Texas, other red states now holding back U.S. economy

Might the “Texas miracle” not be so unique and miraculous? Sure looks like it these days. The state that many Republicans point to as the hallmark of right-wing economic success is becoming a drag on the U.S. economy in 2015, and it’s not just because of the historic floods that ravaged the state over the last couple of weeks (the irony of that happening in a state whose Legislature is filled with anti-intellectual climate change deniers is duly noted).

Texas lost a combined 24,000 jobs in March and April, in a time when the country was gaining more than 300,000 jobs, and it seems quite probable that the strong economic record of the state while Gov Rick Perry was in office from 2003 to 2015 had a lot more to do with location than policy.

…Even after the recent slide, Texas still looks like a bright spot in the national economy. During his years as governor, from December 2000 to January 2015, Texas created more than three out of each 10 new American jobs, and employment rose more than 2.2 million, a jump of nearly 25 percent. Nationally, payrolls increased just 6 percent over the same period.

Mr. Perry’s backers say the policies in place on his watch — no state income tax, a light regulatory touch, tax breaks for business and unquestioning support for the oil industry and hydraulic fracturing — were crucial to spurring the jobs bonanza.

But useful as that platform may have been in creating a benevolent economic backdrop, many economists say differences in state policies play only a limited role in inducing local economic growth.

“Texas did pretty well, but it’s hard to say how much of that is because of policy choices versus luck,” said Tracy Gordon, senior fellow at the Urban-Brookings Tax Policy Center, a nonpartisan research group in Washington. “We often think of states as playing with the hands they are dealt and making policy choices based on that.”

And a big part of that equation is oil production, as shown by the Mining/Logging sector (which includes oil exploration and drilling) having fewer people working in Texas today than they did a year ago, with 20,000 jobs lost since the end of 2014.

As the prices of oil have plummeted in recent months, so have the job prospects in other oil states. This is especially borne out when you look at Thursday’s release on unemployment claims, which includes the state-by-state breakdown for the week before Memorial Day - right before the worst of the floods hit the Southern Plains (so that effect won’t be seen till future weeks). There were only 5 states which had more continuing unemployment claims in late May 2015 than late May 2014.

Texas +20,053 (+14.1%)
Oklahoma +6,212 (+38.4%)
Louisiana +4,568 (+24.1%)
Wyoming +1,971 (+53.3%)
N. Dakota +1,620 (+90.7%)

All states that are heavy into oil drilling and fracking, and all red states that in prior years had been held up as a beacon of superiority of the deregulated, yee-HAH! mentality that had allegedly left us stodgy blue-voters in the dust. Oops. Maybe that’s not quite the case, eh?

The New York Times' Paul Krguman did a similar kind of chortling last week, noting that Texass and Koch-run Kansass are flailing these days, in sharp contrast to a state that many right-wingers often use as a talking point on the "failure of liberal policies".

But Texas wasn’t supposed to be like other states. It was supposed to be the shining exemplar of the economic payoff to reverse Robin-Hood economics. So its recent disappointments hit the right-wing cause hard — especially coming on the heels of the Kansas debacle.

For those who haven’t been following the Kansas story, in 2012, Sam Brownback, the state’s hard-right governor, pushed through large tax cuts that would, he promised, lead to rapid economic growth with little, if any, loss of revenue. But the promised boom never materialized, while big budget deficits did.

And, meanwhile, there’s California, long mocked by the right as an economy doomed by its liberal politics. Not so much, it turns out: The budget is back in surplus in part because the emergence of a Democratic supermajority finally made it possible to enact tax increases, and the state is experiencing a solid recovery.

With the weather and energy markets both being on the downslide for May, don’t count on Texas, Oklahoma, N. Dakota or other oil boom states to rebound any time soon, and Kansas continues to suffer from major revenue shortfalls and its budget is so broken due to its fealty to ALEC/Koch policies. The Kansas City Star said this weekend that Kansas politicians should admit defeat and change course.

Candidates for the governor’s office and legislative seats must acknowledge that the state is in a fiscal crisis, and talk about what they plan to do about it.

They should spare voters the platitudes about “shrinking government.” Kansas government is starving, and politicians are going to have to contemplate the unthinkable — a rollback of the draconian tax cuts that never should have been passed.

The numbers are bad and primed to get worse. No flowery campaign talk can change the dreadful mathematics.

With the anti-education, “give it all to the corporations” mentality that we’re seeing in the Age of Fitzwalkerstan, Wisconsin is right on track to join Texass and Kansass and other declining red states when the businesses the WisGOPs have been favoring have their inevitable slide. This is especially true because Wisconsin's small businesses are being discouraged and driven out due to low demand due to pro-corporate bills that drive down wages, with Wisconsin was listed as being worst in the nation for business start-ups, which could well be related to talent being driven out of the state due to the backwards mentalities from the Legislature and Governor’s Office.

And repelling talent by dumb policies is especially a problem in a state like Wisconsin, which is an icebox for 5 months out of the year, and therefore unlikely to attract transplants who move south and west to avoid the bad weather. So needless to say, Scott Walker’s plans of turning a state into an Idiocracy-like “boom-bust” land similar to Texass is not the way to go, and sets us up to go off a cliff much worse when we hit a decline similar to what's currently happening in oil states and Kansass.