Lowry: Why Texas is a Model for Growth
Rich Lowry writes:
Texas already looms large in its own imagination. Its elevated self-image didn’t need this: More than half of the net new jobs in the U.S. during the past 12 months were created in the Lone Star State.
According to the Bureau of Labor Statistics, 214,000 net new jobs were created in the United States from August 2009 to August 2010. Texas created 119,000 jobs during the same period. If every state in the country had performed as well, we’d have created about 1.5 million jobs nationally during the past year, and maybe “stimulus” wouldn’t be such a dirty word.
What does Austin know that Washington doesn’t? At its simplest: Don’t overtax and -spend, keep regulations to a minimum, avoid letting unions and trial lawyers run riot, and display an enormous neon sign saying, “Open for Business.”
At bottom, the struggle between national Republicans and Democrats is over whether the country will adopt a version of the Texas model, or of the Michigan, New York, or California model. Will government allow the private sector to thrive, or stifle growth with its hyperactivity and favoritism for anti-business interests? If migration were a referendum, the Texas model would be winning in a rout — more than 1,300 people a day moved there between their 2007 and 2008 tax filings, according to Internal Revenue Service data.
It’s not as though Texas has been exempt from the Great Recession. Its unemployment rate is 8.3 percent — high, though beneath the national rate of 9.6 percent. It faces a recession-driven shortfall of roughly $15 billion for its next two-year budget, a significant challenge to its low-tax ways. But it has weathered the storm better than the nation, and better than its mammoth competitor on the West Coast.
A new Texas Public Policy Foundation report notes that Texas experienced a decline of 2.3 percent from its peak employment, while the nation declined 5.7 percent and California 8.7 percent. During the past 12 months, California nearly canceled out Texas’s job creation all by itself, losing 112,000 net jobs. Its unemployment rate is above 12 percent.
Texas is a model of governmental restraint. In 2008, state and local expenditures were 25.5 percent of GDP in California, 22.8 in the U.S., and 17.3 in Texas. Back in 1987, levels of spending were roughly similar in these places. The recessions of 1991 and 2001 spiked spending everywhere, but each time Texas fought to bring it down to pre-recession levels. “Because of this policy decision,” the Texas Public Policy Foundation report notes, “Texas’ 2008 spending burden remained slightly below its 1987 levels — a major accomplishment.”
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