How DeSantis tarnishes his own economic record
Florida Gov. Ron DeSantis ought to have a sunny story to sell as he launches his run for the 2024 Republican presidential nomination. Florida is the fastest-growing state in the nation, and since DeSantis took over in 2019, it has outperformed the rest of the country in job and income growth, especially during the COVID pandemic.
Yet DeSantis is no benevolent Reaganite, stepping aside to let capitalism work its magic. Instead, he’s one of the most meddlesome governors in America, happily upsetting the status quo as part of his war on liberal culture. DeSantis’s smackdown with the Walt Disney Co. (DIS), Florida’s biggest taxpayer, is a looming political debacle that DeSantis could lose in the courts just as the 2024 campaign is heating up. DeSantis brags about taking on Disney and its “woke culture” as if most Americans, if forced to pick sides, would choose a petulant governor over an entertainment colossus. Risky bet.
It's not just Disney. DeSantis’s forced revisions of Florida’s racial history have prompted the NAACP to issue a travel advisory warning that Florida “has become hostile to Black Americans.” An LGBTQ advocacy group has issued a similar warning. That threatens Florida tourism, the state's biggest industry. Some Hispanic truckers are urging a boycott of the state in response to a new law DeSantis signed meant to flush out undocumented workers at businesses with 25 employees or more. Then there’s DeSantis’s push to kill diversity programs at Florida’s public schools and universities, some of them funded in part by wealthy donors who are opposed to DeSantis’s stampede.
DeSantis won reelection last November by a 19-point margin, creating a wide opening for a presidential run. But controversies since then have slowed his momentum. “The overriding reason for DeSantis’s electoral success was keeping the economy in Florida relatively open during COVID,” said John Mousseau, CEO of investing firm Cumberland Advisors, based in Sarasota. “That really resonated with voters. I think all the other stuff that is out there lately, Disney, college curriculums, immigration, transgender laws, all of this has a net effect of giving voters DeSantis fatigue. If last fall’s gubernatorial election were held now, I think the results would be closer.”
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In his recent book, “The Courage to be Free,” DeSantis explains how he wants to “Make America Florida.” That will mean different things to different people. As a sun-belt mecca with no state income tax, Florida has a built-in allure to many businesses and workers. But DeSantis is applying a kind of strong-arm capitalism in which the state issues cultural guidelines it expects businesses to follow as a condition of enjoying Florida’s largesse. As a pitch to Republicans in a bid to win the presidential nomination, it could work. General-election voters, however, may not wish to be Floridafied.
Like other successful politicians, DeSantis is a beneficiary of good fortune. He became governor one year after Congress passed a tax law that, among other things, capped the deduction for state and local taxes at $10,000, which effectively made it more expensive for high earners to live in high-tax states. Florida is a low-tax state, and it has enjoyed a surge of wealthy Americans moving in since the tax law passed. That gooses the state’s economy.
As a warm southern state, Florida also had a natural advantage in weathering the COVID pandemic. DeSantis repeatedly bashes “lockdown politicians” who ordered businesses to close during the first year of the pandemic while Florida remained largely open. Yet in some epicenters of the virus, such as New York City, officials had no choice but to shut down as hospitals filled to capacity and a surging death toll generated panic. Warmer areas where it was possible to do some business outside, where COVID is harder to transmit, simply didn’t face the same scale of difficulty.
In 2020, the first year of the pandemic, Florida had one of the lowest COVID death rates, even though it mostly stayed open. That hints at the benefits of a warm climate. In 2021, however, Florida’s COVID death rate doubled, and even went higher than shutdown states such as New York and California. Florida’s high concentration of older people is probably part of the reason, but the jump from 2020 to 2021 also suggests stronger protections could have saved lives.
Florida presents a few other liabilities a DeSantis opponent could exploit. Home insurance costs have skyrocketed due to ruinous storms and a fraud epidemic. DeSantis has signed legislation to address the problem but it's not clear it will work. Florida's cost of living is also going up as people flood into the state, with some residents complaining that it's getting too expensive.
Still, every state has its woes, and many governors would trade Florida's problems for their own. DeSantis could easily claim credit for Florida’s economic success and run as a traditional laissez-faire Republican favoring low taxes and light regulation. Instead, he has hitched his star to the “war on wokeness,” including attacks on businesses with diversity and inclusion policies meant to show solidarity with racial and cultural minorities. Instead of a light government touch, DeSantis’s war on wokeness can amount to a heavy-handed intrusion into the way businesses operate.
The Disney battle began last year when the company publicly opposed a new Florida law limiting what schools can teach young kids about sex and gender. DeSantis retaliated by attempting to strip the municipal self-governing status Disney had enjoyed near its Orlando theme park for decades. Disney orchestrated a legal maneuver to reclaim that status, which DeSantis tried to nullify. Disney is now suing while also cutting back on investment in Florida. CEO Bob Iger charges DeSantis with creating an “anti-business” climate in the state.
DeSantis brags about taking on Disney, as if he’s a courageous everyman taking on a tyrannical Goliath. If he were president, however, there’d be many more corporations he could target for social policies meant to keep up with evolving norms and values. His war on wokeness could even be self-escalating if he backed new laws or regulations on cultural values that forced companies to take a stand in opposition.
How far would DeSantis go to combat wokeness? Would he use the power of federal agencies such as the Securities and Exchange Commission and the Federal Trade Commission to punish disfavored companies? Would he try to block mergers based on personal grievances, as Donald Trump tried to do as president? Is that what voters really want, anyway?
Probably not. Many Americans don’t even know what wokeness is, and among those who do, more consider it a positive thing than a negative. DeSantis is clearly trying to establish himself as a Trumpy culture warrior without Donald Trump’s personal baggage, since that seems the best way to win the presidential nomination in a party that has veered sharply right during the last decade. Yet DeSantis has fallen further behind Trump in early polling as the Disney battle has intensified and more people have learned about the Florida governor. Trump’s lead over DeSantis has widened from 16 points in March to 33 points in the latest FiveThirtyEight composite.
DeSantis’s nascent campaign is already well-funded, and at least one business titan — Tesla (TSLA) CEO Elon Musk — has his back. So DeSantis likely has enough support to sustain a long campaign, even if the polls don’t break his way.
Now we wait to see if DeSantis can offer peace with prosperity, or only war.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman
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