Publisher’s Note

Is Rick Perry the new Herbert Hoover?

Is Rick Perry the Next herbert Hoover?

Herbert Hoover sank the GOP for two generations. If Rick Perry doesn’t act fast, he may do to Texas what Hoover did to the nation.

IN HIS FIRST FULL TERM, RICK PERRY MAY accomplish something nobody dreamed a Republican governor could do. He may drive white suburban voters into the open arms of the Democratic Party.

Political scientists call a moment of high crisis a “party-changing event.” Politicians call it being hit in the face with a 2-by-4. After a legislative session in which the governor has resolutely refused to act, the Republican Party is likely to find the 2-by-4 swinging in its direction.

I don’t know Rick Perry, but his detractors say he is one taco short of a combo platter. Of course, that doesn’t explain why he’s the governor and they’re not. As far as I can tell, there is little correlation between intelligence and success in politics. History’s floor is littered with the failures of smart people.

Herbert Hoover, for example, may have been the smartest president we ever had. But after the stock market crashed in 1929, he didn’t see what was happening. By the time he did, it was too late.

Now, for the first time since Reconstruction, the Republicans are in charge in Austin. They have done some good with their majority. They are committed to repealing Robin Hood, an egregious bit of socialism that levels public education to the lowest common denominator. They have put reasonable brakes on the emotionally charged decision to have an abortion. They will probably pass tort reform, and they may be able to cap malpractice awards. If they’ve also mixed in a little outright pandering, such as mandating a minute of silence in public schools, I don’t mind. I like being pandered to.

But so far nobody but Lt. Gov. David Dewhurst has shown any intelligent leadership on the one issue that could mean success or failure for this state for the next decade and beyond. I’m talking about money—raising it and spending it.

Texas has always taken pride in its low taxes. When the federal tax rate was 70 to 80 percent of personal income, our low tax rate was a major attraction to companies and entrepreneurs. People flocked to Texas to escape confiscatory tax rates and to make their fortunes.

But that was then. This is now. The federal tax rate, even after Clinton, is 35 to 40 percent. Companies and entrepreneurs now ask what services a state can deliver. California is the eighth highest taxed state in the Union, but that didn’t stop Silicon Valley from exploding with entrepreneurial fervor. Liberal, highly-taxed Massachusetts and New York weren’t far behind. It’s no coincidence that these states contain some of the best universities in America.

Among the four major states, Texas still ranks last in taxation: New York is second (after Maine), California is eighth, Florida is 44th, and Texas is 46th.

Here’s what the four major states’ deficits for 2003 look like: California, $34.6 billion; New York, $12 billion; Texas, $12 billion (at last count); and Florida, $2 billion. New York and California’s high taxes may have caused their deficits. Low taxes caused ours.

All three major states look better than Texas when compared on “fiscal capacity,” the ability to raise revenues from their existing economic base. With 100 as the U.S. state average, California is at 104.7, New York is at 100.8, Florida is at 100.2, but Texas is at 94.6.

Now look at spending needs, again with 100 as the average: California is at 104.4, which means it will overcome its deficit eventually; New York is at 98.3 and Florida is at 96.6, which means they will overcome their deficits easily; but Texas is at 111.1. And that’s spending for current needs and population growth, with not a dime extra for a weakened higher-education system or our public schools.

This is not just bad news; it is terrible news. It means we have a permanent, built-in deficit for the foreseeable future. Meanwhile, the governor merely intones his chant of “no new taxes.” I know a straightjacket when I see it, and Rick Perry seems to have wrapped himself in one. His only option is to call a special session and wait to see if anyone brings a pair of scissors.

Why should I complain? After all, D Magazine pays no state taxes. We get away with that because our parent company is a limited partnership, not a corporation. If we had organized as a corporation, we’d have to pay about $80,000 a year in franchise taxes, so we didn’t. It was as simple—and as patently obvious—as that. It’s a loophole big enough to drive a truck through, and even the governor has meekly suggested that it be closed. But since it mainly protects law firms, my bet is it won’t be.

I once wrote about the lessons of history in a book titled Condemned to Repeat It. I left out the story of Herbert Hoover and the Depression. Until Rick Perry, it never occurred to me that anyone would forget it.


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