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Right Turn
Posted at 11:00 AM ET, 03/25/2011

Interview: Ohio Gov. John Kasich

It’s been more than 10 years since Republican John Kasich left the House. But he’s lost none of his youthful exuberance. In a real sense he carries the spirit of the late Jack Kemp, the quintessential Republican reformer who combined blue-collar appeal with a wonkish love of policy.

In a far-ranging telephone interview yesterday afternoon, Kasich showed why he’s regarded as one of the most aggressive reformers among the new crop of Republican governors. It’s clear he’s working hard. He jokes, “This is the first time in a long time I’ve gone two days without exercising and I’m not sick.” He says with relish, “I’m extremely busy.”

That’s an understatement. I wanted to talk to him about SB 5, the measure to severely curtail public employee bargaining rights and require employees to increase their contributions. (An analysis provided by his spokesman shows that had the measure been in place last year, it would have saved local governments in the state $1.1 billion.) Kasich tells me, “We’ve unveiled the most comprehensive reform budget people have seen in a generation.” The union reform is key, but “it’s only one element” to allow local governments to control their costs. He notes that under the bill public-employee unions can still negotiate for wages and working conditions, but not health care and pension benefits. It would also end public-employee union strikes and automatic pay increases.

Kasich explains that the equation between public employees and taxpayers needs to be “rebalanced,” with the idea that the taxpayers through their elected officials should control the state budget. He points to troubling examples of how the balance has gotten out of whack: “We’re in the bottom 10 [among states] in dollars in the classroom, and the top 10 in dollars for administration.” He continues to rattle off examples in which Ohio and its taxpayers have lost control of government finances. “The city of Mansfield,” he explains, “is on the way to bankruptcy.” He denies accusations that he is out to get the unions. “Nothing could be farther from the truth,” he says. He points to some compelling math: The average Ohioan must pay 23 percent.of his own health care; government workers pay only 9 percent.

He quickly returns to his main point: The union bill is only one of a long list of reforms that include Medicaid reform, prison reform, a strategy to use profits from state-run liquor businesses to fund a public-private job-creation entity to replace the state development department, and a massive overhaul of education (including lifting caps on charter schools, increasing school vouchers, ending “last hired/first fired” teacher tenure rules and inviting Teach America participants to come into the schools.) Moreover, he says, “we’ve asked state agencies, departments and bureaus to come in with savings below last year’s [budget].”

He jokes, using a reference to the classic political movie “The Candidate”: “We didn’t come in and pull a Robert Redford — ‘What do we do now?’” Rather, Kasich tells me, he was working on a reform agenda for his state before he decided to run for governor. He says, “The reason we have such a reform budget is because we’ve been thinking about these things for a long time.”

He says the business community has noticed the change. A major developer in the state who controls tens of millions of square feet of commercial real estate shared with him that “there is a real buzz among the business community that the [Kasich] administration really does get it.” He reels off a list of job-creation efforts. It includes a new warehouse, a new motion picture to shoot in the state and successful outreach to California business. Of the last, he cracks, “We sent a delegation to that foreign country — California.” He relates that of the 20 companies they met with, “12 expressed an interest” in Ohio.

He is realistic about the enormity of the problem. “We are in a deep hole. The Midwest is a deep hole.” A January report in the Dallas Morning News traced the “exodus” of jobs from Ohio.

Several of Ohio’s cities have emptied as completely as medieval Europe when it was ravaged by the bubonic plague. Since 1950, Cleveland and Youngstown have lost more than half of their population. Cincinnati is down by 40 percent.

Left behind were tens of thousands of abandoned homes, empty stores, churches and weedy lots. Ohio’s local governments are demolishing these buildings and ripping up streets so they won’t keep pulling down the value of occupied homes.

In the last decade, Ohio lost more than 600,000 jobs — a misery indicator beaten only by Michigan and California. Texas, meanwhile, added more than 700,000.

But the glass-half-full governor says that because his predecessor so mismanaged the state’s budget he is able to make visible progress rather quickly.

A case in point is Medicaid. Kasich has been crisis-crossing the state selling Ohio voters on a revamp of the Medicaid system. That includes shifting resources from nursing home care to home-based care and moving to outcome-based medical care. (Kasich says the nursing home industry is a vested interest and a lonely voice that has opposed the change.) Kasich is negotiating with the federal Department of Health and Human Services to allow the system of long-term care to be streamlined.

There are also reforms aimed at integrating mental and physical health services, eliminating inefficiencies in community housing care for the disabled, and revising and reducing reimbursements for hospital and managed-care providers. A state report summarizes the scope and impact of these reforms:

The Executive Budget includes an aggressive package of Medicaid reforms developed by the Governor’s Office of Health Transformation. It aligns policy and funding priorities across all Medicaid-related agencies to: (1) improve care coordination, (2) integrate behavioral and physical health care, (3) rebalance long-term care, and (4) modernize reimbursement. These priorities leverage Medicaid to act on opportunities to keep people as healthy as possible instead of reacting only after they get sick, prevent chronic disease whenever possible and, when it occurs, coordinate care to improve quality of life and reduce costs. These changes shake loose the status quo and create win-win opportunities for Medicaid enrollees (better services) and Ohio taxpayers (better value).

The Executive Budget achieves an unprecedented level of Medicaid savings – $4.3 billion over the biennium. It maximizes savings in the state general revenue fund (GRF), resulting in a remarkable 83 percent of net savings ($1.2 billion) accruing to the state. This outcome was critically important to avoid a one-time 42.8 percent ($1.6 billion) increase in state GRF that otherwise would have occurred as a result of Ohio needing to backfill enhanced federal match that is due to expire June 30, 2011. The impact of the expiring federal funds is still significant, but manageable as a result of decisions made in the Executive Budget.

Kasich is generally pleased with the level of bipartisan support for his agenda, although he notes that this is more true in the state Senate than in the House. (A transportation bill passed overwhelming in the state Senate but along party lines in the House.) He says, “I’m a believer in bipartisanship.” While his Democratic opponents may look at him as the “enemy,” he says, “I don’t look at life that way.”

Kasich credits his experience in Congress, specifically as chairman of the House Budget Committee in the late 1990s, with providing him the skill he now needs. “I had to produce a product [the budget] and unite a team,” he recalls. But it was the 10 years out of Congress in the business world that prepared him and gave him the confidence to assume the governorship. That gave him an investor’s and entrepreneur's perspective on the state. “One of the big problems we have is a lack of capital,” he notes. (Trade deals can help with that shortage he says, although he hastens to add that the United States must also enforce existing trade deals.)

As we wrap up I ask him if he has advice for the current House Budget Committee chairman, Rep.Paul Ryan (R-Wis.) He recalls fondly that Ryan was an aide to one of the committee members when Kasich was the chairman. He says with the massive debt you have to be “bold” and “know where you are going” on the budget. Most important, he says, Ryan has to explain that there is a higher purpose to what they are doing. “There is a moral purpose to what you are doing,” he says. Ryan, he advises, has to make that case so “members cannot worry about the next election, but about their children.”

Kasich is doing just that in Ohio. If he succeeds, his state could begin a long-delayed recovery and his own star will certainly rise in the conservative movement.

By  |  11:00 AM ET, 03/25/2011

Categories:  Governors

 
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