Rick Perry's Texas: Not All It's Cracked Up To Be

August 15, 2011 4:26 pm ET

Texas Gov. Rick Perry (R) is quick to take credit for the Texas economy, boasting that his time in office has seen Texas lead the nation in growth. But the reality is that Texas' job growth has not kept up with its population growth, and as a result its unemployment rate throughout the recession has been comparable to that of other states. Moreover, Texan jobs come more from the natural blessings of location and resources that Texas enjoys than from Perry's policies.

Texas Ain't So Miraculous After All

Nobel-Winning Economist Krugman: "The Texas Miracle Is A Myth" Because Job Growth In The State Has Not Kept Up With Population Growth. According to Nobel Prize-winning economist Paul Krugman of the New York Times:

So what you need to know is that the Texas miracle is a myth, and more broadly that [the] Texan experience offers no useful lessons on how to restore national full employment.

It's true that Texas entered recession a bit later than the rest of America, mainly because the state's still energy-heavy economy was buoyed by high oil prices through the first half of 2008. Also, Texas was spared the worst of the housing crisis, partly because it turns out to have surprisingly strict regulation of mortgage lending. 

Despite all that, however, from mid-2008 onward unemployment soared in Texas, just as it did almost everywhere else. 

In June 2011, the Texas unemployment rate was 8.2 percent. That was less than unemployment in collapsed-bubble states like California and Florida, but it was slightly higher than the unemployment rate in New York, and significantly higher than the rate in Massachusetts. [...]

So where does the notion of a Texas miracle come from? Mainly from widespread misunderstanding of the economic effects of population growth.

For this much is true about Texas: It has, for many decades, had much faster population growth than the rest of America - about twice as fast since 1990. [...] 

Texas tends, in good years and bad, to have higher job growth than the rest of America. But it needs lots of new jobs just to keep up with its rising population - and as those unemployment comparisons show, recent employment growth has fallen well short of what's needed. [New York Times8/14/11, emphasis added]

Credit Due? Texas Economy Has Been Resilient For Some Reasons That Have Little To Do With Perry...

Perry's Speech Kicking Off His Presidential Campaign "Touted His Job Creation Record In Texas." From Reuters: "Republican Rick Perry, the conservative governor of Texas, on Saturday declared himself a candidate for president with a blistering attack on Democratic President Barack Obama. [...] Delivering a speech to about 700 conservative activists in South Carolina, Perry, 61, touted his job creation record in Texas and promised to reduce taxes, business regulations and the overall role of government in people's lives. He said leaders in Washington have lacked courage and Obama's policies have 'prolonged our national misery, not alleviated it.'" [Reuters, 8/13/11]

Texas Benefits From Size, Location Factors That Make Its Economy Fundamentally Different From Most States. As reported by the Wall Street Journal: "Texas also benefits from factors not easily replicated elsewhere. Among them: Texas' massive size, which can support job-rich infrastructure such as the Port of Houston; its oil and gas deposits; its proximity to Mexico, an important trading partner; and its young and expanding population." [Wall Street Journal, 7/27/11]

Rising Energy Prices Buoy Texas Economy. As reported by the Houston Chronicle: "When oil prices are high, job growth in Texas historically has exceeded that of the nation, said Keith Phillips, the senior economist and advisor at the San Antonio branch of the Dallas Federal reserve. He said Texas entered the recession late and came out early, mirroring trends in oil prices, which rose towards the beginning of the recession, fell in 2009, but have been steadily rising since. 'If you look at what states were expanding, they are almost all the energy states,' he said. 'When oil prices are high, our job growth is stronger relative to that of the nation.' Based on Dallas Fed research, a 10 percent increase in oil prices leads to a 0.3 percent rise in employment and a 0.5 percent rise in GDP for the state of Texas." [Houston Chronicle, 7/31/11, emphasis added]

As Home To Multiple Military Bases, Texas Was Positioned To Gain From Increased Defense Spending Since 9/11. As reported by the Houston Chronicle:

The federal government has significantly expanded its military spending in the decade since 9/11, and that has been good news for Texas, home to major bases like Fort Bliss and Fort Hood.

For example, over the past three years the Army has relocated about 14,000 troops to Fort Bliss, which is outside El Paso, and plans to permanently relocate an additional 6,000 troops there in the next two years, according to CNNMoney.

"If there were military bases that expanded, there are government jobs that are being created," [Brookings Institution economist Howard] Wial said, explaining that military spending has the potential to make a big impact on the Texas economy because beyond supplying jobs on the base, it pumps money into the local economy.

According to a fact sheet issued in August of 2009 by the Fort Hood Public Affairs Office, "Fort Hood is the largest single site employer in Texas, directly inserting nearly $3 billion annually into the Texas economy." [Houston Chronicle, 7/31/11, emphasis added]

  • CNNMoney: "Fort Bliss, Covering An Area Larger Than Rhode Island," Is "Having A Dramatic Impact On An Otherwise Depressed Economy." As reported by CNNMoney: "The U.S. military base Fort Bliss, covering an area larger than Rhode Island, has become one of America's largest military installations, and that's having a dramatic impact on an otherwise depressed economy. Congress might not have known it then, but its move to expand Fort Bliss as part of the 2005 changes under the Base Closure and Realignment Commission (BRAC) has coincidentally saved El Paso, Texas from falling into the depths of the latest economic recession. Whereas home construction has continued to drop to record lows across most of the country, this city of 751,000 is experiencing relatively robust growth. In fact, the influx of soldiers, military personnel and their families has created a shortage of housing units on the base, helping drive up demand for housing and developers in El Paso, according to U.S. military officials." [CNNMoney, 11/16/10, emphasis added]

Houston Chronicle: "Texas Escaped The Foreclosure Bust." As reported by the Houston Chronicle: "Texas escaped the foreclosure bust that crippled other states' economies - only 6 percent of Texas mortgage borrowers are in or near foreclosure, according to the Mortgage Bankers Association, while the national average is nearly 10 percent. [...] [Federal Reserve economist Keith] Phillips said that because housing prices never rose during the housing boom, partly because Texas has cheap, open land for building, they also didn't crash during the recession." [Houston Chronicle, 7/31/11]

...And Perry's Budget Cuts Threaten To Undermine Job Growth, Now That Stimulus Money Has Dried Up

Perry Used Federal Stimulus Dollars To Balance Texas Budget While Simultaneously Decrying Federal Stimulus Spending. As reported by CNNMoney: "Texas Gov. Rick Perry likes to tell Washington to stop meddling in state affairs. He vocally opposed the Obama administration's 2009 stimulus program to spur the economy and assist cash-strapped states. Perry also likes to trumpet that his state balanced its budget in 2009, while keeping billions in its rainy day fund. But he couldn't have done that without a lot of help from ... guess where? Washington. [...] 'Stimulus was very helpful in getting them through the last few years,' said Brian Sigritz, director of state fiscal studies for the National Association of State Budget Officers, said of Texas. Even as Perry requested the Recovery Act money, he railed against it. On the very same day he asked for the funds, he set up a petition titled 'No Government Bailouts.'" [CNNMoney, 1/24/11, emphasis added]

  • "Texas Was The State That Depended Most On Those Very Stimulus Funds To Plug Nearly 97% Of Its Shortfall For Fiscal 2010." As reported by CNNMoney: "Turns out Texas was the state that depended the most on those very stimulus funds to plug nearly 97% of its shortfall for fiscal 2010, according to the National Conference of State Legislatures. ... Texas, which crafts a budget every two years, was facing a $6.6 billion shortfall for its 2010-2011 fiscal years. It plugged nearly all of that deficit with $6.4 billion in Recovery Act money, allowing it to leave its $9.1 billion rainy day fund untouched." [CNNMoney, 1/24/11]

Perry Defended Taking Stimulus Money By Claiming That Texans "Generally Don't Get Much...Back" From Washington. In an interview on the November 7, 2011, edition of CNN's State of the Union, Perry said: "You talked about us taking stimulus dollars. We send hundreds of billions of dollars to Washington, D.C., and generally don't get much of it back." [CNN, State of the Union, 11/7/11, via Political Correction]

  • 94 Percent Of Money Texas Sends To Federal Government Comes Back To The State. According to Tax Foundation data, Texas receives $0.94 for every dollar it sends to the federal government. [VisualEconomics.com, accessed11/7/10]

Public-Sector Jobs Make Up Nearly One-Third Of Total Texas Job Growth During Perry's Tenure, But "Now Layoffs Loom." As reported by the Wall Street Journal: "Texas has enjoyed the most robust economy in the U.S. during Mr. Perry's decade as governor, which is one reason his potential candidacy is attracting national attention. The Lone Star State gained more than a million jobs since the end of 2000, while the U.S. has lost almost 1.5 million, according data from the Bureau of Labor Statistics. About 300,000 of the new Texas jobs were in government. Well over half of them, fueled by the surging population, were at public schools. Employment in the state's public sector has jumped 19% since 2000, compared with a 9% rise in the private sector. Now layoffs loom." [Wall Street Journal, 7/27/11]

  • Perry's Budget Cuts Are Already Forcing Layoffs Of Public Workers. As reported by the Wall Street Journal: "State budget cuts, championed by Mr. Perry to address a big budget shortfall, are prompting school districts around the state to lay off hundreds of teachers and other workers going into the school year starting next month. The layoffs haven't shown up in federal data, but some economists forecast they may damp the state's vaunted economic growth. And many more jobs are likely to disappear over the next two years as a result of about $15 billion in state budget cuts." [Wall Street Journal, 7/27/11, emphasis added]

Perry's Texas Leads The Nation In Some Pretty Undesirable Ways

Texas Leads The Country In Share Of Its Workforce Making Minimum Wage Or Less. As reported by the Wall Street Journal: "Critics say many of the new jobs are low-wage and without benefits; according to federal data, the state is tied with Mississippi for the largest percentage of hourly workers who make minimum wage or less, at 9.5%." [Wall Street Journal, 7/27/11]

2008: Census Found Texas Ranked Eighth In The Nation In Poverty Rate. According to the U.S. Census Bureau, 15.8 percent of Texans lived below the poverty line in 2008. Only West Virginia, Oklahoma, New Mexico, Mississippi, Kentucky, Louisiana, and Arkansas had higher poverty rates that year. [Census.gov, accessed 8/12/11]

2007: Census Found Texas Ranked 14th In The Nation In Violent Crime Rate. According to the U.S. Census Bureau, in 2007 Texas had the 14th highest violent crime rate in the nation, with 511 violent crimes committed per 100,000 people that year. [Census.gov, 8/12/11]

If Texas Were A Country In 2005, It Would Have Ranked Eighth In The World In Carbon Emissions. As reported by Newsweek: "If Texas were its own country, it would be the 48th most populous in the world, right between North Korea and Ghana. In terms of landmass, at 268,000 square miles it would be the 40th-biggest. But when it comes to environmental impact, Texas is on par with some of the largest, most industrialized nations on the planet. Were the Lonestar State to secede from the union it would be the world's eighth-largest emitter of the greenhouse gas carbon dioxide, just behind Canada, with 630 million metric tons spewed into the atmosphere in 2005, according to new figures released this week by the U.S. government's Energy Information Administration. That's actually a reduction of 40 million metric tons since 2003, when Texas was the globe's seventh-largest CO2 contributor. But even though the state is improving, Texas still outpaces the combined emissions of California and Pennsylvania, the states with the second- and third-highest CO2 outputs." [Newsweek, 2/27/08, emphasis added]

  • In 2006, Perry "Fast-Tracked" Process For 11 New Coal Plants By "Limiting The Time Frame For Public Comment." As reported by Newsweek: "When Dallas-based power company TXU Corp. announced plans to build 11 new coal-fired power plants in 2006, to go along with the 18 the state already had, Gov. Perry fast-tracked the permitting process, limiting the time frame for public comment. That summer a coalition of more than 40 Texas cities and other local governments intervened at the permitting level and stirred up public opposition to the power plants." [Newsweek, 2/27/08, emphasis added]
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