Texas economy not proxy for whole of America’s
By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Texas isn’t a proxy for the broader U.S. economy. Rick Perry, the Lone Star State’s governor, may run for president in 2012. And Texas boasts below-average unemployment and decent growth. But it also has no state income tax, a large energy sector and not too much housing trouble. Washington’s bigger problems may not yield to Texan solutions.
Perry, who has been in charge of the United States’ second-largest state for over a decade, cannot reasonably be called unqualified for the presidency, even though the Texan governorship is fairly weak. But the attempts of his supporters to use his economic record to boost his candidacy are only partially convincing.
The state’s economic record is better than that of the United States as a whole, but only moderately so. Its unemployment rate of 8 percent is more than a percentage point lower than the national average, but has declined only modestly from its peak in March 2010. Growth has also been only a little higher than the national rate.
And Texas started the recent recession with advantages. It had a huge housing and banking crisis in the 1980s, one reason home prices didn’t skyrocket in 2006 as they did in some parts of America. Having avoided a massive bubble, the decline since then has been moderate in Texas. The state’s economy also benefits from its energy sector, spurred along by high commodity prices. The lack of a state income tax — which predates Perry — has also helped economically, particularly as other states have increased taxes during the recession.
That has all made the Texas governor’s fiscal path considerably easier than those of other large states such as Illinois and California, while his economic policies have not produced obvious direct benefits. Perry’s decent record is mostly a product of structural differences and long-standing policies rather than anything he has introduced. Doing no harm is a good start, but the United States needs more than that. If elected, Perry would find the nation’s problems considerably less tractable than he is used to.