Fri April 18, 2014 12:32 pm By Erica Grieder

Those of you who read Texas Monthly's profile of Richard Fisher last year may remember that this is only state that has almost an entire district of the Federal Reserve System to itself. The 11th District of the Federal Reserve includes a few counties in New Mexico and about twenty parishes in Louisiana, but more than 90% of the district's economic activity is in Texas. The result is that we have unusually good research about the state economy, at a moment when Texas's economic performance has significantly outperformed the nation's. Fisher, as president and CEO of the Dallas Fed, has spent years contrasting the two. On Wednesday he did so again, at a keynote speech at a Texas Public Policy Foundation conference on economic issues--and while he told the audience that Texas has plenty to brag about, he warned that this is no time to be complacent.

As background, Fisher pointed to some good news for the national economy: year-over-year real GDP growth has picked up a bit; the unemployment rate has come down; the inflation rate is hovering between 1 and 1.5%, which is a level that even he, a self-professed hawk on the subject, finds tolerable. (The slides he used are here, as a PDF, if anyone would like more information.) The Texas economy, Fisher said, continues to outperform national averages and national expectations. The state's unemployment rate has been lower than the national average continuously since 2007, even "as the denominator grows"--that is, even as hundreds of thousands of people have moved to Texas. Since the beginning of the year, Texas has added 54,000 jobs, and has seen employment growth in every sector other than manufacturing, which has lost some jobs--although, as Fisher added, the manufacturing sector's output has nonetheless increased.

More pointedly, Fisher observed some ways in which Texas contributes disproportionately to the national economy. This is the nation's biggest exporting state, for example, and Texas's exports have grown 24% since their pre-recession peak, in 2008. US exports have also grown--but if you look at the US exports without including Texas, the growth has been just 2%. And most important, Fisher said, is the fact that Texas is creating jobs in every income quartile: between 2000 and 2012, Texas has seen significant employment growth in every quartile, including roughly 10% in the lower-middle quartile and 31% in the upper-middle. If you look at the United States without including Texas, the picture is comparatively grim and the implications for mobility are troubling: total employment in the lower-middle quartile declined by almost 7%, and in the upper-middle quartile grew by only about 1%. "We are the job-creating center of America, and you should be proud," Fisher said. 

The fact that Texas is creating middle-income jobs is certainly a point of pride for Fisher. They are also a key piece of evidence for an argument he has often advanced in his role as a central banker: that monetary policy is not the constraint in America's underwhelming economic recovery. For years, the Federal Reserve governors have tried to encourage private-sector spending by running a loose monetary policy, meaning that interest rates are low and money is accessible. As Fisher sees it, they have succeeded in the narrow goal--capital markets have an abundance of liquidity--but not in the broader one; the private sector is not showing the activity that advocates of a looser monetary may have anticipated. "You cannot count on the Federal Reserve alone," Fisher said, "and you wouldn't want to." That Texas is an exception proves that monetary policy is not the issue. All states are subject to the same monetary policy. Different results must be the result of things they do differently. 

For all its success, though--as a result of its success, in a way--Texas nonetheless has some long-term challenges. Fisher ended his speech by encouraging more attention to what he described as the biggest of them: water. We don't have enough, and supply is decreasing. Growth in Texas, meanwhile, means that demand is increasing. This is a problem that needs to be addressed, Fisher said, and what's more, its solutions need to be financed. The Rainy Day Fund is not enough: "You have to decide if you're going to do it through taxes or if you're going to borrow." Fisher himself seemed ecumenical about which of those approaches the Texas Legislature might pursue. He observed that investors who  took on very long-term debt during the recession had been shrewd to do so, given that interest rates were so low; they remain low, he added, and are likely to rise at some point in the next 100 years. On the other hand, it is possible that there will be political change in Texas during the same span, meaning that today's legislators might shy away from making decisions that their children will have to pay for, and that their opponents' children may have the authority to implement. The main thing, Fisher said, is that the legislature needs to decide how to handle this issue, and how to finance education, which he cited as Texas's other major long-term challenge. 

If Fisher sounded sanguine, it might have been because he overlooked one of the short-term challenges in Texas: the mania for fiscal conservatism among politicians who don't understand the economy nearly as well as he does. A new report from the conservative American Legislative Exchange Council, for example, ranks Texas 1st for economic performance, but only 13th for economic outlook; the pessimism is because Texas ranks poorly on certain measures of fiscal discipline, and the report has, as a result, fueled conservative calls for the Lege to cut taxes, to reduce spending, and to stop borrowing so much. If you look at their ranking, though (PDF), the picture that emerges is not exactly one of unchecked profligacy. Texas's property taxes, for example, are among the highest in the country. That's because we don't have an income tax. Debt service as a share of tax revenue is another thing that ALEC points to as an ominous sign. Texas's debt service is a result of the tremendous growth of combined state and local debt in Texas, which is an issue that deserves more public attention--but the growth of state and local debt is a predictable consequence of the state's genuinely conservative approach to taxing and spending, and one logical way to tackle it is would be to raise more revenue for infrastructure, rather than kicking the can down the road by borrowing. The fiscal conservatives in the Lege shouldn't worry too much about fiscal liberalism during next year's session. What they should be worried about is fiscal literacy. 

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Wed April 16, 2014 3:38 pm By Erica Grieder

“First of all, I’m compassionate,” said state senator Dan Patrick in his opening remarks at last night’s debate on immigration. “And I’m not tough.” When discussing illegal immigration, he continued, it is important to keep in mind that most unauthorized immigrants are the victims of a broken system that “forces people to come to this country illegally,” a broken system for which Washington politicians should take most of the blame.

It would have been an unremarkable opening, if not for the source. Prior to March 4, when he won 41 percent of the vote in the Republican primary for lieutenant governor, Patrick would have scoffed at anyone who suggested he wasn’t tough on the issue. He was going out of his way to prove that he was tougher than the other candidates in the primary, like Agriculture Commissioner Todd Staples, who had, as a state representative, voted for the Texas DREAM Act in 2001. For months, Patrick was stumping around the state warning about an “illegal invasion”, and promoting the policies he would pursue in order to stop it. His rhetoric on the subject was so consistently extreme that other Republicans have apparently reached out to rein him in. The debate itself had been arranged after San Antonio Mayor Julián Castro rebuked him on Twitter, after which both men agreed to a pistols-at-high-noon showdown.

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Wed April 16, 2014 12:06 pm By Paul Burka

I watched the debate on immigration between Dan Patrick and Julian Castro last night. Erica is also going to write about it today, but in my mind it didn't really settle anything though it did raise a long-lingering issue. During the course of the debate, Patrick said that if legal immigration were expanded and the border was secured, "illegal immigration would stop." The problem with this statement is, as I have pointed out in previous posts, that it is nearly impossible to "secure" the border.

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Fri April 11, 2014 10:41 am By Erica Grieder

“Yes, race still colors our debates,” said President Barack Obama during his keynote speech at the LBJ Library’s Civil Rights Summit yesterday. It is also the case, he said, that the country is still wracked by political division and poverty, and that some government programs have fallen short of their goals; nonetheless, 50 years after Lyndon Johnson signed the landmark Civil Rights Act of 1964, “we have proved that great progress is possible.” And the president ended his speech by promising, like LBJ before him, to use the power of his office to pursue further progress. 

The Civil Rights Act banned discrimination in public accommodations and included a provision against unequal application of voter registration rules; the Voting Rights Act, which Johnson signed the next year, reinforced voting rights by establishing federal oversight of state election rules and outlawing literacy tests, among other things. Both sought to guarantee equal access to political participation for African-Americans (and other racial minorities). In his remarks introducing the president, John Lewis, a leader of the civil rights movement who now represents Georgia in the United States House of Representatives, observed that the laws had thereby enabled the elections of Southern Democrats Jimmy Carter and Bill Clinton as well as Obama, the country’s first African-American president. Clinton made that point too, during his keynote address on Wednesday. The election of a black president, however, was a milestone that many doubted was possible right up until the day America voted him in.  

As president, Obama has not gone out of his way to lead a national discussion about the legacy of racial injustice in America, or about the racism that still exists, although his administration has occasionally taken up issues that disproportionately affect African-Americans and Hispanics, as in the Department of Justice’s efforts against state-level efforts to restrict voting rights (including Texas’s Voter ID law). Yesterday’s speech was in line with that approach. The comment quoted above was about as close as Obama has ever come, at least in public, to addressing an argument that many of his supporters have made—that the political opposition to his domestic agenda is so ferocious that it must be driven by racism, at least in part.

Overall, Obama came across as less contentious than Clinton, for example, who gave a blistering take on recent Republican efforts to shake off the restrictions of the Voting Rights Act while simultaneously pursuing state-level restrictions on voting itself: “We all know what that’s about.” Obama’s polite words about Johnson’s legacy, however, conveyed a couple of pointed arguments.

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Tue April 8, 2014 5:16 pm By Erica Grieder

The first day of the LBJ Presidential Library's Civil Rights Summit offered a thought-provoking contrast between the way advocates are approaching two of the more controversial topics of recent years: gay marriage and immigration reform. 

The first panel posed the question of whether gay marriage is a civil right. It was no surprise that both panelists, lawyers David Boies (center) and Theodore Olson (right), agreed that it is. The two are from different points on the political spectrum--they argued against one another in 2000's Bush v Gore--but they worked together to make the case against Prop 8, the 2008 ballot proposition in California that would have amended the state constitution to bar recognition of same-sex marriages, and they are working together now to overturn a similar measure in Virginia. During the course of the discussion, though, they took a more assertive stance than one might have expected. They offered some comments about the benefits of allowing gay couples to marry, and about the disadvantages that may be experienced by children whose parents are legally unable to marry.

Their overarching message, though, was that marriage is a fundamental right, one that the government has no authority to deprive people of. From a legal perspective, "the other side doesn't have an argument," Boies said. More than thirty federal judges have considered cases related to gay marriage since last June, he said and all of them have ruled in favor of access to marriage. For that matter, he continued, the Supreme Court has struck down several state laws that tried to deny someone the right to marriage on the basis of bad behavior (like child support scofflaws) or impracticality (imprisoned felons). In both cases, Boies noted, the people who supported the state laws had a rational perspective on the situation; the laws were nonetheless unconstitutional. 

Immigration was the issue at hand in the second panel discussion of the day, and my colleague Brian Sweany opened the discussion with a logical question: should immigration be considered a civil rights issue? 

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