What's the Matter with Texas?

A populist agenda is needed to recover the economy

By Jim Cullen

(From a speech at the First Unitarian Church of Austin, Oct. 16, 2011)

If it weren’t for the entertainment value, I’d be pleased that Texas Governor Rick Perry is foundering in the Republican presidential race. After all, Governor Perry, who is in an unprecedented fourth term as chief executive of the nation's second-largest state, still might get the Republican nomination for president. If that happens there’s no telling what the voters might be fooled into doing. Just look at how far George W. Bush got.

Sure, you have former governors Jon Huntsman of Utah and Buddy Roemer of Louisiana as voices for sanity among the GOP hopefuls, but there appears to be little demand for sanity among Republican primary voters. Mitt Romney has been forced to renounce most of the good things he did as governor of Massachusetts — particularly the state’s health care plan that was the model for the federal Affordable Care Act. And while Romney is the choice of establishment Republicans and the Wall Street donor class, it is doubtful that the fundamentalist Christians who drive the Tea Party movement will tolerate a Mormon as a nominee.

Rep. Michele Bachmann of Minnesota, the Queen of the Tea Party, had her day in the sun Aug. 13 with her victory in the Ames, Iowa, straw poll, but Rick Perry deliberately eclipsed her moment as he chose that day to announce his own candidacy for the White House. Bachmann has been on the decline ever since.

But Perry had a rough start when reporters got ahold of his Washington-bashing book, Fed Up!, in which he opined last year that Medicare and Social Security are unconstitutional “Ponzi schemes.” He also made off-the-cuff remarks suggesting that Federal Reserve Chairman Ben Bernanke would be engaging in treason if he increased the money supply in an attempt to improve the economy before the election. That loose cannon shot got Wall Street’s attention in a week that the stock market was in free fall — adjusting the money supply is part of Bernanke’s job description, after all — and Karl Rove, who brought Perry into the GOP but has since fallen out with Gov. Goodhair, called Perry “un-Presidential.” But Republican kingmakers are finding that the bench is thin and Perry’s Bernanke bashing may appeal to the teabaggers. Indeed, in September the top four congressional Republican leaders wrote a joint letter to Fed Chairman Bernanke urging him not to engage in any further stimulation of the economy and it became clear even to committed conservatives that their party had taken a turn toward economic sabotage for partisan gain.

Since the bombshell report that Perry's hunting camp in Throckmorton County had an unfortunate racist name and Republicans found that he could barely put two sentences together in the presidential debates, his standing in the polls has dropped. (It makes you think that maybe ducking debates with Democrat Bill White in the last gubernatorial election wasn't such a good idea, after all.) But Perry remains within striking distance of Romney with $17 million in the bank and a lot of Texas politicians have been left in the dust waiting for voters to come to their senses over Rick Perry's qualifications for office.

Despite the talk of a Texas “Economic Miracle,” there is considerable doubt that Perry had much to do with the state’s relatively good health. Almost half of the state’s job growth in the past two years came in education, health care and government sectors. Those same areas took a hit as federal stimulus money ran out and the Legislature cut 8% from state spending. That forced layoffs of thousands of teachers, health professionals and state workers. Indeed, the state’s jobless rate increased to 8.5% in August.

The state’s natural advantages include a thriving energy industry, Gulf ports and proximity to Mexico, as well as a young and rapidly growing population, and the state has long had a reputation as a low-tax, low-service state. As economist James Galbraith, a professor at the Lyndon B. Johnson School of Public Affairs, told the Austin American-Statesman, Governor Perry “has no influence that I’m aware of over geology, the oil price, immigration or capital inflow.”

The state has low tax rates, as the average Texan spends just 7.9% of his income on state and local taxes, compared with 9.8% nationally, according to the Tax Foundation. That 7.9% is up from 7.1% when Perry became governor in 2001. But only five states have lower tax burdens.

Texas has relatively low housing costs, ranking 40th in median home prices. Texas was not hit as hard by the collapse in housing prices as other states where housing prices were inflated by speculators. Texas has stricter regulation of home equity loans. The state limits “cash out” refinancing, where homeowners could take advantage of higher house prices to refinance their homes and pocket the difference. Texas had a populist mistrust of bankers since the days of the Republic. The state did not allow home equity loans until 1997 and then Democrats, in one of their last populist stands before the Republicans took over, insisted on limits that made it harder for bankers to misuse home equity loans. (Perry was agriculture commissioner at the time and was not a leader in the home equity debate.) In Texas, cash-outs and home equity loans cannot total more than 80% of a home’s appraised value and borrowers cannot use the refinance to pay other debts.

Much of the Austin boom was due to the state’s investments in the University of Texas and high-tech research centers in the 1980s that fueled the high-tech boom in the 1990s. But this year the state cut $4 billion from public schools and $1 billion from universities, which could make it harder to find qualified workers in the next decade.

The proportion of adults without a high school diploma is projected to increase from 12% today to 30% in 2040, if current trends continue, the state Comptroller’s office reported in 2008. That report also predicted another 30% of the 2040 labor force will have only a high school diploma and no training for high-tech jobs.

Texans used to be proud that university costs were kept low enough that the children of working-class parents could pursue a college education. In 1970, when Rick Perry attended Texas A&M, the state paid 85% of the cost of running the University of Texas and Texas A&M. Tuition for Texas residents was $50 per semester and fees were $54, for a total of $104 per semester. Since the Republican Legislature deregulated university tuition in 2003, the Legislature has reduced higher education appropriations to cover only about 20% of the universities' budgets. Tuition now costs $4,908 per semester for Texas residents and the total cost for undergraduates, including fees, room and board, is almost $25,000 per year. That puts a college education out of reach for many middle-class high school graduates.

Perry also brags that Texas has generated 37% of the country’s new jobs since 2009, but he is less forthcoming about the 26% of Texas residents who lack health insurance. That ranks Texas dead last among the states. Texas' 26% uninsured compares with a national average of 17% uninsured. Sarah Kliff of WashingtonPost.com noted (Aug. 15) that the 6.3 million uninsured Texans is a population nearly equal to the entire state of Massachusetts.

Texas has a high number of retail and service jobs, as well as a large agricultural sector, and those are industries that are less likely to offer health benefits. The Kaiser Family Foundation reports that 71% of Texas uninsured are part of a family that includes a full-time worker. Put another way, 63% of uninsured, working-age Texans have a job — they just don't have a job that provides insurance to go with it.

Nor has Perry done much to make health insurance more affordable for working Texans. He promoted a 2003 law that caps medical malpractice awards, making it harder for injured patients to recover damages from negligent physicians, because now there is little incentive for lawyers to take malpractice cases. But “tort reform” has not controlled health care costs — since 2003, Texas Medicare reimbursements have actually been rising faster than the rest of the country, Public Citizen reported in December 2009.

And insurance rates are largely unregulated in Texas. The state does not require insurers to sell to anyone who applies for a policy. The insurance company can charge higher rates or refuse to sell policies to older people, women or those with pre-existing conditions.

And Medicaid is relatively limited. The state covers some optional populations — pregnant women and those in long-term care, but otherwise largely sticks with the federally mandated minimums. And Perry would like to do away with those requirements.

Perry is a good-looking guy and a competent speaker, if he can learn to stick to the script. If he can sell himself in Iowa, he could lock up the race next March in the southern primaries regardless of what Mitt Romney does in New Hampshire.

But his Texas record is a target-rich environment. His campaign reminds us of Molly Ivins’ remark in September 2005, writing about George W. Bush but perhaps mindful of his successor, when she wrote, “Next time I tell you someone from Texas should not be president of the United States, please pay attention.”

Many people confuse the demagoguery of politicians such as Perry, former half-term Alaska Gov. Sarah Palin and the Tea Party movement with populism. These faux populists have turned the definition of populism around and it’s time that progressives reclaim the good name of populism.

Since the late 19th century, populists have believed that government should protect working people, small businesses and family farmers and ranchers from predatory corporations. Dick Armey, the former Republican congressional leader, and FreedomWorks, the conservative non-profit organization Armey founded that is funded by business executives such as the Koch Brothers, have tried to turn that populist tradition on its head in organizing the Tea Party movement to protect corporations from government regulation.

The right wing’s attempt to claim the legacy of populism is one of the reasons we called our newspaper The Progressive Populist. When we talked to people about plans for the paper in 1995, many asked why we were calling it “Populist,” which was still widely identified with the late segregationist Alabama Gov. George Wallace and other right-wing politicians.

But Populism is part of the venerable American tradition of rebellion. It dates back to the Farmers Alliance that formed in Lampasas, Texas, in 1877. It was an attempt by farmers to overcome the power of commodity brokers and railroads through collective action. When Democratic and Republican elected officials failed to support the Alliance’s economic agenda, the People’s Party was formed in the 1890s in an attempt to create a national political movement to advance that agenda.

The People’s Party, also known as the Populists, sought to bring together white and black farmers and workers in the South and Midwest and ally them with the Knights of Labor, an early industrial union in the Northeast, to make government a force for economic justice. The original 1892 platform declared, “We believe that the power of government — in other words, of the people — should be expanded ... as rapidly and as far as the good sense of an intelligent people and the teachings of experience shall justify, to the end that oppression, injustice and poverty shall eventually cease in the land.”

In addition to their economic reforms, the Populists sought democratic reforms such as a secret ballot, direct election of senators, the vote for women and initiative and referendum to let the public pass laws when their legislators refused to budge. The Populists also sought a graduated income tax, public ownership of railroads, telegraph and telephone systems, an eight-hour workday and replacement of national banks with a savings bank operated by the Post Office for the benefit of working people.

The Populists achieved political successes in the South and West, and they carried four states (Colorado, Kansas, Idaho and Nebraska) in the 1892 presidential election. The party, often working in fusion with one of the two “major” parties, elected many state officials and members of Congress in the South and West. A coalition of Populists and Republicans swept statewide offices in North Carolina in 1894. But the Populists lost much of their appeal when the Democrats adopted much of their agenda in 1896.

After the Populists were defeated in 1896, Southern Democrats enacted “Jim Crow” laws to disenfranchise blacks and segregate them to prevent future biracial coalitions from forming. Laws were enacted in many states to stop “fusion” campaigns, where two or more political parties support a common candidate. (Fusion remains legal in eight states: Connecticut, Delaware, Idaho, Mississippi, New York, Oregon, South Carolina and Vermont.)

Many of the Populist causes were adopted by Progressives in the early 20th century and the New Deal in the 1930s.

Franklin Roosevelt’s New Deal regulated Wall Street with the Glass-Steagall Act, provided support for family farmers, gave workers the right to organize and provided Social Security for senior citizens, among other accomplishments. It provided the assistance that built the rural electric cooperatives that brought lights to the Hill Country and put dams on the Colorado River to generate electricity for those co-ops as well as to provide flood control and a reliable water supply.

The New Deal was the culmination of progressive populist power in the 1930s. Roosevelt in 1944 even proposed an economic bill of rights that included the right to a job with a living wage; freedom from unfair competition and monopolies; a home; medical care; education; and recreation. But Roosevelt died before he could pursue the economic bill of rights and ever since World War II right-wing corporatists have engaged in a sustained counterattack to repeal the New Deal. They tried to drive a wedge between farmers and labor and between white and black voters. Big Business won the passage of the union-busting Taft Hartley Act, over Harry Truman’s veto, in 1947 and they have been trying to eradicate unions ever since.

But the populist wing survived to promote John Kennedy’s New Frontier and Lyndon Johnson’s Great Society, which won the enactment of civil rights and the War on Poverty in 1964 and federal aid for education as well as voting rights and Medicare in 1965 and establishment of Medicaid to cover low-income Americans in 1966.

Wall Street in 1999 finally achieved repeal of the New Deal’s Glass-Steagall Act, which regulated banks and investment firms. That cleared the way for the trade in exotic financial instruments such as derivatives and credit default swaps for subprime loans that created the financial-industry bubble in the 2000s that busted in 2008.

President Obama’s agenda was diverted by the need to prevent economic collapse, but he alienated his populist base by following the Bush administration’s lead in bailing out Wall Street without demanding concessions from the finance industry. The bailout may have averted a worldwide financial collapse, but that’s little comfort to the more than 9% of the US workforce that remain unemployed and the millions more who are working part-time and are looking for a better job or full-time work.

There are many people who are calling for a third party to represent the Left or the Middle, but last year's debate over the proposals to re-regulate Wall Street showed that there are now three parties in Congress: the populist Democrats who supported strict regulation of the big banks, the corporate Democrats, who protected the interests of the banks but at least supported some financial regulation, and the Republicans, who opposed the entire financial regulation bill.

There were some bipartisan victories, such as the approval of an amendment by independent Vermont Sen. Bernie Sanders to require a first-ever audit of the Federal Reserve’s emergency lending activities. Sanders credited the strong grassroots pressure on senators with turning what he feared would be a bare majority for the measure into unanimous approval.

Unfortunately, there was no such consensus for a proposal by Sens. Sherrod Brown (Democrat from Ohio) and Ted Kaufman (Democrat from Delaware) to break up the nation’s biggest banks by imposing caps on the deposits they can hold and limits on their liabilities. The Senate voted it down, 33-61. On that vote, two Republicans joined 31 Dems against the big bankers. North Dakota Democratic Sen. Byron Dorgan’s amendment to ban “naked credit default swaps,” in which investors buy insurance on bonds that they do not own, was tabled 57-38, with two Republicans joining 36 Dems on the populist side. Rhode Island Democratic Sen. Sheldon Whitehouse’s amendment to restore to the states the right to protect consumers from usurious lenders, failed 35-60, with two Republicans joining 33 Democrats on the populist side. However, none of those Republicans voted to allow the reform bill to proceed to a floor vote.

Another indicator of populist sentiment was the vote on Sen. Dick Durbin's "cramdown" amendment in April 2009, which would have allowed bankruptcy judges to change the terms of mortgages in bankruptcies. The amendment was rejected 45-51, as 12 Democrats voted with the bankers and against drowning homeowners.

So it looks like in the last Congress there were about 20 solid progressive populist votes in the Senate and 25 senators who could be persuaded to vote populist. This year, after three populists left the Senate, it is more like 17 solid progressive populists and possibly another two dozen who can be persuaded.

If Democratic members of Congress can’t take the populist line in reining in Wall Street banks that nearly wrecked the world economy, then we need better Democrats, but there is little recourse in the Republican Party.

The Tea Party movement, whether its members realize it or not, is largely in the service of corporate interests in its campaign against “big government” and health-care reform.

Their hero, Sarah Palin, has embraced the right-wing dogma that big government is bad and that the free market is the best judge. That is the opposite of progressive populism, which believes that the government should protect working people, farmers and small businesses from predatory corporations.

"Occupy Wall Street" and the 99 Percent Movement which is spreading around the country are the populist movements that the Tea Parties claimed to be. And in its third week of confronting the nation’s financial overlords, Occupy Wall Street and the 99 Percent Movement are trying hard not to repeat the mistakes of the Tea Party movement.

Occupy Wall Street and the 99 Percenters are pointedly non-partisan. They were not set up by the Democrats and they are not defending President Obama. But if they get Obama and congressional Democrats to return to the progressive principles of the Democratic Party and defend the accomplishments of the New Deal and the Great Society, that will be a good thing. The Tea Party forced Republicans to choose sides, and that took the GOP hard right to protect corporate interests.

The 99 Percenters can force Democrats to protect the interest of working people, small businesses and family farmers and ranchers. It will take a leap of faith for Democrats to give up the money that Wall Street can shovel to compliant politicians, but even with the threats that corporate-funded PACs can flood the airwaves with attack ads because of the infamous Citizens United decision, the people still get to vote in the election. It is up to the Democrats to prove that they are trying to provide opportunities for those people who are pursuing the American dream.

The American Recovery and Reinvestment Act, enacted in February 2009 to provide an $800 billion stimulus to the economy, was a good start and helped to stabilize the economy, but going forward Democrats need to put people back to work building or rebuilding highways, bridges, schools and other public works. According to the American Society of Civil Engineers, the US needs to spend $2.2 trillion on infrastructure. Democrats also should promote development of high-speed railways and a clean energy industry. President Obama's proposal for a $450 billion jobs act is the minimum Congress should approve, but they should also toughen regulations on Wall Street and help small businesses gain financing from the Small Business Administration if private lenders are not up to the task.

Recovery will be expensive, and this is no time to worry about the debt we’re passing onto our children. Those kids are better off if the government ensures that their parents have a good job with a living wage, health care, an affordable home and the kids have access to quality education through college.


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