Texas Governor Rick Perry has been on a Bernanke-bashing binge this week, demanding on Wednesday that the Federal Reserve "open their books up."
That comment comes after Perry said earlier this week that it would be "treasonous" if Chairman Ben Bernanke used Fed policy to stimulate the economy before the election.
But what books exactly does Perry want opened?
The Federal Reserve already publishes its balance sheet online every Thursday for the entire world to see.
Not only that, it is audited regularly. Every year, an external accounting firm audits the financial statements of the Federal Reserve and all 12 of its regional banks. Last year, that firm was Deloitte and Touche, but PricewaterhouseCoopers and KPMG have also done it over the years.
Those financial statements are also posted online.
"Every aspect of the Fed's financial dealings are wide open -- wide open," Bernanke remarked at the National Press Club in February. "There is no sense in which the Fed has secret financial dealings."
Despite that public information, anti-Fed criticism seems to be the latest craze on the Republican campaign trail. On Tuesday, Rep. Michelle Bachmann criticized the Federal Reserve for not being "subject to transparency."
Those comments echo similar sentiments from Rep. Ron Paul, a renowned Fed critic in his own right, who over the years has repeatedly called for audits of the central bank and even a review of all the gold in Fort Knox. Paul introduced a bill in the House earlier this year, called the "Federal Reserve Transparency Act of 2011.
The Lone Star State is rich in natural resources such as oil and natural gas, so when the rest of the country was struggling with high energy prices at the onset of the recession, Texas companies were turning big profits and, therefore, pumping tax revenue into the state coffers.
These high energy profits helped Texas stave off the brunt of the recession for about six months.
And while the state's economy is growing at twice the national rate, so is its population. Texas grew 20.6 percent from 2000 to 2011, while the country's population only increased by 9.7 percent. With more people comes more purchasing power, which leads to job growth.
Regardless of whether Perry can personally take credit for the jobs created, critics claim the numbers are just smoke and mirrors because the new jobs are primarily low-wage.
"What Texas shows is that a state offering cheap labor and, less important, weak regulation can attract jobs from other states," New York Times columnist Paul Krugman wrote Sunday. "What you need to know is that the Texas miracle is a myth, and more broadly that Texan experience offers no useful lessons on how to restore national full employment."
Texas is tied with Mississippi for having the highest proportion of hourly workers earning minimum wage or less, according to Bureau of Labor Statistics data. Overall, Texans earned about $2,300 less than the national average, according to 2009 Census Bureau data.
These low-paying jobs usually do not come with health insurance, which is part of the reason why Texas has the highest rate of uninsured people in the country. One of every four Texans lives without health insurance.
Depending on which measure is used, the jobs picture in Texas can be painted in radically different ways. On one hand, more Texans are getting a paycheck, on average, than in any other state. But on the other hand, those paychecks are more often from low-wage jobs without insurance in a state that has fewer social benefits than most others.
"People focus on the wage and, yeah, that's important, people need to support their families," said Lisa Givens, a spokeswoman for the Texas Workforce Commission. "But sometimes it's about looking down the road, looking at an area where there are going to be opportunities for me and for my family and for growth.
As expected, Rick Perry, the governor of Texas, has announced that he is running for president. And we already know what his campaign will be about: faith in miracles.
Some of these miracles will involve things that you’re liable to read in the Bible. But if he wins the Republican nomination, his campaign will probably center on a more secular theme: the alleged economic miracle in Texas, which, it’s often asserted, sailed through the Great Recession almost unscathed thanks to conservative economic policies. And Mr. Perry will claim that he can restore prosperity to America by applying the same policies at a national level.
So what you need to know is that the Texas miracle is a myth, and more broadly that Texan experience offers no useful lessons on how to restore national full employment.
It’s true that Texas entered recession a bit later than the rest of America, mainly because the state’s still energy-heavy economy was buoyed by high oil prices through the first half of 2008. Also, Texas was spared the worst of the housing crisis, partly because it turns out to have surprisingly strict regulation of mortgage lending.
Despite all that, however, from mid-2008 onward unemployment soared in Texas, just as it did almost everywhere else.
In June 2011, the Texas unemployment rate was 8.2 percent. That was less than unemployment in collapsed-bubble states like California and Florida, but it was slightly higher than the unemployment rate in New York, and significantly higher than the rate in Massachusetts. By the way, one in four Texans lacks health insurance, the highest proportion in the nation, thanks largely to the state’s small-government approach. Meanwhile, Massachusetts has near-universal coverage thanks to health reform very similar to the “job-killing” Affordable Care Act.
So where does the notion of a Texas miracle come from? Mainly from widespread misunderstanding of the economic effects of population growth.
For this much is true about Texas: It has, for many decades, had much faster population growth than the rest of America — about twice as fast since 1990. Several factors underlie this rapid population growth: a high birth rate, immigration from Mexico, and inward migration of Americans from other states, who are attracted to Texas by its warm weather and low cost of living, low housing costs in particular.
He also has a catchy line on what’s likely to be the critical issue of the campaign: jobs. Texas has weathered the struggling economy particularly well, and he forcefully reminded his audience on Saturday with a vindication of his low-tax, low-spending record in the Lone Star State.
But his strengths are offset by massive liabilities.
On content, most of his speech was over-the-top yet familiar boilerplate about how America is the last hope for the world, how Washington is the enemy, how real Americans solve problems — the last point rendered heavily ironic by the right-wing ideological tenor of his address, which all but ruled out one sure-fire way to solve problems in the capital: reasonable compromise. Candidates for federal office often run against Washington. In a very anti-incumbent election year, this message could work even better than usual. Yet bashing Washington is easy, and it doesn’t substitute for substance on policy. But if Perry tries to move beyond rhetoric, particularly in the general election, he will have to explain some of the far-outside-the-mainstream views he has espoused on things such as Medicare, Social Security and federal power. Even his catchy line on jobs reveals an anti-tax orthodoxy — no more on anyone at any time — that places Perry right of the average GOP voter.
For all his talents on stage, Perry also has a way of letting his mouth get ahead of his brain — or at least one hopes that’s what is happening. Before flirting with running for president, Perry was perhaps best known for speculating about Texan secession from the United States. He implicitly addressed this in his speech on Saturday: “I know I’ve talked a lot about Texas here in the last little bit. I’m a Texan and proud of it. But first and foremost I’m an incredibly proud American.” You can bet the secession incident will come up again, despite his preemptive rebuttal. But Perry’s greatest weakness might end up being the alarming comments he decides not to walk back.
Republicans who think Perry could be the savior they’ve been searching for over the last few months should think carefully about whether this politician can really win a national election that will be decided by the center, not by the Tea Party.
