Scott McCown: The Exit Interview
Reflecting on his ten years as the executive director of the Center for Public Policy Priorities, a center-left think tank based in Austin, Scott McCown makes the case for why some Texans should be paying higher taxes and explains why Governor Perry’s Texas doesn’t work for everyone.
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This summer, Scott McCown will step down after ten years as executive director of the Center for Public Policy Priorities, a center-left think tank based in Austin. McCown appeared on Texas Monthly’s list of the 25 most powerful people in Texas politics in 2005 and again in 2011. McCown came to CPPP after an influential career as a state judge, during which he presided over all of the state’s school finance cases between 1990 and 2002, and made a name for himself as an advocate for abused and neglected children. He is moving on to become the director of the Children’s Rights Clinic at the University of Texas Law School. We asked McCown to reflect on the last decade in Texas politics and CPPP’s role at the capitol.
Nate Blakeslee: Your tenure at CPPP roughly coincided with Governor Perry’s time in office. Can you give us your take on the Perry years?
Scott McCown: I’m a fifth-generation Texan on both sides of my family tree, and I’ve been all over this state and feel like I have a good understanding of Texas, but I never would’ve forecast that we would’ve been dragged this far to the right–I think to the detriment of the state.
NB: What’s caused it?
SM: It’s really a national trend that’s been particularly intense in Texas. I think historians will have to tell us what caused it. But you start with Proposition 13 in California [the 1978 law that drastically limited the state’s ability to raise taxes], and you just see a deliberate campaign to undermine the public’s trust in government and make the public unwilling to make public investments. This is a pendulum that’s swung throughout our history, beginning with the Articles of Confederation versus the United States Constitution, with Hamilton versus Jefferson, with whether we were gonna invest public money in canals and opening the West. In Texas, the arc of that pendulum is much more narrow: it never swung as far toward the public side as it did nationally, and it swung much further to the individualist side than nationally, and we’ve lived in a period where that’s been intensified. I think that one factor in Texas has been the changing demographics. You have an aging Anglo population that I think is very challenged, and to some extent threatened, by an emerging Hispanic majority, and how you manage that change has been one of the issues.
NB: In 1999, the Texas legislature dramatically expanded state health insurance for low-income kids. Fast forward to the 2013 legislative session, where Obama’s plan to expand Medicaid is considered beyond the pale in Texas. How did we get from there to here in such a short period of time?
SM: It’s important to understand that this strain of “everybody’s on their own” runs very deep in Texas history. Our state constitution, for example, has a limit on how much we can spend on aid to dependent children. I mean, think about that: We were so frightened by aid to dependent children that we put a constitutional limit as to what percentage of the budget could go to it. There’s just been this kind of unwillingness to see the public’s role in helping people and to have a sense that we’re all in this together. You know, the problems I have in life are circumstances, and the problems you have in life are because you lack character [laughs].
NB: You are a fifth-generation Texan yourself. Why do you feel the way you do about what the government’s proper role should be?
SM: Actually, it’s Methodism. There are a lot of serious historians who credit John Wesley with averting an English revolution because he focused society’s attention on the needs of the poor and the working class in England. And Methodism has a social gospel that’s coming out of a Christian faith that understands that we’re all in this together. You can’t have the kind of income inequality and create the sort of underclass that we’re creating and live in a stable, prosperous democracy. You can’t do that. These trends have to be reversed.
NB: Your organization has grown in size and influence at a time when the state’s main conservative think tank, the Texas Public Policy Foundation, has also flourished. What was it like doing battle with them for ten years?
SM: Well, we’re both tax-exempt organizations engaged in public education and we both seek funding from the public. And I think if you’re a philanthropist and you’ve made a lot of money and you give to TPPF to keep your taxes low [laughs], that’s an easy sell. Whereas if you’re a philanthropist and you’ve made a lot of money and CPPP asks you for an investment to educate the public about how we need higher taxes, that’s a tougher sell. So I would say if you’re picking a job, they have the easier job.
We do have differing perspectives, and what we try to focus Texans on is how you build a strong economy for everybody and how you move the state forward economically. We really work hard to ground our work in rigorous analysis and data, and I think we’ve established our credibility, so that even those with a different perspective respect our work. So I feel good about where we are.
What’s frustrated me about TPPF is that assertions they have made have been proven to be demonstrably wrong by organizations like Politifact, and yet they continue to say the same things over and over. But we have different perspectives, and other people will have to judge.
NB: Let’s talk about Texas’s tax structure: What should we be doing differently long-term?
SM: We’ve got a serious problem where our economy is growing while our tax base is shrinking, and that’s because we rely mostly on a sales tax on goods. When I started this job over ten years ago, it was with a campaign to get Texas to adopt a modest income tax, and now ten years later across the country, we’re fighting to keep income taxes in places like Kansas. That battle’s shifted from expanding in those few places that didn’t have it to actually defending it in the vast majority of states because of the current anti-tax fervor. In Texas you could dramatically reduce property taxes; you could cut the net tax burden to 60 percent of Texas households; and you could, at the same time, solve your education problems and really build a world-class education system with a very low-rate, modest income tax.
But instead the only solution offered is to take the much more regressive sales tax and increase it dramatically to buy down property taxes. So who benefits from that? Well, huge multinational corporations, and rich people in big homes. If you’re in the bottom 20 percent of households by income, Texas has the fifth highest taxes in the United States. We have this huge burden on low-income Texans to pay taxes, while the top 20 percent makes over half of all the income but they don’t pay even half the taxes.
NB: We’ve heard a great deal, especially in the last few years, about how our state’s low-tax, low-benefit, low regulation system has outperformed the rest of the nation. Does the “Texas Model” work?
SM: Well, there’s two things about the Texas Model. First, there’s this kind of arrogant refusal to distinguish what God has done for you and what you’ve done for yourself. So, we’re awash in oil and gas, which is nothing we did–God did that–and it’s powered our economy. We have a coast and one of the biggest ports in the world, Houston. And we’ve got interstate highways that run north and south, east and west. And we’ve got great weather. So it’s really geography and geology. The other piece of it is the arrogance of refusing to look at our very high poverty rate, our very high percentage of low-wage jobs, our top rate of uninsured medically in the country, and say that this is a miracle. I’ll add a third thing: It’s also really a failure of forward vision. I’m certain if you did a little research in the Detroit newspapers from forty or fifty years ago, they would have talked about the Detroit miracle and how brilliant they all were. And look at that economy today. So the question is, What are you going to do to sustain your economy? Between 2000 and 2010, the child population in the United States grew by 2 million kids, and over half of them were in Texas. That’s astounding! And what are we doing to educate those kids and prepare them to really lead our economy? We’re not. I think more than health care, which has always been a struggle for Texas, the disinvestment in public and higher education has been what’s disappointed me.
NB: You said earlier if we switched to a state income tax we could fund a world-class education system, but can we assume that everyone has that goal in Texas, to dramatically improve public schools and universities?
SM: I don’t think that’s even on the agenda. I mean when I retired from the bench to take this job, one of the reasons was that I had really grown tired of hearing the same school finance lawsuit over and over. I had also come to the conclusion that the solution was really to fix the revenue stream. When you don’t have enough money, there’s always going to be a vicious fight where people are going to try to get as much money as they can. If we’ve got a meal that’s generous, everybody shares. If you’ve got a scrap you’re throwing out to the starving masses, it’s a free for all. So that’s what we have, and one of my frustrations in this job has been my inability to ignite any interest in our revenue system among people who desperately depend on it. Even my friends aren’t my allies.
NB: In 2011, the legislature made unprecedented cuts to public education in response to the budget shortfall caused by the recession. Some have argued, however, that the shortfall was caused not just by the recession, but also by the so-called “tax swap” in 2006, when the legislature cut property taxes and boosted business taxes (the new “margins tax”) to compensate. There seems to be two competing narratives for what went wrong with the tax swap: either the legislature was mistaken in its estimates of how much revenue the new tax would bring, or legislators knew they were voting for smaller budgets long term. They were intentionally creating a structural deficit, in other words.
SM: There’s what people actually know and what people publicly say. Those are different. If you go back and look at the press coverage in 2006 you’ll find [Senate finance chairman] Tommy Williams saying that there’s no structural deficit, we’re just gonna cut education spending. We knew, because the fiscal note told us, that we had a roughly $5 billion hole. Now what some people said at the time is that the comptroller was underestimating how great this margins tax would perform and that there would be even more money. But that was nothing but wishful thinking. That was just a cover story. And then of course the hole turned out to be $10 billion. But what we essentially did in 2011, almost dollar for dollar, was cut public education to cover the hole that the comptroller told us we were going to have.
NB: Earlier you mentioned this bumpy transition that we’re already having in a state that is essentially run by aging Anglos, but which is rapidly becoming a very different place populated by young working-class Hispanics.
SM: Working Hispanics who desperately need two things: education and health care–the two things that the current public policy denies them. Over half of the people that would have benefitted from the Medicaid expansion were Hispanic. And of course in our public education and our higher education systems, our needs are largely driven by our Hispanic population. So we have this demographic that has this huge need, which our current public policy assigns a low priority.
I was reading the constitutional debates for our 1876 constitution, where we adopted the current education clause, and the debate at the time was the same one we are essentially facing now: “Why should I pay to educate somebody else’s kids?” And I think what is misunderstood is our inner-connectedness. I pay to have a road to take my neighbor’s crops to market because that helps me. I pay to educate my neighbor’s kids because that helps me. If we want a vibrant economy where there are good jobs for everybody and lots of money flowing, if we want consumers with money to spend, if we want to sell our services, we’ve got to educate people. I’ve made the economic argument first, but the real argument is that you can’t run a democracy if people aren’t educated, which is why the 1876 constitution made that choice. We’ve had that debate, and we shouldn’t be debating it again–but we are. It’s like it has to be revisited periodically over the generations.
NB: We hear a lot about our frontier roots in Texas–that sort of pioneer mentality, in which it is felt that no one is entitled to anything but the fruits of his own labor. Is that why we think differently about a question like this than someone in Connecticut, for example?
SM: But keep in mind that those same pioneers that had that hardy rugged individualist perspective adopted the constitutional premise that the state was going to provide education and that they wanted a university of the first class. If you look over Texas history you see the push and pull on this idea. The debate over farm to market roads was a big deal, but these same rugged individualists decided they wanted to pay for these roads. And a lot of these so-called rugged individualists of today enjoy law degrees that they paid next to nothing for and have made a fortune from, whereas now it costs a fortune to go to law school. When Hispanic voter turnout ticks up about 6 percent, we’re not going to be debating whether or not these kids should be educated. We’re going to be debating how much to spend on them in magnitudes far bigger than we’re talking today.
NB: How did you find yourself reading the 1876 constitutional debate?
SM: I was looking back thinking about school vouchers and wondering what conception our forebears had about public education. They’re online and they are very interesting.
NB: In your mind what do the school reform advocates really want, the people who are pushing vouchers, charter schools, school choice, and the like?
SM: When you live in a cash-strapped system, the goal is to get more than your share because your share wouldn’t be enough. And the people who have fought equity in school finance year after year wanted low taxes and great schools for themselves, and the people who fight for vouchers have that same goal. It’s a way of underfunding your system while taking care of my kids. Let me say there are legitimate frustrations with public education. But the things that people are frustrated about, they won’t fix. A lot of upper class people flee our public schools because of the testing regime that we’ve imposed. They won’t subject their own kids to that, and yet they leave it in place. You know, longer school days and longer school years would be the biggest bang for the buck when it comes to reforms. People talk about good teachers, but they have kind of the [Texas Association of Business lobbyist] Bill Hammond approach of the lash: The beatings will continue until the teachers teach! Instead of what would actually work, which is getting salaries up to $75,000 to $100,000.
NB: If Bill were here, he would point to his longstanding commitment to improving Texas education.
SM: I do not question his sincerity. I think he is 100 percent sincere, and 99 percent misguided. I actually enjoy Bill, in the way you enjoy your curmudgeonly uncle at Thanksgiving. I find him very interesting, but almost everything he’s done in public education is so wrong.
One more thing about education before we move on: our community colleges and our state universities. There’s all this focus in the legislature on funding enrollment growth in public education [i.e. K-12]. They all recognize that not funding enrollment growth is not keeping your commitment to school children. But when it comes to community colleges and higher education, we don’t have that same view. We don’t look at that growing need and say we have to increase our resources to keep up. Everybody recognizes that community colleges are central to building a work force, and yet we’ve been cutting state funding. We’ve also been cutting state funding for state universities and we’ve been cutting access. When we look at how much debt students have to take on, that’s just a huge drag on the economy. And let me connect this up with taxes, because folks don’t realize we have a trillion and a half dollar economy and we are taking a smaller percentage of it for the public sector than we did at the peak in the 1990s. We aren’t talking wants versus needs, we’re talking about critical needs for our economic future, and yet there’s just not a willingness to pay a little more. That’s because we want to take the little more through regressive taxes out of those who can least afford it, instead of taking the little more out of multinational corporations or rich folks who aren’t paying their fair share. But you don’t have anybody in Texas anywhere on the political spectrum talking about that essential problem.
NB: If you look back on the last ten years, what are CPPP’s biggest victories?
SM: We have a $2 million per year budget, and our policy recommendations return many times that amount in help to low-income Texans through better policy and better budgeting. Those are mostly smaller victories that the general public wouldn’t necessarily have in mind: whether you have a guardian assistance program at Child Protective Services, or you get breast cancer treatment covered under Medicaid. Those are the kinds of things we’ve been able to achieve–things of enormous importance but not necessarily big headlines. I think our other contribution is shaping the public debate, keeping the idea in the public debate that we need to make investments. We got a better budget coming out of the great recession than we would have otherwise if there weren’t voices like ours here, but we didn’t get the budget we need. I just think in over ten years of this role of loyal opposition, we’ve had some victories and we’ve mitigated a lot that would have otherwise been intolerable. But I think our most important role has been in keeping this notion about investing in Texas’s future central to the debate. If we weren’t here providing that analysis and emphasis, I don’t know that it would much be in the debate at all.