The lieutenant governor of the nation's second-largest state measured by gross domestic product says structuring government spending and taxation the Texas way is the ideal approach -- and even if Congress doesn't entirely agree with it, he wants to see Washington lawmakers get the fiscal cliff resolved.Speaking Thursday at an event hosted by the Dallas Regional Chamber, Texas Lt. Gov. David Dewhurst spent considerable time praising the successes of his state's economy in recent years and stressing his position that low taxes and minimal government interference make the Lone Star State appealing to businesses and individuals alike. Texas is one of the states with no income tax on its residents.
While many of his remarks were specific to Texas, such as dealing with the future needs for water and roads as well as the state's projected population growth, he also addressed the fiscal cliff, the combination of tax increases and government spending cuts Congress and the White House are trying to head off before the end of the year.
Should an agreement not be reached, Dewhurst, a Republican, said he believed Texas was capable of withstanding the impact, but he'd clearly rather that outcome be averted.
"If that happens, the state of Texas is still sitting in a good position," he said of the cliff. "It will affect all states, all the markets. It will slow down, some, our economy. It will hurt our banks, our financial institutions." Dewhurst, who made a bid this year to get to D.C. himself before losing the GOP Senate nomination to Ted Cruz, didn't want to speculate on the chance of the United States experiencing recession anew, "but I know that the fundamentals in Texas are strong. I think our fundamentals in Texas are stronger today as we close out 2012 going into 2013 than we were in late 2008 going into early 2009."
Before, during and after the last official U.S. recession, Texas showed gross domestic product growth that outpaced the nation overall.
(Source: Commerce Department - Bureau of Economic Analysis)
"I think in the Armageddon event of the country going back into a double dip or a new recession, that the state of Texas would do better than it did in 2009," he said. "But having said that, I find it hard to believe that good men and women of different parties can't come together sometime in January or February if they're not able to reach an agreement on Jan. 1 and solve this. We've got to put the country first. We can't keep putting ideology and parties first, with the exception that we know there are certain fundamentals that work and certain things that don't work."
Dewhurt's comments came just hours after House Speaker John Boehner said he was discouraged by the most recent talks on how to avoid the cliff. "No substantive progress has been made in the talks between the White House and the House over the last two weeks," the Ohio Republican said. "There's been no serious discussion of spending cuts so far, and unless there is, there's a real danger of going off the fiscal cliff."
At the same time, a guest on The Daily Ticker said cliff worries aside, the U.S. is in fact already back in a recession. Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, has made a series of negative calls on the state of the economy in the last year-plus, and he did so again this week.
"The evidence is starting to mount that a recession is already underway, and we're a few months into it," he said. Achuthan said that readings on production, income and sales since July support his view that the economy has again fallen back into recession. This, despite the Commerce Department saying GDP rose at a 2.7% annual rate in the third quarter, an upward revision from its prior 2% estimate, published in October. The Commerce Department's final reading on third-quarter GDP will be available next month. Second-quarter GDP, meanwhile, rose 1.3%.
For the time being, there's simply no knowing whether a pact on the fiscal cliff is going to be reached in 2012 or sometime next year -- or not at all. Dewhurst's point about compromise in Washington was also raised this week by billionaire investor Warren Buffett, who said he's expecting a deal, though he's not sure one will be reached before Dec. 31.
Dewhurst's answer to the matter might not exactly be simple to implement, but he's confident in it. "I believe that good people, if they look at what works ... look at a model, like Texas," he says. "The empirical evidence is there if people would just open their eyes and stop playing politics."
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