| According to Republicans Texas is the U.S. shining model and poster child for successful conservative economic ideologies. The belief is that if taxes are kept low, as is spending and a super friendly, pro-business environment is established with little government regulation and interference, the state's economy will flourish and grow. There will be a slab of beef on every barbecue grill. People will live happily ever after forever and there will be a rainbow at the end of every storm.
Except that now, in 2011, we are in the middle of the Great Bush Recession of 2008 and the low tax, low spending, pro-business friendly environment model turned out to be nothing more than an illusion. There is little happiness about jobs, or the economy, the prices of beef and propane are higher than ever and there few rainbows to be seen anymore.
According to the Nobel Laureate in Economics, Paul Krugman, the conservative economic ideology driving Texas is not only deeply flawed, it is one in which is based on smoke and mirrors.
Wait - Texas? Wasn't Texas supposed to be thriving even as the rest of America suffered? Didn't its governor declare, during his re-election campaign, that "we have billions in surplus"? Yes, it was, and yes, he did. But reality has now intruded, in the form of a deficit expected to run as high as $25 billion over the next two years. |
The failure and sham of modern conservative economic theory will find its comeuppance in Texas.
And that reality has implications for the nation as a whole. For Texas is where the modern conservative theory of budgeting - the belief that you should never raise taxes under any circumstances, that you can always balance the budget by cutting wasteful spending - has been implemented most completely. If the theory can't make it there, it can't make it anywhere.
How bad is the Texas deficit? Comparing budget crises among states is tricky, for technical reasons. Still, data from the Center on Budget and Policy Priorities suggest that the Texas budget gap is worse than New York's, about as bad as California's, but not quite up to New Jersey levels.
The low tax, pro-business Texas is on a nose dive downward to a third world country state.
The point, however, is that just the other day Texas was being touted as a role model (and still is by commentators who haven't been keeping up with the news). It was the state the recession supposedly passed by, thanks to its low taxes and business-friendly policies. Its governor boasted that its budget was in good shape thanks to his "tough conservative decisions."
We know all about those "tough conservative" decisions. Big oil, banking, insurance, and business in general can run roughshod over all regulations. Nor do businesses have to worry much about any tough worker safety or consumer protection initiatives coming out of Austin.
Oh, and at a time when there's a full-court press on to demonize public-sector unions as the source of all our woes, Texas is nearly demon-free: less than 20 percent of public-sector workers there are covered by union contracts, compared with almost 75 percent in New York.
So what happened to the "Texas miracle" many people were talking about even a few months ago?
Part of the answer is that reports of a recession-proof state were greatly exaggerated.
A Texas miracle indeed.
And now the unmiraculous Texas GOP is fully ready, locked and loaded to impose an austerity program upon the people that will run on steroids.
But have no fear. The pain resulting from such austerity will not be shared by all. Of course the big moneyed fat cats and corporate interests will feel little if any pain at all.
Children, the elderly, the poor, the jobless and middle class Texans, teachers, librarians, military veterans, police, fire fighters, oil field workers, construction workers, health care providers, schools, college students and state employees in all sectors of the Texas government will shoulder the burden of the cuts.
Krugman reports that the Republicans have been playing a game of smoke and mirrors where the budget is concerned.
What about the budget? The truth is that the Texas state government has relied for years on smoke and mirrors to create the illusion of sound finances in the face of a serious "structural" budget deficit - that is, a deficit that persists even when the economy is doing well. When the recession struck, hitting revenue in Texas just as it did everywhere else, that illusion was bound to collapse.
The only thing that let Gov. Rick Perry get away, temporarily, with claims of a surplus was the fact that Texas enacts budgets only once every two years, and the last budget was put in place before the depth of the economic downturn was clear. Now the next budget must be passed - and Texas may have a $25 billion hole to fill. Now what?
Conservatives in Washington D.C. firmly stand by the Texas economic illusion. Republicans insisted on preserving tax cuts to billionaires while expressing concern about the federal deficit and spending at the same time. One can only imagine what programs the Republicans in Washington will want to slash in order to protect tax cuts for the wealthy.
If the low tax, low spend, pro-business scheme does not work in Texas it will not work in other states either, unless these various states are willing to become like third world countries.
Right now, triumphant conservatives in Washington are declaring that they can cut taxes and still balance the budget by slashing spending. Yet they haven't been able to do that even in Texas, which is willing both to impose great pain (by its stinginess on health care) and to shortchange the future (by neglecting education). How are they supposed to pull it off nationally, especially when the incoming Republicans have declared Medicare, Social Security and defense off limits?
People used to say that the future happens first in California, but these days what happens in Texas is probably a better omen. And what we're seeing right now is a future that doesn't work.
According to the Economist Texas has already cut the fat. Now it will have to cut to the bone.
This being Texas, the cuts have already started, and they will be harsh, particularly in higher education, health care and prisons. In February Mr Perry, along with the lieutenant-governor and the speaker of the Texas House, all Republicans, directed state agencies to find ways to cut their budgets by 5%. A few months later they demanded another 10%. As Texas already runs a tight ship, in keeping with its low-tax, low-spend philosophy, this means cutting to the bone rather than trimming fat.
Mr Perry, for the most part, has downplayed the gravity of the situation. Until quite recently he was saying that he was not even sure there would be a shortfall, despite the cuts he had demanded. It was an odd stance, but not inexplicable. The budget cuts will have to go through the state legislature, which does not meet again until January. The elections, of course, are in November.
Now what?
Rick Perry's Banana Republic State of Texas.
Good luck to Ohio, Michigan, Wisconsin and other states that are saddled with Republican governors like Rick Perry. Voters have no clue as to what they have done to themselves in the Midwest. Get ready for rotten roads, crumbling bridges, unmitigated flooding, rotten schools, fewer police, fewer fire fighters, fewer teachers, expensive and rotten insurance policies, stingy if not non-existent social services, crashing state web sites and very, very long lines (up to six hours) to get one's driver's license renewed. And that is merely the tip of the iceberg in the rotten of Republican economic policies. |
