Will Ohio's economic uptick be a boon for Obama?
Sep 30, 2012 at 6:03 AM
Healy, the Democratic mayor of Canton, recalls how, in the grim early days of 2010, when unemployment topped 13 percent, the budget was shrinking and pressures to meet payroll were mounting, his city desperately needed help. The rescue, he says, came with millions of dollars in federal funds that Canton used to repair bridges, pave streets, demolish homes, hire workers and help keep police and firefighters on the job.
"Those stimulus dollars allowed us to survive the recession," the mayor says. "Without them we would have been dead in the water."
Halter, meanwhile, is a Republican and CEO of a small steel forging company forced to cut workers during the downturn. He watched with frustration as billions of dollars were doled out to stimulus projects, drowning banks, the collapsing U.S. auto industry — and green energy companies.
"I don't know that government spending has ever really grown the economy," he says. "I don't believe in subsidies — period," Halter adds, pointing out no federal agency provided money when his business struggled. (It has since rebounded and added workers.) He prefers tax cuts and less regulation.
The debate over how big government should be and how much it should do — a common theme in this campaign — has special resonance in this pivotal state, where many hail the auto bailout as a catalyst in Ohio's recovery. It also raises larger economic questions about which direction — and which candidate — offer the best hope for more progress.
Will voters focus on the revitalized auto industry and unemployment below the U.S. average and regard President Barack Obama as the architect of a hopeful but not yet robust economy? Or will they see government as an obstacle, hundreds of thousands of people still out of work and look to Mitt Romney for the answers?
"Each side is selling a portrait," says James Brock, an economics professor at Miami University in Ohio. "For Obama, it's, 'Look, things are getting better, stick with me.' For Romney, it's, 'Things will be a lot better if you switch to me.' Where does the electorate go? Will they stick with what seems to be working or jump to something that might work better?"
The answer could determine who captures Ohio's 18 all-important electoral votes — and wins the White House.
Ohio was once synonymous with steel and rubber, a land of roaring blast furnaces that filled the night skies with smoke and flames, home to generations of blue-collar workers who streamed through the plant gates with clockwork precision every morning.
The era when Goodyear, Firestone and LTV dominated the Ohio landscape is long gone; the state has lost more than 368,000 manufacturing jobs since 2000.
But heavy industry still has an enormous presence. There are autos in Lordstown (General Motors), Toledo (Chrysler), Marysville (Honda) and Cleveland (Ford). There's steel in Youngstown and Lorain (and elsewhere). There are polymer companies making car parts, specialty tires, bowls, wall fabric, paint and more in Akron, the former rubber capital. There are medical hubs in Columbus, Cincinnati and Cleveland. There's farming across the state. And there's a natural gas boom in eastern Ohio, driving demand for steel parts used in drilling.
Politically, the state is as diverse as the nation:
The industrialized, union-friendly Northeast, and Democratic-dominated cities ringed by Republican-ruled suburbs with Christian evangelicals and soccer moms. Small towns and rural stretches between Dayton and Toledo running up western Ohio that go Republican. And hard-scrabble Appalachian communities among the hills and rivers of the southern and eastern tier that have Democratic roots but can swing Republican because of conservative social views.
That mosaic has helped cement Ohio's reputation as a bellwether: The state has picked the winner in all but two presidential races since World War II. No Republican has lost here and made it to the White House.
This year's contest is particularly intense with both candidates and their running mates making frequent appearances and their campaigns pumping in more than $100 million in TV ads, each side trying to open up a lead in what has generally been a neck-and-neck race.
Much of the focus is on the economy in this state where the jobless rate has dropped from its 10.6 percent recession peak to 7.2 percent in August — almost a point below the national average.
That decline, Brock says, complicates matters for the Republican ticket. "Romney wants to paint this picture that the economy is in a ditch and awful and the economy just refuses to play that role," he says.
In fact, Brock says, the state has bounced back more quickly than it did after earlier recessions.
"What's different this time is Ohio has recovered faster than the rest of the nation," he says. "We were quick to get hit, quicker to recover. In the past, we were quick to get hit and slower to recover."
The reason, he says, is many plants with antiquated equipment closed in the last few decades. "The strong survived, the weak disappeared and that left room for newer, stronger type of industries to pop up," Brock explains. "It's almost like a forest growing after a fire. What has grown since is much healthier, so it's recovered quicker."
And yet, not everyone is prospering.
About 10 percent of the state's counties have double-digit unemployment, especially those in long-distressed Appalachian areas of southern Ohio. State and local governments are still shedding jobs and Ohio has regained less than 40 percent of the 370,000 jobs lost during the downturn, according to Brent Campbell, an analyst at Moody's Analytics.
The result: continuing anxiety, even among those with a paycheck.
"Uncertainty is what's driving people's emotions right now," says Jason Haas, president of the Akron school board and an Obama supporter. "There's a lot of fear out there — uncertainty that my job is still going to be there in 12 months, that I'm ever going to get a raise again, that my health care's going to go up."
Haas knows some folks think the president should have turned the economy around by now, but he doesn't. "These were the worst economic times since the Great Depression," he says. "I think it's foolhardy to expect that we're going to come out of it in three years," he declares, adding that a relatively small group of Obama backers "maybe had greater expectations than political reality allows."
There's no question, though, Ohio's economy has improved. The question: Why?
Obama and his supporters point to the U.S. auto comeback and a manufacturing rebirth. Republican Gov. John Kasich lauded his own policies in a speech at the GOP convention, noting he'd erased a projected $8 billion deficit without a statewide tax increase and Ohio has moved from 48th to 4th in job creation. His office says 122,500 jobs have been created since he took office in January 2011.
So who's right?
"They both served the state well," says Ned Hill, professor of economic development at Cleveland State University. "The fact is if this wasn't a political season, they'd both be sharing credit. They both played important roles."
Kasich has recruited international food companies and manufacturers, improved the regulatory climate for businesses, taken innovative steps to finance infrastructure and promoted the energy boom that will produce oil, natural gas and natural gas liquids, an industry that already has reaped hundreds of millions of dollars in investment, Hill says. "He took it from zero to 100 miles an hour," the professor adds.
Obama, meanwhile, also should be credited for being "aggressive" in providing stimulus dollars. Ohio received about $8.8 billion, with much going to communities such as Canton. Mayor Healy says his city is still struggling, but without those funds "we would have been in a world of hurt."
Hill also praises Obama for "having the guts to do the auto bailout," which he says "preserved a large part of the state's economy."
Campbell, the Moody's analyst, agrees it was helpful. "The jobless rate definitely would have been higher if we had not had the rescue," he says.
The U.S. auto industry's renewed vigor has become frequent fodder for Obama and other Democrats, including Sen. Sherrod Brown, a target of Republican super PACS in his re-election bid. In one TV ad, the senator touts his support of the bailout standing before a Chevy Cruze, rattling off Ohio cities that produce parts of the car.
And in campaign appearances before autoworkers, the president and Vice President Joe Biden repeatedly remind voters Romney opposed the bailout, sometimes referring to the Republican nominee's widely quoted 2008 op-ed piece in the New York Times, titled "Let Detroit Go Bankrupt."
Romney preferred a managed bankruptcy — without federal funds — and maintains the rescue was unfair, unnecessary and political payback to the unions.
While the candidates differ on the need for the bailout, Obama and Kasich, the governor, differ on its impact.
Kasich's office says that since he became governor (20 months ago), the 122,500 new jobs have been in areas such as plastics, metal and food manufacturing, health care and information technology — and auto jobs have actually dropped by 3,200. That count is limited to workers who assemble cars and make parts.
The Obama administration takes a longer and wider view in a bailout that began under former President George Bush, more than two years before Kasich became governor. In a three-year period starting in June 2009 — when GM and Chrysler were emerging from bankruptcy — it reports a gain of 17,400 industry jobs. Those numbers include auto parts stores and dealerships.
What is indisputable is the auto turnaround has been good for Ohio, where about one in eight jobs is linked to the industry.
In August, GM announced it will invest $220 million in manufacturing plants in Lordstown and Parma to build the next-generation Cruze, preserving more than 5,000 jobs. Chrysler is adding 1,100 jobs by late 2013 at its assembly complex in Toledo where it will make a new Jeep sport utility vehicle. Three years ago, there were rumors about the plant's future after production had dwindled to one shift.
Not surprisingly, many autoworkers like Obama.
"He had our backs then," says Dave Green, president of UAW Local 1714 in Lordstown. "We have his back now."
"It was a courageous decision," says Jim McGowan, a 24-year GM veteran. "It was a risk because he didn't know what the outcome would be. ... I know there are a lot of people out there that don't like it. But the (government) loaned all the money to these banks and they were making all these crazy investments. With the auto loan, they were at least supporting workers and keeping good jobs in the community."
Still, there remain fierce opponents to the idea of using taxpayer dollars to help troubled companies.
"If they can't stand on their own, they don't deserve to be propped up," says Halter, the steel company CEO and Romney supporter. "Nobody propped up Toyota or Nissan. ... That was unfair. That was a political gift to the United Auto Workers. There's no way around it. I could care less whether General Motors goes away because there's somebody else there that's going to take their place."
The rescue does have one Republican booster: Randy Hunt, a lawyer, head of the Stark (Canton area) Development Board and owner of two small businesses, one an auto parts company.
Hunt says government is too big, too intrusive and spends too much money, but acknowledges from a "selfish standpoint" the bailout was a "great thing. ... The federal government needs to step in periodically to help the private sector."
This isn't the only polarizing election issue in Ohio.
Democrats and unions vow to remind voters of Romney's support of a law supported by Kasich and approved last year by the GOP-dominated legislature that would have severely restricted collective bargaining for some 350,000 public workers, including police and firefighters.
The measure, billed as a cost-cutting necessity, was resoundingly repealed in a referendum eight months later, following protests, a statewide petition drive and a multimillion dollar campaign spearheaded by unions.
"Everybody I talk to it's like 'Remember the Alamo,'" says John Russo, co-director of the Center for Working Class Studies at Youngstown State University. "There may be a small decline of energy because of time, but people have very strong memories and feel betrayed."
Al Tuchfarber, a polling expert and professor emeritus at the University of Cincinnati, disagrees.
"The bottom line is that issues aren't nearly as important as they're made out to be," he says, with the exceptions being the economy and an unpopular war. "They're what I call the 800-pound gorilla — when they jump on the table, they knock off everything else."
Tuchfarber says he doesn't think the collective bargaining fight or auto loans will matter much and Ohio will continue to vote 1 percent to 3 percent more Republican than the nation. In 2008, Obama beat John McCain by 4.6 percent.
But other economic issues weigh on voters' minds.
For Hunt, the lawyer and Romney supporter (he likes the GOP nominee's business credentials), it's spending.
"Nobody's coming up with a viable solution to deal with our federal deficit," he says, adding that he'd willingly pay higher taxes if he knew the money was used responsibly. "If you said 5 percent for five years and it's all going to go for the federal deficit," he says, "I'd be the first person to sign up."
For Ed Burgy, it's Romney's plan to cut income tax rates across the board, including for the wealthiest households. Burgy, who recovered after losing two jobs with auto suppliers during the recession, sees this as a return to trickle-down economics.
"I'm 46 and I've never seen it trickle down to me," he says. "The people who own the companies — they don't trickle it down to the employees. ... Show me the proof and I'll listen to you."
Burgy, who's backing Obama, says he'd rather no one receive the cut if it means the richest Americans will get more. "I try not to be jealous, I try not to be petty but every one of those guys is making big money," he says. "They have tons of ways to shelter their money even if they were paying the old rate."
And, he adds, there already are vast inequities in corporate America, with some CEOs earning five, six times that of small business owners. "Is that fair?" he asks. "How are we going to keep our country afloat if we keep letting that happen?"
For Aaron Foust, who has a small furniture refinishing business, there's a different money worry: entitlement programs.
He says Obama's words about welfare recipients don't match his deeds. Publicly, Foust says, the president is urging "them to go to work, but if they (did) ... they wouldn't need him anymore. He needs their vote. As long as they're dependent on the government, they're going to vote for the people that give them money."
Foust, who is backing Romney, believes the system is weighted against hard workers.
"The more money you make, the more you're taxed, the more you have to give to people who don't work," he says. .... "I feel he (Obama) paints a target on my back and he wants to redistribute wealth and I can't stand that."
But Haas, the school board president, thinks voters expected too much from Obama — both in changing the rancorous tone in Washington, D.C., and erasing a huge financial mess.
"I think people give way too much credit to what a president can actually do to influence a national economy," he says. "Whoever's in that seat has the ability to guide and push, but they're pushing upstream."