If you're Ohio Gov. John R. Kasich, last week was rough but ultimately successful, after just five state legislators delivered the gift of expanding Medicaid that the state's full compliment of 132 General Assembly Members wouldn't do when it crafted a $62 billion two-year state budget in late June.
In that spending plan, the largest in state history, which seems odd since it was crafted by self-declared fiscal hawks, Republicans either gutted or radially altered key Kasich proposals—including delivering health care to approximately 366,000 poor or low-income Ohioans as provided by the U.S. Supreme Court in its historic ruling that last summer declared the Affordable Care Act, and the controversial "individual mandate" requirement at its heart, constitutional.
But just as Gov. Kasich was basking in the 5-2 decision by the Controlling Board to accept $2.5 billion in federal Medicaid expansion money that enables him to wear his political badge of courage as a GOP moderate, a lawsuit challenging the 5-2 ruling was brewing.
Meanwhile, the governor's signature job creation group that became the first order of business for the Republican-controlled legislature that was swept into office with him and other statewide Republican candidates in 2010 came under fire from Good Jobs First, a group that describes itself in terms of accountable development and smart growth for families, whose report on JobsOhio, Gov. Kasich's privatized job creation group that by some estimates has created more controversy than jobs since its born-on date in early 2011.
The report follows months of reporting in Ohio that has focused on the group's cadre of hand-picked directors and their alleged conflict of interest, based on their affiliations with companies doing business with the secret nonprofit JobsOhio. The report delivered more body blows to the group at a time when Team Kasich is playing defense over poor job performance statistics, which will erode further next month when the cost in jobs from the recent shutdown in Washington are factored into Ohio's unemployment rate and unemployment claim filings.
Enter the Supremes
From the start of the year Gov. Kasich has been playing defense on several fronts, from expanding Medicaid which Tea Party advocates who claim credit for his narrow win in 2010 to his attack on women by allowing harsh restrictions on their healthcare, inserted in the state budget at the last hour without a minute of public debate, to stand.
What could become a real problem for the go-go CEO who spent six years at Lehman Brothers before it failed and triggered the great meltdown on Wall Street the nation has yet to fully recover from five years later, is the 30 minutes of oral testimony that will be delivered before the Supreme Court of Ohio on Nov. 6, when the case involving JobsOhio—ProgressOhio.org, Inc., et al. v. JobsOhio et al.—is heard on the court's oral arguments calendar.
The worst outcome for Gov. Kasich's 2014 re-election plan would be for four of the seven members, which could have happened at Controlling Board but didn't, to side with Progress Ohio and not Team Kasich on the issues on the case, which alleges that the General Assembly and the current administration created an "unconstitutionally chartered corporation that will spend government revenues secretly and free from accountability" while also violating the Ohio Constitution in seven other ways:
(1) It's a special act conferring corporate powers;
(2) It violates Article XIII, Section 2, which requires all 1 A 501(c)(4) organization is a non-profit entity operated to promote social welfare to benefit the
(3) It violates Article VIII, Section 4, which prohibits the state from making equity investments;
(4) It violates Article I, Section 16, which requires the courts be open so injured parties may obtain a remedy by due process;
(5) It violates Article II, Section 22, by providing appropriation for JobsOhio for more than two years;
(6) It violates Article VIII, Section 2(h), by authorizing the state to exceed its bond limit; and
(7) It violates Article VIII, Section 4, by lending the credit of the state to a private corporation.
Three years ago, newly elected governors in several states, most notably Wisconsin and Ohio, decided that the best way to create jobs was to transfer economic development business-recruitment functions to "public-private partnerships." These experiments in privatization have, by and large, become costly failures, GJF said in its report.
In mid-October, one long-time pundit from the Cleveland Plain Dealer whacked Kasich for JobsOhio's disappointing performance to date. In Brent Larkin's article "14-Month String Of Disappointing Jobs Numbers," he said, "Instead, Kasich ignored that history, coining the ‘Ohio miracle’ phrase, complete with the inference that he was the maker of that miracle. On June 3, 2012, Kasich appeared on NBC’s ‘Meet the Press’ and clearly associated Ohio’s then-remarkable job growth with his leadership style. The very next month, Ohio’s economy hit the wall, beginning that 14-month string of disappointing jobs numbers."
At the beginning of the year, Kasich referred to his work as "The Ohio Comeback." The always glib governor said his enthusiasm and salesmanship for the state was turning eyes to Ohio, according to the Associated Press.
But despite Kasich's rhetoric on how well Ohio is doing, one report from the Pew Charitable Trusts surfaced that calculated Ohio wasn't doing that well. Between April 2012 And April 2013, the 4,400 jobs created under Kasich—representing a 0.1 percent increase—ranked Ohio 47th in the nation. Another nonpartisan group, the W.P. Carney School of Business at Arizona State University, arrived at the same conclusion posted by the PCT.
Statistics from Bureau of Labor Statistics revealed in June again demonstrated that Ohio's job recovery began in January 2010, a full year before Kasich assumed off. Ohio’s unemployment rate began to drop steadily starting in January 2010 from a peak of 10.6 percent, a turnaround Democrats and Kasich critics attribute to policies pushed by President Obama and sympathetic senators like Sen. Sherrod Brown, Ohio's senior senator by virtue of winning a bloody contest last year with Ohio's first-term Treasurer Josh Mandel.
The problems with privatized development corporations are not new to the discussion about JobsOhio, as they were raised in testimony in the legislature when JobsOhio was first created. Critics testified that groups like JobsOhio pay their executives larger salaries than are paid to governors, as is the case in Ohio, where JobsOhio leaders rake in $250,000 compared to the meager $148,000 salary the legislature pays Gov. Kasich. The bottom line, according to GJF, is that these groups lack oversight. In Ohio, JobsOhio is seen either as a black-box group, purposely exempted from transparency laws other public groups are routinely subject to, or a magic hat chock full of job-creating rabbits that jump at the speed of business.
John Minor, JobsOhio's chief, who worked together with then citizen Kasich for years while they both worked at Lehman Brothers, makes $102, 000 more than his friend and governor. The Kasich administration effectively privatized 40-years of public economic development efforts with ease and speed, a political feat made possible only with a friendly Republican legislature.
From its first day, JobsOhio has been plagued by accountability and transparency problems. There have also been numerous political controversies, which is not surprising given that it is often difficult to distinguish between the agency and the governor’s office. JobsOhio’s first annual report featured Gov. Kasich prominently, and statements regarding the agency are as likely to be issued from his office as they are from JobsOhio itself, the reported noted.
Giving ammunition to his critics who argue the secret group has done little if anything to create the number of jobs candidate Kasich said his administration would in the wake of a Great Recession that hit Ohio hard, Gov. Kasich appeared on NBC's Sunday political talk show Meet the Press today and blamed Washington, as he has repeatedly before, for Ohio's stalled economy.
Kasich on Meet the Press
Appearing on NBC's Meet the Press Sunday with Democratic Kentucky Gov. Beshear, Kasich admitted the Ohio "economy is stalled," but the 18-year of veteran of Congress again blamed Washington—and Obamacare specifically for not controlling healthcare costs and creating an issue of confidence—for "talking past each other."
Doing for a national audience what his surrogates did last week at the meeting of the Controlling Board, a group of six lawmakers and one member appointed by Kasich that provides oversight of executive branch budget spending, Gov. Kasich touted his reforms in Medicaid that reduced program costs from eight percent to about three percent. He said Ohioans will pay higher healthcare costs while declaring that Obamacare has done little to control healthcare costs.
The governor got lampooned in a political cartoon last week in the Cleveland Plain Dealer that poked fun at his often invoked references to being compassionate for the poor because that's what the Bible teaches. Kasich's arguments that money and jobs associated with expanding Medicaid are his drivers to buck the tide of Republicans in the legislature who are adamant that expanding Medicaid is wrong.
By challenging supermajorities in both chambers of the General Assembly, Kasich has convinced some that he's a moderate Republican. Critics say he's as far to the right as he ever way, and that his compassion for the poor seems oddly absent when issues of lowering taxes for the wealthiest Buckeyes was done by raising consumer taxes on everyone else and revoking a 40-year lending hand from the state to seniors 65-years and older who lost their property tax subsidy in Kasich's second biennial budget.
Kasich repeated his dislike for the Affordable Care Act, saying that those who put it together "never worked in business and never spoke to a business person ..."
GJF concluded that privatization favors big business when small business deserves more help. "The privatization structures we describe here, including the increasing use of corporate seats for sale on governing or advisory boards, absolutely favor large businesses that have the money and executive staff time to pay and play at such levels ... But small businesses already get short shrift in economic development resource allocation, and they are still suffering the most in the Great Recession’s aftermath."
"There is no evidence that public agencies are not 'nimble' ... Amidst lingering high unemployment, painful budget cuts and struggling small business prospects, taxpayers deserve job-creation agencies that are transparent, ethical and effective," the report said, adding that privatization delivers none of these qualities.
In line with the objections Progress Ohio will make in ten days, GJF said, "Amidst lingering high unemployment, painful budget cuts and struggling small business prospects, taxpayers deserve job-creation agencies that are transparent, ethical and effective. Privatization delivers none of these qualities."
If the Ohio Supreme Court allows the case to move forward, Gov. Kasich could see his narrative of how great JobsOhio is melt along with his chance to win a second and final term, which must be accomplished if his hopes for the national limelight, in the form of a contender for the White House in 2016 or as a running mate for whomever does become the Republican standard bearer, are taken seriously.
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