Ohio Gov. John Kasich’s name popped up on late night TV again, this time as the butt of a joke made by The Late Show host Stephen Colbert. The former Comedy Central host joked that one lone Texas elector has vowed to cast his vote for the Buckeye State’s term-limited, lame duck governor for president. Doing that, Colbert said, was like getting three wishes from a genie and using them to pick three Old Navy gift cards.
While professional comedians like Colbert have rich soil to till with Mr. Kasich, serious observers of the governor’s administration, like Michael B. Sauter, Evan Comen, Samuel Stebbins and Thomas C. Frohlich at Yahoo Finance, write that Ohio ranks in the bottom half of the worst and best managed states. After six years at the helm, Gov. Kasich can do no better than #28 among the 50 states.
The authors still apply the pejorative moniker “Rust Belt” to Ohio even after Kasich promised to “move the needle” on job creation, but so far has overseen years of job performance that is both too slow and unable to even meet the national average. Far from turning Ohio into a mecca for jobs, John Kasich took a recovering economy handed to him by former Gov. Ted Strickland and pretty much sent it sideways at best and down at worst. Ohio’s low unemployment rate, now at 4.9 percent and tied for 21st lowest, reflects a shrinking workforce due to jobs not being plentiful enough versus jobs created. But Mr. Kasich and his Republican Party have nonetheless branded him a “turnaround” governor whose narrative of recovery isn’t matched by the reality of the day.
Yahoo Finance’s report on Ohio says the economy remains relatively dependent on its manufacturing sector, citing that the industry employs 15.5 percent of the state’s workforce, the fifth largest manufacturing employment of all states. Citizen John Kasich, who once worked as a high-paid Wall Street banker for Lehman Brothers and hosting a Fox News political talk show, eked out a win in 2010 on a campaign that blamed Gov. Strickland for the Great Recession that sucker punched Midwestern states including Ohio with devastating job losses.
The authors cite the governor’s long-help fiscal conservative policies, that were manifested in cutting the state income tax by over $5 billion and balancing the state budget by denying local governments and schools billions in shared revenue. Gov. Kasich then sequestered those funds in the emergency fund, where he’s refused to tap them, even to better attack Ohio’s nation-leading plight in fighting opioid use that results in eight deaths per day. As a result of Gov. Kasich’s sequestration of so-called “rainy day” funds, Ohio’s reserves are now equal to 5.5 percent of annual expenditure, more than the majority of states.
It’s comes as little surprise, then, that following Kasich’s obsession with tax cuts that disproportionately benefit the wealthy—something the 64-year old boasted about on the campaign trail for president this year—Ohio’s per capita tax revenue is lower than in the majority of states. Poverty in the state is 14.8 percent, tied for 21st highest.
“While his administration has been praised for fiscal responsibility, others have attributed local budget shortfalls to the governor’s state-level cuts,” the authors correctly observed. They add another very important fact that almost always escapes media attention, but is key to why tax policy changes won’t be busting any job creation records anytime soon.
“Ohio is also one of a minority of states with a negative net migration, as nearly 58,000 more people left than moved in between 2010 and 2015.” States that grow their population also grow jobs. Every ten years when the Census is taken to reassess representation in Congress based on population, Ohio has been losing seats for decades while a state like Texas gains voting power as people flood into it. With 18 Electoral College seats now, Ohio’s total has dipped back to where it was in the mid-19th century, when it was growing by leaps and bounds.
Kasich Sees Recession
In another classic Kasich move, he appeared in the Ohio House on Tuesday to warn “we are on the verge of a recession in our state.” The reason for his prediction appears to be that Ohio’s latest state tax receipts showed revenue falling behind estimates. Total tax revenue for November came in $99 million below estimates, a fact that when added to news from last month that revenue were off by $88 million is another sign of a state waffling.
Gov. Kasich has defended his sequestration of billions in the emergency fund on several occasions, saying Ohio needs a robust rainy day fund in case another recession happens. The fiscal conservative who’s famous for pushing a balanced federal budget amendment, seems incapable of laying the blame for the Great Recession where it should be, at the feet of his own party and its standard fare of lower taxes and less regulation, the two primary causes of the economic downturn that Ohio, eight years later, is barely out of.
Talking as if he’s a stranger in a strange land instead of an authoritarian governor who’s been intimately involved with reforms in state government that haven’t pushed the state to the vanguard of states doing very well, his prediction of recession without evidence causes some economic research analysts to question where he’s getting his information.
“Nobody, including me, or anybody else can accurately forecast the starting point of the next recession,” said Ohio’s premier economic research analyst. George Zeller, based in Cleveland, is a little taken aback by Mr. Kasich’s declaration that the sky is about to fall. Zeller said Kasich “has decided that he can make such a forecast for some unknown reason,” adding, “Of course, he says nothing about his own fiscal policy while he announced his forecast.”
Adding to his last point, Zeller said, “Ohio not only manages its statewide revenues, but it also has restructured its tax policies so that relatively progressive taxes such as the state income tax were cut, while local revenue sharing funding streams were slashed. Thus, resulting in huge regressive tax increases at the local level in cities, counties, and school districts.”
In sharp contrast to Kasich’s claim of a coming recession, one expert who closely observes the national economy says things look pretty good and predicts no recession on the horizon. Bill McBride at Calculated Risk, one of the nation’s top economic forums, cites five reasons to be thankful for:
- The number of new claims for unemployment insurance benefits is at the lowest level in 40 years
- There were 5.5 million job openings in September. This is close to the record high of 5.8 million in April 2016.
- Household debt burdens have declined sharply over the last several years.
- Gasoline prices are near the lows since the Great Recession.
- Wages growth is picking up.
“There is much more positive economic news – solid auto sales, housing starts increasing, U-3 unemployment rate below 5%, and U-6 rate falling, the recent pickup in GDP – and much more,” says. McBride, who still sees problems—not everyone has participated in the current expansion, wealth and income inequality are record extremes, there is too much student debt, and climate change is posing a real threat to the economy in the future.
So if recession does loom, as Gov. Kasich seems to believe, he ought to look inward at his own stewardship of the state’s economy instead of blaming someone or something else for Ohio’s own shortcomings under his watch.
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