• With: Dan Henninger, Jason Riley, Kim Strassel, Stephen Moore, Mary Anastasia O'Grady, Joe Rago, Matt Kaminski, Bret Stephens

    So, Steve, this is really an interesting story that I don't think gets enough attention --


    GIGOT: -- the reforms taking place across the country in a lot of states.

    Who are the stars you're looking at?

    MOORE: I entirely agree with your premise, Paul. If you look at the -- you talked about the demise of the Republicans on the national levels, we're not seeing that on the state level. There are 30 Republican governors today in America. The Republicans actually picked up a governorship in North Carolina. So that south now is almost entirely Republican, whereas just 25 years ago, it was pretty entirely Democratic. And it's not just the south. States like --


    GIGOT: Right. Steve, but what are they doing --


    GIGOT: What are they doing with that power? That's the interesting thing.

    MOORE: Right. So, they have the power and they are actually using it.

    You've got states like Kansas and Florida that have been cutting taxes very aggressively to promote jobs. You've got a lot of these states in the mountain states that are Republican, where they're very aggressively promoting pro-energy drilling policies to get at the national resources.

    And of course, the big story that you mentioned, Paul, is what's happening with Right-to-Work. It wasn't just Michigan. Sometimes we forget that earlier Indiana became a right-to-work state, too. So, two Midwestern states that have traditionally been pretty heavily unionized moved to right-to-work. And I wouldn't be surprised if next year we see a couple more states fall.

    RILEY: Interesting contrast in Maryland and Virginia, neighboring states.

    You have, in Virginia, a Republican governor cutting taxes, cutting spending. In Maryland, you have a liberal Democratic governor who's raised taxes, all kinds of taxes, income taxes, gas taxes, sales taxes, you name it. As a result, Virginia has a job growth rate that is three times that of Maryland. Virginia has a lower unemployment rate. So you see that contrast.

    And, Paul, I think, in this election, it actually worked to the president's benefit in some of the swing states, like Ohio and Virginia. And you had the voters in the states experiencing above-average economic growth thanks to the policies of Republican governors.

    GIGOT: Kim, then you see the alternatives. There are --


    And let me mention one state, where Democrat Gina Raimondo, the state treasurer, pushed through a terrific pension reform, probably the best in the country. But if you look at other states where the Democratic coalition is dominant, Illinois, for example, New York State and California, you see a very different policy mix. Which direction are they going?

    STRASSEL: Their policy mixes to mirror what's happening in Washington, which is, do not address any of your structural spending problems. In fact, continue to add spending and ask your taxpayers in particular the wealthier taxpayers to contribute more to that. So it's a tax-and-spend policy. One of the problems that the states have, obviously, this is not helping their economic growth. And you're beginning to see a huge contrast on the ground between the economic situations of states that are reforming and those that are not.


    GIGOT: Give us a couple of examples, Kim. Where is growth occurring and where you're seeing it? The jobless rate, for example, in Illinois, the last time I checked, was 8.8 percent.

    STRASSEL: Yes.

    GIGOT: And meanwhile, Wisconsin 6.9 percent. Very interesting contrast.

    STRASSEL: Look at Indiana, where it's also low, and --

    GIGOT: Something like 8 percent.

    STRASSEL: Yes. North Dakota, which, by the way, Steve mentioned, you know, the fracking boom going up there. And I think it's below 5 percent.

    It's astonishing.

    GIGOT: It's three percent.


    STRASSEL: Yes.

    GIGOT: So, what about -- Steve, where do you think this is going? I mean, we've got, you know, the states are supposed to be laboratories are democracy and we're going to see the next two, three, four years --

    MOORE: No doubt about it.

    GIGOT: -- what laboratories work and what laboratories don't.

    MOORE: Yes. No question about it. I think this is the big story in America, Paul, is that, just as I was talking about the red states getting redder, the blue states like California and New York, my home state of Illinois, got bluer. Republicans are kind of endangered species in those states. And so now you have a very sharp contrast, an almost economic balkanization that's going on in America where states like California pass this massive tax increase. They have cap-and-trade.

    GIGOT: Right.

    MOORE: And so I think more so than any other time in our lifetime, Paul, you're going to see a divergent path taken by states like California that are very liberal, and states in the south and some of these mountain states that are going to promote tax cuts, reductions in pension costs, and I think it will be a real experiment to see which of these models work.

    GIGOT: So, Steve, are you predicting that California is not going to get down from its current jobless rate, or is going to see an outflow of capital really?

    MOORE: Oh, yes. There's no doubt about it.

    GIGOT: Because that state, remember, it's tremendous. It still has tremendous resources and agriculture and high-tech, obviously, in the Hollywood area. So, are you overdoing some of the pessimism here about California?

    MOORE: No. No, I think it's hard to see any optimistic forecast for California. Everywhere I go, and as you know, I go all over the country, I can't tell you how many time I run into businessmen who say, I used to be in California and now I'm in Texas or now I'm in Virginia or Florida or Nevada. I think that state is in real trouble. And it has big implications for the national academy, Paul, because if California isn't growing, it's hard for the nation to grow.