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Rick Perry and The Texas Way

The governor and possible GOP presidential contender boasts that he’s a true conservative who can also show real results. The truth is messier.


The trade-off: Texas offers businesses low tax rates, light regulation, and not much of a safety net for the poor. Has it worked?(Ben Sklar/Getty Images)

EDITOR'S NOTE: This story appeared in the August 6, 2011 edition of National Journal. Rick Perry is set to announce his presidential bid on Saturday.

Everything is bigger in Texas. And possibly for the next 16 months, so too will the focus be on its decadelong governor, Rick Perry.


The man who succeeded George W. Bush in 2000 has evolved from a nonfactor in the Republican presidential race to a potential front-runner who, if he chooses to run, would be Mitt Romney’s toughest rival for the nomination. Perry still hasn’t decided to jump in, but every speech he gives and every high-level donor meeting he holds suggests that he will become an official White House aspirant.

Friends and foes alike are scrambling to assess Perry’s record as Texas’s chief executive, and there is plenty to review. As the nation’s longest-serving governor, he took office as the dot-com bubble was bursting and a year before the 9/11 terrorist attacks. By the end of the decade, he was overseeing the state during the worst economic crisis in a generation.

Early reviews for Perry, especially among conservative opinion leaders, have been glowing. Columnist George Will was so impressed by the number of jobs created in the state that he coined a new term: “Texas Exceptionalism.” Some national polls of Republicans already show the Texan running second to establishment candidate Romney, the former Massachusetts governor, and he is also popular among tea party activists.


Perry’s record should, in fact, send chills down the spines of his GOP rivals. The governor can boast not only of unparalleled job creation but of a distinctly conservative record, including several high-profile fights to ward off tax increases. In other words, he can argue that he is both a true believer in conservative principles and that he has gotten results. But his tenure also carries blemishes—among them deep inequality in income and some of the poorest educational results in the country—that call his record into question and could sink his chances in a general election.


Texas’s economic success can be summed up in one word: jobs. The Lone Star State has had a solid job-creation record during the past decade, certainly in comparison with the anemic growth in most other parts of the country. It weathered the recession far better than the country as a whole and emerged from the economic downturn as the country’s most vibrant employment hub.

Prerecession, jobs in Texas grew at an exceptional clip. From December 2000 through December 2007, according to the Bureau of Labor Statistics, employment in Texas increased by 10.4 percent, or almost 1 million jobs. That was more than double the nationwide increase of 4.1 percent over the same period.

When the financial crisis hit in 2008 and devastated markets across the United States, Texas held its own. From December 2007 through June 2011, the state actually added about 60,000 jobs, an increase of 0.6 percent. That stability contrasted starkly with what happened in the rest of the country: Those three-and-a-half years saw nearly 7 million positions eliminated nationwide, a 5.3 percent decrease. Other states similar in size to Texas, which has more than 25 million residents, fared worse. California lost over a million jobs, a decline of 7.4 percent. And since the recession officially ended in June 2009, Texas has produced more new jobs than any other state by a wide margin.


For conservatives, there’s a straightforward explanation for the Lone Star State’s surge: low taxes. Mostly because Texas doesn’t levy a state income tax, its tax burden is the fifth-lowest in the country, according to the Washington-based Tax Foundation. And the tax bill for business is much lower in Texas than in the most other states, especially in the large, liberal-leaning states like California and New York.

“When you look at states with major populations as well as geographic size, I think Texas is at the top of the list as far as conservative governance,” said Talmadge Heflin, director of the Center for Fiscal Policy at the conservative Texas Public Policy Foundation in Austin. “People have been able to make investments without fearing the Legislature coming down three years down the road and yanking the rug out from under them.”

Perry routinely crows about luring jobs away from comparatively high-tax states such as California, as he did in July when EA Sports, producer of the top-selling video games Madden NFL and NBA Elite, announced that it would be locating 300 new jobs in Austin. “This isn’t rocket science,” he said. “You keep taxes relatively low. You have a regulatory climate that’s fair and predictable, a legal system that doesn’t allow for over-suing, and you have institutions of higher learning … who allow for these innovative programs to be developed because of the curriculum that they put in the schools.”

Whether Perry has a right to brag or should simply be thankful for his luck is another matter. Texas is rich in oil and natural gas, and his tenure as governor has coincided with a decadelong surge in energy prices. Employment in natural resources in Texas has increased by 63 percent since 2000, the fastest growth of any sector, according to BLS data. It’s also worth noting that the three states with even faster job growth over the past decade—Alaska, North Dakota, and Wyoming—are also big oil-and-gas producers. “Even though Texas is not as dependent on oil and gas as it was say in the 1980s, that is still one of the major drivers of the economy,” said Mine Yucel, a senior economist at the Federal Reserve Bank of Dallas. “That helped keep us afloat.”

This article appears in the August 6, 2011 edition of National Journal Magazine.

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