Douthat explains that when looking during this crisis we should look to red states, and holds Texas as the exemplar. Texas has weathered the economic crisis much better than blue states he argues, holding up California as the other end.
Normally, I think Douthat actually does say worthwhile things, and he writes a well-reasoned column. However, his facts are wrong.
First, Texas is a major oil producing state. Economies based on energy, while they to saw a downturn, have tended to weather this crisis well. California where the housing bubble burst soon after the tech bubble earlier in the decade burst definitely has those problems. New York of course is the center of the financial industry, and that has caused it some problems. Even Massachusetts, which actually has not seen the worst of it, has taken a hit because of the base of its economy in financial products and health care, though the latter really does cushion some of the blow. Likely if Texas had no oil, it would probably feel a bit more like its southern resource poor neighbors.
Second, there is little correlation between red states that voted for McCain and blue states that voted for Obama and various economic factors. That really does not help us out then in terms of trends. Texas, after all, is not the only low tax state, unregulated state. Others exist, mainly in the South.
Third, Texas does provide fewer services. The result, greater inequality, and quite high rates of poverty. You are more likely to be poor in Texas, and you are less likely to get any help. As the link also shows, Texas also is not the top state in terms of growth. I think such a combination then shows a picture that is less than rosy. Growth is not as hot as the conservatives would like you to think. However, inequality is quite big. If you are poor, do not expect any health care. Work three jobs? You still get no help.
Fourth, Texas for all the talk about its low tax life and the fact it has never seen a budget crisis, did actually see a budget crisis. Yes, it had no income tax. But, it did have property and sales taxes. A couple of years ago, if I remember correctly, there was a gaping hole in the budget, and surprisingly no one wanted to raise taxes. However, this went to education, and so legislators and Governor Rick Perry, who hates taxes and even tried to return federal stimulus money, crafted a plan to . . . raise taxes. Except, it did it by imposing a new tax, a franchise tax. It fit the old maxim of "don't tax you, don't tax me, tax the man behind the tree."
On the franchise tax, many tax policy people kind of liked it, including myself. It was a base broadening effort. However, one should remember that the tax arose because Texas needed revenue, or else it faced dire circumstances. Luckily franchises and certain types of partnerships did not pay tax, so they just asked them to pay their fair share, and thus kept the merchants happy without a sales tax increase. However, the effect was the same, the tax burden in Texas rose. That burden could continue to rise too.
Finally, California does spend significantly more on services. However, it too has a lot of business. As many of the links point out, it has an average tax burden. The fundamental problem of course is that California has a lot of spending that does not go to true programs, but rather weird little siphons as a result of propositions. It is unable to levy property taxes, that would actually help spread the burden out a bit more. While both states have weak governors, Texas's weird legislature actually has a history of moving things quickly. And it does not have the same weird 2/3 rules that California has.
So, what does this say about Texas? Well, I think it says that the idea is at least more complicated than many would like to believe.
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