Campaign Update

A Natural Experiment in Political Economy

October 18, 2010


John Steele Gordon

It is often pointed out that the states make great laboratories for political-science experiments. And an experiment has been underway for quite a while testing the liberal model — high taxes, extensive regulation, many government-provided social services, union-friendly laws — against the conservative model — low taxes, limited regulation and social services, right-to-work laws. The results are increasingly in. As Rich Lowry reports in National Review Online, the differences between California and Texas are striking. Between August 2009 and August 2010, the nation created a net of 214,000 jobs. Texas created more than half of them, 119,000. California lost 112,000 jobs in that period. Lowry writes:

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.”

The result has been dramatic: “A new Texas Public Policy Foundation report notes that Texas experienced a decline of 2.3 percent from its peak employment [in the current recession], while the nation declined 5.7 percent and California 8.7 percent.” And people have been voting with their feet: A thousand people a day are moving to Texas. It will likely gain four House seats next year, while California for the first time since it became a state in 1850 will gain none.

So, again, the evidence would seem to be overwhelming: high tax-and-spend policies and regulation produces stagnation and unemployment, low tax-and-spend policies and regulatory restraint produce the opposite.

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The EPA’s Anti-Prosperity Agenda

October 19, 2010

National Review

Kathleen Hartnett White

Texas has been the engine of the current economic recovery, creating more than half of net job growth across the country in the last twelve months. From 2000 to 2009, while Texas created more jobs than all the other states combined, it simultaneously lowered its ozone levels 22 percent; the nation as a whole lowered its ozone level only 8 percent. Houston, which had long been vying with Los Angeles for the title of the most ozone-polluted city in the country, achieved the federally required ozone standard last year. In fact, all Texas urban regions met the federal standard except Dallas/Fort Worth, which exceeded the standard by only one part per billion. Stringent but targeted controls, cutting-edge science, innovative technology, billions of dollars invested by the state and private industry, and the volunteer efforts of thousands of Texans drove the improvements in air quality. The state designed and implemented the undertaking largely in cooperation with EPA.

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Farouk Shami Endorses Gov. Perry for Re-election

October 18, 2010

BROWNSVILLE – Gov. Rick Perry today received the endorsement of Farouk Shami for re-election. Shami made his announcement during a campaign grassroots event at Cobblehead's in Brownsville.

“Gov. Perry has not only been true to the values that matter most to the people of Texas, he is also a conservative leader that has led our state in job creation and renewable energy,” said Farouk Shami. “As a former Democratic gubernatorial candidate, I believe jobs and the future for Texans is beyond partisanship. I am proud to endorse Gov. Perry for the general election. His proven track record of helping businesses grow and invest for a cleaner and stronger tomorrow is the reason why he is the best choice for Texas governor.”

Farouk Shami is the founder and chairman of Farouk Systems, a multinational corporation that manufactures the world-renowned brands BioSilk and CHI. As an entrepreneur and small business owner, Shami’s priorities are to uphold environmental responsibility, promote education and adhere to the highest ethical standards. He is also committed to partnering with factories all over the state in order to create more jobs for Texans. In the wake of hurricanes Katrina, Rita and Ike, Shami was instrumental in providing resources to support the needs of local shelters and communities affected by the disasters. Farouk has received numerous awards, including Entrepreneur of the Year and the Apollo Green Award in recognition of his decision to relocate Farouk Systems’ operations from China to the USA, which has brought 1,200 jobs back to our nation and to Texas.

“It is an honor to receive Farouk Shami’s endorsement of my re-election,” said Gov. Perry. “His entrepreneurship and dedication to Texas jobs and the environment is a profound example of what our state needs to continue leading the nation. Bringing 1,200 jobs back to our country and Texas shows a vote of confidence in the Texas economy and the work ethic of Texans. I look forward to working with Farouk so we can keep Texas the envy of the nation and continue creating jobs so that every Texan who wants one has one.”

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Texas Building Owners and Managers Association Endorses Gov. Perry

October 15, 2009

AUSTIN – Gov. Rick Perry today received the endorsement of the Texas Building Owners and Managers Association (BOMA) for the general election.

“Gov. Perry has been a true advocate in fighting to maintain a vibrant economy that keeps the doors of opportunity open for all Texans to succeed,” said Lisa Hensley, president of Texas BOMA. “We are proud to endorse Gov. Perry and eagerly look forward to the accomplishments his leadership will continue to bring to Texas.”

Texas BOMA represents the interests of owners and managers of commercial real estate in the State of Texas. Texas BOMA is composed of more than 2,000 members statewide through its local federated associations located in Austin, Corpus Christi, Dallas, Fort Worth, Houston, and San Antonio. Texas BOMA members manage 661 million square feet of commercial real estate in Texas and pay an estimated $1.6 billion in property taxes annually.

“I am honored to receive the endorsement of the Texas Building Owners and Managers Association,” said Gov. Perry. “Their work plays a crucial role in upholding our state’s friendly business climate, and I will continue fortifying the pillars that will keep our economy strong well into the future.”

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A Trenchant Tale Of Two States

October 15, 2010

Investor's Business Daily

Business Climate: In Texas, the payroll count is back to pre-recession levels. California is nearly 1.5 million jobs in the hole. Why such a difference? Chalk it up to taxes, regulation and attitude.

The contrast between America's two largest states, in terms of both population and economic heft, is as stark as it has ever been. Texas is leading the country out of the recession; California is holding it back.

By August, the job count in Texas had rebounded to where it was when the recession officially began in December 2007. California's payroll was still 1.46 million below the pre-recession level. The nation as a whole was down by 6.42 million jobs. In other words, California, with one-eighth the nation's population, accounts for more than a fifth of its job deficit left over from the downturn.

What country needs a state like that dragging it down?

Of course, what America really needs is not to be California-free, but to have something like the old California back — the economic dynamo that was the envy of the nation in the '50s and '60s. But to those who try to do business in the state now, those days seem impossibly distant.

California's business climate is notoriously bad. CEOs polled by the magazine Chief Executive have ranked it dead last for the past five years, with Texas, naturally, ranked first. To anyone seeking to start an enterprise and hire workers, moving to Texas is a lot less trouble than trying to change California's high taxes, overregulation and not-so-subtle bias against the profit motive.

A new study from the Texas Public Policy Foundation gives a good overview of why California lags so far behind and what it can learn from its Lone Star rival. The study was prepared by the econometrics firm of supply-side guru Arthur Laffer, so it's no surprise that Texas gets high marks for low taxes and, in particular, its lack of a personal income tax. The data behind these conclusions are hard to discount, no matter what your point of view.

California and other states with steeply progressive income taxes simply do not grow as fast as their tax-free competitors. The nine states with no income tax had nonfarm payroll growth of 11.76% from 1999 to 2009. Payrolls in the nine states with the highest top tax rates (a group that includes California) rose an anemic 2.48%.

The difference in tax systems reflects a difference in attitudes toward business and the wealth that business generates. Capital gains are tax-free in Texas; in California, they are taxed up to 10.55%. To an entrepreneur choosing where to set up shop, the message is clear: Texas wants to reward success; California wants to tax it.

California also has developed a web of regulations that raises labor costs, spurs litigation and ties up building projects indefinitely. Government at all levels squeezes businesses and property owners with fees and mandates.

Finally, at the basic, personal level, businesses in California feel what can only be described as a bad vibe. They get the sense that they're just not wanted.

As one of the CEOs in the Chief Executive survey put it: "California is terrible. Even when we've paid their high taxes in full, they still treat every conversation as adversarial. It's the most difficult state in the nation. We have actually walked away from business rather than deal with the government in Sacramento."

Just how pervasive is the state's anti-business attitude? Consider a recent story about how some governments in the San Francisco Bay Area — get this — are gouging the solar power business.

If California officialdom stands for anything, it stands for renewable energy, against Big Oil and for "green jobs." Yet an informal survey by the Sierra Club, reported this week in the San Jose Mercury News, found that some cities were charging sky-high fees for solar installations on schools, churches, retail stores and other buildings.

The city manager of Brisbane, a town that charges $13,510 for a permit to install a 131-kilowatt system, told the Mercury News that his city is "trying to promote the most solar that we can."

But lowering the fee would "be passing on savings to a commercial, for-profit developer, and that doesn't make a lot of sense to us."

That just about says it all — we're all for solar, but we can't have people making money off it, now can we? As long as California officials can say something like that with a straight face, the state faces a very long slog back to prosperity.

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The Texas Model: The Lone Star State speeds up its recovery with pro-business policies.

October 15, 2010

National Review

Rich Lowry

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.”

Less spending means lower taxes. Texas doesn’t have an income tax — in contrast to California’s highly progressive income tax — and it is among the 10 lowest-tax states in the country. Its regulatory burden is low across the board, and it’s a right-to-work state that enacted significant tort reform in the middle of the last decade.

It is true that Texas enjoys bountiful oil and natural-gas reserves, but its attitude toward those resources is what’s most important — “if you got ’em, use ’em.” If only the Obama administration’s Department of the Interior agreed. The state long ago defied the stereotype of an economy entirely dependent on bumptious oilmen. In Dallas–Fort Worth, Houston, San Antonio, and Austin, it has four diverse, thriving metropolitan areas featuring robust high-tech and manufacturing sectors.

In Texas in recent decades, the watchwords have been prudence and stability in the course of nurturing a pro-business environment, while California has undergone a self-immolation that Pres. Barack Obama wants to replay nationally. Joel Kotkin writes of California in City Journal, “During the second half of the twentieth century, the state shifted from an older progressivism, which emphasized infrastructure investment and business growth, to a newer version, which views the private sector much the way the Huns viewed a city — as something to be sacked and plundered.”

With predictable results. For policymakers wanting to restart the American jobs machine, forget the Alamo. Keep in mind the Texas model.

— Rich Lowry is editor of National Review. He can be reached via e-mail,

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Texas Auto Dealers Association Auto PAC Supports Gov. Perry in his Re-election

October 14, 2010

AUSTIN – Today Gov. Perry received the support of the Texas Auto Dealers Association (TADA) Auto PAC for the 2010 general election.

“Gov. Perry has been a true leader and friend to the automotive retail industry,” said Rob Braziel, Texas Auto Dealers Association CEO for Legislative Affairs. “He understands what it takes for franchises and businesses, in Texas, to be successful. Gov. Perry’s leadership has helped keep taxes low and regulations limited. As a result, Texans enjoy fair pricing and healthy competition in the marketplace. We support Gov. Perry’s re-election bid for this coming November.”

Since 1916, the Texas Auto Dealers Association has been the voice of Texas' franchised dealers. It provides members with legal support, training and education programs, business services, a variety of informative publications, public relations on behalf of the industry, and even a consumer mediation service.

TADA and Auto PAC objectives include promoting the best interests of franchised new car and truck dealers, consistent with the public good; maintaining good relations among customers, dealers, distributors, and manufacturers; promoting motor vehicle and driver safety; supporting laws and policies that benefit association members, the automotive industry and the public; opposing unfair, unreasonable or discriminatory laws and regulations; and supporting the principles of private enterprise and a business climate that affords a reasonable opportunity for profitability and financial security.

“I'm honored to receive the support of the Texas Auto Dealers Association Auto PAC,” said Gov. Perry. “The auto dealers play an important role in keeping the Texas economy strong and I look forward to continuing to work with the industry to keep Texas moving forward. From families to businesses across the state, auto dealers throughout Texas contribute to our great quality of life and make Texas the best place to live, work and raise a family.”

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Statement from Texans for Rick Perry Spokesman Mark Miner

October 14, 2010

“Bill White’s latest false attack ad from his trial lawyer friends is nothing more than an attempt to divert attention from the fact that Bill White profited from a company he had a financial relationship with in the aftermath of Hurricane Rita,” said Texans for Rick Perry spokesman Mark Miner. “In order to respond immediately, the state of Texas used general revenue funds for expenses incurred in response to Hurricane Ike, funds that were later reimbursed by the federal government and returned to the state’s general revenue fund and appropriated by the Texas legislature.”

From H.B. 4586 passed by the 81st Texas legislature:

SECTION 6. PRESERVATION BOARD OR HISTORICAL COMMISSION: RESTORATION OF THE GOVERNOR ’S MANSION. Out of reimbursements received from the Federal Emergency Management Agency for expenditures that were paid for with funds transferred from the Health and Human Services Commission to the Department of Public Safety during the state fiscal year ending August 31, 2009, an amount not to exceed $11,000,000 is appropriated for the two-year period beginning on the effective date of this Act, in addition to other amounts appropriated for the state fiscal biennium ending August 31, 2009, for costs associated with the restoration of the Governor’s Mansion. The appropriation is to: (1) the State Preservation Board, contingent on the enactment and becoming law of S.B. 2307 or similar legislation by the 81st Legislature in regular session that imposes responsibility on the State Preservation Board for the preservation and maintenance of the Governor’s Mansion; or (2) the Texas Historical Commission, if the 81st Legislature in regular session does not enact S.B. 2307 or similar legislation that becomes law that imposes responsibility on the State Preservation Board for the preservation and maintenance of the Governor’s Mansion.

S.B. 2307 became law May 27, 2009.

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Dallas Mayor Tom Leppert Endorses Gov. Perry for Re-election

October 13, 2010

DALLAS – Today Gov. Perry received the endorsement of Dallas Mayor Tom Leppert for the November 2010 general election.

“Gov. Perry’s dedicated leadership has helped the city of Dallas expand its economy, improve its environment and enhance our education,” said Dallas Mayor Tom Leppert. “Our city continues to prosper in every aspect, thanks in part to the unwavering efforts put forth by Gov. Perry. I am proud to announce my endorsement of Gov. Perry for the general election.”

Since taking office in 2007, Mayor Leppert has aggressively pursued policies that have dramatically improved the quality of life in Dallas. In the areas of public safety, economic development, education and the environment, Dallas has emerged as a focal point in the nation.

The Dallas economy has experienced steady growth with over 50 companies having moved to Downtown Dallas, and the opening of the world-renowned AT&T Performing Arts Center. Investors have created new opportunities for the future of second largest city in Texas.

“It is a real honor to receive Mayor Tom Leppert’s endorsement for the general election,” said Gov. Perry. “I’ve known Mayor Leppert for many years and I’ve witnessed the positive results the city of Dallas has achieved. From lowering the crime rate by double digits to the expansion of its economy and education, this city has continued to be a hub where businesses can create jobs and families can have a good quality of life. Having a common vision and shared values, Mayor Leppert has proven to be a man of integrity and principle, and I will continue to work closely with him so that together we can keep Texas as the economic leader in the nation.”

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The Conservative Hispanic Society, RNHA and Amigos de Patriotas Endorse Gov. Perry for Re-election

October 13, 2010

DALLAS – Today Gov. Perry received the endorsement of the Conservative Hispanic Society, Republican National Hispanic Assembly (RHNA) and Amigos de Patriotas for the general election this November.

“I am deeply honored to have the endorsement of the Conservative Hispanic Society, Republican National Hispanic Assembly and Amigos de Patriotas,” said Gov. Perry. “Your support sends a strong message to the people of Texas, who are proud of our state and its strength in these tough economic times. Texas continues to be the envy of the nation as we lead in job creation, Fortune 1000 companies and exports.”

“It gives us great joy to endorse Gov. Perry in this year’s general election,” said Steve Navarre, president of the Conservative Hispanic Society. “I can truly say that Gov. Perry has proven time and again that conservative values and fiscal responsibility are his top priorities. He continues to show his strong support for the Hispanic community though his appointments and the policies he champions that keep this state strong through improving education and jobs growth. We are living in a state with the strongest economy in the nation because of Gov. Perry’s tireless efforts in keeping our state strong for all Texans.”

The Conservative Hispanic Society was formed in September 2009 and exists to preserve and protect traditional conservative Hispanic values through community involvement, advancement of Hispanic-owned businesses and promotion of conservative policies at the local, state and federal levels.

“For his consistent and unwavering commitment to the good men and women of the Hispanic community in the great state of Texas, the Texas Chapter of the Republican National Hispanic Assembly enthusiastically and without reservation endorses the Honorable Rick Perry for Governor of Texas,” said Jason Villalba, chairman of the Dallas Chapter of the Republican National Hispanic Assembly. “Gov. Perry has been a friend to Texas Latinos and a champion of the causes and issues that are most important to the Hispanic community. He has shown remarkable strength of character in the face of political adversity and has exhibited a steely resolve when dealing with tough issues such as border security, homeland security and economic security.”

The RNHA aims to build a membership organization to foster the principles of the Republican Party in the Hispanic community, provide Hispanic Americans with a forum to play an influential role in local, state, and national Party activities, increase the number of Hispanic Republican elected officials, and create and maintain a network of Hispanic Republican leaders.

“As Hispanics it is imperative that we vote our values and dispense with the myth that the Democrats own the Hispanic/Latino community,” said co-founder of Amigos de Patriots, Sylvia Guzman. “In the fiscally strong state of Texas, Amigos de Patriots is proud to endorse Rick Perry for governor.”

Amigos de Patriotas is a conservative Hispanic grassroots organization established by Latin-American Women. Its membership believes in a constitutionally limited government, fiscal responsibility, strong national defense, personal responsibility, and strong family values. Its mission is to educate and attract Latinos to its cause and support public policy that is consistent with its core values.

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