Last Call For Texas Wreckonomics

With former Texas Republican Gov. Rick Perry back in the race, The Kroog revisits the "Texas Miracle" that Perry touted in 2012 and finds things are not nearly as rosy.

The facts: For many years, economic growth in Texas has consistently outpaced growth in the rest of America. But that long run ended in 2015, with employment growth in Texas dropping well below the national average and a fall in leading indicators pointing to a further slowdown ahead. In most states, this slowdown would be no big deal; occasional underperformance is just a fact of life. But everything is bigger in Texas, including inflated expectations, so the slowdown has come as something of a shock.

Now, there’s no mystery about what is happening: It’s all about the hydrocarbons. Texans like to point out that their state’s economy is a lot more diversified than it was in J.R. Ewing’s day, and they’re right. But Texas still has a disproportionate share of the U.S. oil and gas industry, and it benefited far more than most other states from the fracking boom. By my estimates, about half the energy-related jobs created by that boom since it began in the middle of the last decade were in Texas, and this extractive-sector windfall accounted for about a third of the difference between growth in Texas and growth in the rest of the country.

What about the other two-thirds? Like the rest of the Sunbelt, Texas is still benefiting from the long southward shift of America’s population that began with the coming of widespread air-conditioning; average January temperature remains a powerful predictor of regional growth. Texas also attracts new residents with its permissive land-use policies, which have kept housing cheap.

Now one of the three big drivers of Texas growth has gone into reverse, as low world oil prices are bringing the fracking boom to a screeching halt. Hey, things like that happen to every state now and then.

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.

So no, Perry's second term set Texas up for a disaster and now the state is cutting back even more on social programs. It's amazing how tax cuts for the state's top earners manage to not create anything but more money for the state's top earners.