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A Heartfelt Apology To The Club For Growth

Earlier this week, I posed what I saw as a crucial question hanging over Rick Perry's prospects in the primary: whether Republican voters nationally would show more concern than Texas voters have about the pay for play, corporate-welfare aura that has enveloped Perry's tenure as govenror. I noted that Perry could take comfort in the fact that, for all the populist, anti-Wall Street rhetoric of the Tea Party movement, Republican voters in 2010 showed few qualms about voting for candidates who had received huge support from deep-pocketed big-business sources such as the Chamber of Commerce, the Club for Growth and individual financiers. Perhaps, I conjectured, voters would similarly shrug at Perry's high-dollar dealings (campaign contributions coming in, contracts and economic development grants going out) on "job-creating" businesses.

Well, this didn't sit right with the Club for Growth, the political outfit that spends heavily to elect Republicans committed to tax cuts and free market doctrine. The organization's Barney Keller wrote to point out that the group is in fact on the record as expressing concern about the traces of crony capitalism in Perry's record. In its white paper on Perry, the group praises Perry for maintaining Texas' low taxes and scant regulation, but then adds:

On the bad side, however, Perry has also aggressively used government spending to attract jobs to Texas.  During his time in office, Perry has signed into law two major economic development initiatives, the Texas Enterprise Fund and the Texas Emerging Technology Fund.

The Texas Enterprise Fund, established at Governor Perry’s request in 2003  has doled out $426 million since its inception to attract businesses like JP Morgan Chase and Frito-Lay.  A similar program, the Texas Emerging Technology Fund, was created in 2005 and signed into law by Perry. That fund has doled out $259 million in capital for “cutting-edge research and technology” entrepreneurs.  Economic development initiatives like these, often supported by big business, create huge market distortions in a place that should naturally be a nationwide leader in attracting jobs. Texas doesn’t need to provide $1.4 million in taxpayer dollars to Facebook, as the Texas Enterprise Fund did in February of 2010  - it can simply point to a positive regulatory and tort climate along with a strongly competitive tax climate.

These gimmicky subsidies are a form of corporate welfare, and they’re similar in effect to the tax credits decried by Perry in his 2010 book. This suggests that Governor Perry is more pro-business than he is pro-free markets.

In general, Keller said, the Club for Growth sees this as a key distinction between itself and "pro-business" groups -- that it, unlike the Chamber and others, has opposed virtually all forms of government intervention in the economy, from job incentives like Texas' Enterprise Fund, to TARP and the 2009 stimulus. It is a distinction that was lost in my blurring of Texas voters' tolerance of the crony capitalism that has been allowed to flourish in their state and Republican voters' embrace nationally of candidates whose financial backing belies the voters', and candidates', populist rhetoric. But I would still argue that the broader point applies: that Republican voters' disregard for the business and financial interests behind the candidates they support (despite the voters' purported resentment of moneyed elites) suggests that Perry will not necessarily be hurt by the perception that he is too close to business interests in his state. Unless voters come to see a true ethical taint in his dealings, the mere fact that businesses in Texas have enjoyed more than their share of giveaways and have in turn been generous in their support of Perry's campaign kitty may not necessarily be a deal-killer. If it is, then that would suggest that Republican voters are bringing their populist rhetoric and voting preferences into alignment in an entirely new way.