Their state economies may lag, but Republican hopefuls still brag

Reuters News
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Posted: Jun 10, 2015 6:36 PM

By Andy Sullivan

WASHINGTON (Reuters) - Various Republican governors with an eye on the White House can point to tax cuts and other business-friendly policies they spearheaded as they enter the crowded 2016 presidential contest. But many of them can't highlight robust economic growth.

Among the handful of governors and former governors competing for the Republican presidential nomination, only one - former Texas Governor Rick Perry, who declared his candidacy last week - can say that his state has outpaced the national economy over the past four years.

Economic growth lagged in other states whose governors are expected to run for president, according to U.S. government figures released on Wednesday.

"Only Perry can really brag," said George Mason University economist Stephen Fuller. "The other guys just haven't been there long enough and don't have anything to show for it, anyway."

The Texas economy grew by 17.8 percent between 2011 and the beginning of 2015, according to the U.S. Bureau of Economic Analysis, well above the national pace of 6.3 percent during that period. The state's economy, however, has begun to show signs of weakness recently as oil prices have plunged.

In Ohio, Governor John Kasich, who has been mulling a White House run, presided over a state that grew by 6.0 percent over those four years, slightly less than the national average. Wisconsin Governor Scott Walker, considered a likely Republican contender, oversaw growth of 4.3 percent in his state.

In New Jersey, the state economy under Governor Chris Christie grew by 3.8 percent, while Louisiana grew by only 1.2 percent during that period under Governor Bobby Jindal. Both Christie and Jindal are eyeing White House bids.

Governors have a limited ability to shape a state's economy in the short term, economists say.

Investments in education and highways can take years to bear fruit, while tax cuts must be offset by spending cuts to keep budgets in balance, resulting in little overall stimulus in the short term.

"If you shift state tax policy to make it more inviting for businesses to expand here, that can increase employment," said Dale Knapp, research director at the nonpartisan Wisconsin Taxpayers Alliance. "But that's a long-term impact."

The dynamics of the particular industries that dominate in a region play a significant role as well. Economists say that manufacturing-heavy Wisconsin, for example, is more susceptible to recession than an oil state like Texas.

Experts say the true impact of any governor often isn't apparent until years after the person leaves office.

But that has not stopped potential candidates from talking up their economic track records on the campaign trail as they criticize Democratic President Barack Obama for presiding over sluggish growth at the national level.

Walker, for example, argues that tax cuts and weakened labor laws have helped Wisconsin climb out of recession, even if he fell far short of his promise to create 250,000 jobs by the beginning of 2015.

In Texas, Perry's spokeswoman said growth was boosted by Perry's focus on low taxes, business-friendly regulations and limits on lawsuits.

In Louisiana, Jindal's administration cites a growing population, rising income and favorable ratings by business magazines to argue that the economy has improved, despite the tepid growth of recent years.

In New Jersey, Christie spokesman Kevin Roberts said Democrats have slowed his efforts to cut taxes and implement other changes. New Jersey's economy also suffered when Hurricane Sandy devastated much of the coast in 2012.

No matter the facts on the ground, White House hopefuls will find a way to argue that they are leaving their states in better shape than when they arrived, said James Pethokoukis of the conservative American Enterprise Institute.

"For these guys there's only two kinds of situations: a booming economy or a turnaround economy, and in both situations they get the credit," he said.

(Reporting by Andy Sullivan; Editing by Leslie Adler)