How Ohio's Budget Battle Could Decide Who Wins the White House

There's a chill in the air as Ohio Gov. John Kasich ambles down the steps of a white propeller plane and dips his athletic frame into the black car waiting on the tarmac of the Youngstown-Warren Regional Airport. Originally, the cab was supposed to convey the former Republican congressman and Lehman Brothers managing director to a posh Italian eatery a few miles away in Howland, where he would regale the local chamber of commerce with details about his plan to bring jobs back to the Buckeye State. But at the last minute, Kasich's people relocated the luncheon to the airport itself.

The official explanation for the change was convenience. But the real reason has been clear to Ohio's chattering classes for days. At the start of the week, thousands of protesters descended on the statehouse to protest Kasich's support for a bill that would severely restrict collective-bargaining rights for public-sector unions, rendering them irrelevant. (The unions had already made concessions on pay and benefits to help fill the previous budget gap.) The scene was familiar to anyone who'd been paying attention to the kerfuffle in Madison, Wis., where another recently minted Republican governor, Scott Walker, had started a national shouting match over collective-bargaining rights the week before: men in flag bandannas and flannel shirts; women waving signs that said WALK LIKE AN EGYPTIAN on one side and IF YOU CAN READ THIS, THANK YOUR TEACHER on the other. The protesters' main gripe was familiar as well: that conservatives were using a fiscal crisis caused by greedy Wall Street bankers and disconnected Washington deregulators—not rank-and-file government workers—to pass new restrictions that would do more to cripple a key Democratic constituency than to reduce the state's daunting $8 billion deficit. So when the union members in Youngstown heard that Kasich was coming north, they quickly hatched a plan to protest, and when Kasich's team heard about the protests, they quietly changed locations. The objective, as one local paper put it, was "to avoid any hang-ups that may be caused by people seeking to disrupt the event."

Unfortunately for Kasich, however, the switcheroo did little to deter the opposition. Inside the hangar, hundreds of area bigwigs are munching on chicken française; outside, an even greater number of union members are shouting their slogans. As Kasich starts speaking, the sounds of the protesters filter through the room, interfering with his remarks and forcing him to defuse the situation. "I understand passion and I respect it," he says. "Let's give them a round of applause." The crowd complies. It isn't long, however, before the governor is back to being his blunt—and sometimes strident—self. "We've got a budget coming on March the 15th," he declares. "And as Ronald Reagan said, 'You ain't seen nothin' yet.' "

The problem for Kasich, and for his fellow union busters, is that their opponents are now saying the same thing. When Wisconsin's Walker launched his crusade against collective bargaining in late February, the initial response among Beltway bloviators was that the GOP had struck gold. With all those wimpy Democratic legislators fleeing Madison and all those overpaid teachers whining outside the statehouse, the thinking went, Republicans couldn't help but look like the only grown-ups in town. But a funny thing happened on the way to political nirvana: one by one, Walker's fellow Republican governors began to come out against his hardline proposals. Last week Iowa Gov. Terry Branstad and Pennsylvania Gov. Tom Corbett said they would not repeal collective bargaining. In Indiana, Gov. Mitch Daniels asked Republican lawmakers to table legislation that mirrored Wisconsin's. "There [is] a better time and place to have this … issue raised," he said. Even Garden State Gov. Chris Christie, who's spent the past year branding himself as the party's most avid union adversary, refused to adopt Walker's tactics, telling The New York Times that "I'm ready to embrace the collective-bargaining situation." By the time Gallup released a poll last week showing that 61 percent of voters oppose laws designed to do away with collective bargaining, there were few Republican governors on Walker's side.

All of which invites an important question: have Republicans gone too far, damaging their political prospects in the process? Or are Christie, Daniels, Branstad, and Corbett missing some sort of golden opportunity here? Ohio may be the best place to look for answers. In part that's because Kasich is one of the only governors still waging war on collective bargaining. But it's also because the political stakes are higher in Ohio than almost anywhere else. In the general assembly, Republicans outnumber Democrats 82 to 50, which means the bill has a better chance of passing than in the more evenly divided Wisconsin legislature. But it also means a lot of Republican lawmakers now represent union-heavy districts that usually elect Democrats. If they overreach, they risk losing their seats. The presidential politics are even chancier. Since 1944, Ohioans have sided with the losing candidate only once—opting for Nixon over Kennedy in 1960—and few Republicans have won the White House without winning the state's electoral votes. Any passions unleashed by the collective-bargain battle could alter the local political landscape heading into 2012—and potentially swing a crucial battleground state. "Something like this can tilt the balance one way or the other quite easily," says John C. Green, a political-science professor at the University of Akron. "It really doesn't take very much in Ohio."

On the flight from Columbus to Youngstown, Kasich, 58, made his case in an exclusive interview with NEWSWEEK. Again and again, Kasich sought to depict himself as a change agent determined to drag Ohio into the 21st century; his opponents, meanwhile, were people who "don't understand" his vision and think that "change is scary." "The Midwest has been getting crushed, and we've got to fight back," he said, "which means eliminating the friction that gets in the way of entrepreneurs." For the governor, ending collective bargaining is a key part of making the public sector work more like the private sector. "Everything shouldn't be negotiable," he said. "You don't go to Apple and say I need to have a different [health-care] plan. They wouldn't hire you." Kasich claimed to be unconcerned with politics, but his supporters are clearly hoping that his reforms lead to jobs, and that jobs lead to Republican victories at the ballot box (a likelier outcome without strong public-sector unions bankrolling their Democratic rivals). The most that Kasich would say was that "timing may be an issue" and that unemployment may remain high through the next election. "We have a long way to run," Kasich confessed. "If the jobs come in '13, then God bless them."

What Kasich didn't mention is what everyone in Ohio politics has spent the past week whispering about: the possible payoff for the governor himself. As chairman of the House Budget Committee in the mid-1990s, Kasich fought a similar battle over government spending and won; he helped pass the Balanced Budget Act of 1997, which led to the first federal surpluses in decades. Two years later he was forming a presidential exploratory committee and jetting off to Iowa and New Hampshire (he pulled out soon thereafter), and associates think that Kasich still aspires to higher office. "John Kasich, from the time he was the son of a mailman to the governor of a state, believes there is a bigger future for John Kasich," says Scott Borgemenke, the former chief strategist for Republican lawmakers in Columbus. "Do I think John Kasich is going to retire after being the governor? I don't." Green adds that the Ohioan may be angling for a vice-presidential nomination this time around. "I wouldn't be at all surprised if that kind of calculation has crossed his mind," he says.

There are signs, however, that Kasich's bold move may not be worth the political backlash it inspires. Already, leaders of major public- and private-sector unions nationwide have agreed to set aside their longstanding divisions and coordinate a campaign to counter anti-union legislation. That's good news for Democrats, who managed to rack up $600 million in union donations in 2008 and 2010—election cycles when the groups weren't working together. "I don't think they realize how big of a hornet's nest they poked," says Dennis Willard, spokesman for the American Federation of State, County, and Municipal Employees. If the Ohio bill passes, the pushback will only intensify. In that case, according to Ohio Democratic chairman Chris Redfern, Democrats will place a repeal provision on the 2012 ballot and spend the next two years mobilizing and uniting the base in opposition to the new law (and the party that passed it). "That is the great fear the Republican Party has right now," Redfern says. To get a sense of why, consider some recent election results. In 2006, Democrat Sherrod Brown won by clobbering incumbent Sen. Mike DeWine 68 percent to 32 percent among union households; four years later, when Democrats were demoralized, Republican Rob Portman shrank that gap to a mere 4 percentage points and came out on top. In other words, the better a Democratic candidate does with Ohio's 685,000 union members, the more likely he is to win. "Victory is not as useful for mobilizing as defeat," says Green. "A ballot initiative can change the nature of the electorate by bringing people out to vote who wouldn't normally turn out."

That possibility is making some of Kasich's Republican colleagues uneasy. Last week,The Columbus Dispatch spoke to eight state GOP senators who either "would not express support for the bill or have stated varying degrees of discomfort with it." Bill Seitz of Cincinnati is one of them. "We need to be careful that we do not turn this into an overreaching effort that jeopardizes our chances," he tells Newsweek. "We have a history in Ohio, when the legislature overreaches and the public snaps back, you end up losing everything. I would prefer a more consultative process."

In the end, Seitz and his fellow skeptics may get their wish. Unlike the Wisconsin bill, which outlaws collective bargaining for benefits but permits it for wages, Ohio's original proposal simply eliminated the practice altogether. But late last week lawmakers decided to exempt salary negotiations from the ban. Kasich says he prefers the new version and wants to "end the strident partisanship." If he compromises on collective bargaining after taking such a hardline stance, he could wind up looking relatively reasonable and engendering enough goodwill to pass the rest of his painful cuts. Still, there's a chance the damage has been done. Asked to predict what will happen next, Seitz offers up a little history lesson. Legend has it that "Custer charged into the Battle of Little Big Horn without waiting for support because he thought a smashing victory over the Indians would garner him a nomination for president," Seitz says. "It didn't work out so good."