Should We Envy Texas?
Ross Douthat has a strange column today arguing that Texas -- yes, Texas -- represents the sort of "model" economy that Barack Obama promised but can't quite seem to achieve. "The president wants to govern America like a blue state," writes Douthat. "But for that to work, he’ll need the nation’s economy to start performing more like Texas."
There are two problems with this column. The first is that it's wrong. The second is that it's misleading.
Let's start with the wrong. Red states are not, as Ross implies, obviously outperforming blue states. On June 2nd, the Bureau of Economic Analysis released this map showing the 2007-2008 changes in GDP across the states. It doesn't look a whole lot like the electoral map:
The BEA separates the states into five quintiles. The top performers -- that is to say, the 10 states (11, as the District is included) exhibiting the most GDP growth between 2007 and 2008 -- are Washington, Wyoming, North Dakota, South Dakota, D.C., West Virginia, Iowa, Kansas, Oklahoma, New Mexico, and Colorado. Five states that went for Obama, six that went for McCain.
Texas, you may notice, doesn't even appear on that list. It's in the second quintile of growers. Along with New York, Vermont, Massachusetts, New Hampshire, Minnesota, Mississippi, Montana, Utah, and Oregon. Six states that went for Obama. Four that went for McCain. And to put this really clearly, the most recent BEA data show that Texas's per-capita GDP has shrunk by $11 since 2007. In Massachusetts, it's grown by $700. Compare that to Douthat's contention that Obama is "pushing a blue-state agenda during a recession that’s exposed some of the blue-state model’s weaknesses, and some of the red-state model’s strengths."
But let's talk about Texas for a second. "The Lone Star kept growing well after the country had dipped into recession," writes Douthat. "Its unemployment rate and foreclosure rate are both well below the national average. It’s one of only six states that didn’t run budget deficits in 2009." Texas isn't alone in any of that, really. About 24 states have unemployment and foreclosure rates beneath the national average. Not all of them are governed by Republicans or voted for McCain. Texas's balanced budget is a more interesting phenomenon, however. Douthat doesn't say why Texas managed to keep its books so clean. But I'd bet it has something to do with these numbers:
Compared with, well, most everyone else, Texas has a lot of uninsured people and a lot of people beneath the poverty line. Fully 26.6 percent of Texas's kids, for instance, don't have health-care coverage. That's in part because Texas is pretty poor, with a lot of immigrants. But it's also in part because Texas has a very spare social safety net. Which makes it, in turn, easier for Texas to balance its budgets in recessions. A state like California sees its social services spending shoot up in a recession, because the programs are relatively generous and more people need them during an economic downturn. A state like Texas also sees a rise, but less so, because the programs are less generous and cover fewer people.
Is that the whole story behind Texas's balanced budget? Almost certainly not. But it's probably part of it. And it does point to the difficulties of naming a state where 24 percent of the residents are uninsured and 29 percent of the children live in poverty as a "model" for the nation. Compare that with Massachusetts, which is seeing more per-capita GDP growth and far fewer residents either in poverty or without health insurance, though it does have a slightly higher unemployment rate. It's not obvious to me that the archetypal red state bests the archetypal blue state in that comparison.
August 3, 2009; 2:23 PM ET
Categories: Economic Policy
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