Do We Want the US to Be More Like Texas?


Imagine that you are granted the power to decide the future of the American state, and you are standing at a crossroads before two signs pointing in opposite directions. The first sign says: This way for low taxes, low regulations, low unemployment, and no budget deficit. The second sign says: This way for higher taxes, higher regulations, higher unemployment, and a crippling budget deficit. Which path do you choose?

That's not exactly a perplexing fork in the road. And Ross Douthat explains today in the New York Times why Texas -- which waits at the end of the first path -- could be the blueprint for the future of America, while the sun sets on the Californian ruins that smolder miles past the second sign. But let's dig into this a bit more:

Douthat is right that Texas has weathered the recession well by some important factors. Unemployment is below the national average and the state budget is still running a surplus. That's impressive for a state the size of Texas, but it comes at a cost. 

"Money has to come from somewhere," Douthat writes as he takes California to task for failing to build a tax-paid foundation to support its soaring spending. And he's right: States can only spend the money they raise. And by raising very little money, Texas spends very little money. The results are predictable. Texas ranks near the national bottom in all sorts of social services stats, from percentage of uninsured children to percentage of the population that goes hungry. Here's a quick list of categories in which the state ranks last or second-to-last:

Percentage of population with health insurance Source 50-1
Percentage of high school graduates age 25 and over Source 50-2
[Percentage] of insured low-income children Source 50-3
Per capita spending on state arts agencies Source 49-2
Per capita spending on water quality Source 49-4
Amount of monthly Women, Infants, and Children (WIC) benefits paid Source 49-5

Texas is a model, yes, for loose regulations, a consistent standing as one of the most business friendly states in the country, and a remarkably healthy budget. But it's important to add what Douthat left out: That the untold ingredient of Texas' secret sauce is a draconian approach to social services that, if nationalized, would represent a 180-degree turnaround from the platform elected in November 2008. That's the other side of the destination waiting past the first sign.

But I think we're actually heading down a different path the ones offered in the crossroads above. There is another way to pay for what you spend, and that is, not to spend less, but to pay more. And for better or worse, with health care reform, cap-and-trade and the Bush tax cuts coming up for review, it's likely that we are on that path, which will end with higher taxes for more than just the richest one percent of Americans.
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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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