​Did you know there’s a state park in Arkansas where you can search for diamonds—real diamonds? And you get to keep what you find. In April, Adam Hardin was visiting Crater of Diamonds State Park and came across a 2.38 carat stone—the largest found so far this year.

Diamonds can be found in the 37-acre plowed field, but naturally, they’re rare. It’s a little like the successes that can be seen in our nearly 60-year-old War on Poverty: valuable, but rare.

Nationally, about $25 trillion (adjusted for inflation) have been spent to combat poverty since 1964 when President Lyndon B. Johnson’s War on Poverty engendered the Great Society. However, the country’s poverty rate was declining before 1964 but remained virtually unchanged since then, suggesting a failure of these redistributionist measures.

But over the years, we’ve learned much. And we know what works in combatting poverty. We also know which key institutions and factors contribute to keeping people in poverty. With good policy—and clearer objectives—we can reverse this trend and truly lift people out of debilitating circumstances that lead to generational poverty.

But first, a little history. The 1920–21 recession was the last major economic downturn in American history that was not met with federal intervention designed to stabilize the economy and mitigate poverty. A decade later, Presidents Herbert Hoover and Franklin Delano Roosevelt presided over the first large-scale and nationwide anti-poverty measures during the 1930s and the Great Depression.

Despite these large-scale interventions, the unemployment rate remained in double digits for the remainder of the 1930s. More people were dependent on new government programs, and the costly economic effects of these and other government actions reduced both productivity and job creation.

A quarter century later, President Lyndon B. Johnson advocated his War on Poverty as part of domestic policy initiatives commonly called the Great Society. But again, poverty relief programs did not substantially accelerate the poverty rate’s reduction—in fact, the rate of decline slowed before essentially stalling.

Why? Because these efforts failed to address the real drivers of poverty—in many instances, they became drivers of poverty themselves.

There are several factors that are strongly linked with continued poverty and an inability to build income and wealth. The most powerful predictor of poverty in general is single motherhood. Another factor is where you live (including all 41 Texas counties within 100 miles of the U.S.-Mexican border, considered “persistently poor”). And age is also a factor in poverty, but its impact varies depending on other group characteristics. Metro areas with a younger Black population have higher poverty rates, while areas with an older Black population have lower poverty rates.

But possibly the most pertinent factor in keeping people trapped in poverty is an incentive not to work or to be more productive. For example, a “benefits cliff” occurs when a safety-net recipient goes back to work, increases their workload, or accepts a higher rate of pay, resulting in increased total earned income—which then triggers a greater loss of payments from government programs.

What works? Work. Employment, in general, drives down poverty.

By connecting people to work, education, or training, enhancing community-based case management, streamlining safety-net programs, and getting resources to those who need it most, we can create more opportunities for people to be self-sufficient—and thereby reduce the number of Americans experiencing poverty—so long as we have the will, perseverance, and right approach.

Finding diamonds in a field of dirt isn’t easy; nor is providing people with a real path out of poverty. But with diligence, and a keen eye, we can see more and more success.

https://www.texaspolicy.com/we-know-what-works-in-the-war-on-poverty/

​Celebrating the Life of Melody Kay Lane -- The Karaoke Princess (12/19/1957-4/27/2022: 64 years old)

​John 8:12 – Jesus said, “I am the light of the world. Whoever follows me will not walk in darkness, but will have the light of life.”

Revelation 12:4 – “He will wipe away every tear from their eyes, and death shall be no more, neither shall there be mourning, nor crying, nor pain anymore, for the former things have passed away.”

Welcome to the stage the Karaoke Princess, Melody Kay Lane. (Read obituary here)

Let me tell you about this wonderful woman, my momma, who overcame many challenges throughout her life. Her overcoming nature shines in her performances and in life no matter the obstacle. It may not always have been perfect, but she overcame it and grew stronger. And this strength was rooted in her passion for her Savior, Jesus Christ, who was her guiding light in every venue and song.

She originally joined life’s stage on December 19, 1957, in Fort Worth, Texas to loving parents, Vandol Lane and Oma Lane (Denny), who were both from Peerless, Texas. As momma told it in her writing and stories, her earliest memories were of living in Houston where her family had moved from ages 2 (1960) to 5 (1965). They then moved back to Haltom City in Fort Worth, where she lived from ages 5 to 16 (1976). 

Momma told stories about how she hated school (I shared that sentiment until college), loved playing with baby dolls and barbies, always had a dog growing up, remembered JFK being shot, recalled a Christmas when Santa brought her a doll and stroller, loved her childhood boyfriend Teddy Ray Coon, sung in front of the mirror with a perfume bottle as a microphone, made up songs and dances with her friends, and overcame the challenges her family faced, especially when her parents divorced when she was 5 years old. 

Her parents’ divorce was something that really rocked her throughout her life because she loved her mom and dad so much but spent most of her childhood seeing her dad just during the summer. She wrote that while she seemed like she was laughing on the outside she was sometimes hurting on the inside. This challenge contributed to her coping through eating excessively, dating many boys, and other ways; but the key thing that kept her going was her Christian faith. She watched her parents and grandparents sing in church and have a devout faith. Momma accepted Jesus as her Savior at an early age.

She grew up relatively poor. She said that her mother, Becky (her middle sister—mom was the baby), and her lived in little houses and usually all shared a room with two beds. But they had plenty to eat and her mom did her best to provide for them. 

Momma went to Westbury Senior High School in Houston, Texas. She lived with her dad then for a while. She was proud to drive her dad’s truck with loud pipes and wide tires, something she told the family about many times. When she was about 16, she quit school and moved out of the house, and started working and living at a hotel in Brookshire, Texas. This is around the time that she met my dad, Harold Ginn. She eventually got her GED when she was 29 years old and started college, which was at the behest of one of her best friends and mentors Mrs. Chris Smith, her husband and her continue to be blessings to our family many decades later. 

Momma went on to work at daycares for many years. She started as a teacher at Christian Care Learning Center, which Mrs. Chris owned and directed. She then moved up the ranks over time, worked hard to get licensed, and eventually was director of daycares, such as Discovery Kingdom, Kinder Care, and other facilities. Her passion for kids was uncanny, as she wanted better for them than what she had growing up and it showed in her work. This love was also shared with Tiffany and me at home. It wasn’t always perfect, as there were two years when I went to live with her mom and Gene near Fort Worth, but we all learned lessons during those years, and she did her best as a single mom, and we turned out okay…I think. HA! 

She married Harold Ginn on August 25, 1979, and had two kids, Tiffany (38) and me (40). She said that she met dad at a place called Big Reds in Monaville, Texas, where she asked him to dance, which dad was a great dancer, and the rest was history. She would visit dad on weekends, and it took about a year to convince him that he loved her. They had many great moments and many not-so-great moments. A great moment was when they were married at the Justice of the Peace in Monaville, Texas. Another major challenge in her life was marrying dad without any sickness and then several years later he started having seizures and would later be diagnosed with epilepsy (he passed from SUDEP in 2011). This hurt her so much. This along with other issues eventually led to them being divorced when I was 5 years old, then they would get remarried a couple of years later, and then divorced again later. Even with these ups and downs, she always loved him and tried to do as much as she could for him over time, even having him live with us off and on. This was a major challenge for her, and I don’t think she ever recovered from it. 

She had me in 1981 when she was 23 and said she would never have kids after me. I guess I was that special. Ha! She did have a huge scare when the doctor told her that I would die before they prayed for me, and I went home after being 9 days old. Then Tiffany was born 22 months later. That must have been another challenge with us being so close together in age. We were her greatest gifts from God, as she was once told that she couldn’t have kids. We have many great memories growing up. The many parties at our house, the go-kart rides behind Dairy Queen, the movie nights, baseball and softball games, Astros games, the wonderful holiday celebrations, and so much more. We have our tough stories, and some of them are very tough, but just like most parents and children, though we didn’t always see eye to eye, we were very close. Her dream was to always be a momma, and while she was challenged by it as a single mom for most of our lives, she persevered. It wasn’t always pretty, but we survived. She is a survivor! She wasn’t happy about happened in her past but tried to do all she could to show us love with all her heart. There’s not a day that she didn’t worry about us, even in recent years when I was ill, she said she wanted to hold me. We kept her going. 

Another thing that kept her going throughout whatever struggles she may have had were her grandkids: Hailey, Jordyn, Masen, Bricen, Cooper, Skylar, and Parker. We were blessed to keep her loving heart going as it passed along through our mothers’ lessons and her smile couldn’t have been wider when we were around. I think we helped rejuvenate her and keep her younger. She said that one of her greatest blessings in life were her grandchildren. I felt her love every time I was around her, and I’m sure each of you did too, know how much you were all loved. 

She also loved her extended family and friends. We had a beautiful celebration of her at Tiffany’s house the Sunday before she passed last Wednesday. She couldn’t walk or say much, but she wanted to go outside to visit with everyone, have Hannah play her a son, visit with her sister Jackie, and hear the stories and laughter of others as they visited her. This is the epitome of what she loved: laughter and a good time. 

Momma had many great friends and loves. Many of you have great memories of her. Keep those memories with you. Though taken too soon, she lived a blessed 64 years in her earthly body, but her spiritual body recently grew wings and flew away to the light of life with her Lord and Savior Jesus Christ. No more suffering. No more stress. No more pain. She now walks those streets of gold in Heaven. May we all follow her lead here on earth with such a devout faith and Jesus in our hearts so we can see her again in her new body full of life. Although she faced battles, she persevered through her faith and left the world a better place. 

Family, friends, and acquaintances, the world lost a beautiful woman, but instead of burying ourselves in sorrow, let’s celebrate her life, her joy, and her beauty. As has been said, beauty is in the eyes of the beholder. The beauty that encompassed momma was far-reaching and multi-faceted. Words signifying her beauty provided by her family and friends that best represent this karaoke princess include:

God-loving, dear friend, wonderful woman, funny, one of a kind, beautiful laugh, caring, kind, mother-to-many, and no doubt many more that each of you could identify.  

She loved her family. Her mom was her best friend. Her dad was her hero. Her sisters weren’t always close until later in life as they had 5 years difference between each of them, which she was the youngest and she liked to bring that up, but they were best friends later in life. Unfortunately, her middle sister, Becky, passed away tomorrow six years ago from ALS, but her oldest sister Jackie McLendon lives in Cedar Park, and sends her best today as her health isn’t doing well. She was here at the celebration of mom’s life two Sundays ago before mom passed away, so she was able to say goodbye. 

During the last year or so, she went downhill quickly from what was originally fatty liver disease but matured into end-stage liver disease, without us knowing until only a few weeks ago. She overcame those challenges, but it wasn’t easy. There were falls, but she was blessed to not get severely hurt. There was memory loss, but fortunately we were able to help her along the way. There was less of the karaoke princess that we knew, but she had the drive to keep going. However, the fatty liver disease that she had been diagnosed with in 2017 after her double-bypass surgery continued to get worse without much medication for it as it hid underneath the other issues she faced, including IBS and anxiety. 

Her tough life growing up, smoking cigarettes since she 16, being overweight for most of her life, drinking too much at times, living with severe depression and anxiety, and a host of other things made her health condition complicated in her later years. Then she started losing weight over the last couple of years but also becoming weaker which is when the falls and other issues started. And then late last year she had ascites in her abdomen that had to be drained a couple of times. She had a fall when she was visiting my family in Round Rock for Christmas that sent her to the emergency room for 8 staples in her head. That hit her and me very hard, but she kept going. Then she fell again at Tiffany’s house. 

That was when things really started going downhill faster. She spent two weeks in a hospital where they found that she had end-stage liver disease, which was a shock to the family. And then they said that she had at most one year to live. We started looking into a liver transplant. She then was transferred to a rehabilitation center to try to gain strength. After her three weeks there, she returned to Tiffany’s house. Five weeks had passed, and mom was weaker than ever, which she couldn’t get out of the bed on her own. During this time, Tiffany, Jordyn, and Margarita, her attendant over the last few years, were true blessings to get mom out of bed and care for her every need. It was soon thereafter when the doctor said that mom wasn’t eligible for a liver transplant, so the end was close. But then after a couple of more weeks, we got hospice involved and they soon said that she had at most two weeks to live. That’s when we decided to have the celebration for her at the house two Sundays ago. And it was only about a week after then that they told us she had at most two weeks before she would die.

But before she died there was something missing. Tiffany and Margarita said that mom kept asking about our family’s newest addition, my baby Parker. They hadn’t met yet. Apparently, this was bothering mom even as she wasn’t there in many ways, her mind was set that she wanted to meet the newborn. On the Tuesday before the Wednesday when she passed, Tiffany asked me if I intended to bring Parker to visit. I wasn’t sure given that she is a newborn who was battling reflux so that was likely to be a tough drive. However, Emily and I knew that this would be important to mom and us, so we decided to do it. I should also note that on Tuesday there was a strange light on the baby monitor moving back and forth with the swing, almost like mom’s spirit was already with Parker. 

So, we decided to head to Houston from Round Rock on Wednesday morning. We made one stop for about an hour because Parker couldn’t keep from crying from the reflux while drinking the bottle. We finally were able to get her to drink the bottle and get to sleep. She slept the rest of the way. We arrived at Tiffany’s house to visit mom at 1 pm. Before we pulled up, mom was crying in bed and visiting with Tiffany, Jordyn, and Margarita. By the time they left her bedside, and we went inside with Parker, mom had passed away. It had to be no more than 5 minutes. I truly believe that her spirit knew that we were there together with the family and that it was time to go to be with the Lord. Or rather, that’s when the Lord decided to take her. And no one was there with her when she took her last breath because even though her earthly body isn’t here anymore, her spirit is always with us, and she is singing and dancing in Heaven!
 
Although we will miss her tremendously and are sad to lose her, this was a beautiful day as her spirit met her latest grandkid on the day she turned three weeks old and mom died with minutes of when Parker was born at 1 pm. This was also two weeks after the day that dad, her long-time love, died eleven years prior. We know that mom is singing hallelujah in Heaven with family members who left too soon in her perfect body without suffering or anxiety.

Thank you for everything, momma. I know you were faced with many challenges throughout your life, but you continued to overcome them by taking each opportunity along the way. It wasn’t always easy and I know your kids made it tough sometimes, too, but your laughter, smile, encouragement, love, and care for others were always on display. Your grandkids loved you so much and you loved them, there’s nothing like that bond. The love for your kids is what you said you wanted to be known for, and it’s so true! No matter the deep hurt that I feel from the loss of this beautiful woman, I know we are blessed to have known such a Godly woman and have all learned lessons from her along the way. Let’s celebrate her life as she is not suffering anymore and is dancing and singing in Heaven. Let’s remember how funny she was and never forget that delicious food and beautiful smile. 

She was a beautiful woman that we should celebrate. She will continue to be with us, here in our hearts. She will be looking down from above continuing to help us steer our path like the lighthouse she has always been. For those saved, we will see her again one day on those streets of gold. Let us honor her by being more faithful, by being followers of Christ, and by loving each other more. By doing these things and passing along her memories and life lessons, momma will live on here on earth as she spreads her wings and flies in Heaven. We love you, momma. I would not be the man I am today without you. Melody Lane was a wonderful granny, mother, daughter, sister, wife, and friend. The many facets of her beauty will live on and in some ways; she will always be our family's heart. I’d like to close with a poem that was recently shared with me:
“A limb has fallen from the family tree.
I keep hearing a voice that says, “Grieve not for me”
Remember the best times, the laughter, the song.
The good life I lived while I was strong.
Continue my heritage, I’m counting on you.
Keep smiling and surely the sun will shine through.
My mind is at ease, my soul is at rest.
Remembering all, how I truly was blessed.
Continue traditions, no matter how small.
Go on with your life, don’t worry about falls.
I miss you all dearly, so keep up your chin.
Until the day comes we’re together again.”

I can’t wait to see you again in Heaven, momma. Thank you for everything. Love you!

Poverty is often misunderstood because most people do not know who qualifies as poor, how much governmental assistance is available to the poor, or what allows people to escape poverty. Understanding this is crucial to provide more opportunities for work-capable people to attain self-sufficiency with a flourishing civil society as a first resort and effective government programs as a last.
 
Key points
• Poverty has long been a public policy concern with roughly $25 trillion (adjusted for inflation) spent on it by governments in the U.S. just since the 1960s’ Great Society in an attempt to help people move out of poverty
• But this sort of primary financial assistance by governments has not substantially mitigated poverty and too often made it worse through dependency on government programs.
• Instead, there should be a more holistic approach to effectively mitigate poverty through work, community, and opportunity to provide people with long-term self-sufficiency.
• Texas and the U.S. can do this with a flourishing civil society and a robust economy as a first resort and effective government programs as a last resort instead of spending more on the current flawed approach.

​The fact that our nation’s unemployment rate is approaching the low rate of 3.5% that was reached just prior to the pandemic should be a cause for celebration. But for a variety of reasons, the official unemployment number is misleading.

The employment situation is not as rosy as it may seem. There is a wide disparity among the states that can be explained by how much economic freedom they allow, including how severely each state shut down its economy due to the COVID-19 pandemic.

Consider that the U.S. remains 1.6 million jobs short of our February 2020 high, just before the pandemic came to our shores. Since then, our population has grown by 3.8 million people but the labor force shrank by 174,000 workers.
The picture diverges for states. As demonstrated in our 2021 study, the states with the worst job recovery also imposed the harshest COVID-19 measures.

For example, two states with the severest lockdowns — California and New York — are also experiencing two of the worst job recoveries, with unemployment rates at least a full percentage point above the national average of 3.6% based on the newly released March 2022 data.

Conversely, Utah and Nebraska, who are among the states with the least severe lockdown policies, are tied with the lowest unemployment rate of 2.0%, well below the national average.

In measuring how states have rebounded, a better metric than the unemployment rate is the recovery in private employment. Only 16 states have recovered all the private jobs lost due to the shutdowns compared to February 2020. But if we account for each state’s pre-pandemic job growth trajectory, our analysis shows that Montana and Utah stand above the rest for exceeding our forecast of their private employment.

Idaho follows closely behind Montana and Utah, and then Wyoming, North Carolina, Mississippi, South Dakota, Arkansas, Maine, and Georgia to round out the top 10 performing states. Except for Maine and North Carolina, each one has a Republican trifecta (GOP controls both chambers of the legislature and the governor’s office).

North Carolina leans Republican, and Maine is the anomaly having a Democrat trifecta.

What about the bottom 10 states in private-sector jobs recovery? They are Hawaii, New York, North Dakota, California, Maryland, Vermont, Minnesota, Oregon, Massachusetts, and Louisiana. Four of those have Democrat trifectas and four lean Democrat. Louisiana, the last state to make the bottom 10, leans Republican.

North Dakota — a Republican trifecta that had one of the least restrictive COVID policies — is a special case due to an unusual economic situation. Its pre-pandemic job growth numbers differed from all other states, and it also relies more heavily on mining and petroleum than any other state. Its petroleum industry went bust in 2014, causing private employment to peak in December 2014 that finally bottomed out in January 2017. Since then, its private job growth has been slow, less than 1% per year.

President Biden’s anti-fossil fuels executive orders, including the cancellation of the Keystone XL Pipeline, have only made matters worse for North Dakota.

Putting this outlier aside, what accounts for this dramatic difference in recoveries between red and blue states? As already indicated, Republican governors were less severe with their lockdown policies.

For another, all Republican governors (with the exception of Louisiana) ended supplemental unemployment payments before they were set to expire last September. These payments contributed to some people receiving more than they would have had they been working. In fact, one study finds that those states that didn’t end these payments early contributed to 3 million fewer people in the labor force.

Underlying the difference is likely the extent of economic freedom in each state. Using the Economic Freedom of North America 2021 report published by the Fraser Institute, which is based on 2019 data, the top 17 states allowing for the most economic freedom either lean Republican or have Republican trifectas. In fact, 14 of them are the trifectas.

Eight of the bottom 10 have Democrat trifectas, with New York leading the pack, followed by California. The other two in the bottom 10 include Vermont that leans Democrat and West Virginia with a Republican trifecta.

The best path to prosperity is a job. Work brings dignity, hope, and purpose to people by allowing them to earn a living, gain skills, and build social capital that endures. Advancing policies that connect people with work, along with reducing barriers for new jobs and opportunities, should be our goal, rather than making a government the first resort for help that disconnects people from what work brings.

The red states are showing the way to achieve this sound policy. Other states should follow while things at the federal level look bleak. But as our founders desired, the system of federalism that breeds a laboratory of competition helps shed light on what works best to let people prosper.

https://www.texaspolicy.com/economically-free-states-are-recovering-rapidly-high-control-states-not-so-much/

​Texans are facing a crisis when it comes to paying for their skyrocketing property taxes, inflated bills, and saving for a rainy day. In fact, many Texans are living with the fear that exorbitant taxes could take their home away or keep them from buying their first home. The Foundation has developed a balanced, practical solution to lower property taxes by eliminating the maintenance and operations (M&O) property taxes while also funding the needs for critical services.

Invited Testimony Before the Texas House Ways & Means Committee

https://www.texaspolicy.com/lower-taxes-better-texas-2/

Texas is a leader in the economic recovery from the severe spring 2020 shutdown recession. Texans have overcome many challenges especially since the state was fully opened in March 2021, without statewide mask, closure, or vaccine mandates since then—as these should be voluntary. The 87th Texas Legislature supported the recovery with the passage of many pro-growth policies like the nation’s strongest state spending limit, but there were missed opportunities like permanent, broad-based property tax relief. Given other states are drastically cutting or eliminating taxes, Texas must make bold reforms so it can remain an economic leader, support more opportunities to prosper, and withstand bad policies from D.C.

https://www.texaspolicy.com/texaseconomy/

​The economic shock from the shutdowns in response to the COVID-19 pandemic were unprecedented. Never had state governors imposed stay-at-home orders that cut people off from their lives and livelihoods. Those costly policies were bad enough, but then came historic increases in deficit spending and money creation.

While these may have been well-intentioned policies early on, their repercussions—amplified by misguided macroeconomic policy since January 2021—continue to plague many Americans. The antidote is pro-growth policies.

There was a vibrant economy on the eve of this shock. In fact, about three quarters of the flows of people into employment were Americans returning to the workforce—the highest on record.

For context, 2.3 million prime-age Americans—people between the ages of 25 and 54—returned to the labor force during Trump, after 1.6 million left during the Obama recovery. This happened with a robust private sector providing many opportunities because the Trump administration focused on removing barriers by getting the Tax Cuts and Jobs Act of 2017 through Congress and providing substantial, sensible deregulation.

We often hear that these tax cuts were “trickle-down economics” or “tax cuts for the rich and big business.” But the change in real (inflation-adjusted) wages was positive across the income spectrum. The bottom 10% of the wage distribution rose by 10% while the top 10% rose half as fast. And real wealth for the bottom 50% increased by 28%, while that of the top 1% increased by just 9%.

The results show those tax cuts weren’t designed for the “rich.”

In 2019, the real median household income hit a record high, and the poverty rate reached a record low. Poverty rates fell to the lowest on record for Blacks and Hispanics, and child poverty fell to 14.4%—a nearly 50-year low. Clearly, Americans were doing well across the board, especially those who had historically been left behind.

These stellar results were from reducing barriers by government in people’s lives—a stark contrast to what happened by state governments during the pandemic and exacerbated thereafter by Biden’s big-government policies.

While there were similar spending bills passed into law during both administrations, it’s comparing apples and oranges.

Trump supported congressional efforts in March and April 2020 when huge swaths of the economy were shut down, 22 million Americans were laid off, and 70% of the economy faced collapse. In contrast, Biden substantially increased regulations immediately and passed a nearly $2 trillion spending bill in March 2021—an amount equal to approximately 10% of the U.S. economy, at a moment when the U.S. economy was already 10 months into recovery.

Another difference was that Trump introduced sunsets for emergency pandemic provisions so that they would expire. But Biden continued and expanded many of them, increasing dependency on government.

Through March 2022, employment is back up 20.4 million but remains 1.6 million below the peak in February 2020. While Biden touts the most jobs gained in one year in 2021, more jobs were recovered in just the two months of May and June 2020 than in all 12 months of 2021, and nearly two-thirds of this jobs recovery was during Trump. Moreover, job gains of 6.7 million in 2021 were far less than the glorified projections coming from the White House of around 10 million.

Just think if Biden had practiced the pro-growth policies of Trump.

Instead, inflation is at a 40-year high and looks to continue to soar, fueled by a host of self-imposed costly policies in Washington.

This includes Biden’s over-regulating of the oil and gas sector, massive unnecessary spending bills, and attempts to drastically raise taxes. And the Federal Reserve has more than doubled its balance sheet over the last two years, purchasing a majority of the $6 trillion increased national debt in that period, which is a 25% increase to $30 trillion.

These policies, which simultaneously boost demand while constraining supply, have brought the prospect of stagflation—high inflation and low growth—back for the first time since the late 1970s.

Rather than directly addressing the crisis, Biden has consistently deflected the issue by first doubting the reality of inflation to now falsely blaming it on corporate greed or Russian President Vladimir Putin. But the causes and consequences fall at his feet.

It’s time to return to the proven, pro-growth policies that worked during the Trump administration, along with an essential missing factor then of spending restraint by Congress. Doing so will provide a solid foundation for more opportunities to let people prosper.

This commentary was based on the remarks by Mr. Ginn and Mr. Goodspeed on a panel at the Texas Public Policy Foundation’s 2022 Policy Orientation.

https://www.texaspolicy.com/biden-should-pivot-to-trumps-pro-growth-policies/

​Overview

• Over the last 20 years, property taxes have increased 81% faster than the average taxpayer’s ability to pay for them, contributing to too many Texans struggling to pay bills and keep their home.
• Our Lower Taxes, Better Texas plan will help Texans by eliminating local maintenance and operations (M&O) property taxes in a revenue neutral way by no later than 2033.
• This balanced solution will give Texans the relief they demand while continuing to fund critical services, like public safety and education.
• After eliminating the M&O property taxes, which represent 80% of all property taxes in Texas, constitutional changes should prohibit re-imposing these taxes.
• Texas governments ought to embrace this fiscal framework to ensure all Texans can flourish and deliver real peace of mind to Texas homeowners in a timely way.

​When Uvea was 9, Oregon’s foster care agency couldn’t find a placement in-state, so it sent her to Montana—to a poorly supervised facility where she was drugged, physically restrained and verbally abused by facility staff.

“Can I say the two words she called me?” Uvea asked a lawmaker during a later legislative hearing. “They made me feel very uncomfortable. She called me a pervert and a prostitute.”

Remember, she was 9 at the time. Untold damage was done to the young girl—but one thing came of it that will benefit all Oregon foster children. Her story sparked an effort to reform Oregon’s child welfare programs, beginning with an efficiency audit. Following the audit, every single child placed out-of-state was brought back to Oregon without increasing the number of foster homes, simply because the state learned how to use its resources more efficiently. And that Montana facility has been shut down.

Today, Uvea is 11 years old and living in what she recently told state lawmakers is “the best foster home” she’s ever been in.

Too many government programs aren’t achieving their intended purpose. This doesn’t serve the intended recipients—like Uvea—or the taxpayers well. Next session, the Texas Legislature can utilize effective and powerful independent efficiency audits to determine how programs, including Child Protective Services, are performing, where waste can be cut, and what outcomes can be improved.

While traditional financial audits can uncover evidence of malfeasance, they only look at the money trail. An efficiency audit goes even further, investigating whether funds are being used for their intended purpose and whether they’re being spent efficiently toward desired outcomes. Bringing in an independent, private sector auditor, rather than the state’s auditor, prevents a potential collusive situation between government entities and provides a fresh perspective that can identify innovative solutions, counteracting the myopic tendencies of government bureaucracy.

Last session, the Texas Public Policy Foundation identified the need for independent efficiency audits of the Temporary Assistance for Needy Families (TANF) program and the Department of Family and Protective Services (DFPS), which contains CPS. Both TANF and DFPS have had problems achieving their intended goals.

DFPS is a major recipient of TANF dollars in Texas, which is intended to help strengthen families and promote self-sufficiency. DFPS is also responsible for administering the state’s foster care system. In response to the ongoing foster care crisis, the Legislature increased appropriations to the agency. Our internal analysis of corresponding DFPS expenditures raised significant concerns regarding the appropriateness and efficacy of those dollars spent.

Specifically, our analysis found that a significant portion of these funds were not getting to the families most in need. Rather, one third of the roughly $1 billion annually in TANF funds are allocated to DFPS, yet half of that third goes to administrative and overhead expenses—things like staff salaries and IT services. That’s money that could have otherwise been used towards its stated intent to help needy Texans.

Why was this happening?

TANF is primarily funded through a block grant from the federal government, with the rest funded by the state. States have flexibility in how they administer and distribute that funding. While this flexibility can be helpful, DFPS used TANF dollars to fill budget gaps rather than meet its goals. This misuse of TANF dollars by the department revealed a need to investigate whether other agencies were engaging in similar behavior.

When we advocated for the use of an independent efficiency audit, we specifically sought to investigate how well both TANF and DFPS were doing at achieving the intended goals of helping Texas families move from dependence to self-sufficiency.

Under the new laws passed in 2021 (HB 1516 and HB 2374), that question must be answered every four years before the start of a legislative session. Doing so allows legislators to critique agency appropriations requests more knowledgeably and to ensure taxpayer resources are generating intended outcomes.

Because these audits must stay within the bounds of current resources available to each department or agency, taxpayers are assured these efforts will not be used to grow government, but rather evaluate how government could be improved, reformed, or cut. Identifying opportunities to consolidate efforts across separate agencies for example, or when a governmental function might be performed more successfully by a community provider, can provide legislators and the public with solutions that will lead to better services to beneficiaries at lower costs to taxpayers.

Oregon, Wyoming, and Kansas are states that have made great strides because of their respective efficiency audits. Louisiana, likewise, recently did an internal efficiency audit of TANF, which the legislative auditor found much needed improvement to achieve the intended goals.

Texas Legislators should bring efficiency audits to every aspect of government to generate better outcomes and save taxpayer resources. Little children like Uvea are counting on them.

https://www.texaspolicy.com/efficiency-audits-arent-about-saving-money-theyre-about-saving-lives/

The shutdown recession from February to April 2020 was devastating, and the costly effects of the policy errors since then have been large and long-lasting. There must be a return to the dignity and permanent value of work instead of dependency on government from Washington’s big-government agenda and mandates related to COVID-19. The U.S. labor market is better, but improvements are needed. This is in spite of Congress adding $6 trillion in deficit-spending since January 2020 to reach the new high of $30 trillion national debt. And the Federal Reserve has monetized the vast majority of the new debt, leading to a 40-year high inflation rate. Given high inflation and a stagnating economy, stagflation is here for the first time since the 1970s. Congress and the Fed should stop overspending and overprinting money, respectively, and instead provide pro-growth policies so that Americans can improve their livelihoods.

https://www.texaspolicy.com/an-insiders-insight-on-todays-economy/

Americans have less money than they had last year—though taxes haven’t been raised. So what’s the problem? Inflation, which has increased at a 40-year high annual pace of 7.9%. It acts as a hidden tax because we don’t see it listed on our tax bills, but we sure see less money on our bank accounts.

In fact, inflation-adjusted average hourly earnings for private employees are down 2.8% over the last year. This means a person with $31.58 in earnings per hour is buying 2.8% less of a grocery basket purchased just last February. “For a typical family, the inflation tax means a loss in real income of more than $1,900 per year,” stated Joel Griffin, a research fellow at The Heritage Foundation.

The hidden tax of rapid inflation has been avoided for four decades. But that’s understandable because we haven’t seen these sorts of reckless policies out of Washington since the Carter administration.

The policies from the Biden administration’s excessive government spending and the Federal Reserve’s money printing must correct course now before things get worse.

What’s causing inflation is being debated.

One claim is “Putin’s price hikes” stem from the Russian president’s invasion of Ukraine.

While this has contributed to oil and gasoline prices spiking recently, these prices—and general inflation—were already rising rapidly. This was because of the Biden administration’s disastrous war on fossil fuels through increased financial and drilling regulations, cancelation of the Keystone XL pipeline, and more.

Specifically, the price of West Texas Intermediate crude oil is up about 110% since Biden took office, yet only up 21% since Russia invaded Ukraine. And to think, the U.S. was energy independent in the sense that it was a net exporter of petroleum products in 2019.

Another claim is the supply-chain crisis.

For example, the global chip shortage has contributed to a large shortage and subsequent increase in the average price of new vehicles—to a record high of $47,000, up 12% over the last year. This contributed to buyers switching to used cars, which has pushed the average price up to nearly $28,000, about 40% higher.

These two claims will likely be transitory price increases, though not sufficient to drive down overall inflation to what we’ve experienced for the last year-plus.

Inflation is persistent because of rampant government spending and money printing.

Larry Kudlow, who served as the director of the National Economic Council for President Trump, stated that inflation “is destroying working folks’ pocketbooks and devaluing the wages they earn, and the root cause of the inflation is way too much government spending, too many social programs without workfare, and vastly too much money creation by the Federal Reserve.”

Both political parties share the blame for too much government spending, which has caused the national debt to balloon to $30 trillion. Just over the last two years, the debt has increased by 25% or $6 trillion.

While some of that may have been necessary during the (inappropriate) shutdowns in response to the COVID-19 pandemic, much of the nearly $7 trillion passed in spending bills was not, especially the trillions by the Biden administration far after the pandemic had slowed and people were returning to work.

Laughably, Speaker of the House Nancy Pelosi recently argued that government spending is helping inflation and President Biden argued that he’s cutting the deficit. Both are false.

Government spending doesn’t change inflation because it just redistributes money around in the economy. And the deficit would only be rising from Biden’s big-government policies but he’s taking advantage of an optical illusion: one-time COVID-19 relief funding drying up and tax revenues rising partially from the effects of inflation.

Ultimately, the driver of inflation is from discretionary monetary policy by the Federal Reserve as it monetizes much of the $6 trillion in added national debt since early 2020.

The Fed did this to keep its federal funds rate target from rising above the range of zero to 0.25% by more than doubling its balance sheet to $9 trillion. More money is fueling the ugly government spending and bubbly asset markets that’s resulting in dire economic consequences.

Instead, we need to learn what Presidents Harding and Coolidge realized a century ago. This would mean a return to sound fiscal policy, monetary policy, and the dollar that built on the principles of America’s founding.

We need binding fiscal and monetary rules to hold politicians and government officials in check of we hope to tame inflation and return to prosperity.

https://www.texaspolicy.com/the-tax-increase-thats-hidden-in-plain-sight/

​In recent years, there’s been a growing consensus that the “Success Sequence” is a key pathway to avoiding poverty. Unfortunately, this prevailing theory doesn’t fully account for circumstances beyond one’s control. We need a more holistic approach to poverty prevention and alleviation.

Brookings Institution fellows Ron Haskins and Isabel Sawhill originally coined the “Success Sequence” in their book, Creating an Opportunity Society. The sequence notes that if you finish high school, get a full-time job, and marry before kids (in that order), you’re more likely to avoid poverty.

However, while research finds a strong correlation between this sequence and avoiding poverty (97% of Millennials), proof of causation has been more elusive, leaving gaps in how to achieve lasting poverty relief.

The Success Sequence doesn’t account for adverse situations beyond one’s control, such as the diminishing value of a high school diploma, availability of full-time jobs, accessibility to the workforce by the formerly incarcerated, and affordability of housing.

Today, one might do everything “right” and still experience poverty. Ultimately, the path to long-term poverty relief includes—but is not limited to—the Success Sequence.

To maximize opportunities for success, policies should remove obstacles often imposed by governments. This includes ensuring abundant job opportunities, addressing workforce and affordability issues, and streamlining safety nets.

Doing so would allow safety nets to fulfill their purpose as a trampoline to quickly spring people back into self-sufficiency rather than as a hammock that traps recipients into a cycle of dependency on government.

Recently, the Texas Public Policy Foundation launched the Alliance for Opportunity initiative with our friends at the Georgia Center for Opportunity and the Pelican Institute in Louisiana. This initiative promotes a strategic policy roadmap for these states that in many ways supplements the Success Sequence. It does so by working to keep vulnerable Americans on track, ensure everyone has a right to earn a living, and address poverty through the justice system.

One way is to reform education systems so that career and technical education funding is individualized and institutional funding is tied to employment and wage outcomes. Doing so will ensure students are better prepared for today’s jobs.

Consider the return-value funding model for the Texas State Technical College, a two-year institution with an emphasis on technical programs geared toward post-graduation employment. They partner with businesses, government agencies, and other education institutions to coordinate career development routes for students.

Notably, the Texas Legislature established an outcomes-based funding model for TSTC based on the annual wages of its graduates five years after graduation. Legislators across the country should utilize similar competency-based models to improve employment outcomes.

Policymakers should also be looking for ways to reduce or to remove burdensome occupational licensing requirements and encourage paid apprenticeships throughout the education system in order to protect the right to work and maximize the skills for in-demand jobs.

Occupational licensing overall has been shown to restrict the labor market, presenting a significant cost of entry to work, even as there is limited evidence that licenses increase the quality of goods, services, or public safety. States should instead look to implement a systematic process of identifying and removing overburdensome licensing regulations through processes such as a sunset review, while expanding universal recognition of licenses obtained in other states with similar requirements.

Moreover, lawmakers should align education and workforce programs to ensure students are able to learn and earn wages as they work. By improving the availability of paid apprenticeships, states can maximize opportunities to find meaningful education and employment. The State of Georgia’s program recently had more than 60% of youth apprentices receive a full-time job offer from their employer upon completion.

Finally, for those workers who lose a job unexpectedly, as 22 million Americans did during the government-imposed shutdowns due to the COVID-19 pandemic, legislators should reduce disincentives to work by revamping and streamlining safety net programs.

One of the most common reasons recipients are discouraged from pursuing better employment outcomes is the “benefits cliff.” Because of the setup of safety-net programs, many recipients find that a small increase in earnings will result in a large loss of benefits. This creates a vicious cycle of dependency and despair.

States must flatten these “cliffs” by leveraging their flexibility with block grant programs and waivers in federal law while keeping the programs tied to work, training, or education, such as an empowerment accounts pilot program.

The Success Sequence is a noble, beneficial approach to help avoid poverty, but ultimately its application has gaps that should not be taken for granted. With the Alliance’s strategic policy roadmap, we hope to provide an improved situation with more opportunities in a flourishing civil society that helps those in need achieve financial self-sufficiency, dignity, and purpose faster and longer.

https://www.texaspolicy.com/supplementing-the-success-sequence/

​An MSNBC headline reporting on a recent interview of a White House economic advisor Jared Bernstein claimed that America has a “booming economy.” But that’s not what most Americans think about the economic situation.

The University of Michigan’s consumer sentiment index for March, which gauges how consumers feel about the economy, fell to a decade low at 59.4. This is a 5.4% drop from February and a 30% drop from March 2021.

The survey reveals Americans’ pessimism and uncertainty amidst the highest levels of inflation since the 1980s. Many Americans reported that they have had to reduce their quality of life and lower their living standards amidst the inflation crisis.

This crisis has been created by the Federal Reserve printing too much money to fund the overspending by Congress, and exacerbated by the Biden administration’s war against oil and gas that fueled higher energy prices and have been amplified by the Russia-Ukraine conflict.

The only positive news from the survey was slight optimism for the strengthening labor market. Survey statistics revealed that there was hope that the unemployment rate would continue to decline.

While there are reasons to be optimistic about the labor market’s increase in monthly nonfarm jobs—431,000 (with 426,000 in the private sector)—and the unemployment rate dropping to 3.6%, weaknesses remain.

For example, since the shutdown recession ended in April 2020, total nonfarm jobs are up 20.4 million but are still down 1.6 million from February 2020. This indicates that though the labor market is improving, but it’s not as strong as it was then.

And while the Biden administration touts the jobs created since he took office in January 2021, only 39% have been added since then while the other 61% were during the Trump administration.

Other unaddressed labor market weaknesses remain. Inflation-adjusted wages are down by 2.3% over the last year, a depressed prime-age (25-54 years old) employment-population ratio by 0.5 percentage point since February 2020, and a broader U6 underemployment rate of 6.9%.

Further adding to the concern in the labor market is a record high of 5 million more unfilled jobs (11.3 million) than unemployed people (6.3 million).

These ongoing weaknesses are shedding light on the impacts of big-government policies out of D.C., such as the “stimulus” checks, enhanced unemployment insurance, expanded child tax credits, and pandemic-related mandates, that have limited and are hindering the rebound of the American economy.

Instead, we must return to normalcy if we wish to give Americans more opportunities to prosper.

But that’s not happening. Paired with the inflation we’re dealing with stagnating economic growth, creating a period of stagflation for the first time since the 1970s.

Rising inflation is foreshadowing concerns of a future recession and economic crisis as American families are paying substantially more for products and services amidst reduced purchasing power.

Why is our economy out of control, and what can be done to mitigate the economic crisis?

The government imposed a “shutdown recession” from March to April 2020 that proved devastating. Amidst the shutdown, elected officials heightened Americans’ economic dependence on government through $6 trillion in deficit-spending that included programs which disincentivized working.

Two years later, there must be a return to the dignity and permanent value of work — instead of the dependence on the government that the Biden administration is promoting.

For example, the Biden administration’s irresponsible proposed budget of $5.8 trillion includes massive spending while raising and creating harmful taxes, such as the new “billionaire tax” that Sen. Joe Manchin already shot down. The result of this irresponsible budget would be an increase in the debt by 50% to $45 trillion over the next decade, which is highly optimistic given their unlikely rosy economic assumptions.

Given the likelihood of continued trillion-dollar deficits for the foreseeable future and the Fed keeping its target overnight lending rate low even as it raises the rate by printing more money means that more inflation and economic damage are to come.

But this doesn’t have to happen.

Congress should choose a different path, enacting pro-growth policies like those passed from 2017 to 2019, which will better provide Americans with opportunities to improve their lives and livelihoods. This should be paired with binding fiscal and monetary rules to stop Congress from overspending hard-earned taxpayer dollars and to stop the Fed from overprinting money that’s reducing families’ purchasing power.

We should stop the “booming economy” rhetoric and focus on how families are doing. The way to give them more opportunities to flourish is by removing obstacles imposed by government.

https://www.texaspolicy.com/booming-economy-not-if-you-ask-most-americans/

We should be able keep what we purchase outright. But that’s not the case with real estate in Texas. Even if a mortgage is paid, many homeowners struggle to afford their yearly local property tax bill. This forces too many Texans to lose their homes. And renters who pay more because of skyrocketing property taxes too often can’t pay their rent.

In the March 1 primary election, 76% of Republican voters supported eliminating property taxes in 10 years—without implementing a state income tax. The Foundation has a plan to achieve this worthy goal.

Some suggest property taxes are a necessary evil because the state (rightfully) prohibits an income tax. But this claim isn’t true for other states. Florida and Tennessee don’t have a state income tax, yet they have a much lower property tax burden.

So we should ask, what are these taxes funding?

Most property taxes (80%) are collected from taxpayers for the maintenance and operations (M&O) of a local government’s day-to-day expenses. Of these M&O taxes, the school district portion is the largest. The other portion of your property tax bill goes to the interest and sinking (I&S) fund, which pays down local debt. Collectively, local governments siphon about $70 billion (and rising) from Texans every year.

That elevated burden is also growing too fast.

In the last 20 years, property taxes have grown by 181%, far exceeding the average taxpayer’s ability to pay for these taxes—as measured by population growth and inflation. This measure has grown by only about 100% over the same period.

And this excessive burden isn’t met with efficient spending.

Unfortunately, some taxpayer dollars are lost to waste, fraud, and abuse by governments. These happen from paying too much to fix a road to building Taj Mahal-like facilities to giving public sector executives massive severance payments.

Nearly half of property taxes paid go to support government schools, which haven’t always been good stewards of that money. The latest total expenditures available for the 2019-20 school year for 5.5 million students was about $14,000 per student. That’s close to the national average ($15,342), but shocking when we realize that only 40% of Texas students are reading and doing math on grade level, and 95% of kids who fall behind don’t catch up

By comparison, private schools in Texas cost parents about $10,000 per student, which is in addition to the property taxes paid to a government school their kids don’t go to.

How are private schools doing better, for less money? Basically, government schools aren’t spending money efficiently. Misspending is often rampant, revealing itself in expensive management posts and perks, redundant administrative positions, and other frills.

But even if local governments spent property tax dollars efficiently, property taxes hurt lower- and fixed-income Texans by forcing people out of their homes through no fault of their own. Individual liberty should allow people to own what they purchase instead of renting from the government.

The Foundation has a plan to eliminate M&O property taxes by 2033.

In 2021, we helped put into law the state’s spending growth limit—now, the strongest in the nation—of general revenue to grow less than population growth and inflation. As a result, this limitation should lead to recurring surpluses that ought to be returned to taxpayers. This spending limitation should be expanded to local governments, too.

The Texas Legislature should return at least 90% of the general revenue surplus back to taxpayers by lowering school district M&O property tax rates, which the state already has much control over with the Robin Hood redistribution scheme. Doing this each session could take at most 30 years, depending on the fiscal restraint lawmakers show.

Given this delay, we suggest that after about 10 years (if not before) of this buy down, the elimination process should be sped up and done immediately by broadening the sales tax base without raising the overall tax rate.

To help eliminate the rest of M&O property taxes, local governments should follow the state’s lead by using surplus revenue to lower their M&O property taxes. Then when the state broadens the sales tax base, they could eliminate their M&O completely.

By limiting spending and cutting property taxes, Texas could eliminate 80% of its property taxes by 2033. This would also provide time for lawmakers to determine what to do with the other 20% in I&S, which is already approved by local voters.

Our approach would provide a fairer tax system and a more robust economy in Texas. A happy side effect of this could be even more people and businesses moving to Texas along with more economic growth, further easing the tax burden for all, and helping Texas families flourish for generations.

https://www.texaspolicy.com/property-taxes-in-texas-must-go/

It’s bad enough when politicians enact witless economic policies with huge price tags, but it’s even worse when those policies destroy American lives and livelihoods. New research shows that this will be the pandemic-era legacy of the politicians that forcibly closed businesses, made people stay home, then incentivized millions of out-of-work Americans to give up the opportunity to get their lives back on track.

It’s now clear that half the states kept destructive policies in place even after their devastating effects were known. What should have been a temporary bridge to keep people afloat while America tackled COVID-19 became a nightmare of dependence and depression.

In March of 2020, the federal government began paying weekly “bonuses” known as supplemental insurance to people on unemployment. That meant many people received more money from unemployment insurance than they did while working. It was even expanded to include those who hadn’t paid into the program.

By the fall, the country began emerging from the pandemic, vaccines became available, and business started to open again and look for workers. The speed of American resilience was something to behold. But the government refused to make the transition with the rest of the country and kept paying people to stay home.

Eliminating people’s jobs and paying them to be unemployed was robbing millions of Americans of the dignity that comes with finding purpose and achieving self-sufficiency. It destroyed lives, driving dependency on government, contributing to drug and alcohol addiction, and exacerbating isolation and depression.

These effects of the program were blatantly obvious through the spring of 2021 but that didn’t stop the Biden Administration and Congress from extending the benefits through September. By the summer of 2021, the nation had nearly 11 million unfilled jobs, a spike from just under 7.2 million at the beginning of the year.

That’s why 26 states decided to terminate the unemployment bonuses early instead of letting them expire in September 2021. At the time, some in the media portrayed the move as cruel, ripping critical funds away from those struggling during the pandemic.

But new research from the Texas Public Policy Foundation shows that the states that ended the benefits early had superior job growth, ending the soul-crushing dependency inflicted upon millions by the misguided policy.  By the end of 2021, only Texas and three other states that ended the bonuses early had regained all the jobs that they lost during the pandemic.

In the states that continued paying the unemployment bonuses through September 2021, job growth was anemic. Roughly 3 million more people stayed on unemployment in states that maintained the increase in benefits versus the states that ended the program early.

The states that continued this policy deserve particular scorn for going down this fatuous path because they should have known better. The unemployment bonuses were first implemented in 2020 during the depths of the government-imposed restrictions and the disastrous results were known a year later. Yet they pushed forward full throttle irrespective of the harm it was causing to millions of Americans.

There were better solutions.

Early in the pandemic when much wasn’t known, Congress could have eliminated federal payroll taxes. Instead of creating a new disincentive to work, policymakers could have removed an existing disincentive and let workers keep more of what they earned. A July 2020 study found that eliminating payroll taxes would have added 2.7 million jobs in six months.

Later, after we learned more about the pandemic and the costs of shutdowns, the Biden administration should have focused on ending state government-imposed shutdowns. These shutdowns were a failure that did little to nothing to mitigate the pandemic’s effects yet contributed to massive business closures and job losses, along with a host of other problems that will be long-lasting..

The experiment with unemployment “bonuses” should be closed and never opened again. It unnecessarily prolonged the economic devastation brought on the country by the pandemic and slowed the path to recovery for millions of Americans. Job creation proved to be the fastest road to provide help and hope.

https://www.texaspolicy.com/the-real-cost-of-pandemic-era-policies/

Watching the screen on a gas pump while filling your vehicle’s tank is liable to induce a panic attack. Paying for a used car almost requires taking out a second mortgage. Speaking of mortgages, members of the middle class are being priced out of the housing market as home prices march relentlessly upward. Many price increases are out of control.

How did we get here? A little over a year ago, and in the years before the Covid-19 pandemic, most prices were relatively stable. But more recently, general price inflation is at a 40-year high.

The late economist Milton Friedman helped explain the inflation and stagflation of the 1970s. His explanation helped shape the strong economic recovery of the 1980s, built on the principles of limited government, with sound monetary policy that resulted in a steep decline in what had been rampant, double-digit inflation.

Inflation Is a Monetary Phenomenon

Friedman pointed out that “inflation is always and everywhere a monetary phenomenon.” The seemingly force majeure is actually a manmade problem, caused by the Federal Reserve (Fed) creating too much money. These principles of money and inflation aren’t new.

But those lessons are being disregarded by some in the economics profession. People like Stephanie Kelton have been promoting Modern Monetary Theory (MMT), which is virtually a complete reversal of what Friedman espoused and history demonstrated. This theory contends that the federal government’s current deficit spending isn’t an issue — it can, and should, be solved by the Fed creating money to fund it without concern about inflation as long as the U.S. dollar is the world’s reserve currency.

President Joe Biden has not openly endorsed MMT, but he’s no fan of Friedman either. Instead, he seems content to have many mostly younger congressional Democrats advocate for MMT, which provides convenient and seemingly academic reasoning for financing more federal spending without explicitly raising taxes. It has a similar political appeal that Keynesianism presented almost a century ago, and MMT is just as flawed.

But proponents of MMT do get one thing correct — the Fed can create money to service the debt and avoid a default. But in real terms, meaning adjusting for inflation, this assertion is false. Creating money to service the debt devalues the currency. Investors then receive a lower real return on their holdings of federal debt.

Furthermore, everyone is hurt by inflation, whether they own government bonds or not. Inflation is essentially a tax, as it robs people of their purchasing power at no fault of their own. Everyone who received a 7.5 percent raise over the last year probably thought they would be able to afford more stuff, but they were deceived. Inflation rose just as much — so there was no real raise.

False Claims That Taxes Are the Solution

But MMT proponents claim that the massive budget deficits are what allow people to save money. Were it not for those deficits, they contend, people would have no cash to save. At first glance, the pandemic seemed to support that. People received transfer payments from the government and saved much of them due to uncertainty. But more recently, people’s savings are being depleted as this dependency on government dries up and prices soar.

Now that inflation is running amok, MMT adherents believe tax increases are the primary (if not only) cure. They claim inflation is not caused by the Fed creating too much money, but by people having too much money to spend; taxation will remove that excess liquidity and stop inflation.

However, MMT doesn’t explain why it’s only inflationary when people spend money, but not when the government spends it. Somehow the Fed creating money by purchasing government debt miraculously doesn’t bid up prices for scarce resources. The theory sounds more like a belief than science — something that must be trusted rather than demonstrated.

Specifically, MMT ideology is built on mathematical relationships between economic variables like private and public savings and debt rather than a strong theoretical construct, and breaks down quickly when analyzed with sound economic theory. Moreover, these relationships seem to be used to derive a funding mechanism for their big-government policy goals, such as a federal jobs guarantee, universal healthcare, and other costly initiatives.

How Taxation Might Stop Inflation

But MMT is not entirely wrong on using taxation to stop inflation. If those taxes are used to pay for deficit spending — which really should be done by spending less — rather than the Fed financing it, then higher taxes can lower inflation. But that is far too nuanced of an explanation for MMT, which paints in much broader brushstrokes.

Regardless, MMT cannot dispel the hard truths of monetary policy, which is inflation comes from one place — the Fed. When the Fed creates money faster than the real economy grows, prices will rise; it’s that simple.

To alleviate the uncertainty and distortions across the economy of bad policies in Washington, there should be binding fiscal and monetary rules based on sound economics instead of ideology. This should include changing government spending by less than the growth in personal incomes and only changing the money supply to keep prices stable.

Almost two years after President Biden declared “Milton Friedman isn’t running the show anymore,” the late economist is clearly the one with the last laugh. Perhaps next time, the president will think twice before speaking ill of the dead.

https://www.texaspolicy.com/the-real-cause-of-inflation-is-insane-government-spending/

The media is quick to explain away the runaway inflation that is squeezing American families and darkening the prospects of Democrats in the upcoming midterm elections.

“The U.S. economy has been hit with increased gas prices, inflation, and supply-chain issues due to the Ukraine crisis,” CBS News tweeted on Tuesday.

Its article went on to claim, “Although many Americans may prefer that the U.S. stay out of the conflict between Russia and Ukraine, the brewing violence and political fallout are already hurting their wallets.”

Americans know better—because each of these problems has been worsening ever since President Joe Biden took office in January 2021.

The West Texas Intermediate crude oil (WTI) price is up 98% since January 2021. Yet WTI is essentially flat since the White House warned that Russia would soon invade Ukraine on Feb. 11. On that day, WTI sold for $93 per barrel. On Tuesday, it closed at $92.

It just goes to show that the Biden administration (and its allies in the media) will try to blame anything except its own bad policies.

https://www.texaspolicy.com/you-cant-blame-ukraine-crisis-for-rising-inflation-gas-prices/

We think about poverty all wrong. And because we think about poverty all wrong, much of our approach to alleviating it is wrong. Thus, poverty stubbornly persists and the trillions of dollars we spend barely nudges the needle to long-term poverty relief.

The problem is the disconnect between what poverty really is and what our public policies are trying to solve. A clear understanding of poverty is offered by Steve Corbett and Brian Fikkert in their book, When Helping Hurts.  “While poor people mention having a lack of material things, they tend to describe their condition in far more psychological and social terms…” the authors explain.

“Poor people typically talk in terms of shame, inferiority, powerlessness, humiliation, fear, hopelessness, depression, social isolation and voicelessness. Low-income people daily face a struggle to survive that creates feelings of helplessness, anxiety, suffocation and separation that are simply unparalleled in the lives of the rest of humanity.”

Most Americans don’t define their self-worth based on material possessions (or lack thereof). But our public policies too often focus on stuff. American families below the poverty line have access to a plethora of programs, benefits, cash, and services that provide them with things, especially since the COVID-19 pandemic. But what they lack is a voice. Alleviating poverty means increasing opportunities to gain human dignity, purpose, and self-sufficiency.

Understanding that poverty encompasses more than just a dearth of disposable income is key to addressing the systemic issues at play. Those suffering from real poverty live a very different life and see their condition as something quite different from simply being “broke.” It’s more appropriate to say they lack the social capital—a buzz phrase, sure, but a useful one in this case—upon which to rely.

The poor lack many intangible things most of us take for granted, like having marketable skills and using them to contribute to our communities in a way society values. Absent a sense of their own dignity, purpose, and self-sufficiency, people are left with dependency to survive—a poison to the human soul. Any attempt to alleviate long-term poverty with little more than repeated handouts, without also connecting people with work, training, or education and building community connections, is not helping, it’s hurting.

If we truly intend to love our neighbor as God has commanded, we must recognize that the War on Poverty, fought LBJ-style with government programs, has been lost. A new approach must be charted—an approach that emphasizes keeping vulnerable Americans on track, developing valuable skills, individualizing plans that help people overcome their specific barriers to employment, and—most importantly—an exit strategy. With few exceptions, the goal should be to help people earn self-sufficiency through increased opportunity and work, not lock them into a lifetime of dependency and despair.

A good example of this approach is Bonton Farms, an inner-city Dallas urban farm that provides support for people to bridge the gap from poverty and prison and has helped hundreds of people gain a new sense of dignity and purpose. At Bonton Farms, it’s not about handouts. “This gives a lot of guys the opportunity to change,” one former inmate says.

“If they want to do better, they can. If they want to be more than just a street guy, a drug dealer, they can. If they want their kids to watch them be something more, it’s possible. That’s what we show them.”

Work is the key. Work means using one’s God-given talents and learned skills to provide a value to the community. Doing so confers on those suffering from poverty the very things they cry out for, such as hope, purpose, and a voice. They gain agency—the ability to make their own decisions—and learn skills necessary for them and their families to prosper. A job is the beginning of an exit strategy out of poverty.

This should be a bipartisan issue. Indeed, some of the greatest gains made in recent decades fighting poverty came via the Welfare Reform Act of 1996, passed by Republican majorities in the House and Senate and signed by Democrat President Bill Clinton. But even that was incomplete, and later presidents and governors dropped many of the work requirements that were its centerpiece.

These factors contributed to the recent launch of a multi-state poverty relief initiative called the Alliance for Opportunity. This includes three state-based think tanks, the Georgia Center for Opportunity, Pelican Institute in Louisiana, and Texas Public Policy Foundation. With a top-notch team and high-quality work that provides a toolkit for policymakers, we hope to help 1 million people out of poverty in these three states to show proof of what works for other states and for Congress to hopefully follow.

Our new efforts must begin with a full and fair assessment of how the current situation is helping keep vulnerable Americans on track. Existing programs, especially at the state levels, must be audited and made more transparent by improving data collection to evaluate desired outcomes. And we must partner with community groups closest to those in need—the real safety nets—while streamlining current programs with new ideas like empowerment accounts.

Additionally, we must remove barriers to ensure everyone has the right to earn a living. This includes removing obstacles like unreasonable occupational licensing, delay of a driver’s license for many who were formerly incarcerated, or simply instituting more apprenticeship programs to improve access to skills training.

And last, but certainly not least, we must address poverty through criminal justice reforms, which our new initiative aims to do. This includes restoration through diversion programs and specialty courts, life and work skills through rehabilitation and transition programs, and a productive path back into the community for the formerly incarcerated.

We must do more than send a check every month like the child tax credit payments sent by Congress in the second half of 2021. We must treat the poor like human beings, not just a number. We must meet them where they are and help them achieve their full potential.

If poverty was as simple as a lack of funds, then surely the money spent thus far would have made a bigger dent. But it’s not that simple. It never was. We’ve merely sought too long for easy answers. Now it’s time to roll up our sleeves and pursue a new path to eliminate dependency and restore the dignity of work so that more people can be financially self-sufficient.

https://www.texaspolicy.com/a-new-approach-to-reducing-poverty/

There’s new evidence government-imposed shutdowns prompted by the COVID-19 pandemic have done more harm than good. Instead, a better choice is keeping the economy open so people stay connected to work and targeting resources to vulnerable populations.

A new meta-analysis from Johns Hopkins University underscores this finding, revealing that lockdowns in America and Europe during the first pandemic wave in spring 2020 only reduced the death rate by 0.2% on average. Researchers concluded that lockdowns “have had little to no public health effects” while imposing “enormous economic and social costs” and should be “rejected as a pandemic policy instrument.”

While businesses were shuttered, people were forced to stay home, and schools remained closed, the unintended social and economic consequences were clear: Rising unemployment, learning loss among students, spiking rates of domestic violence, and a pandemic-level rise in drug abuse and overdoses. All of that social and economic devastation yielded a minimal impact on health-related suffering due to COVID-19.

The new research from Johns Hopkins mirrors our own findings in a recent nationwide study, which found that overreaction by states to waves of the pandemic did substantial damage without much benefit in reducing the effects of the pandemic.

The research shows a statistical correlation between how severe state governmental actions were in shutting down their economies and negative impacts on employment more than a year after the pandemic began in America. This was the case even after controlling for a state’s dependence on tourism or agriculture, population density, and the prevalence of COVID-19 infections and hospitalizations.

Our research found no correlations between the severity of shutdowns imposed by state governments and the rate of reported COVID-19 hospitalizations or deaths. States like Hawaii, New York, California, and New Mexico that imposed harsher economic restrictions generally have greater job losses even today than those states that were less harsh, such as South Dakota, Iowa, Nebraska, Missouri, and Utah.

For example, New York was 10.2% below its trajectory in October 2021 while Nebraska was just 2.4% below.

The bottom line is that while policymakers were likely working in good faith to do their best in a challenging situation, it’s crucial we learn from these past mistakes so that we don’t repeat them. And make no mistake about it—those mistakes have driven untold amounts of human suffering during the past two years.

The worst part is that the government-imposed shutdowns created even more barriers for people who were already struggling. Every American was impacted, of course. These interventions created challenges and burdens for the middle and upper classes, but for our poorest communities they were outright damaging.

Protecting the rights and opportunities of workers to earn a living is obvious. Equally important are the psychological benefits that come with the dignity of work. And there are socio-economic benefits from work that positively impact everyone, such as building social capital and gaining skills, which are especially important for those in marginalized communities who were most impacted by the shutdowns.

As the states look for a long-term strategy to deal with the pandemic, it is paramount that they consider the empirical evidence and not impose burdensome restrictions—such as business closures, stay-at-home orders, school closures, gathering restrictions, and capacity limits—on economic activity that have proven to do more harm than good.

Instead, the policies need to be crafted more carefully to expand opportunities for the poor and preserve jobs in an open economy in which entrepreneurs can solve problems while taking measures when necessary to protect vulnerable populations.

These are the policies that should have been done all along to avoid the severity of the shutdown recession and the effects on lives and livelihoods thereafter. Let’s not make another mistake when so many are already suffering.

https://www.texaspolicy.com/lockdowns-were-a-failure-what-we-do-next-doesnt-have-to-be/

​Even though Sen. Joe Manchin says the Build Back Better Act is “dead,” we all know that spending plans in the D.C. swamp have a disturbing tendency to rise from the grave. There’s already speculation (on CNN and elsewhere) about what a new big-government spending bill will contain.

But with the national debt recently surpassing $30 trillion, we can’t allow even more irresponsible spending. The time for a Responsible American Budget is now.

Another big-government bill making its way down the pike is The America COMPETES Act of 2022, which the House passed last week. It contains up to $350 billion more in deficit spending, all in the name of making us more competitive with China.

This includes billions and billions of dollars in corporate giveaways, such as sending $50 billion in taxpayer money to the semiconductor industry, another $50 billion to the Energy Department as a slush fund for “science purposes” and $8 billion to the U.N. Green Climate Fund. That fiscal cost plus the bill’s regulatory cost will make the nation substantially less competitive.

The truth is, what Americans and Texans need is relief, not more debt and higher prices. The last two years have been increasingly difficult on our wallets. With inflation hitting a 40-year high, prices of everyday consumer goods continue to increase compared to years past, thereby reducing our purchasing power.

As the nation continues to recover economically, now is not the time to continue discussing increasing the burden of federal government spending and taxing on Americans. Should it pursue fiscal excesses like those included in the Build Back Better Act, each American would be saddled with an additional $24,000 of national debt, raising the total debt owed by each taxpayer to $111,000.

Over the past couple of years, we’ve seen major Texas metropolitan markets like in Dallas, Austin, and Houston become the new home to many companies in industries like technology and manufacturing. As quickly as Texas begins to see these new job opportunities, there is the potential for them to vanish should Congress raise taxes.

While the Tax Cuts and Jobs Act helped to increase the competitive advantage for businesses through cutting the corporate tax rate from 35% to 21%, there is movement to raise this rate and raise the global intangible low-taxed income (GILTI) rate on businesses. This would follow a disruptive trend of imposing a global minimum tax rate of 15% that was agreed to by more than 130 countries in October 2021, which would hit Texans hard.

Much like our business community, Texans could find themselves struggling to get by as they see things like their inflation-adjusted wages decline, making it difficult to afford things like childcare or increasing challenges in saving for retirement.

There should be a united voice in opposing additional hikes in spending and taxes and help refocus Congress toward supporting a stronger economy and more opportunities with fiscal restraint and deregulation that have been proven to work for all.

A good start is making the Trump tax cuts permanent. Of course, America doesn’t have a revenue problem, but a spending problem. So, the primary way to provide Texans and all Americans with relief is by passing a Responsible American Budget. This budget would freeze government spending per person so that there is less of a burden on taxpayers.

This budget approach has received high praise from members of Congress, top economists, state policymakers, and experts from across the country. Here are three of the many takes:

Art Laffer: “Government spending is taxation, and we cannot spend and tax our way into prosperity. The Responsible American Budget is a terrific way to rein in this government waste by imposing fiscal limitations on the profligate spenders in Washington.”

Steve Moore: “Spending in D.C. is simply out of control, and we have to act now to stop it. Fiscal restraints like the Responsible American Budget will go a long way to preserving our freedom and unleashing prosperity.”

Grover Norquist: “There has been success in reducing federal tax rates in recent years, which President Biden and congressional Democrats are now trying to undo. Where we’ve yet to make sufficient progress is reining in federal spending. With the Responsible American Budget, the Texas Public Policy Foundation has laid out plan to get federal spending under control.”

If we can have less spending, taxing, and regulating, we can compete and return to the real prosperity earned in 2019 rather than the increased dependency on government today. Otherwise, America can’t compete.

https://www.texaspolicy.com/the-u-s-needs-a-responsible-american-budget/

Latest on Texas budget. 

https://www.texaspolicy.com/txbudget/

​Government spending is at the heart of sound public policy. But out-of-control spending for decades has created substantial economic destruction and ongoing threats that must be remedied before things get worse. Fortunately, we have examples of how fiscal rules can solve this problem. We must put these rules into place before our economy gets any worse.

Excessive federal government spending has created mounting budget deficits that have driven the national debt to $30 trillion. This debt has given the Federal Reserve ammunition to use to excessively print money, resulting in the highest inflation in 40 years. And inflation destroys our purchasing power as it is a hidden tax that erodes our livelihood.

Controlling spending takes discipline, and applying fiscal rules can help.

Policymakers should follow the examples a century ago of Presidents Warren G. Harding and Calvin Coolidge, who demonstrated that controlling spending and cutting the debt is possible.

President Harding assumed office in 1921 when nation was suffering an overlooked severe economic depression. Hampering growth were high income tax rates and a large national debt after WWI. Congress passed the Budget and Accounting Act of 1921 to reform the budget process, which also created the Bureau of the Budget (BOB) at the U.S. Treasury Department (which was changed in 1970 to the Office of Management and Budget in the Executive Office of the President). President Harding’s chief economic policy was to rein in spending, reduce tax rates, and pay down debt. Harding, and later Coolidge, understood that any meaningful cuts in taxes and debt couldn’t happen without reducing spending.

Charles G. Dawes was selected by Harding to serve as the first BOB Director. Dawes shared the Harding and Coolidge view of “economy in government.” In fulfilling Harding’s goal of reducing expenditures, Dawes understood the difficulty in cutting government spending as he described the task as similar to “having a toothpick with which to tunnel Pike’s Peak.”

To meet the objectives of spending relief, the Harding administration held a series of meetings under the Business Organization of the Government (BOG) to make its objectives known.

“The present administration is committed to a period of economy in government…There is not a menace in the world today like that of growing public indebtedness and mounting public expenditures…We want to reverse things,” explained Harding.

Not only was Harding successful in this first endeavor to reduce government expenditures, his efforts resulted in “over $1.5 billion less than actual expenditures for the year 1921.”  Dawes stated: “One cannot successfully preach economy without practicing it. Of the appropriation of $225,000, we spent only $120,313.54 in the year’s work. We took our own medicine.”

Overall Harding achieved a significant reduction in spending. “Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922,” noted Jim Powell, a Senior Fellow at CATO Institute. Harding and the Republican Party viewed a balanced budget as not only good for the economy, but also as a moral virtue.

Dawes’s successor was Herbert M. Lord, and just as with the Harding Administration, the BOG meetings were still held on a regular basis. President Coolidge and Director Lord met regularly to ensure their goal of cutting spending was achieved.

Coolidge emphasized the need to continue reducing expenditures and tax rates. He regarded “a good budget as among the most noblest monuments of virtue.” Coolidge noted that a purpose of government was “securing greater efficiency in government by the application of the principles of the constructive economy, in order that there may be a reduction of the burden of taxation now borne by the American people. The object sought is not merely a cutting down of public expenditures. That is only the means. Tax reduction is the end.”

“Government extravagance is not only contrary to the whole teaching of our Constitution, but violates the fundamental conceptions and the very genius of American institutions,” stated Coolidge.

When Coolidge assumed office after the death of Harding in August 1923, the federal budget was $3.14 billion and by 1928 when he left, the budget was $2.96 billion.

Altogether, spending and taxes were cut in about half during the 1920s, leading to budget surpluses throughout the decade that helped cut the national debt.

The decade had started in depression and by 1923 the national economy was booming with low unemployment. If this conservative budgeting approach—which was tied with sound monetary policy for most of the period—had been continued, the Great Depression wouldn’t have happened.

Officials at every level of government today should learn from this extraordinary lesson that fiscal restraint supports more economic activity as more money stays in the productive private sector.

With spending out of control at the federal level and in many states and local governments, the time is now for spending restraint and strong fiscal rules to set the stage for more economic prosperity today and for generations to come.

https://www.texaspolicy.com/learning-from-the-champions-of-fiscal-conservatism/

​While Michigan employs 205,200 fewer people than in February 2020, a 4.6% decrease, the state government’s budget continues to grow.

To keep the government from spending more and further crowding out the productive private sector, the Mackinac Center has created the Sustainable Michigan Budget. This plan would set a maximum limit on what lawmakers can spend, based on changes in population and inflation. The next state budget would be allowed to grow by 3.15% under this formula, limiting spending of revenue from state taxes and fees to $39.1 billion.

Spending restraints should make it easier for lawmakers to lower tax rates. If state revenues exceed what needs to be spent, lawmakers should let individuals keep more of their hard-earned income. This would encourage job growth, provide more opportunities for Michigan residents and make the state more competitive economically.

Over the past two years, 14 states have cut their tax rates — including Ohio, which now taxes income at lower rates than Michigan. Lawmakers in Indiana are also looking to cut income taxes and business taxes as well as eliminating two state utility taxes. Limiting spending can help the state compete with its neighbors while providing a better economic environment for residents.

When lawmakers limit spending, they can use the extra revenue raised by the state to improve Michigan’s financial prospects by paying down long-term debt. Lawmakers accidentally made school employees the state’s largest creditors by severely underfunding the school pension system. This is a disservice to teachers and expensive to taxpayers. Paying down this debt would save billions of dollars in interest costs over time.

Spending limits also encourage lawmakers to prioritize effective government programs. They must balance devoting state resources to their highest priorities while keeping government affordable to taxpayers. This increased prioritization can help ensure that residents receive more effective services from government each year, not just more expensive services.

Michigan’s initially approved FY 2021-22 budget included $37.9 billion in spending. U.S. CPI inflation was 3.32% in FY 2020-21, while Michigan’s resident population declined 0.17%. That comes to 3.15% in population growth plus inflation. Based on the Sustainable Michigan Budget, the FY 2022-23 budget should be no more than $39.1 billion.

The Sustainable Michigan Budget does not apply to the large amount of federal funds recently sent by Congress to Michigan, as these should be only one-time appropriations. This is because fiscal transfers to the state budget are made primarily by federal lawmakers for restricted purposes. The funds cannot be used to lower state taxes or pay down state debts, for instance.

It’s an appropriate time to limit state spending. Michigan suffered through a one-state recession in the 2000s and these losses affected the state budget. Since then, however, state revenue has steadily increased. Spending grew faster than the rate of population growth plus inflation for eight out of the past 10 years.

The Sustainable Michigan Budget would provide further protections than exist in the state’s current spending limit, which was put in place in 1978 by the Headlee Amendment. The current limit, based on personal income growth since 1977, would allow lawmakers to ratchet up spending by 35% before meeting this threshold. As such, it provides no real constraint on the size of the state budget.

Legislators find themselves with more taxpayer dollars at their disposal than ever before. They have been in the habit of spending every one of those dollars. As anyone who manages a household budget should know, that’s not a long-term, fiscally responsible practice. A Sustainable Michigan Budget would change this tendency. It would help ensure state funds are devoted to highest priorities, bolster the state economy, and, more importantly, ensure that residents have more opportunities to flourish in the productive private sector.

James M. Hohman is the director of fiscal policy at the Mackinac Center for Public Policy, a research and educational institute based in Midland, MI.

Vance Ginn, Ph.D., is chief economist at the Texas Public Policy Foundation, and served as the associate director for economic policy of the White House’s Office of Management and Budget during the Trump administration, 2019-20.

https://www.texaspolicy.com/approve-a-sustainable-michigan-budget-spending-limits-on-government-can-boost-economic-growth-and-opportunities/

​Mission: To enact public policy solutions that promote the human dignity, fruitful purpose, and self sufficiency of every American.

https://www.texaspolicy.com/tppfs-alliance-for-opportunity-agenda/​

​Texas continues to recover from the shutdown recession of 2020. The state has made strong progress toward a full recovery, especially compared to other states. But it has much room for improvement by many metrics before we’ll see the robust pre-shutdown prosperity.

In February 2020, Texas had low unemployment and relatively high labor force participation. The unemployment rate was just 3.7%, which some economists consider to be full employment. That basically means the state’s labor resources were being used as efficiently as possible and there was no cyclical unemployment, which occurs when the economy is in recession or growing too slowly.

Likewise, a large portion of the population was participating in the labor market. In February 2020, the labor force participation rate was 64% and the employment-to-population ratio was 61.6%.

That then changed drastically with the COVID-19 pandemic and government-imposed shutdowns in March 2020. By April 2020, those numbers had dropped to 60.2% and 52.4%, respectively, the private sector lost 1.4 million jobs (12.8% decline), and the unemployment rate skyrocketed to 12.9%.

Since then, Texas has regained its lost private sector jobs, plus another 105,200 jobs, and the unemployment rate is back down to 5%.

These data tell an important story about the effect this had on Texans. The best path to prosperity is a job, as work brings dignity and hope to people by allowing them to earn a living, gain skills, and build social capital that endures. Public policy that affects the labor market is so important because it affects people’s livelihoods and their sense of dignity.

Last year, the federal government gave extra unemployment payments on top of normal payments. Together, these payments often resulted in recipients receiving more money than they might have made working. This, of course, incentivized them not to work.

About half the states, including Texas and mostly red states, rightly ended this program early and those states have been recovering faster than the states which continued the program. The states that discontinued the program before its nationwide expiration in September 2021 have averaged lower unemployment rates. They have also recovered jobs faster, relative to the number of jobs they had before the shutdown recession.

Of the 10 states with the highest proportion of private sector employment to pre-pandemic levels, nine are in red states, including Texas. Conversely, six of the 10 states and D.C. with the lowest proportion are in blue places. In general, conservative policies have been more conducive to job growth and overall recovery because they tend to get government out of the way so that people can make the decisions that are best for themselves and their families.

Texas is one of just seven states that have recovered all the private sector jobs lost in the shutdown recession. That is an achievement, but the state is still far behind (3% below) the pre-shutdown trend and other measurements of the labor market’s health show that Texas has more work to do.

The labor force participation rate is still 1.3 percentage points below its pre-pandemic level, meaning that some people have left the labor market, such as those who have given up looking for work. The employment-to-population ratio is also down 2 percentage points from its pre-pandemic level. It’s important to get these figures back to normal.

In November, Texas had 884,000 unfilled job openings and just 770,000 unemployed. That is 114,000 more job openings than workers available to fill them. To fill these jobs, Texas needs more of its people to rejoin the labor market. Achieving that goal starts with responsible government policies.

The Texas Model of lower taxes, no personal income tax, less spending, and sensible regulation is necessary to unlock poverty and let people prosper. Texas’ free-market-focused institutions helped the state outpace the national average both in economic growth and income growth in the latest data for the third quarter of 2021.

Because the 87th Legislature followed many of the Foundation’s recommendations, especially by passing the strongest spending limit in the nation, these successes for the state and Texans will hopefully continue. But we can do better.

Texas can build upon its past success in the upcoming 88th Legislature by further limiting government spending, ensuring opportunities to earn a living, eliminating property taxes, and advancing education freedom.

Such efforts will help families flourish, keep Texas Texan, and make Texas the leader for the rest of the nation.

https://www.texaspolicy.com/strengthening-the-successful-texas-model/