A conservative friend recently touted Texas as a great place to live: low taxes, low unemployment, none of the budget problems facing places like California, on a roll. Sounded good. Until I read this.
These are tough times for state governments. Huge deficits loom almost everywhere, from California to New York, from New Jersey to Texas.
Wait — Texas? Wasn’t Texas supposed to be thriving even as the rest of America suffered? Didn’t its governor declare, during his re-election campaign, that “we have billions in surplus”? Yes, it was, and yes, he did. But reality has now intruded, in the form of a deficit expected to run as high as $25 billion over the next two years...
...The only thing that let Gov. Rick Perry get away, temporarily, with claims of a surplus was the fact that Texas enacts budgets only once every two years, and the last budget was put in place before the depth of the economic downturn was clear. Now the next budget must be passed — and Texas may have a $25 billion hole to fill.
And that reality has implications for the nation as a whole. For Texas is where the modern conservative theory of budgeting — the belief that you should never raise taxes under any circumstances, that you can always balance the budget by cutting wasteful spending — has been implemented most completely. If the theory can’t make it there, it can’t make it anywhere.
How bad is the Texas deficit? Comparing budget crises among states is tricky, for technical reasons. Still, data from the Center on Budget and Policy Priorities suggest that the Texas budget gap is worse than New York’s, about as bad as California’s, but not quite up to New Jersey levels.
It reminds me of the much touted (by GW Bush) "Texas Miracle" of public education. Amazing test scores, found to be quite literally fraudulent, as it was discovered that the Houston education supe, whom Bush appointed Education Sec, was booting out struggling kids before they had a chance to take the tests.
The reality is that Social Security, Medicare and Medicaid are where the real money is, and reducing outlays for these programs is very, very hard; not just for political reasons, but because they are highly complex programs and require changes in the law governing eligibility to reduce spending in the long run. Doing so in a way that can’t be gamed by beneficiaries or create massive unfairness is a major challenge.
Congress needs the best possible analysis and research to help it understand the nature of the programs it wants to cut and how to write laws that will achieve its goal. Fortunately, it already has an organization at its disposal called the Congressional Budget Office to do this. Established in 1974, it has 250 of the best budget analysts and economists in Washington and deep institutional knowledge of every facet of government spending. (A parallel organization called the Joint Committee on Taxation does the same thing for tax policy.)