Matt Mackowiak, 6/23/2015 [Archive]

Texas Economic Model a Proven Success

Editor's note: Consider running alongside "How to Produce Your Own Texas Miracle" by Jason Stanford.

By Matt Mackowiak

Everything is bigger in Texas — and for the past decade, that's also included job creation.

Just this month, a National Public Radio report proves that GOP presidential hopeful Rick Perry can claim job creation "four times as fast" as the national average.

NPR's Danielle Kurtzleben analyzed St. Louis Federal Reserve data and found that only three GOP presidential candidates can "claim job growth faster than the national rate" and that "Perry leads the pack."

You may have heard about the "Texas Model," a way of summarizing the major economic policies in place in Texas. You may even think you know the statistics.

But they bear repeating.

Under Perry, Texas added more than 2.2 million jobs over his 14-year tenure, an increase of 23 percent. Over the same period, nationally, jobs grew by 6 percent. While Perry was in office, Texas created 28 percent of all new jobs in the nation.

According to Bureau of Labor Statistics data, from December 2007 to December 2014, national employment would be down 275,000 jobs without Texas. During that time, Texas created more than 1.4 million jobs.

Now to be sure, Perry does not take all the credit. He often gives the credit to the job creators who risk their capital and succeed through determination and hard work.

But not every state is like Texas. In fact, no state is like Texas. It's important to understand why.

Let's examine the four reasons that Gov. Perry often mentions:

1. Low taxes — Texas has no state income tax and no corporate tax. Their gross receipts tax was just cut by 25 percent.

2. Predictable regulation — Texans do not believe in nanny government, and their part-time Legislature is cautious in passing new laws. Texas is consistently voted the best state for business.

3. Tort reform — Since the 2003 tort reform bill passed, tort lawsuits are down by more than half, noneconomic damages are capped, forum shopping is out, insurance premiums paid by doctors are down 60 percent and thousands of doctors are now practicing in Texas.

4. Accountable public schools — Texas had the highest high school graduation rate in 2015, with 88 percent graduating, and fourth and eighth grade reading and math scores are up over the past decade. Districts had been receiving grades, and now individual schools will be graded.

There are two main arguments critics lob against the Texas Model.

The first claims that Texas' economy is succeeding solely because of the oil and gas industry.

According to Energy Information Administration data, Texas produces 30.5 percent of the nation's crude oil and 28.6 percent of the nation's natural gas, leading in both categories. According to Bureau of Economic Analysis data measuring economic diversification by state, Texas is in the middle of the pack when nonfarm employment is measured, and in the lower third when output is measured.

The second claims that Texas' job creation is primarily minimum wage jobs. Texas is creating jobs across a range of industries. Only 5-6 percent of all jobs in Texas are minimum wage jobs. The service economy grows along with other industries, and it has grown in the Eagle Ford area, as well as in suburban areas.

But it's not just job creation. During Perry's 14 years, the state's population grew 29 percent, while the national population grew 13 percent. When population grows that fast, it creates problems. Texas has infrastructure needs, future water problems, an unusually large unskilled workforce and a high uninsured rate.

But we also have $10 billion in our Rainy Day Fund and just passed billions in new spending on education and transportation.

I am confident that 49 other states would trade places with Texas if they could.

Perhaps the strongest case for the Texas Model is the impact of opposite policies on another state.

Connecticut resident and MSNBC host Joe Scarborough just wrote a blistering column in The Hartford Courant attacking his adopted home state for raising taxes on businesses. He notes that Connecticut is "last in job climate and 46th in job creation" and that the state cannot take the Legislature's new $1.6 billion tax hike, the second largest in state history after a $2 billion hike in 2011.

One consequence of these policies is that large employers like General Electric and Aetna are considering leaving Connecticut.

The opposite of the Texas Model is a disaster.

Texas has challenges, without question. But we have a 4.2 percent unemployment rate and a vibrant, diversified economy.

Texas is a remarkable success story.


©Copyright 2015 Matt Mackowiak distributed exclusively by Cagle Cartoons newspaper syndicate.

Mackowiak is an Austin- and Washington-based Republican consultant and president of Potomac Strategy Group, LLC. He has been an adviser to two U.S. senators and a governor, and has advised federal and state political campaigns across the country.

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