Governors reflect partisan divide in debt debate

By Charles Babington/The Associated Press

SALT LAKE CITY — Governors nationwide are nervously watching the debt-ceiling debate in Washington, fearing that a partisan impasse could rattle financial markets and slow the economic recoveries they desperately want for their states.

Yet many of them are sticking to the same partisan loyalties and talking points that are making it so difficult for President Barack Obama and Republican lawmakers to find a way to avoid a borrowing cutoff, which could force the government to default on some of its bills.

In fact, some of the harshest rhetoric was heard this weekend in Salt Lake City, where the National Governors Association is holding its annual meeting.

At stake is “the full faith and credit of the United States of America, and we have Republican members of Congress that say ‘Faith and credit, baloney. We don’t care about that,’” said Montana Gov. Brian Schweitzer, a Democrat.

He called those lawmakers “the same yahoos who didn’t pay for two wars,” a reference to the Afghanistan and Iraq invasions, which President George W. Bush launched while cutting taxes.

Maryland Gov. Martin O’Malley, chairman of the Democratic Governors Association, said Republicans should be a moderating voice in the debt talks. He criticized House Majority Leader Eric Cantor and “the dinosaur wing of the Republican Party” for adamantly opposing tax increases on the wealthy, which Obama and demands as part of a deficit-reduction package.

Republican governors defend their party’s lawmakers. Iowa Gov. Terry Branstad laughed at the notion that “dinosaurs” are heading the GOP effort in Washington.

“The dinosaurs are the ones that spent all the money,” he said “This is the new energy.”

“I don’t think Eric Cantor and Paul Ryan are out of touch,” Branstad said. “I think they might be a little more bold than most politicians have historically been. But maybe the times call for that.”

Ryan, a Wisconsin Republican, chairs the House Budget Committee and authored a major spending plan passed this year by the House.

Despite the rhetoric, governors in both parties agreed that failing to problem could gravely injure state economies.

Noting that dozens of Chinese political and business officials are attending the governors’ meeting here, Schweitzer said potential investors from Asia and Europe might steer away from Montana and other states if they feel the U.S. government is in fiscal disarray.

“The amount of havoc that would be created in the financial markets would make Greece and Portugal and Ireland and Italy look miniscule,” said Connecticut Gov. Dan Malloy, also a Democrat.

Republican Gov. Scott Walker of Wisconsin said the impasse in Washington created uncertainty, which employers hate when deciding whether to expand their businesses. But he said he was not surprised because Washington decisions are usually made based on what will win the next election.

“What states are better at doing is courage,” Walker said. “It’s having the courage to make decisions that some might view as more about the next generation than about the next election.”

But neither Walker nor other governors here found any fault with specific stands taken by their party in the debt showdown.

Branstad strongly defended Cantor’s opposition to new taxes, even if they were to hit only wealthy people.

“This anti-wealth rhetoric actually hurts the economy,” Branstad said, “because it makes these people afraid to invest for fear that whatever they make is going to get confiscated.”

“Those are the people you want to invest in great jobs,” he said.

Branstad, who notes that he has never lost an election in his long career, said Republicans credit much of their 2010 campaign success to a fiercely anti-tax stand. He said voters sent a message last fall: “The last time the Republicans had control of the Congress, they lost their way on spending. And you’d better not do that again.”

Mississippi Gov. Haley Barbour, who strongly considered a presidential bid this year, echoed those remarks, even as he left the door slightly ajar for a possible compromise.

“I think a tax increase would be terrible,” said Barbour, who once chaired the national Republican Party. But Republicans might have to grimace and accept a compromise, he said, if they can win deep spending cuts and cost-saving changes to Medicare and Social Security.

“At the end of the day,” Barbour said, “you have to look at the whole package.”

The governors here differ widely on how that package should be shaped. But to a person, they say they desperately want an end to the debt brinkmanship in Washington.

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Associated Press writer Josh Loftin contributed to this report.