Federal Funding: A Double-Edged Sword for GOP Governors

Haley Barbour, an adept user of federal funds, leads the GOP's charge in an anti-stimulus election landscape

"He's like fog," former Senator Bob Dole once said of Mississippi Governor Haley Barbour.  "Get up in the morning, there's Haley, a cloud hanging over somewhere." So it was last summer when Governor Mark Sanford of South Carolina resigned as head of the Republican Governors Association: Within an hour, Barbour had become the new chairman.

Barbour's new role may have been unexpected, but to many Republicans the move seemed inspired. This November, 37 gubernatorial seats are up for grabs, and Barbour has a knack for turning isolated local elections into well-orchestrated national crusades. As head of the Republican National Committee from 1993 to 1997, he helped fashion Newt Gingrich's Contract with America, a nationwide messaging campaign for a House majority. Now, under Barbour's direction, the Republican Governors Association is pursuing a broad strategy that aims beyond the statehouses. The association's website asserts that "Republicans won't win back the U.S. Senate, House or Presidency until first reclaiming a majority of governorships for the GOP."

And that is Barbour's mission. The 37 gubernatorial elections are fairly evenly split, with Republicans defending 18 seats and Democrats 19. But of those 19 states, 11 will have no Democratic incumbent on the ballot in November (12 if Wyoming's Dave Freudenthal decides not to challenge his state's term limit law). In these races in particular, the Republicans think that they can capitalize on a public that seems to be turning against the president and several of his signature initiatives.

It was Tip O'Neill who famously said that all politics is local. But not for the GOP in the governors' races, at least not in 2010. "If you say all politics is local," insists former House majority leader Dick Armey, "you miss our base." Like RGA chair Barbour, Armey was instrumental in the 1994 Contract with America. Today, Armey heads FreedomWorks, an organization closely associated with the Tea Party Movement. The FreedomWorks website lists numerous federal issues that Armey believes should be at the forefront of all political discussions. Some of them are framed positively--a chief goal is a balanced budget--but most are assertions of what the federal government should not do: it should not own auto companies, pick winners and losers in the financial industry, or kill jobs by passing cap-and-trade legislation. The site also includes pages for individual states, but each one bears the same message: "Let's work together to fight for less government, lower taxes, and more freedom in [name of state]!"

There's a problem with this campaign rhetoric: it will lose its power as soon as governors enter office and start juggling the tasks of taxing and spending that are part of the job. Take Florida Governor Charlie Crist, once the heavily favored Republican nominee for Senate in the Sunshine State. Crist has suffered tremendously because of his support for President Obama's economic stimulus package, which provided up to $16 billion to the state--an amount about equal to the $16 billion in budget deficits facing Florida between 2009 and 2011. His challenger going into the August primary, Tea Party favorite Marco Rubio, has leveraged attacks on Crist's support for the stimulus (which Rubio calls "horrifying") into an 18-point advantage over the sitting governor. While Crist is left defending his gratitude for federal dollars that have prevented service cuts and tax increases, Rubio is free to wax philosophic about government, telling The New York Times Magazine, "We are not debating stimulus bills or tax codes. We are debating the essence of what government should be and what role it should play."

To avoid Crist's fate, GOP governors have adopted an increasingly hostile attitude toward Washington's perceived encroachments. Along with Barbour, Texas's Rick Perry, Louisiana's Bobby Jindal, Alaska's Sarah Palin, and Idaho's Butch Otter all initially and very publicly considered refusing federal stimulus funds. South Carolina's Sanford, a presidential contender before his ill-fated Argentinean holiday, wrote a Wall Street Journal op-ed entitled "Don't Bail Out My State."

But even the most vociferous proponents of an anti-tax, anti-Washington philosophy have difficulty upholding it. Governor Barbour has been widely lauded for his post-Katrina stewardship of Mississippi, but he relied heavily on federal funds to pull his state through. Barbour is also a former lobbyist for tobacco companies and outwardly opposes tax increases, yet he signed a tax on cigarettes into law late last spring because of depressed state revenues.

Other Republican governors have been equally willing to censure Washington's taxing and spending policies while eagerly accepting federal funds. Governor Sanford recently met with Secretary of Education Arne Duncan to get his hands on some of the $5 billion in stimulus funds allotted to the Race to the Top program. Governor Bobby Jindal, whose response to President Obama's 2009 State of the Union address mocked several of the bill's spending provisions, calls Race to the Top a "unique opportunity." Minnesota Governor Tim Pawlenty criticized the stimulus last February, but he later proposed using it to cover one third of his state's budget shortfall. And according to the National Council of State Legislatures, Texas Governor Rick Perry signed a budget into law that used stimulus funds to fill almost 97 percent of the state's budget gap, making the Lone Star State the most dependent on federal largesse of all the states in the NCSL report. When Crist is attacked for his support of the economic recovery package, he defends himself by pointing out that "every Republican governor in the country took" stimulus funds.

Nonetheless, in a period of voter frustration with Washington, bashing the federal government will be an attractive strategy for GOP candidates trying to edge out Democrats. But governors who have their sights set on the White House need to show that they can run a state, and maintaining state services requires funds. Finding a way to raise revenue while still posing as an anti-Washington conservative is a difficult balancing act. Consider Haley Barbour. Democrats acknowledge his strength as a possible presidential candidate, but his reputation as a leader relies largely on his adept use of FEMA money to help his state after Hurricane Katrina. "While Louisiana floundered, Mississippi survived and thrived," said Pennsylvania governor and former Democratic National Committee chair Ed Rendell, playfully contemplating a campaign slogan for the Mississippi governor. "Why? Because of the leadership of one man: Haley Barbour."

Harry Moroz is a research associate at the Drum Major Institute for Public Policy.

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