Economist Ray Perryman’s warning for Texas Democrats, and Republicans
AUSTIN — It might seem that when it comes to the economy, Texas is like the lucky gambler at the blackjack table who every hand is dealt a card face up and an ace down.
The most recent example came Wednesday when a Texas House committee was looking at what ramifications the state could expect as a result of U.S. sanctions on Russia over its invasion of Ukraine. What members heard was that the related spike in oil prices means more tax revenue for Texas, and as well as more drilling, and drilling means more jobs and more opportunities to export elsewhere.
Were it not for the heartbreaking human suffering endured by the Ukrainian people brought on by Russia’s aggression, it wouldn’t have been much a surprise if the committee members responded, “Keep those cards coming, dealer.”
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But the panel only heard a slice of the story when it comes to some of the forces at play in Texas’ financial health. Ray Perryman, the renowned Texas economist who was among those who presented the rosy scenario regarding the sanctions, kept another card up his sleeve, to further torture the gambler metaphor.
Around the same time Perryman was testifying in Austin, his office in Waco posted a report on the economist’s website that showed unsettling fallout on another front.
The weeklong delays at the Texas-Mexico border brought on by Gov. Greg Abbott’s order that all trucks crossing into the state be stopped and given an extra inspection caused an estimated $10 billion in lost expenditures to Texas, the report said. That translates to a $2.6 billion loss in personal income and drop of more than $4.2 billion in the value of total goods and services in the state.
The figures related to the border shutdown were not part of Perryman’s presentation at the Capitol. But during his testimony, he did describe himself as an “equal-opportunity offender” regarding the partisan ramifications of his data-crunching, which, according to his website, has been used by about “half of the Fortune 100, the 12 largest technology firms in the world (and) 10 U.S. Cabinet Departments.”
Because Mexico is a top trading partner with Texas, any purposeful disruption of cross-border commerce is going to reverberate throughout the economy, Perryman said in his report.
“While border security is certainly an issue that must be addressed, introducing artificial inefficiencies into an important, capacity-constrained element of an already overly stressed national supply chain is a costly option,” he wrote.
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Aside from the scholarly prose, Perryman’s observation pretty much echoes what Abbott’s Democratic critics have said about the policy the governor implemented as part of his border security measures. Abbott has said he won’t hesitate to reimpose them if conditions on the border don’t improve.
But Abbott is not the only one whose policies might threaten the Texas economy’s lucky streak, Perryman warned.
Even though the present Texas oil boom, which began well before Russia’s military adventurism, is powering much of the post-COVID recovery, Democrats appear to be doing all they can to discourage the traditional energy sector, Perryman told the legislative panel.
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He pointed to a report last month by the U.S. Energy Information Administration that showed that even with the current surge in renewables, “petroleum and natural gas (will) remain the most-consumed sources of energy in the United States through 2050.”
“At the same time, they (the Democratic Biden administration) say we’re not going to let you have pipeline permits, we’re going to penalize you for exporting, we’re going to make it very difficult for you to drill,” Perryman said. “So that creates an (unfavorable) investment climate.”
So far, the political pitfalls for the Texas economy that Perryman warned against appear to be comparatively shallow. Plus, it’s election year, when each side plays to its base. So a change of course is probably not in the cards.
John C. Moritz covers Texas government and politics for the USA Today Network in Austin. Contact him at jmoritz@gannett.com and follow him on Twitter @JohnnieMo.
Read More:Economist Ray Perryman’s warning for Texas Democrats, and Republicans