GOP Wonderland: Inside North Carolina's Conservative Makeover

Will new Republican policies create a business-friendly climate or destroy the education and lifestyle strengths that have made the Tar Heel State a magnet for talent?

Liberal protestors in Raleigh demonstrate against the state GOP's policies. (Associated Press)
RALEIGH, N.C. — She was the self-described "new sheriff in town," and Bev Perdue promised, a thousand years ago in 2008, to change the way North Carolina did business. As a woman and a Democrat, she embodied the quantum electoral shift that was occurring across the nation, one powered by the nascent Obama coalition. The nation's first African-American president had just edged out a stunning win in this Southern state, and Gov.-elect Perdue had ridden the surge, along with Sen.-elect Kay Hagan. With its diversifying electorate, its thriving cities, and both legislative chambers and the Governor's Mansion in Democratic hands, the state seemed on the verge of a new, more progressive — and, yes, if you want go there — bluer era.
Cut to: The new sheriff's being run out of town on a rail, along with the Democrats running the General Assembly. The state is once again subject to single-party hegemony, but it looks a lot different. Now the only progressives who can be claim to be doing anything meaningful in the state capital are the ones who jammed it in protest every Monday this summer as they watched conservative legislators dismantle as much of their legacy as fast as possible.
The Republicans, too, are out to reshape the way the state does business, but in a much more radical way. They have the keys to the entire kingdom: They own a supermajority in the Legislature and have a compliant ally in Gov. Pat McCrory, Perdue's Republican successor. As such, they essentially govern unchecked and unopposed, exerting their will on everything from taxes to abortion to voting rights to the social safety net to more arcane matters like denying the city of Raleigh the use of state land for a public park.
In this new climate, Barack Obama didn't win the state the second time around; he lost to Mitt Romney by 2 points. And Hagan's reelection next year is in deep jeopardy. "We're pushing legislation we've always dreamed about," says Claude Pope, the chairman of the state Republican Party. North Carolina didn't just step back from its once-imminent purple-to-blue transformation. It now glows scarlet-fever red.
Conservatives nationwide have watched the state with envy — and liberals with horror — as their bedrock ideological principles have alchemized from shopworn cable-news talking points to tangible policy. It's as if the House of Representatives were allowed to run the country, a prospect that must make Eric Cantor gaze at the moon like a dreamy child. The North Carolina Legislature has been cheered by The Wall Street Journal and derided by The New York Times. Pope was so incensed by a Times editorial titled "The Decline of North Carolina" that he fired back an open letter to the paper. ("When you're a Southern boy," he says, "you hear your whole life how stupid you are, how backwards you are.")
The driver of all of it, Republicans say, has been the state's economy, which has remained stubbornly resistant to the lurching national economic recovery. At 8.9 percent, North Carolina's unemployment rate ranks fourth in the nation, right up there with luckless states like Rhode Island and Nevada, neither of which has anything like North Carolina's crown-jewel universities, booming New South cities like Charlotte and Raleigh, or famous Research Triangle Park. This, the GOP thinks, is reason to slash personal and corporate taxes, cut the budget, and ease regulations — all in an effort to make the state more conducive to business, an economic-development strategy that may come at the expense of thriving urban areas like Raleigh. It's an "experiment that has real significance for the rest of the country," says Brent Lane, an economist at the University of North Carolina (Chapel Hill). "They've made an ideologically true bet on free enterprise," he continued. "They've really rolled the dice."
But conservatives being who they are, they didn't leave it at that. The moment, long-awaited, had to be seized by the throat. So they passed a restrictive abortion law that will force most of the clinics in the state to shut down and a measure that will require voters to produce IDs, which is almost certain to disproportionately affect minority voters. They loosened gun laws to allow concealed weapons in bars and restaurants; gutted unemployment benefits; slashed teacher pay; and rejected the Medicaid expansion available through Obama's health care initiative. That, combined with a constitutional ban on same-sex marriage passed by voters last year, has economic-development officials in major cities like Raleigh rattled.
They worry the state's political environment has turned so toxic that, despite all the incentives, businesses won't want to relocate there, that recent transplants to the state will leave, and that college graduates will follow them. At the same time, deep tax cuts could leave North Carolina unable to invest down the road in education, public safety, and infrastructure if (very optimistic) revenue projections don't pan out. "It's hard to get people to understand the impact of what they're doing is going to be," says Nancy McFarlane, the alarmed mayor of Raleigh.
Republicans like Pope dismiss complaints like hers as liberal carping, a hangover from Democrats losing power in a state they ruled — albeit in old-school, business-friendly moderation — for more than a century. "Imagine if you were in power for 140 years and you found yourself out of that power," Pope says. "They don't know how to be the minority."
Pope's attitude is common among North Carolina conservatives: They don't want to hear it. And given their numbers in the Legislature, they don't have to — at least until the pendulum swings again. That may not happen for a while. Several progressives I spoke to here shrugged off the suggestion that a political civil war was raging within the state. "In a war," one said, "both sides are evenly matched." This was a massacre.

The Blitzkrieg

Raleigh is a low-slung, verdant, tree-canopied place that feels more like a tranquil hamlet than a bustling city on the move. The square across the street from the city hall can be virtually empty at the height of afternoon. But blocks away, on gentrifying Wilmington Street, brew pubs with draft beers like Green Flash Hop Odyssey can be found next to Lebanese restaurants serving kibbeh nayyeh. Spurred by the burgeoning tech industry, young residents are moving downtown and bringing the totems of 21st-century hipsterdom with them: bikes, festivals, farmers' markets.

Peruse just about any of those quality-of-life surveys in business magazines, and you'll find the region ranked near the top. Besides the tech industry and a growing entrepreneurial culture (app design is big), the area has three major universities, strong public schools, affordable housing, an abundance of green space, and Research Triangle Park, the longtime template for public-private partnerships that drew multinationals to North Carolina and spurred much of the region's growth. Raleigh, Durham, and Chapel Hill attract converts from both the East and West coasts who, naturally, import their ethos along with them.
The three cities are the face of a changing state. Wake County, where Raleigh sits, is the state's second-most populous, and it supported Obama over Romney by 10 percentage points last year. To much of the local citizenry, the state Legislature in the center of town is now something like a foreign embassy. In turn, many of the conservatives from rural enclaves across the state view Raleigh and the Triangle at large as a bubble — an island of prosperity in a struggling state and an incubator for Democratic voters.
It may not come as a surprise, then, that some local officials, such as McFarlane, feel targeted by the Legislature — that the GOP is busily working to undermine the basic tenets that fuel cosmopolitan success in the interest of benefiting the state's other regions. They worry that cuts to public education, both at the university and K-12 levels, will make it harder to draw and keep young families and to recruit large employers looking for a skilled workforce. That conservative stances on issues such as abortion and same-sex marriage will alienate the young programmers and designers who are the lifeblood of the tech sector. That the hostility to targeted tax incentives and public investment will drive away high-end industries. (Gov. McCrory's budget, for example, slashed funding for the state's Biotech Center, which assists start-ups in that industry, by almost one-third.)
Raleigh officials note with irony that, during the same summer the state banned gay marriage, the regional airport finally secured its first nonstop flight to San Francisco — something the tech community had been clamoring for. "There's a disconnect," says Mary Ann Baldwin, who sits on Raleigh's City Council and has played a large role in recruiting tech firms, such as Citrix. "The GOP believes they are creating an environment that supports job creation. That model doesn't work anymore."
To McFarlane and Baldwin, it can come down to something as simple as a park. During Perdue's administration, the state had signed off on a deal to transfer 325 acres it owned (an abandoned mental hospital sits there now) to the city of Raleigh for use as a world-class civic green space. When the Republicans took control of the Legislature, they passed a law undoing the lease deal. "The kids we are attracting, this is the kind of thing they want to see," McFarlane says of the park plan.
Allan Freyer, a regional economist who works for the left-leaning North Carolina Justice Center, characterizes the divide this way. "Clearly, cultural issues matter," he says over lunch at Sitti, the Lebanese restaurant on Wilmington. "The quality-of-life variable — they don't get it."
What's playing out in Raleigh mirrors a nationwide debate between liberal and conservative economists and urbanists: What really matters when it comes to economic development? And, in a larger sense, what is the future of metropolitan areas?
Is it the Triangle approach, which calls for deep investments in education and infrastructure; tax incentives for high-end industries; development of an urban core (with, for example, dog parks, bike lanes, light rail) for young professionals; and "creatives" like the ones streaming into Raleigh, accompanied — to be sure — by a progressive view on social issues? Or is it the GOP philosophy, which seeks to lower regulatory hurdles for businesses, keep more money in the hands of taxpayers, and introduce the free market to education? (In the latter case, that would mean private-school vouchers and more charter schools to compete with, and potentially even cripple, the existing system.) As for culture, bike lanes and dog parks be damned. People like their cars — and they care more about finding affordable housing in suburbs and exurbs close to their jobs than inhabiting an urban playground. In that GOP view, social issues don't enter the economic equation at all.
"Part of it is getting government out of the way," says Brian Balfour, policy director for Civitis, a conservative advocacy group based in Raleigh. Before the flip at the Statehouse, Balfour was resigned to being an unwanted guest at the party. Now he relishes Civitis's new role as a partner to the policymakers. "Taxes are the largest barrier to growth," he says — echoing a Republican argument during last year's presidential campaign.
But, as both sides pointed out then, the research is all over the map. "Pick a study," concedes Lane, the UNC economist. Still, while local experts like Freyer worry that GOP policies create only low-wage jobs in the service sector, not the kind of high-end jobs that states covet, Lane says that might not be such a bad idea. "What we need are living-wage, low-skill jobs," he says. The Triangle's success, he argues, doesn't spill over to the rest of North Carolina — and the Legislature is trying encourage job creation in other parts (where most residents live), even if it comes at the expense of places such as Raleigh. Ten-thousand tech jobs, Lane says, can't replace 100,000 jobs lost as the state's manufacturing base continues to erode. Lured by state marketers' sales pitch, which makes North Carolina sound like a land of plenty, too many people are streaming into the state without employment lined up. "Our goals," he drawls, "don't fill our holes."
Thom Tillis, the Republican speaker of the House of Representatives, rejects the notion that the Assembly's aggressive stance on social issues could impede economic development, arguing that North Carolina is a Southern state vying for business against Tennessee, Georgia, South Carolina, and Virginia. "We've got to focus on states that are truly our competition," Tillis says. (The last thing liberal Raleighites want is to be more like South Carolina or Tennessee.) "All of them have those policies for years. It doesn't seem to be hurting their ability to compete," he says. "That's more of a red herring."
Others aren't so sure. Brad Wilson, the CEO of BlueCross/Blue Shield of North Carolina, told a corporate forum in August that the Legislature was tarnishing the state's image. "Broadly speaking and all things considered, it has not been helpful to the North Carolina brand nationally," said Wilson, according to The News & Observer of Raleigh. "Anything that tarnishes the brand, by definition, has the potential of eroding the state's economic development story."
At the same forum, Colin Powell, the former secretary of State, made news for ripping the state's voter-ID law. "These kinds of actions do not build on the base. It just turns people away," he warned.

How Far Is Too Far?

Yevonne Brannon blinks in the summer sunshine. We're sitting outside a Burger King down the road from the farmers' market. "I was there the day the governor came out with cookies," she says.

That was July 31, the height of the protests over the Legislature's agenda, when McCrory walked out of his mansion, crossed the street, and greeted a handful of abortion-rights protesters with a plate of cookies. The national media quickly seized on the moment as a crystalline image of the gulf between the state's warring camps. The protesters thought McCrory was being condescending. The governor says he was just being friendly. (His office declined an interview request for this article.)
A former Wake County commissioner, Brannon has been a liberal activist in Raleigh for decades, and this day, she's wearing a T-shirt with an honest-to-goodness peace emblem on the front. Her hatchback sports a bumper sticker that reads: I CAN'T BELIEVE I'M STILL PROTESTING THIS CRAP. She calls the weekly demonstrations at the Capitol, which became known as Moral Mondays, "the only source of hope and solidarity" in the current political climate. "It's everything Republicans hate about the Triangle," she laughs, but she calls McCrory's cookie moment "a gift." The incident catalyzed the opposition, she says, and shone an even brighter light on the Legislature's actions. "I believe the public's catching on. I think the public will turn on them. I think they already are."
Beyond the back and forth over economic policy, the true argument raging in Raleigh and elsewhere in the state is whether Republicans will pay a political price for running roughshod, or whether they can continue to govern with impunity for the foreseeable future. Changing the Legislature's makeup won't be easy. The tea-party wave in 2010, which gave Republicans control of both chambers of the General Assembly, allowed the GOP to redraw congressional and state districts to help ensure they stay in power. The state Democratic Party remains tainted by a sexual-harassment scandal that helped eject Perdue from office. Perdue's former campaign finance director was also indicted and eventually pleaded guilty in a campaign-finance probe.
The first test will be whether Hagan, elected with the help of Obama voters, can keep her Senate seat next year, when turnout will be lower, older, whiter, and redder. Her campaign plans to make the Legislature's agenda a central issue, especially since Tillis intends to run against her. The state Senate president, Phil Berger, was said to be mulling a run, too. "It's going to be a big liability for either one of them," says Ben Ray, a spokesman for the state Democratic Party. "This will stick to these guys. They will own it." (Berger announced Monday that he will not run.)
Tillis, who doubts his record will hinder him, concedes that Hagan will use it "to try and get some traction in the state." And while the Legislature seems secure, McCrory may have reason to worry. The state is still about evenly divided, and some centrists believe the governor, a former mayor of Charlotte, has strayed too far from his mandate. A recent poll by the Democratic firm Public Policy Polling showed his approval rating dropping to 35 percent. In a show of independence, McCrory recently picked a fight with the Legislature over two high-profile bills that he vetoed; but to show how little power he has, the Republicans returned to Raleigh in a special session to override them.
If Republicans have one truly vulnerable spot, it may lie in education spending. The Legislature approved a voucher program that will help route families to private schools. It also froze teacher pay for K-12 and eliminated a bonus for teachers who obtain advanced degrees. That's what most worries business leaders — even those sympathetic to the GOP platform. "We did not get here with that philosophy," says Bob Geolas, the chief executive officer of the Research Triangle Park Foundation, which oversees the sprawling research campus northwest of Raleigh that is home to such companies as IBM, Cisco, and GlaxoSmithKline. "It's a fundamental mistake for the state to back away from that commitment."
Tillis seems to understand that. He says that when the General Assembly reconvenes next year, it will reconsider education funding and teacher pay (just in time for the midterm elections). Lane, the UNC economist, predicts a course correction. "I think they will regret some of the decisions they're making now," he says, adding that the negative publicity has obviously damaged the state. "It's terrible," he says. "Of course it matters."
Pope, the GOP chairman, disagrees. "Who is it that says our brand has been tarnished?" he asks, defiantly. "It's the Democrats who are critical. They're trying to make it a brand issue when it's a power issue."
He is right about that. Republicans have it — they have all of it. The old adage about power is that you use it or you lose it. But that isn't always true in politics. As Obama and his allies found out in 2010 with his health care plan, and as the GOP may discover here in time: Sometimes, you use it and you lose it.