The Agenda

Further Thoughts on Rick Perry and the Perry Record

I’ve been airing skeptical views of Gov. Rick Perry’s record in this space, and also in my latest column for The Daily, in large part because I think now is the time to bring out the brickbats and be sure that all conservative presidential contenders are battle-tested and ready. But I want to lay out some further thoughts, some modest defenses of Rick Perry, and to sketch out my tentative views on what Perry’s brand of originalism really means. 

(1) Lawrence Scalf, a Texas-based reader, very kindly shared his thoughts on the so-called “tax swap,” responding to the characterization of Perry’s record in the pages of the Texas Observer:

A point of clarification is necessary about something that article says. There is no state property tax in Texas. There has not been one since 1980, when a constitutional amendment prohibited the levy of a state property tax. Therefore it is a misnomer for the Observer to speak of a “tax swap.” The tax in question is actually a “franchise tax.” While it is true that money from the “franchise tax,” to the extent of amounts exceeding the franchise tax collected in FY 2007, is placed into the property tax relief fund, it was not intended to replace property taxes of any kind or to somehow swap them out. It was intended to provide a vehicle whereby the State of Texas replaced direct funding by school districts to equalize school funding across the state with state aid, in order to avoid both rich and poor school districts having to increase property taxes locally in order to meet statutory wealth equalization obligations. I know, that term “wealth equalization” even sounds ridiculous to me. But that was primarily the reason.

The previous system (developed in response to a Texas Supreme Court decision – one of the worst decisions ever made by that court – holding the old system of school financing unconstitutional) worked by mostly forcing property–rich school districts to literally transfer money to property–poorer districts. That law, as I recall, was also ultimately held unconstitutional by the Texas Supreme Court for reasons unrelated to equality of funding. So in 2006, the governor and others came up with the franchise tax idea, because he was out of ideas, period. He wanted to lower school property tax rates (or at least keep them from going out the roof) and no one in this state wanted a state income tax, either.

The reason why this financing scheme isn’t working is because the law has more holes in it than Swiss cheese. There are a huge number of exclusions and exemptions for a variety of businesses; the lobbyists, as with any tax legislation, had their hand in the sausage-making. Politically, the idea was not all that popular to begin with, and Perry and those carrying the water for the bill in the Legislature had to cut a lot of deals, especially to avoid the potential constitutional challenges that would have occurred had the law taxed everybody without exception. But the scheme has worked in one respect – school property tax rates were reduced considerably after 2006, and right now, because of some quirks in school funding in the school district where I live (supposedly because of the state aid the district receives), the maintenance portion of the property tax in the district is being lowered for next fiscal year. Part of the reason why this is possible is because for the coming fiscal biennium, the Legislature tapped the “rainy day fund” to replace a lot of the lost revenue from the franchise tax. What they will do in the 2013 Legislature is anybody’s guess. It won’t be in any position to tap a “rainy day” fund next time.

Keep in mind, the Texas Observer has to be taken somewhat with a grain of salt. I am occasionally amused by the Observer’s perfidy, but they are nothing but Leftist scalawags. Nevertheless, Texas does have a long-term financing problem in all areas of state government, and it is not something that even a healthy economy is going to solve any time soon. This is not necessarily Rick Perry’s fault, but it is a fact that none of the politicians down here have yet found a way to come to grips with.

First, I’m very grateful to Lawrence for his thoughts, which I found informative and impressively lucid. Second, I think he was having a bit of fun at the Observer’s expense. I’m aware of the magazine’s reputation, which is why I was impressed by the fairly measured tone of the article.

Regardless, Lawrence makes a number of important points, perhaps the most pressing of which is this: Perry has had a good amount of time to shape the policy environment in Texas, and the fact that he’s had to course-correct so aggressively should give us pause about his ability to plan for the long-haul. Given the central importance of the next presidential term for America’s long-term fiscal future, this isn’t a trivial matter. 

The post continues below.

(2) Kevin Williamson has written an excellent rebuttal to Paul Krugman’s recent column on the Texas economy, which makes a number of crucial points about the demographic composition of the Texas population. Though Kevin and I have our disagreements, I’m very honored to share a URL with the man.

I was also very impressed by a comprehensive, but balanced and non-cheerleaderish, defense of Perry at the site Pesky Truths. Section 5, in which the author delves into wage and cost of living data, is particularly insightful:


Texas is ranked third among “Best States to make a living.” The ranking is based on anAdjusted Average Income value which considers taxes, housing, and cost of living. Texas’ average is $41,427. Compared to Massachusetts: $38,665, Minnesota: $37,721, and California: $29,772 just to compare a few. This from CBS MoneyWatch, April, 2011. 

And finally, Texas places two metro areas, Houston ($60,634) and Dallas ($59,217) among the top ten metro areas in the nation with the highest real income. Real income is the median household income adjusted by the COL. Compare those figures with a couple of other large metro areas from the bottom ten: New York ($35,370) and Los Angeles ($41,331). The figures are from a June, 2011 analysis by the U.S. News  using latest available (2009) data. 

And what about wages? Texas has seen wages climb faster than the country overall. According to the Bureau of Labor Statistics, the average wage for employees in Texas rose 7.4% between May 2008 and May 2010 (the latest data available). For the nation as a whole, average wages climbed only 5%. This from

So, contrary to the poverty implied by the original criticism, the standard of living in Texas isn’t as bad as the “low paying” statement (if true) would indicate – the accusation is just an another attempt to diminish the job creation achievement, Texas’ standard of living, and by association, Governor Perry. 

The entire post in worth reading. 

(3) I should note that I haven’t been discussing what many Perry’s views about what some call “the constitution-in-exile,” i.e., his stated view that the expansion of federal power from the New Deal era to the present has been largely unconstitutional, and there are a few reasons for that: (a) others are more well-versed in the specific doctrinal questions; (b) as a practical matter, I don’t think Perry’s views on constitutional questions will prove very consequential, as I imagine he would gravitate towards the same kind of judicial appointees as President George W. Bush; (c) my sense is that the nitty-gritty details of the Perry policy record are ultimately a better predictor of the kind of president he’ll be; (d) the interesting thing about Perry’s constitutional remarks is what it says about his affect, and in particular the contrast between the “radicalism” of his rhetoric and what appears to be the pragmatism, or opportunism, that defined his governing style; and (e) I am not entirely unsympathetic to the view that the post-New Deal shift in our constitutional order has had less-than-salutary consequences for American public life, and more specifically for our economic development, yet I have a somewhat different view of what it means for laws to be constitutional or unconstitutional.

Basically, I think that the Supreme Court itself creates a legitimating framework, and we have periodic “foundational” moments when our collective sense of what is and what is not constitutional really does change. Conservatives have been working towards building a consensus around a new constitutional framework, which is in may respects quite different from the constitutional order that prevailed before the New Deal era. There are divides among conservatives, from the subtle split between textualists and originalists, those who emphasize the central importance of the commercial constitution and those who do not, firm believers in libertarian institutional reform and those who place a heavy emphasis on popular sovereignty, etc. My cautious view is that conservatives need to tread lightly in this space, as building a consensus takes time. One essential ingredient of success is that conservatives need to persuade non-conservatives of the virtues of a more strictly limited federal government, which seems to have happened on the margins. Conservatives have made real progress in this domain, particularly with respect to revitalizing the intellectual case for federalism. 

Because of (b), my basic take is that Perry’s constitution talk is mainly relevant insofar as it will be used by his political rivals to discredit him as a presidential contender. If Perry is the Republican presidential nominee, we will all become very familiar with his book Fed Up! Various colorful and at times intemperate remarks, including his recent remarks on the Fed, will be replayed endlessly. Per Herman Cain, we could very well believe that Americans need to learn how to take a joke. I certainly do. But this isn’t going to satisfy twitchy voters who find the idea of a hothead president alarming. 

Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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