As Texas Goes... (13 page)

The White House did eventually set a goal of reducing the growth of greenhouse gas emissions by 18 percent by 2012. It’s always hard to get a fix on goals that involve reducing the rate at which something is growing. So
when Bush held a press conference
in 2008 to announce that his initiatives were going great, I did some calculations. If Bush, that well-known fitness buff, had discovered two years into his job that he had gained 40 pounds and resolved to deal with the problem by reducing the rate at which he was gaining weight by 18 percent, he would have weighed 400 pounds in 2012.

When delivering his good news about global warming, Bush also vowed to stop the growth of US emissions entirely by 2025. Setting aside the fact that Bush was only going to be president for nine months of that next seventeen years, and that the president warned that the “wrong way” to accomplish this goal was “to raise taxes, duplicate mandates or demand sudden and drastic emissions cuts,” you were still talking, in my original model, about a 486-pound ex-president.

“The science is actually going the other way”

In the real world, W. was the same size as always when the White House changed hands in 2008. The Bushes returned to a quiet life in Texas and Barack Obama came roaring into Washington promising aggressive action on environmental issues, almost nothing of which made it into law. The White House claimed it had accomplished quite a bit through executive orders, but there is a limit to how much you can do without any congressional help whatsoever.

The surging Tea Party movement helped pressure Senate Republicans into delaying or derailing everything possible, and when the Republicans recaptured the House in 2010, they marched through the agenda that DeLay had once pursued.
The Democratic minority
on the House Energy and Commerce Committee tallied “191 votes against environmental protection” in the first year of Republican control, which would have averaged out to more than one anti-environmental vote per day. The House majority knew that virtually none of their environmental rollbacks had a chance of going anywhere in the still-Democratic Senate. But if you envisioned the environmental legislation that had been set into place since the days of Lyndon Johnson as bowling pins, the House Republicans were very happily knocking them down, just to show they could: weaken the Clean Air Act, weaken the Endangered Species Act, defund and declaw the EPA, and, of course, liberate the cement industry. Also, refuse to acknowledge that the globe is warming. “The science is not settled and the science is actually going the other way,” said Joe Barton, who had, in the wake of the BP apology dustup, been kicked upstairs to Energy Committee Chairman Emeritus.
Texan Ralph Hall
, who had taken over Sherwood Boehlert’s old post as chair of the Science Committee, told the
National Journal
that he was “pretty close” to the Rick Perry theory of climate change as baloney that research scientists were tossing out to qualify for federal funding. “I don’t think we can control what God controls,” Hall added, scientifically.

The environmentalists were stuck in a world where a victorious day was one in which something had been stopped from happening.

“One contrived phony mess”

To judge how badly things were going for the clean-air-clean-water crowd, you just had to look at Texas, where the torch had been passed on to Rick Perry.

One big difference between George W. Bush and his successor as governor was their perceptions of how the nation in general felt about the environment. When Bush began positioning himself to run for national office, he got greener. The man who, as governor of Texas, had once expressed serious doubts about the whole climate change issue announced as a presidential hopeful that after consulting some experts he had decided that yep, global warming was out there. Environmental groups were thrilled when his staff started asking the experts sophisticated questions about methane emissions and black carbon particles and the candidate himself announced he wanted to do something about controlling carbon emissions. It never came to anything, but still it did indicate that Bush felt you needed to at least go through the motions. Perry, who had won his first statewide office by opposing a rule requiring that farm workers be kept out of the fields when they’re being sprayed with pesticides, started out further to the right on environmental issues, and when he began thinking about a national run, he only got more so.

Perry had an ongoing fight with Lisa Jackson, the Obama administration’s Environmental Protection Agency head, over air quality rules. (The EPA, Perry wrote in his campaign book,
Fed Up
, is “
destroying federalism
and individuals’ ability to make their own economic decisions.”) But it was once again on the issue of climate change that Texas really went to war with Washington.

Texas produces the most greenhouse gases in the nation, what with one thing (energy production) and another (energy use). All those cars aren’t just there for decoration. But
Perry didn’t put any stock
in climate change—an aide told the Austin
American-Statesman
that the governor was “not convinced that it’s an issue.” In
Fed Up
, Perry was a little more forthcoming, describing global warming science as “
one contrived phony mess
that is falling apart under its own weight.”

During the George W. Bush presidency, the post-Whitman EPA had announced that it had no authority to regulate carbon dioxide and other greenhouse gas emissions in order to halt climate change. Massachusetts and eleven other states filed suit, and in 2007 the Supreme Court ruled that greenhouse gases counted as pollutants. The states won; the EPA, after a fair bit of foot-dragging, including a totally futile attempt to find some scientific proof that greenhouse gas emissions were harmless, announced its regulatory plans. Texas was the only state that refused to join in the program. Instead, it led its own consortium of states in suing the EPA.

Announcing the action
, Texas attorney general Greg Abbott said the EPA was relying on global warming information that was tainted by “cover-ups and the suppression and destruction of scientific evidence.”
In response, climate scientists
from the state’s major universities published an op-ed in the
Houston Chronicle
pointing out that no climate scientist in the state agreed with the suit’s premise.

“To me, it’s a sign of an extremely weak position, to start attacking the process. And if you read the petition—
I was just amazed
,” said Larry Soward, a former member of the Texas Commission on Environmental Quality who had been appointed by Perry, and who called the governor “a dear friend.”

At this particular point, Soward said, his dear friend was being “short-sighted.”

“Texas is the largest emitter of carbon dioxide in the nation,” he continued. “We’re the—I can’t remember if it’s the eleventh or twelfth or whatever in the world—and nobody can reasonably tell me that if we didn’t reduce our carbon dioxide emissions in the atmosphere that it wouldn’t have a positive effect locally.”

By the end of 2011, Perry took his anti-environmental regulation crusade national, through his much-ballyhooed, though ultimately deeply humiliating, presidential race. Meanwhile, Perry’s national ambitions were having an impact back in Texas, where the state’s Commission on Environmental Quality took a blue pencil to a 200-page scientific study it had commissioned on the deteriorating condition of Galveston Bay, editing out every mention of climate change and sea-level rise. Every scientist involved in the project demanded his or her name be removed.

“
I like to tell people
we live in a state of denial in the state of Texas,” said John Anderson, an oceanographer at Rice University.

PART THREE

THE TEXAS

MODEL

10

The Texas Miracle, Part II

“America’s new land of opportunity”

I
n the depths of America’s post-recession recession, Texas looked like a proverbial jobs oasis. What were they doing right? Non-Texans were unnerved—maybe humbled—by the idea that the state had discovered the secret sauce for fixing the American economy. First they want to secede; now they want to grow all the jobs. What gives?

“
For the last few weeks
, I’ve been unable to get a startling statistic out of my head: Since the recession officially ended [in 2009], Texas has created more than four out of every ten new jobs in America,” wrote Rick Wartzman of Claremont Graduate University’s Drucker Institute in the summer of 2011.

Four out of ten! Or maybe more. “
Since June 2009
, about 48 percent of all the jobs created in America were in Texas. Come add to it,” Perry told Glenn Beck in June of 2011.

“Thank you. I’d love to,” Beck responded. And indeed, after his unceremonious departure from Fox, the loud, emotional, right-wing populist announced he was moving to Dallas. Gone To Texas.

Or even more! “
Approximately 70 percent
of the jobs created in the US from November 2007–8 were in Texas,” announced the governor’s office in 2009, as it reported on a Perry speech crediting “Texas’s low taxes, reasonable regulatory structure and economic development incentives” for this wonderful achievement—which, it turned out, was actually based on statistics from only fourteen other states. “
In fact, if you throw out
just thirteen more inconvenient states, Texas accounted for 100 percent of all new US jobs,” snarked Texans for Public Justice.

Obviously, we are paddling in statistically challenging waters. But whatever the jobs number was, the Texas Miracle seemed impressive. (When good news comes to other states, it’s an uptick. In Texas it’s always a miracle.)

“
There is still
a land of opportunity, friends. It’s called Texas. We’re creating more jobs than any other state in the nation,” said Rick Perry during his last gubernatorial campaign. “Would you rather live in a state like this, or in a state where guys can marry guys?”

Okay, not normally what you would think of as alternate career paths.

OVER THE PAST
decade Texas has replaced New York as the nation’s second largest economy. California, which is still first, has been struggling and Texas, which has spent most of its modern history resentfully sitting in California’s shadow, has been known to gloat. “
As the state of California
continues to support legislation that causes undue burden and taxation on companies doing business in the Los Angeles area, I invite you to consider your future in America’s new land of opportunity, the state of Texas,” Perry recently wrote to companies in the California town of Vernon. (He was attempting to profit from the bad feelings that arose over a bipartisan attempt in Sacramento to deprive Vernon of its status as an independent municipality, for no good reason except Vernon’s enormous political corruption and lack of actual residents.) And in 2006,
when a trade association paid
for a private jet to fly Perry and his family to the Rose Bowl (U. T. was playing!), a gubernatorial spokesman suggested the real reason for the trip was to hold a barbecue during which the governor would persuade California companies to relocate.

Texas has been named the best place to do business by so many publications, it has come to resemble an irritating kid who wins all the awards at graduation and then devotes the valedictorian speech to his secrets for success.

• In
Forbes
, columnist Joel Kotkin put Austin first on his “next big boom town” list, giving the number four slot to San Antonio and number five to Houston.

•
CNBC chose Texas
as the top state for business in 2010, citing the state’s first-place ranking in the categories of overall economy and transportation. Texas came in thirtieth in education and twenty-ninth in quality of life, but you can’t have everything.

• A magazine called
Site Selection
awarded Texas its Governor’s Cup for the most new and expanded corporate facilities in 2010. Sending a shout-out to his fellow governors, Perry said: “It’s a clear challenge to improve the business climate in their states to put pressure on Texas to be more competitive.”

•
Chief Executive
magazine, in a 2011 article naming Texas the best state for business for the seventh consecutive year, deemed it a “Periclean Athens” compared to archrival California.

Perry did love to boast about the companies he’d snatched away from California, although critics claimed he frequently confused “moving to Texas” with “opening a modest-sized branch in Texas.” But sometimes it did seem as if California couldn’t do anything right. In 2011, the
Houston Business Journal
reported that
Andrew Puzder
, the CEO of Carl’s Jr., a fast-food chain that boasts a six-dollar bacon-burger, was in town scouting sites. Carl’s Jr. was headquartered in Carpinteria, California, but the lure of the Lone Star State, Puzder said, was compelling: “People in Houston love their meat.”

Take that, you West Coast vegans.

California’s deepest humiliation came in April of 2011, when a delegation of its state legislators, led by Lieutenant Governor Gavin Newsom, came to Texas claiming they wanted to learn what their state was doing wrong. (Their motivation wasn’t entirely clear, although the desire to drive Governor Jerry Brown crazy must have figured in there somewhere.) The group was organized by Dan Logue, an assemblyman who had put together a similar pilgrimage to booming Nevada two years earlier. Since then, the Nevada economy had tanked so deeply that it had the highest unemployment rate in the country and was in worse shape than California.
However, Logue told
the
Los Angeles Times
that Nevada would come back faster “because it has a business-friendly climate.”

We will stop for a moment to mull how a state with such an estimable attitude toward the free market managed to get in such a hole in the first place.

But about the legislators’ visit to Texas:
The gang was trotted
from one meeting to the next, where the message, as Nolan Hicks of the
Houston Chronicle
described it, was always pretty much the same: “Lowering taxes, handcuffing trial lawyers and a ‘business friendly’ (or lax) regulatory climate were the keys to Texas’s success and could be the keys to boosting the California economy.” At one stop, Governor Perry joined the fun, listening to the speakers sing his state’s praises while he sat, cowboy-style, legs crossed, the boots Liberty and Freedom on display, with his arm around the back of Newsom’s chair.

Perry’s worldview was simple. Texas had lower taxes, less regulation, and more business-friendly incentives like its Enterprise Fund, which offered money to sweeten the deal for firms looking to move in. So it was growing business. And if the rest of the country would follow its lead, they, too, would create lots and lots of jobs all over. And the whole country would be booming. “
As well as Texas
has done in the past and in 2010, we’re not going to be what we can be, or as strong as we can be, unless we have competition from other states,” Perry told
Site Selection
in his victory interview. In other words, Texas was doing the rest of the states a favor. And the governor was dying for the other forty-nine to get in the game and try to snitch Texas jobs, too. Really, nothing would make him happier.

“It started up as a good plan and it
wound up a mess”

It was an early clarion call for what would become a national debate during the presidential election year. Perry might have been gone from the scene, but the Republican argument over how jobs could be created was still built around the Texas model—low taxes, low regulation, special incentives to lure businesses to move in.

There are a couple of ways to look at Perry’s idea for a national competition among the states to see who could develop the most business-appealing environment. Perhaps Texas has the recipe for growing the national economy. Great! On the other hand, maybe job growth in Texas is mainly due to accidents of the state’s location, and the competition is just a way to blackmail other states into bankrupting themselves for no good reason whatsoever except corporate greed.

Of course, the truth could lie somewhere in the middle. That’s always a good bet, but for the moment, I’m going with the blackmail-and-bankrupt scenario.

Tax-wise, the thing businesses love most about Texas is that it has no income tax, and is highly unlikely to have one in the future. As former Lieutenant Governor Bob Bullock once said, you’re more likely to see
a Russian submarine invade Houston
. Supporting a state income tax is considered such political suicide that when Bullock called for one during the Ann Richards administration, word spread that he had thrown political caution to the winds due to a terminal illness. The entire experience was so traumatic that the lieutenant governor, in one of those deeply Texas impulses, expressed his frustration over the lack of an income tax by engineering the passage of a constitutional amendment requiring a voter referendum before an income tax could ever be put into law.

Unless such a referendum passes, an event slightly less likely than that submarine attack, an income tax is officially unconstitutional, right up there with same-sex unions and state officials who don’t believe in God.

For revenue, Texas relies heavily on the sales tax, as regressive a levy as you can invent short of a tax on children. It averages out at more than 8 percent once the local governments get their extra taste. “
When we were faced
with the necessity of passing a tax bill in the legislature, we would talk about this idea and that recommendation and in the end it all came down to the same thing—add a quarter penny to the sales tax,” former Lieutenant Governor Bill Hobby recalled.

So as it turns out, Texas is a low-tax state only for people with lots of income.
A study by the Institute
on Taxation and Economic Policy found that the bottom 20 percent of residents pay more than 12 percent of their income in state and local taxes, while the top 20 percent pay about 3.3 percent.
After the report came out
, the
Dallas Morning News
interviewed a former state House Appropriations Committee chair, Talmadge Heflin, who denounced the study for praising states like New York and Vermont for their more even-handed taxation systems. What Texan would want to be like New York or Vermont? “The data show emphatically that people want to live and do business in states with low overall taxes and no income tax,” Heflin concluded.

Rule One: To join the Texas job-growth derby, begin by making sure poor people pay a disproportionate share of the freight.

On the business side, Texas had long made its money off a complicated levy known as the franchise tax, which fell heavily on some firms while leaving many others untouched. Meanwhile, the localities and school districts got their funds mainly from the property tax, which was also relatively high on average in Texas, and hard on large-space enterprises like manufacturing.
The Council on State Taxation
, an organization representing business taxpayers, estimated that in 2010, Texas ranked nineteenth highest in what it called its “total effective business tax rate,” slightly above the national average.

So, rule two in the economic development sweepstakes is to lowball the taxes you’re actually imposing.
Those pilgrims
from the California state legislature eventually made a stop at the Texas Taxpayers and Research Association, which broke the news that the business tax numbers of the two states were actually pretty similar. They left “kind of in shock,” said Dale Craymer, the association’s president.

In 2006, under the gun to do something about the level of property taxes Texans were paying to fund their schools, the legislature undertook a big, ambitious reform. “They needed to create a business tax that was fair. The franchise tax only taxes one in four,” said Bill Ratliff, the former Republican state senator who was once acting lieutenant governor. The endeavor, he said unhappily, “started up as a good plan and it wound up a mess.”

The franchise tax was out, and something called the margin tax on business profits was in. The Tax Foundation, a conservative Washington think tank that’s generally been a big fan of Texas fiscal policy, denounced the new tax as “
a failed experiment
desperately needing reform” that had already “become notorious for its complexity.” Politicians’ passion for passing exemptions for favored businesses, the Foundation noted, was so fierce that “in 2009 alone, an additional 100 proposals to modify the tax made their way through the Texas state legislature.” But the biggest defect was in the math.
The lawmakers refused
to believe the comptroller when she said the new tax structure would raise around $12.5 billion a year less than they were counting on. Which was exactly what happened.

But nobody’s perfect. And remember, no income tax.

“A smoking gun of bad economic development”

When it comes to job growth policies that businesses really love, there are few more attractive than the idea that states should simply give them a bunch of money to move in. No part of Rick Perry’s vision of a national job-attraction competition sounded more delicious than the idea of a perpetual bidding war.

In Texas, the cash used to bribe—um,
incentivize
—businesses to relocate is called the Enterprise Fund. In recent years it’s been the largest program of its kind in the country, handing out more than $400 million in taxpayer dollars to encourage corporations to create jobs in the state. The Fund is Governor Perry’s particular brainchild, one he protected even in 2011, when the legislature was forced to slash other programs, including public schools, in order to create at least a pretense of having balanced the budget without tax hikes. There is also an Emerging Technology Fund and a special fund for moviemaking which critics say is actually more like a special fund for subsidizing the filming of corporate TV commercials.