From the Los Angeles Times:
Reporting from Columbia, S.C. — Would a governor in a state with the third-highest unemployment rate in the nation really say no to President Obama’s stimulus money?
That is the question reverberating through South Carolina, where Republican Mark Sanford — a popular second-term governor and noted fiscal conservative — says he may reject some of the $2.8 billion in federal funds headed to his state.
Some observers suspect that the governor, who is regularly mentioned as a presidential contender in 2012, is just grandstanding. It’s hard for them to imagine a lawmaker leaving millions of dollars on the table in a state with a 9.5% unemployment rate — one that has cut hundreds of millions from its budget in recent months, and will cut millions more in the next fiscal year.
“I don’t know whether this is some presidential politics underway, and just headline [grabbing],” said Republican Glenn F. McConnell, president pro tempore of the South Carolina Senate.
But others said they wouldn’t be surprised if Sanford tried to send something back. The 48-year-old real estate entrepreneur has earned a reputation as a fiscal hawk since his 1994 election to Congress as part of Newt Gingrich’s “Republican Revolution.” As governor, he has vetoed hundreds of projects in the name of budgetary restraint, earning the ire of both Democrats and Republicans.
For some out-of-work South Carolinians, even the suggestion of rejecting bailout money fills them with outrage. William Williams, 38, a laid-off telecommunications worker, had a message for Sanford as he searched futilely through a computerized job bank in Marion County, a struggling industrial area where unemployment has reached 19%.
“Stop playing politics with my life,” Williams said, looking at his unemployed brother James. “If you ain’t going to help your people . . . “
“Then get on out the way,” James said.
Although a majority of Republican governors, including California’s Arnold Schwarzenegger and Florida’s Charlie Crist, have supported the stimulus, a few have emerged as vociferous opponents of the legislation. Sanford leads a group of GOP governors — including Rick Perry of Texas, Bobby Jindal of Louisiana, Haley Barbour of Mississippi and Sarah Palin of Alaska — who have left open the possibility that they could try to send a portion of the money back.
[Sanford's] threat to block South Carolina’s share of the money prompted Rep. James E. Clyburn (D-S.C.), the House majority whip, to insert language that allows state legislatures to accept stimulus money even if it is rejected by a governor.
But governors may have other tactics at their disposal, like ordering agency heads not to spend the cash.
No matter what course they take from here, the political stakes will be high as the governors jockey for leadership of a Republican Party eager to retool for 2012. If the stimulus package is deemed a failure in the coming months, politicians like Sanford could be seen as prophetic, and lead a resurgence of fiscal conservatives within the GOP. But if the recovery plan proves popular, fiscal hawks could lose ground to stimulus supporters like Crist.
Sanford, in an interview at the statehouse last week, said politics weren’t a factor in his dissent.
Some of his issues with the stimulus money were specific: He worried that some would be used to fund programs that the state may not be able to afford after the one-time federal subsidy is gone.
But Sanford, the head of the Republican Governors Assn., has broader concerns as well. He fears that excessive government borrowing to fund the stimulus could lead to an inflationary spiral to rival Weimar Germany’s. He fretted over a “moral component” to multi-trillion-dollar debt — that it was a “future tax” that must be repaid by generations to come.
To critics like Democratic state Sen. Robert Ford of Charleston, the governor’s threat to reject some of the stimulus is the latest example of an unwavering belief in free-market ideals that are detached from the realities facing many South Carolinians.
Now, as South Carolina’s economy threatens to get even worse — the state Board of Economic Advisors predicts unemployment at 14% by June — it remains to be seen if Sanford’s supporters will continue to agree with his principles.
Part of that may depend on the kinds of battles in which Sanford chooses to engage. Last year, he was criticized by some fellow Republicans for refusing to apply for a $146-million loan from the federal government to cover the state’s unemployment benefits fund. He relented under pressure.
This just in…
WASHINGTON (Reuters) – Even Republican governors who have said they will reject some of Washington’s stimulus money will end up taking much of the funding, the leader of the National Governors’ Association said on Saturday.
“In the end … most of the governors will accept most of the money and use it for the benefit of their citizens,” said Pennsylvania’s Democratic governor, Edward Rendell, at the association’s annual meeting.
In the four days since President Barack Obama signed the $787 billion economic recovery bill into law, providing increases in federal backing for states’ social services, infrastructure and education funding, at least two Republican governors have said they may not take all of the money.
Mississippi’s Republican Governor, Haley Barbour, told reporters at the meeting he would decline some $50 million in extra unemployment insurance funding, because it includes a condition for expanding the benefits to more people.
Even if governors turn down money, the economic recovery law includes a provision allowing state legislatures to override governors. Barbour added that “100 percent of the governors are going to take some percentage of the funding.”
Louisiana Governor Bobby Jindal, who has often been mentioned as a potential Republican presidential candidate for the 2012 elections, said late Friday he too would not take Louisiana’s portion of the unemployment money.
The Louisiana Workforce Commission estimates that would total $32.8 million over three years, but once the stimulus plan ended the state would have to cover the benefits at roughly $12 million a year.
Many U.S. mayors have worried much of the stimulus money will be delayed at the state level and not reach cities in time to help them. Mayor Ray Nagin of New Orleans, Louisiana, said on Friday that because of Jindal’s possible presidential aspirations, the governor has “a certain way he has to talk right now.” Nagin added, “any dollars he does not want, we will take them gladly.”
But in Maryland where unemployment has spiked in recent months, Democratic Governor Martin O’Malley said his state had no problem with the unemployment provisions in the law.
“I don’t believe they’ll cause tax increases or spending increases,” he said. “We welcome the unemployment dollars.”
“There is not a state in this union that is going to be able to use this stimulus money and wipe away all of the problems and all of the challenges that we face,” Rendell said, adding that $1 billion in spending still had to be cut recently from Pennsylvania’s budget.
The assistance for states will only “partly close budget gaps in fiscal 2009 and 2010 that are estimated to total between $100 billion and $350 billion,” credit rating agency Moody’s Investors Services said on Wednesday.
Utah Governor Jon Huntsman, a Republican, said his state recently cut its transportation budget in order to preserve funding for education and other social services.
“Now the stimulus money comes in and it basically allows us to backfill in many of these critical areas like public and higher education and healthcare,” he said. “So we can now take the transportation money that was taken off the table a couple of months ago back to where it was originally intended. Our transportation budget is going to be whole.”