States of bind

WASHINGTON, D.C.-Minutes before television cameras rolled at a recorded breakout session of the National Governors Association meeting in Washington, D.C., a high-energy makeup artist patted Gov. Arnold Schwarzenegger's nose and forehead under the glare of bright lights. Another assistant brushed lint off the Republican governor's shiny gray suit and deep purple tie as audience members craned their necks to see the famous Californian.

During an on-camera discussion moderated by Robert MacNeil, former co-anchor of the long-running MacNeil/Lehrer NewsHour, Schwarzenegger joined Pennsylvania Gov. Edward Rendell, a Democrat, in praising President Barack Obama's economic stimulus plan, including the $135 billion slated for state governments. The pair wished the plan included more funding for infrastructure projects, and Schwarzenegger quipped: "We've got to come up with a sexier word than infrastructure."

After the broadcast Republican Gov. Mark Sanford of South Carolina sat on a padded bench in a dim hallway nearby, visibly weary from a -grueling schedule that includes duties as chairman of the Republican Governors Association. Bearing dark circles under his eyes, Sanford wasn't worried about finding sexier ways to talk about his opposition to Obama's stimulus plan. "We need to be telling the truth," he said. "There's going to be pain."

Pain isn't a popular political -message, but even the most optimistic observers agree economic recovery won't be easy. There's far less -consensus on how to foster recovery, and the disagreements are particularly stark among one group: Republican governors grappling with their states' stakes in the massive stimulus bill. The two poles-represented by Schwarzenegger and Sanford-point to a deeper struggle within the party, and a tug-of-war for the identity of the GOP.

Every Republican House member voted against the president's $787 billion economic stimulus plan, and only three Senate Republicans supported the bill. But as political scientist Larry Sabato of the University of Virginia points out: "It's much easier to be an ideologue as a legislator." Political purism is harder for governors tasked with the day-to-day management of their states, says Sabato: "They're where the rubber meets the road."

So while Republican legislators can vote against funding, Republican governors must decide whether to accept or reject the funds. That's a tough spot for cash-strapped state leaders: States face a combined $270 billion in deficits through 2010, estimates The Center on Budget and Policy Priorities.

Still, a handful of the nation's 22 Republican governors insist increased spending doesn't solve economic problems. At least six GOP governors openly criticized Obama's stimulus plan: Sanford, Bobby Jindal of Louisiana, Haley Barbour of Mississippi, Sarah Palin of Alaska, C.L. Otter of Idaho, and Rick Perry of Texas. Sanford won headlines in February when he warned the country was moving toward "a savior-based economy"-what you see in authoritarian countries "where it -matters not how good your product is to the consumer but what your political connection is to those in power."

At least three of the six governors went further: Jindal, Barbour, and Sanford said they would likely reject portions of the funds for their states. Jindal announced he would reject $98.4 million in federal incentives to expand unemployment coverage. Barbour said he's likely to make a similar decision, and Sanford said: "I would say that it's probably a no-brainer that we would likely be in the same spot."

The governors focused on unemployment insurance because the stimulus bill attaches strings to the federal aid: Accepting the funds would require states to extend unemployment benefits to part-time workers and would increase employer taxes. "It would be like spending a dollar to make a dime," said Jindal.

Sanford agrees, saying his state's employment commission already asked his office to endorse more than $300 million in federal loans to pay for unemployment benefits in South Carolina because the commission didn't have sufficient funds: "It's nonsensical to think that the only way we can be -eligible for federal funds is to expand the program to part-time workers-which we've never done before-when the program can't pay for the current level of benefits."

Other Republican governors are grappling with other parts of the plan, though they haven't announced whether they'll reject any of the funds. Indiana governor Mitch Daniels said he's worried about how his state will fund expanded education, welfare, and health-care programs once the federal dollars are gone. "Some school systems will see a gusher of money the like of which no one has seen before," said Daniels. "When the federal funds stop coming, there will not be any way to replace all that."

Critics of the Republican governors opposed to Obama's plan said the leaders should prove their fiscal convictions by rejecting all the funds offered to their states. But Sanford disagrees: "I fought as hard as I could, and I fought for a long time. But those of us who wanted to derail the stimulus lost." Sanford said he wouldn't block all the funds passed by Congress but will consider rejecting funds that could harm the state or prove particularly wasteful.

Obama pledged his administration would implement the stimulus plan "without waste, inefficiency, or fraud" and tapped Earl Devaney, inspector general of the Interior Department, to oversee the spending. But governors expressed confusion over how they should allocate funds, even as the administration released a 25,000-word document on how agencies should report their spending.

David Quam of the governors association said a large chunk of the dollars would flow to the states through existing programs, but states will have to decide how to pick projects within those programs. State officials will also have to decide whether to compete for grants. Some grants could require changes to state laws, something governors may avoid. Tensions between governors and legislatures could also prove problematic: Democratic governor Ted Strickland of Ohio appointed a temporary "infrastructure czar." The state's Republican legislature responded with a separate "spending blueprint."

GOP governors may find it difficult to reject even a portion of the funds. Rep. Jim Clyburn, a South Carolina Democrat outraged by Sanford's opposition to the stimulus, engineered a loophole in the bill: If governors reject stimulus funds, state legislatures may ask the federal government for the money anyway. Conservative blogger Michelle Malkin called the provision "The Punish Mark Sanford Amendment."

While another handful of Republican governors remained silent about the stimulus, at least four GOP leaders -vigorously supported the plan: Schwarzenegger called the plan "terrific," and Charlie Crist of Florida campaigned with Obama to support the bill. Jim Douglas of Vermont and M. Jodi Rell of Connecticut joined the pair in signing a letter with 14 Democratic -governors praising Obama's plan.

Crist, a popular governor considered a possible running mate during Sen. John McCain's presidential bid, said Florida needs the funds to plug a hole in a projected $5 billion budget shortfall this year. "As a governor, the pragmatism that you have to exercise because of the constitutional pull to balance your budget is very compelling," he told The New York Times. But in January, Crist vetoed $365 million in spending cuts passed by his Republican legislature to help close the budget gap.

Schwarzenegger-fresh from signing a $130 billion California budget that includes sweeping sales and income tax increases for the first time in 17 years-said he would accept any money GOP governors reject: "Governor Sanford says that he does not want to take the money. I want to say to him: 'I'll take it.' I'm more than happy to take his money."

(Democrats appeared happy to do the same: New York Senators Charles Schumer and Kirsten Gillibrand sent a letter to the president asking for any unwanted stimulus funds.)

Being at odds with fellow Republicans isn't new for Sanford. The 48-year-old governor spent six years in Congress battling spending increases. (The famously fiscal Sanford slept on the couch in his D.C. office to save taxpayer funds for congressional housing.) The now two-term governor regularly butts heads with the Republican majority in his state legislature: Sanford has used his line-item veto over 500 times since 2002, though lawmakers usually override him. Sanford is particularly tough on pork-barrel spending: He once carried a pig under each arm into the House chamber to protest earmarks.

In November, Sanford was the first governor to speak against the bank -bailouts, penning a column for The Wall Street Journal called "Don't bail out my state." When Obama introduced his economic stimulus plan, Sanford traveled to Washington to oppose the measure.

It's not that South Carolina isn't needy: The state has the third-highest unemployment rate in the nation and a deep budget deficit. Thousands of jobs have evaporated as manufacturing has gone overseas. But Sanford says spending more isn't the answer. He favors tax cuts and blames his state's deficit on a 40 percent increase in spending between 2004 and 2008.

For Sanford, the issue is a moral one, and the member of the evangelical Seacoast Church in Mount Pleasant, S.C., says biblical principles like avoiding debt and exercising self-control apply to economic decisions, even on a governmental level: "The rules in the Bible are ultimately about protecting us from ourselves."

Sanford also says poor decisions yield unavoidable consequences, and the government shouldn't "prop up -people who made fundamentally bad decisions for a long number of years." Instead, Sanford says government should have a limited role in economic recovery. "We're going to go through deleveraging, and it's going to be painful, and a lot of people are going to get hurt," he said. "And you can stick a bunch of Band-Aids on it, but you can't make it go away."

Some Republicans downplay the schism between GOP governors, but Sanford sees the tension as a serious debate about fundamental questions: "What are we about as a party?" As some Republican governors embrace big-spending plans, Sanford thinks returning to conservative -principles is key: "Our problem is that we've run as conservatives and -governed in a different way. And that disconnect is deadly."

Some political observers believe Sanford and other high-profile governors like Crist and Jindal are posturing for presidential aspirations in 2012. Sanford demurs on the question. But Dave Woodard, a GOP expert and -political scientist at Clemson University in South Carolina, says he thinks Sanford is just being Sanford: "He just doesn't want to do this, and even if the stimulus package works, he's still not going to change. He's so convicted, he will not budge."