Texas - Not A Good Economic Model

The last election put Republicans back in power in many states (due to a large influx of corporate money from secret donations that was used to help Republican candidates). There was far more money spent in the last election than ever before in an off-year election -- mainly due to the misguided decision Supreme Court decision in Citizens United vs FEC.

Now the new (and old) Republican officeholders are trying to repay their corporate masters by busting unions, laying off workers, cutting pay and benefits and giving corporations (and the rich) more tax breaks. The most obvious example of this is in Wisconsin, because the workers there have begun to fight back and by doing so have made headlines. But the same thing is going on in many other states.

These Republicans are trying to turn these states into low-tax corporation paradises, where there are a large quantity of desperate people willing to work for poverty wages and no benefits (because that's all that's available). In addition they want to cut education and other state services and put the burden of paying for those cut-back services on workers and the middle class. It's the old Republican dream of giving more to the rich and less to everyone else.

It's called "trickle down" economics. It is the reason that we are currently in a recession, but the Republicans have been pushing this failed version of economics so long they can no longer see reason.

Here in Texas we have had this Republican economic dream for quite a while now, and it's been an unmitigated disaster. The corporations and the rich don't have to pay much in taxes, and there aren't any unions to force them to pay decent wages and benefits, so they like it in Texas. It's everyone else that is suffering. The state has poor schools with a huge drop-out rate, the largest percentage of uninsured people in the nation, low wages with poor benefits, poorly paid state workers and inadequate social services.

And what has this Republican dream produced for Texas? A $27 billion budget deficit for the next biennium (as the above sign shows -- taken by the excellent Juanita Jean). That's far more than any of the strong-union states. Cutting taxes for the rich and cutting services for everyone else is not the way to develop a healthy economy. It just makes the rich even richer and everyone else poorer, while putting the future of the state in jeopardy.

Here's how columnist and Nobel Prize winning economist Paul Krugman puts it:

Consider, as a case in point, what’s happening in Texas, which more and more seems to be where America’s political future happens first.


Texas likes to portray itself as a model of small government, and indeed it is. Taxes are low, at least if you’re in the upper part of the income distribution (taxes on the bottom 40 percent of the population are actually above the national average). Government spending is also low. And to be fair, low taxes may be one reason for the state’s rapid population growth, although low housing prices are surely much more important.


But here’s the thing: While low spending may sound good in the abstract, what it amounts to in practice is low spending on children, who account directly or indirectly for a large part of government outlays at the state and local level.


And in low-tax, low-spending Texas, the kids are not all right. The high school graduation rate, at just 61.3 percent, puts Texas 43rd out of 50 in state rankings. Nationally, the state ranks fifth in child poverty; it leads in the percentage of children without health insurance. And only 78 percent of Texas children are in excellent or very good health, significantly below the national average.


But wait — how can graduation rates be so low when Texas had that education miracle back when former President Bush was governor? Well, a couple of years into his presidency the truth about that miracle came out: Texas school administrators achieved low reported dropout rates the old-fashioned way — they, ahem, got the numbers wrong.


It’s not a pretty picture; compassion aside, you have to wonder — and many business people in Texas do — how the state can prosper in the long run with a future work force blighted by childhood poverty, poor health and lack of education.


But things are about to get much worse.


A few months ago another Texas miracle went the way of that education miracle of the 1990s. For months, Gov. Rick Perry had boasted that his “tough conservative decisions” had kept the budget in surplus while allowing the state to weather the recession unscathed. But after Mr. Perry’s re-election, reality intruded — funny how that happens — and the state is now scrambling to close a huge budget gap. (By the way, given the current efforts to blame public-sector unions for state fiscal problems, it’s worth noting that the mess in Texas was achieved with an overwhelmingly nonunion work force.)


So how will that gap be closed? Given the already dire condition of Texas children, you might have expected the state’s leaders to focus the pain elsewhere. In particular, you might have expected high-income Texans, who pay much less in state and local taxes than the national average, to be asked to bear at least some of the burden.


But you’d be wrong. Tax increases have been ruled out of consideration; the gap will be closed solely through spending cuts. Medicaid, a program that is crucial to many of the state’s children, will take the biggest hit, with the Legislature proposing a funding cut of no less than 29 percent, including a reduction in the state’s already low payments to providers — raising fears that doctors will start refusing to see Medicaid patients. And education will also face steep cuts, with school administrators talking about as many as 100,000 layoffs.


The really striking thing about all this isn’t the cruelty — at this point you expect that — but the shortsightedness. What’s supposed to happen when today’s neglected children become tomorrow’s work force?


Anyway, the next time some self-proclaimed deficit hawk tells you how much he worries about the debt we’re leaving our children, remember what’s happening in Texas, a state whose slogan right now might as well be “Lose the future.”