Lone Star Lame Duck
Another generated tale, in other words, which when examined by rationale minds isn’t so great after all. Just ask the Texas teachers who are about to be fired. Rick Perry is still going to repeat his so-called Texas Miracle fable thousands of times in the next few months though, facts be damned.
While Texas has created more jobs than any other state in the past two years, the increase is far less than advertised. The rate of increase is not much higher than a number of other states, including former rustbelt centers like Pennsylvania or liberal sanctuaries like Vermont.
Moreover, its recent performance is a classic case of “all hat, no cattle.” Texas lost 34,000 jobs in June, causing its unemployment rate to jump to 8.2 percent, which ranks it 25th among states and leaving it worse off than its immediate neighbors. Even as Texas’ unemployment rate rose along the lines of the entire country, the neighboring states of Louisiana and New Mexico saw their unemployment rates fall to 7.8 percent and 6.8 percent, respectively.
Moreover, to the extent Texas has succeeded in adding jobs over the past two years, most of its good fortune rests on conditions that are not replicable elsewhere. Soaring oil prices have provided a substantial number of new jobs and tax revenue since it is the nation’s leading oil- producing state, even as those $4-a-gallon gas prices drained consumers nationwide and put pressure on other states’ budgets. An influx of new government defense spending has also pumped up revenue, while the state has used oil revenue to postpone a sharp cutback in state and local government employment, which is about to hit in full force.
Two other factors that may not play well with Republican Party primary voters also contributed to the Texas economic performance over the last decade and through the Great Recession. According to a recent analysis in the Ft. Worth Star-Telegram, state debt grew by 282 percent over the last decade, a slightly faster rate of increase than the ostensibly more profligate federal government. Local government debt in Texas grew by a heady 220 percent over the same period.
Texas also benefited during the downturn by having tighter housing finance rules – a stark contrast to the business-friendly regulatory environment Perry likes to tout. After the savings and loan crisis of the early 1990s, which hit Texas hard, the state legislature prohibited “cash out” mortgages. The state’s tough mortgage rules kept housing prices in check and saved it from the huge price declines and foreclosures that devastated many other areas of the country. Still, construction employment fell by 95,000 jobs during the recession and remains 14 percent below its pre-recession peak.
“Anyone who thinks the relatively strong performance in Texas has much to do with state government policy is wrong, except when it comes to housing, where regulation helped the state,” said Howard Wial, an economist and fellow at the Brookings Institution’s Metropolitan Policy Program. “In Texas, the worst is yet to come.”
(click here to continue reading Rick Perry and the Myth of the ‘Texas Miracle’.)