Rhode Island Gov. Lincoln Chafee says he feels 'a lot of pessimism' about the future. Governors agree: Washington broken

WILLIAMSBURG, Va.—The nation’s governors are unnerved by the course that’s being set in Washington, and many dread that neither party will be able to fix what’s broken after November.

The anxiety is bipartisan in scope, with deep worries about sequestration and ‘taxmageddon,’ the shorthand for federal spending cuts and tax increases scheduled to automatically go into effect at the end of the year.


There’s confusion about what federal education standards will look like when Congress finally reauthorizes No Child Left Behind and hesitation about whether to expand Medicaid — one of the biggest expenses in every state’s budget — in the wake of the Supreme Court’s health care decision that gives governors the choice. Farm state governors worry about how the final ag bill will look when it’s finished.

Then there’s everyone’s other fear: that the fragile economy will slip back into recession.

The level of “uncertainty” — a word that came up repeatedly during interviews with 13 chief executives at the summer meeting of the National Governors Association — has left the governors with a sense of impotence, derived from their frustration that so much is beyond their control right now.

The dominant outlook, rarely mentioned on the record, is that neither party will be able to fix D.C. after November, at least not for the foreseeable future.

Rhode Island Gov. Lincoln Chafee said he feels “a lot of pessimism” about the future. The former Republican senator, now an independent supporting President Obama’s re-election, had just emerged from a lunch focused on the ballooning national debt.

“You could get this economy going if you just gave the business community some confidence that we’re willing to take on the hard issues, but everyone’s just hunkered down,” Chafee said. “So there’s a lot of uncertainty, and that affects the economy. And it’s going to be very slow, and I’m not overly optimistic until I see bipartisan action in Congress.”

He said he does not see that happening.

“We’re divided, and we’re likely to remain divided,” added Connecticut Gov. Dannel Malloy (D), who warned that Democrats are unlikely to send more money to help states but Republicans would find a way to slash support.

“It’s a huge headache, but the bigger issue is the country’s momentum,” said Colorado Gov. John Hickenlooper (D). “It reminds me a little bit sometimes of kids in…the old cartoons of taking the pigtails of the little girl in second grade who’s ahead of you and putting it in the ink well. And throwing spit balls. And teasing. They can’t resist poking the other person across the aisle and causing a little bit of a ruckus. We’re getting closer to the point where we don’t have that luxury anymore. That’s both parties.”

“It needs some cathartic event of something, and I don’t know what that cathartic event is going to be,” he added. “I thought it was going to be that budget crisis we had last year…This is a grim perspective, but historically it’s taken war. What really got us out of the Great Depression was World War II.”

With everyone’s eyes fixed on the presidential election, most governors have now adopted a wait-and-see approach until November. Some are more hopeful than others.

“Everywhere you go, whether it’s with the business sector or the political elites…folks are uncertain,” said North Carolina Gov. Bev Perdue (D), who is not running for re-election. “I believe that by 2013, once we get through this national election, and once we can have some indication that the Congress — dear God, please — comes together and begins to make some really important decisions, then those of us at the state level will feel more optimistic.”

“Right now the mood of governors is probably focused on November of this year and what happens in the election,” said Pennsylvania Gov. Tom Corbett (R). “I’m focused on this because it has a great impact on health care. It could have a great impact on education and the most important part is I think it has a great impact on the economy.”

Virginia Gov. Bob McDonnell (R) and several others expressed concern about defense cuts. Because the super committee failed to reach agreement last year, automatic cuts – called sequestration – are set to begin taking effect on Jan. 2. Trying to spur Congress to avert this, defense contractors have announced plans to send notices to hundreds of thousands of their employees on Nov. 2 warning that they could lose their jobs 60 days later.

“I would say that the mood here is one that is very much of concern,” McDonnell said. “There’s not clear guidance now from [the Department of Defense] on where those cuts are going to take place…The problem is that everybody pretty much thought sequestration is not really going to happen, ‘It’s simply the sword of Damocles, equal pain for everybody. Hang that out there, and it will work us to force something out.’ Well, it’s been five months, ain’t nothing worked out and everybody’s interested in re-election.”

McDonnell maneuvered behind the scenes as the host of the meeting to get Democratic governors to sign a joint letter to put pressure on both the president and Congress to act before the lame duck session. If Democrats don’t sign on, a group of GOP governors has already committed to send one.

“We don’t want another cliff that we’re about to get pushed over like you did with the super committee and the debt ceiling,” said McDonnell, the chairman of the Republican Governors Association. “We’re not interested in more drama on New Year’s Eve. We’d like you to get it fixed now.”

Oklahoma Gov. Mary Fallin (R) spent two terms in the U.S. House before being elected in 2010. So she’s seen it from both sides.

“I’ve always known that congressional [action] causes havoc to state budgets, but I’m really seeing it now,” she said. “The continuing resolution has not been done. The Bush tax cuts expire. The alternative minimum tax is set to expire. So you’ve got a lot of tax cuts that could possibly hit people who aren’t expecting all that.”

“There’s a lot of things up in the air,” she added. “A lot of companies are telling me they’re sitting on the sidelines and not willing to invest, not willing to expand, because there’s so much uncertainty on the federal scene. That’s affecting companies and businesses and employees in our states.”

Questions surrounding implementation of the Affordable Care Act also occupied the governors’ time as they were hounded over the course of the three-day meeting for their latest thinking on whether they’ll join exchanges or accept new Medicaid money that comes with strings attached.

Tennessee Gov. Bill Haslam (R) is still trying to figure that out. He said preparing for exchanges that may end up not going into effect if the federal health care law gets repealed could be a big waste of time. But he’s earnestly trying to figure out whether it makes financial sense, especially because the Volunteer State already has its own program.

“The truth is the Obama administration doesn’t know the answers to a lot of these questions,” he said. “There’s a lot of really big questions that nobody knows the answers to.”

Hickenlooper said Republicans privately realize that the federal health care law will not be repealed no matter what happens in November, but that election year politics force them to stay noncommittal.

“There is a real belief among Republicans and Democrats that after this election, no matter what happens, everybody’s going to roll up their sleeves and work together,” he said.

Wisconsin Gov. Scott Walker said Democratic governors privately share GOP concerns that the federal government will leave states holding the bag if they go ahead with Medicaid expansion.

“After the elections, I think a number of Democratic governors might be a little more candid than they are now,” he said. “We look at the track record already on things like special ed [funding]…Medicaid expansion would be 100 percent covered for three years. It goes down to 90 percent of that. Lord knows where it goes in the future. If you’ve got tough budgetary times, the federal government’s already in over its head to begin with…So for a lot of us, it’s a question of saying, why would anyone take on more potential risk?”

The National Governors Association tends to be relatively nonpolitical, a place for candid discussion about best practices, but the already-bitter national election put a cloud over proceedings, which ended Sunday.

“It’s hard for me to imagine a Congress that’s worse than the one we have now,” Vermont Gov. Pete Shumlin (D) said after a Democratic Governors Association press conference.

“I’m the eternal optimist,” said Utah Gov. Gary Herbert (R). “I always think things can get better, and I believe that having President Mitt Romney, who is a former governor … will be a good change.”

Malloy from Connecticut said the “the big X-factor is Europe.”

“There’s things beyond the craziness of American politics,” he said. “Listen, if you’re talking about the world economy, you have to be nervous…We’re in a mixed period of time, where we’re getting some good signs. We’re getting some weak signs. And we’ve got to do the best we can…You have to manage what’s thrown at you.”