The Texas Model:How to Defend It and Expand It

Brooke RollinsPresident and CEO

Texas Public Policy Foundationfor the

Texas Federation of Republican WomenApril 16, 2015

The Texas Model

Liberty = Jobs = Prosperity

It Starts with Liberty

• Government’s true purpose: secure liberty– That to secure these rights (liberty),

Governments are instituted among Men…Declaration of Independence, July 4, 1776

– When a government has ceased to protect the lives, liberty and property of the people… (it) becomes an instrument in the hands of evil rulers for their oppression.

Texas Declaration of Independence, March 2, 1836

Views of Liberty

• Today’s conservatives see liberty, rightly understood, as highest purpose of government

• Liberals see it differently—that you can’t enjoy liberty if you are hungry and need shelter—so, it’s necessary to take from some and give to others– Franklin Roosevelt called this the “Second Bill of

Rights” in 1944 for “equality in the pursuit of happiness”

Measuring Liberty Today

• Modern governments, even those based on a popular vote, can infringe on liberty many ways:– High taxation; confusing tax code– Complex, burdensome regulations drafted

and maintained by an unelected bureaucracy– Out of control civil justice systems with

uncertain outcomes

How Does Texas Stack Up?—Taxes

• Texas ranks 47th for its state and local tax burden as a share of income

• 10th-best business tax climate • Comparing Texas to its largest peer—if

California were to abolish either its income tax or its sales tax, it would still tax more of its share of income than does Texas!

• California taxes 52% more as a share of income than Texas

How Does Texas Stack Up?—Regulations

• Texas an A+ for small business regulations (Survey from Kauffman Foundation think tank & Thumbtack, a website that matches customers to businesses)

• 33% of low-income occupations require a state license in Texas vs. 61% in California

• Among all North America, Texas is the highest-rated state and ties for 3rd in economic freedom with British Columbia and Newfoundland (Fraser Institute)

How Does Texas Stack Up—Lawsuits

• Texas has 36th-best lawsuit climate, very close to national average (according to U.S. Chamber of Commerce, 2012)– In 2002, Texas was 46th—so, big improvement

• 18th-best tort liability ranking in 2010 (Pacific Research Institute)

• 6th-best medical tort ranking in 2010• Texas’ loser pays reform, passed in 2011,

should improve these rankings

Liberty is its Own Reward, But, Does it Foster Prosperity? Yes!

26%22%

15%

6% 5%8%

52%

34%

18%

23%

8%6%

0%

10%

20%

30%

40%

50%

60%

SINCE 2000 SINCE 2005 SINCE 2010

TEXAS JOBSREST OF U.S. JOBSTEXAS ECONOMYREST OF U.S. ECONOMY

+325% +366%

+80%

+126%

+316%

+179%

MORE JOBS MORE

JOBSMORE JOBS

BIGGERECONOMY

BIGGERECONOMY

BIGGERECONOMY

(JOBS THROUGH FEB. 2015; REAL GDP PRIVATE INDUSTRY THROUGH 2013)

But All that Lone Star Success Generates Attacks from the Left

• “It’s all about the oil!” “Lowest percentage of high school graduates!” “Low SAT scores!” “Low wages!” “High poverty!” “Highest percentage of uninsured!”

There’s a reason these claims come mainly from the political Left—the Texas model must

be shown as unworkable since Texas governs the opposite of the Left’s ideal

“It’s All About the Oil!” Wrong!• Oil & gas extraction today is less than half

as important as it was to Texas in 1980

25%

10%8%

10%

0%

5%

10%

15%

20%

25%

30%

1980 1990 2000 2012

OIL & GAS EXTRACTION AS A SHARE OF THE PRIVATE TEXAS ECONOMY

• Texas passed California in tech exports in 2012!

“Fewest High School Graduates”

• Texas critics say the Lone Star State has the lowest percentage of adults with a high school degree or better (2009 Census data)

• 2014 data show Arizona, then Texas, then California are at the bottom, but this measures adult education levels and includes immigrants

• As for Texas students, the U.S. Department of Education said Texas was tied for the 2nd highest 4-year high school graduation rate in 2012, 88%

“Texas has Low SAT Scores”• In 2014, Texas had the 5th-lowest average

SAT scores among its seniors• But, Texas’ 62% of Texas seniors took the

test vs. an average of 41% among states– The higher percentage of students who take

the test, the lower the average score

R² = 0.8313

1300

1500

1700

1900

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

SAT TOTAL SCORE

SAT PARTICIPATION RATE

TEXAS

HIGH COEFFICIENT OF DETERMINATION, SHOWING STRONG RELATIONSHIP BETWEEN TEST SCORES AND PARTICIPATION RATES

Mandatory Nationwide Standardized Tests Tell a Different Story

• The National Assessment of Educational Progress (NAEP) is a better gauge of academic achievement

• Among the 5 most heavily populated states, Texas had the best overall scores in math, reading and science for 4th and 8th graders

• Texas scored tops in 9 of 24 categories (4th & 8th grade, math, reading, and science, white, black, and Hispanic) and last in none (California was 1st in one and last in 12)

“All Those Texas Jobs? Nothing but Minimum Wage!”

• Texas wasn’t first in the percentage of minimum wage workers as a share of hourly earners in 2013, but it was close (Idaho, Tennessee, Arkansas, and Alabama had more)

• But, what does this measure? Wages are earned to buy stuff and Texas was the 15th-least expensive state in which to live in 2014 with an index of 92.8 (U.S.=100)

In Past 15 Years, Texas Created More “Good” Jobs Than Rest of U.S.

NOTES: Calculations include workers over age 15 with positive wages and exclude the self-employed. Wage quartiles constructed based on U.S. 2000 wage distribution. SOURCE: Federal Reserve Bank of Dallas figures based on Current Population Survey.

Lowest wage quartile

Lower-middle wage quartile

Upper-middle wage quartile

Highest wage quartile

26.3%

14.7%

33.7%

46.2%

11.3%

-0.4%

2.5%

14.0%

Texas U.S. minus Texas2000 TO 2014 JOB GROWTH BY WAGE QUARTILE

The Cost of Living Matters

• Easier zoning rules and commonsense regulations help keep Texas housing and energy affordable

• Example: The U.S. Bureau of Economic Analysis says Texas’ 2012 per capita income was $41,471 vs. $44,980 for California but, adjusting for regional costs reverses this with Texas Real Per Capita Income of $44,503 vs. $41,469 in California

“What About Poverty in Texas?”

• The official poverty measure does NOT count state cost of living differences nor the value of all government benefits – Does Brooklyn have the same costs as

Lubbock? No!• A new, more comprehensive measure of

poverty, the Supplemental Poverty Measure, pegs Texas’ poverty rate at 15.9%, the same as the national average!

“Texas Has the Highest Percentage of People without Healthcare!”

• This claim is based on health insurance coverage, not healthcare services and counts people signed up for Medicaid as having insurance– But, people here illegally cannot legally use Medicaid

• The federal Medicaid system is broken, with many states offering such low reimbursements that doctors refuse to participate—a Medicaid “insurance” card isn’t worth much doctors don’t accept them

• Further, Texas spends billions every year on local health services to care for those without insurance

How Do We Build on the Texas Model?• How do we keep Texas from becoming

California?• Foster self-reliance & economic strength by:

– Reforming public education: school choice– Reducing taxes and restraining government

growth at both the state and local levels– Blunt efforts by government unions to expand in

Texas– Reduce barriers to employment, whether

occupational licensing or post-incarceration

“Texas has yet to learn submission to any oppression, come from what source it may.”Sam Houston

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