Varying state economies pose challenge

January presents an extraordinary challenge for the Republicans running for president. Because of very different economic circumstances facing Michigan, South Carolina and Florida, it’s difficult to fashion a single coherent economic message that is appealing and relevant to the Republicans in each of these states.

Tuesday’s primary in Michigan was held in a “rust-belt” state that has high unemployment and declining property values. Saturday’s primary will be held in South Carolina, where the economy is booming on most fronts. The month closes out in the Sunshine State of Florida, where concerns about high property taxes and insurance rates are wreaking havoc.

Because campaigns are local but most news coverage is national, there is danger in promising some economic policy in one state that would offend or seem inappropriate in other states. In Michigan, even Republicans have become so disconsolate about that state’s economy that many seem inclined to abandon traditional Republican principles regarding free trade, intervention by federal and state regulators, managed economic development policies, including tax breaks and other financial incentives, and even some tax cut principles fundamental to what has become known as Reaganomics.

When your jobs are fleeing the state, headed not just overseas, but also to Southern states like Texas and South Carolina, your values get tested. When you cannot sell your home because of a sub-prime mortgage crisis, you start thinking about the need for bailouts that Republicans might normally abhor. When your children and grandchildren move to other states because the Big Three automakers are in decline, and when your pension plan is underfunded and threatened, you start wondering when there should be less free trade and more government regulation, something genuine Reagan Republicans would have never pondered.

Some Republicans were bold enough to say the “R” word (recession) while campaigning in Michigan, suggesting strategies to get that state’s economy back on track. But this sort of talk was and is potentially dangerous because it puts candidates at odds with President Bush, who sticks to the party line on the economy, repeating that “the fundamentals are sound” while his Federal Reserve chairman, Ben Bernanke, says, “I believe we can avoid a recession.” Republicans who acknowledged that a recession is already underway, especially in Michigan, may find a less receptive audience in South Carolina.

Charleston’s Post and Courier reported this week that officials there boasted that state economic developers in South Carolina brought in almost 16,000 new jobs in 2007 and more than $4 billion in spending by about 150 expanding companies. On PMI Mortgage Insurance’s 2008 Risk Index, Florida and Michigan metro areas are high risks for falling property values while the largest South Carolina metro areas present virtually no risk. In that environment, Republicans may be tempted to take credit for the “great economy” as they move through the Palmetto State, but that is risky as they go next to Florida, where news clips of candidates boasting of robust economic growth could offend Floridian Republicans who are mired in an economic mess, particularly as it relates to real estate.

Just this week, the Sunshine State Survey, a November telephone poll of 1,200 Florida residents, reported that nearly half of those interviewed say “life in Florida is worse today than it was five years ago.” Top concerns driving pessimism were “high property taxes and homeowners insurance, so-so public schools, and ineffective growth management.” While Republicans can warm to caps on property taxes, it’s a trickier matter to fashion a Republican plan for reining in insurance profits, reforming schools that Jeb Bush is supposed to have fixed during his eight-year tenure, and managing growth.

Hill is director of Hill Research Consultants, a Texas-based firm that has polled for GOP candidates and causes since 1988.