Ohio Debt-Deal Revolt Shows U.S. Spending Split

Photographer: Daniel Acker/Bloomberg

Workers load and unload bricks at the Belden Brick Co. south of Akron, Ohio on July 28, 2011. Close

Workers load and unload bricks at the Belden Brick Co. south of Akron, Ohio on July 28, 2011.

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Photographer: Daniel Acker/Bloomberg

Workers load and unload bricks at the Belden Brick Co. south of Akron, Ohio on July 28, 2011.

(Corrects age in second paragraph.)

Democratic U.S. Representative Tim Ryan’s district includes Youngstown and part of Akron, two Ohio cities once dominated by steel and rubber mills. He’s concerned that Washington’s debt-ceiling deal will hurt an economy that’s already struggling.

Congress approved raising the U.S. debt limit yesterday by at least $2.1 trillion and reducing federal spending by $2.4 trillion or more. The spending cuts come when more money should be invested to keep and create jobs, said Ryan, 38.

“All the sacrifice is being made by my constituents,” he said in a telephone interview from Washington. “This idea of pulling money out of the economy in the next couple of years is just bad economics.”

Every Democrat in Ohio’s House delegation voted against the deal, and all Ohio Republicans, including Speaker John Boehner, supported it except Jim Jordan of Urbana and Mike Turner of Dayton. The polarization over the impact of the deal in Ohio is a microcosm of national divisions -- and a possible preview of the fight in the presidential-battleground state next year, said John Green, a political-science professor from the University of Akron.

“This isn’t just partisanship,” Green said in a telephone interview from Akron. “There is a fundamental disagreement on how we’re going to make the economy grow.”

Photographer: Dennis Brack/Bloomberg

Democratic U.S. Representative Tim Ryan’s district includes Youngstown and part of Akron, two Ohio cities once dominated by steel and rubber mills. He’s concerned that Washington’s debt-ceiling deal will hurt an economy that’s already struggling. Close

Democratic U.S. Representative Tim Ryan’s district includes Youngstown and part of... Read More

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Photographer: Dennis Brack/Bloomberg

Democratic U.S. Representative Tim Ryan’s district includes Youngstown and part of Akron, two Ohio cities once dominated by steel and rubber mills. He’s concerned that Washington’s debt-ceiling deal will hurt an economy that’s already struggling.

Less Federal Money

Ohio House members who opposed the debt-ceiling deal have reason to worry: Companies working in their districts got less in federal contracts in fiscal 2010 than the national median, data compiled by Bloomberg Government show.

The median amounts for the districts of the seven Ohio House members voting no on the debt deal was $360.4 million, compared with the national median of $448.8 million. The median federal contracts in districts of the 11 Ohio members who approved the deal amounted to $345.3 million.

The federal cuts will come on top of spending reductions in Ohio’s two-year state budget that first-term Republican Governor John Kasich and the Republican-controlled Legislature passed in June, Ryan said. Ohio eliminated an $8 billion deficit without raising taxes by cutting spending including $1.6 billion for schools and local governments, according to the state budget office.

The deal in Washington will mean fewer federal dollars for Ohio and other states, which could cause the economy to slide back into recession, said former Democratic Governor Ted Strickland, a six-term congressman who lost a bid for re- election as governor last November to Kasich.

‘Reduced Funding’

“What I see coming out of this deal is reduced funding for activities that keep people working,” Strickland said in a telephone interview from Columbus. He called the deal “a win for the plutocrats and a defeat for the working middle class.”

Ohio lost 370,500 jobs during the recession, including 20,200, or 8.5 percent, in the Youngstown area, according to the U.S. Bureau of Labor Statistics. During the past decade, only Michigan and California lost more jobs than Ohio, the BLS data show.

The state’s economy added 72,400 jobs during the past year, and its unemployment rate declined or remained unchanged for 15 months before increasing to 8.8 percent in June from 8.6 percent in May, according to the Ohio Bureau of Labor Market Information.

Kasich, a former congressman and chairman of the House Budget Committee who helped craft a balanced federal spending plan in 1997, has said a compromise debt-ceiling deal was necessary and that he is monitoring what impact it could have on the state.

‘Greater Flexibility’

States will be getting fewer dollars, so “we’re hopeful that Washington will provide states with greater flexibility to manage any changes,” Tim Keen, Ohio’s budget director, said yesterday in a statement provided by Kasich’s office.

Ohio, the nation’s seventh most-populous state, is a presidential battleground. No Republican has won the presidency without carrying Ohio since Abraham Lincoln, and only two Democrats have since 1892: Franklin Delano Roosevelt in 1944 and John F. Kennedy in 1960, according to the Ohio Politics Almanac.

The Buckeye State also has experienced the same fast- swinging political pendulum that the nation has. Ohio voted for President George W. Bush in 2000 and 2004 before supporting President Barack Obama in 2008.

Shift of Control

Republicans had controlled the Ohio governor’s office and Legislature until Democrats won all executive offices except auditor in 2006 and the Ohio House in 2008. In last year’s elections, Republicans retook the governor’s office, the House and all state executive offices.

The recent fight in Washington has set up elections in November and for the presidential race in 2012 by crystallizing the choice for voters, Strickland said.

“What’s happening here in Ohio and what’s happening in Washington has brought clarity to the differences that exist between the various parties,” Strickland said. “I look forward to November 2011 and November 2012, so that the people can express their opinion and make their judgment as to what kind of country we want to live in.”

The U.S. Senate voted 74-26 for the debt-ceiling deal, with both Ohio senators, Democrat Sherrod Brown and Republican Rob Portman, in favor.

Boehner, from West Chester, said addressing a burgeoning U.S. debt and deficit will help the economy.

Confidence for Employers

“Beginning to take steps towards fixing our fiscal problems will in fact provide more confidence for employers in America, the people we expect to reinvest in our economy and create jobs,” Boehner said in a news conference before the Aug. 1 House vote.

The bill would cut $917 billion in spending over a decade and assign a special congressional committee to find another $1.5 trillion in deficit savings by late November, to be enacted by Christmas.

Jordan, chairman of the fiscally conservative Republican Study Committee, voted against the deal. Jordan said in a statement he’s concerned it “opens the door to dangerous national security cuts” and raises the possibility the committee “could put tax increases on the table.”

‘Extreme’ Position

Polarization was inevitable because of the “extreme, even radical position on the part of the Tea Party Republicans” who demanded spending cuts with no new revenue, even at the risk of default, Strickland said.

Ohio Tea Party supporters are glad the nation is focused on spending that caused rating companies including Moody’s Investors Service to threaten downgrading the nation’s credit, said Tom Zawistowski, president of the Ohio Liberty Council, an umbrella organization of Tea Party groups.

“If I was Moody’s, I’d downgrade us,” Zawistowski said in a telephone interview from Brimfield Township near Kent, Ohio. “What we really are looking for is to change the conversation, and we did change the conversation.”

To contact the reporter on this story: Mark Niquette in Columbus at mniquette@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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