Now that Rick Perry has joined the already crowded GOP Presidential candidate field, look for even more examination of the so-called “Texas Miracle.” Paul Krugman is the latest to jump on the bandwagon bashing Perry’s claim to have led the Texas economy to great things through low taxes and lax regulation. Krugman concludes, “that tax cuts are a universal elixir that cures all economic ills is the ultimate zombie idea — one that should have died long ago in the face of the facts, but just keeps shambling along.” And while he is at it, Krugman throws Kansas under the bus too.
The states, Louis Brandeis famously declared, are the laboratories of democracy. In fact, Mr. Brownback himself described his plan as an “experiment” that would demonstrate the truth of his economic doctrine. What it actually did, however, was demonstrate the opposite — and much the same message is coming from other laboratories, from the stumble in Texas to the comeback in California…
Nothing that has happened in the past quartercentury has supported tax-cut mania, yet the doctrine’s hold on the Republican Party is stronger than ever. It would be foolish to expect recent events to make much difference.
Still, the spectacle of the Texas economy coming back to earth, and Kansas sliding over the edge should at the very least make right-wing bombast ring hollow, in the general election if not in the primary. And someday, maybe, even conservatives will once again become willing to look at the facts.
Forbes reports on the importance of Texas oil and gas production to the nation as a whole and begs the question if the so-called Texas miracle would have occurred in any state so fortunate as to have the oil and gas reserves that underlie Texas soil.
“The Texas Miracle” is being built on oil and natural gas. Thanks to hydraulic fracturing (“fracking”) coupled with horizontal drilling, Texas crude oil production has tripled since 2010, and gas output is up 15%. Every day, Texas now produces 3.6 million barrels (b/d) of crude oil and about 22 billion cubic feet (Bcf/day) of natural gas. Texas now accounts for nearly 40% of U.S. crude output, compared to less than 20% in mid-2009, and over 30% of our natural gas. Texas is the source of ~55% of the incremental U.S. oil production since 2008 that has transformed the international market. Texas’s shale oil revolution has been launched by the Eagle Ford play in South Texas and the Permian Basin in West Texas, constituting more than two-thirds of U.S. shale output in April. Texas now yields more oil than Iran or Iraq and more natural gas than any nation except Russia and the U.S. as a whole. About half of all rigs actively exploring for or producing oil in the U.S. sit in Texas.
The importance of the Texan energy juggernaut can only increase. Texas has 11 billion barrels of proven oil reserves, 31% 0f the national total; and 90 Tcf of proven natural gas (a doubling since 2003), 26% of the national total.
Which also begs the question of why we aren’t hearing about the “North Dakota Miracle”? Red loves Texas, but doesn’t like folks (ahem Rick Perry) taking credit for a “miracle” that they had nothing to do with.
Rick Perry may no longer be able to point to the so-called Texas Miracle if he decides to run for President. It turns out that the miracle may have been nothing more than the result of an oil boom that boosted the entire State’s economy and had nothing to do with Perry’s misguided policies. The Wall Street Journal reports that Texas continues to lose jobs in the wake of falling oil prices. JP Morgan Chase economist Michael Feroli had reported in 2014 in that Texas’s economy was in for serious problems based on his analysis of the effect of rapidly declining oil prices. Richard Fisher who was then President of the Dallas Federal Reserve Bank likened Feroli’s report to “bull shit.” But Feroli may be getting the last laugh at Texas’ and Rick Perry’s expense.
Mr. Fisher, who has since retired as Dallas Fed president, argued Texas was no longer tied to the fate of the oil industry. He said the Lone Star State had diversified itself considerably and could withstand the big drop in oil prices and continue to be an engine of growth for the nation.
In a new report, Mr. Feroli was back to say he was right, and Mr. Fisher was wrong. “The only thing dropping in the Texas economy lately is the number of jobs,” he said in a report. The economist said Texas is now seeing the sort of job losses that would normally occur only in a recession.
Mr. Feroli pointed to a report from the Texas Workforce Commission showing the state lost 25,400 jobs in March. He said a proportional loss on the national scale would be if the U.S. lost 304,000 jobs – a recession-like outcome not seen in some time.
Anyone in this state with half a brain (and that would not include most of our politicians) knew that high oil prices were boosting the economy in ways that would not be sustained at say $50 a barrel. You don’t see 20 new hotels on the loop around Victoria during regular times. And you don’t pay $269 a night to stay at a Holiday Inn Express in San Angelo just to eat at the Cork and Pig Tavern. When Schlumberger and Halliburton are laying off tens of thousands of workers, the ripple effects are just beginning to be felt. The Texas Miracle was always a bunch of hooey. Texas leads the nation or is near the top in all the negative categories such as children living in poverty, overall poverty rates, citizens on food stamps, high school dropouts, numbers of uninsured and many other things. Texas Miracle indeed! Rick Perry can go around the nation touting his right wing, anti-consumer, corporate giveaway nonsense all he wants – but nobody is likely to be listening now.