Sunday, August 14, 2011

Gov. Perry's Miracle - All Hat, No Cattle?

Texas Governor Rick Perry is some sort of economic genius, according to Rick Perry, but it’s worth taking a closer examination at his record as governor.

On issues across the board, from Perry’s support for ending Social Security and Medicaid to Texas' pollution record to low tax job creation and his proposal that Texas secede from the United States, the Republican governor has amassed a record of far-right political positions.

Texas, economists note, has long been a low-tax, loose-regulation state, but it hasn’t always thrived—between 2008 and 2010, after the U.S. economy collapsed, the state’s unemployment rose faster than in high-tax Massachusetts.

The New Republic:

The Texas’s unemployment rate, remains over 8 percent, ranked twenty-fourth in the country for unemployment, slightly worse than liberal New York’s. What’s more, not all of those vaunted jobs are great jobs: Texas has the highest percentage of minimum-wage workers in the country, and its per-capita income still sits below California’s.

What is clear is that Texas’s population has been exploding, leading to disproportionate job growth. In the past decade, the state added more people than anywhere else, partly due to fast-growing Hispanic families, but due also to migration from other states. So why are people flocking to Texas?

It could be the state’s lower taxes, though that probably isn’t a big driver: As Brad DeLong of University of California, Berkeley, has noted, Texans pay, on average, 26 percent of their income in taxes, not much lower than the 28.5 percent average in California.

More likely, people are moving to Texas because housing is so affordable. In a 2006 survey by the Census Bureau, Texas ranked forty-second in the cost of housing. Conservatives can take some credit—by and large, it’s easier to build houses in Texas’s biggest cities, with fewer land-use and zoning hassles, according to Harvard economist Edward Glaeser.

But conservatives shouldn’t be too triumphal. Texas didn’t suffer from a ruinous housing bubble like nearby Arizona and Nevada, thanks to regulations that limited debt on homes and restricted “cash-out” refinancing (a common practice in states like Florida and California, in which people got free cash for refinancing their homes). As a result, Texas didn’t fare as badly when the housing market cratered this time: Only 6 percent of Texas borrowers were in or near foreclosure, versus a national average of nearly 10 percent. Two cheers for intrusive regulations.

Other aspects of Texas’s success come down to sheer luck. The state is home to large oil and gas reserves. As oil prices have climbed over the past decade, new rigs have sprouted up like toadstools, while the natural-gas craze has led to economic booms in North Texas and the Eagle Ford Shale near San Antonio. The Dallas Fed has found that, every time oil prices rise 10 percent, Texas gets a 0.5 percent GDP bump. That’s hardly something other states can replicate.

Then there’s the uglier side of Perry’s rule. The state is looking at a staggering $27 billion deficit for 2012-2013. Perry managed to paper over Texas’s last budget shortfall by taking $6.4 billion in Obama stimulus money, more than all but two governors. (At the same time, he was suggesting Texas should secede from the union.) Now, without Democrats in Congress to bail him out, Perry and other Republicans in Austin are proposing big cuts to Medicaid and education—this in a state where 26 percent of people are uninsured, the highest percentage in the United States.

Ironically, Perry could end up undermining the very things that make Texas great. The last time the state faced a steep recession, after oil prices had collapsed in the late ’80s, the legislature also confronted a massive budget shortfall. But Republican Governor Bill Clements raised taxes and invested in public schools, which at the time were competing with Alabama’s and Mississippi’s for worst in the country. The investment paid off—and laid the foundation for 25 years of growth. Perry’s still reaping those benefits, though if he slashes the budget, he may be the last Texas governor to do so for a long time to come.

Video released by
giving their view on Gov. Perry's record

On June 28, 2011 Gov. Perry signed a $172 billion budget passed by the super Republican majority Texas House and Senate. The budget signed by Gov. Perry cuts $15 billion from the level of spending last authorized in the 2009-11 state budget.

The largest individual cut was to public education, which lost over $4 billion over the biennium.

While public education received the deepest cuts, other agencies that saw their budgets reduced, too. Other agencies cut included public universities and community colleges (with the two largest universities in the state losing $100 million in funding) and state health and welfare programs, which saw Medicaid and food stamp funds slashed by up to $2 billion.

San Antonio News-Express reports up to 1,500 jobs in the state prison system, run by the Texas Department of Criminal Justice (TDCJ), may also be eliminated. These cuts will have the most immediate effect on Texas citizens, resulting in direct hits to consumers' wallets as college tuition rates increase, state employees are laid off, and social welfare programs cut levels of financial assistance.

The cuts to the Texas Department of Criminal Justice may also hurt poorer areas disproportionately due to the increased reliance of these areas, such as rural areas, on TDCJ services and employment. Prisons, for example, are often not located in the midst of urban centers, meaning that a reduction in correctional staff at these rural-based facilities would increase local unemployment.

Any losses in Texas Highway Patrol personnel may also be disproportionately felt by citizens of small towns, whose municipal law enforcement agencies are small and often rely on state-level services.

Even after Gov. Perry signed the2011-13 budget cutting billions of dollars from state education, Medicaid and other state agencies Republican legislative leaders in Texas acknowledge the 2011-13 budget signed into law by Perry under-funds the state’s projected Medicaid costs by about $5 billion. A summary portion of the budget says that’s the amount the state expects the program to need in supplemental state aid in 2013. Also, the 2011-13 budget defers $2.3 billion state payment to K-12 public school districts to fiscal 2014. [TexasTrib, Politifact, StarTribune/AP] more...

ThinkProgress has assembled a list of the top ten things you need to know about Perry’s tenure as governor. Think Progress also profiles Perry's record on: Social Security Medicare & Medicaid, Federal Stimulus Money, Secession, Environment and Gay Rights.


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