While the economic downturn has been an unmitigated disaster for state budgets, Texas has repeatedly been singled out for its apparent resilience to the recession. Last week the Economist became the latest publication to applaud the state, contrasting its “booming” economy with that of reeling California. A special report dedicated to Texas (and featuring—what else?—Dallas Cowboys cheerleaders on the cover) fawns over the state's pro-business environment (light regulation, no state capital-gains or income tax) and unemployment rate (2 points below the national average), crediting the state's "small government" model for much of its success.
Yet the Economist might be looking at Texas through rose-colored glasses. Last Thursday News 8 Austin reported that rapidly depleting unemployment funds have compelled Gov. Rick Perry to ask the federal government for a $170 million loan. This is highly ironic. Perry made headlines in April for suggesting his state might secede from the Union if Washington continued to “thumb their nose at the American people” by offering states stimulus money. Perry was one of a handful of Republican governors who rejected the federal funds -- $555 million in unemployment benefits -- citing burdensome federal strings attached to it.
There are other signs that the country’s overall economic condition is finally catching up with Texas. The unemployment rate, while still below the national average, is rising, and the state has already lost twice as many jobs as Comptroller Susan Combs predicted for the year. Shrinking sales taxes suggest an acceleration in Texas’ economic decline. Even the Economist takes note of areas where the state is critically lacking: Of all 50 states, Texas has the highest proportion of uninsured people, the third highest poverty rates, and ranks near the bottom in education achievement.
These are precisely the sorts of conditions the recession is likely to aggravate, and that will cost Texas dearly in the long run. None are surprising, given that Texas spends less on each citizen than any other state. All in all, there’s ample evidence that Perry’s haughty anti-government approach is not an example the rest of the country should follow.
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