Texas and the New Millennium

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Texas and the New Millennium

Politics & Economics

George W. Bush was elected President in the 2000 election in a very close and controversial vote that was not decided until a month after election day. Democrat Al Gore won the popular vote by several hundred thousand, but the election was so close in the electoral college that the outcome of the race depended on the returns from Florida. Democrats alleged that some counties in Florida had confusing ballots and that many votes had not been properly counted. Further, the contested counties had a high population of black voters who historically had voted Democrat.

Since the Florida election had ended in a virtual tie, the Democrats wanted a recount in some counties. However, deadlines mandated by election laws apparently did not leave enough time for recounts. The Florida secretary of state certified the election and named Bush the winner. Democrats appealed to the Florida Supreme Court, whose members favored a recount. Republicans took the case to the United States Supreme Court, whose majority ruled that Florida election laws should be followed. Florida�s returns were allowed to stand, and Bush became the new president.

George W. Bush takes the oath of office for President of the United States.

After George W. Bush's election as President, Lieutenant Governor James Richard Perry became Governor. He fashioned a progressive program focusing on education, transportation, technology, the border and health care to improve the quality of life in Texas . He increased state assistance to higher education, most particularly by expanding the �work-study� program for college students who worked part time to have funds to help pay for tuition, books and other expenses. The governor and his supporters also crafted a $20 million grant program to encourage �first generation� college students to continue their education. �First generation� means students whose parents did not go to college.

The unemployment rate in Texas was 4.2 percent in 2000. According to the 2000 Census, 16.7 percent of the people in Texas lived below the poverty line. That figure included 23.6 percent of the state�s children. Statistics for some urban areas were also informative. Dallas, for example, had a poverty rate of 13.5 percent, which was considerably below the state average. Houston's unemployment rate of 15.2 percent was only slightly lower than the state average.

A economic recession hit the United States during 2001 and 2002. The recession also affected the Texas economy as overall non-farm employment fell. Layoffs were common among technology companies. Unemployment was expected to rise to 5.5 percent in 2002. The transportation, communication, manufacturing, wholesale and retail trade and service industries all suffered net job loses during the last half of 2001 and the beginning of 2002. Agriculture was also suffering in Texas at the beginning of the 21st Century because of a drought in the west and central regions that began in 1998. Ironically, excessive rainfall in south central Texas in July, 2002 caused flooding that killed numerous people and resulted in millions of dollars of property damage.

Projections on future economic trends were more positive. Productivity continued to grow and new residents increased the state's population. State exports of about $112 billion in 2000 were predicted to rise to approximately $144 billion by 2005. Additionally, the state�s oil and gas industry, a mainstay of the Texas economy, continued to prosper due to high energy prices. Most of the figures indicated a basically sound state economy even in the midst of the country�s recession.

The fall of 2001 saw the collapse of Enron, an energy company with headquarters in Houston. Enron was formed in 1985 by the merger of Houston Natural Gas and Internorth, an Omaha, Nebraska natural gas company. Enron expanded into supplying electricity, trading energy futures and other physical commodities, and selling high speed Internet access. By 2000, Enron was the seventh largest corporation in the United States and it was the largest supplier of natural gas in North America and England. Enron collapsed after it was discovered questionable accounting practices had overstated its revenues by millions of dollars for a number of years.

Enron's collapse caused thousands of the company's employees who held its stock to lose their retirement benefits. A congressional investigation was held to find out what happened and Enron's auditing firm, Arthur Anderson, was put on trial for obstructing justice for shredding documents about Enron's practices after being notified about the congressional investigation. The fallout from the Enron collapse resulted in new laws being considered that would limit the percentage of company stock employees could hold in their company's retirement plan.

Rick Perry was reelected governor in the 2002 elections. In 2003, the state legislature engaged in a contentious debate over changing the boundaries of state congressional districts. The House Democrats staged a walkout in May over the proposed new plan, which would have given the Republicans more seats, preventing it from coming to a vote. Governor Perry then called a special session in June to deal with the redistricting issue, but the Senate couldn't come up with the required 2/3 majority needed to bring the issue to a vote. Governor Perry immediately called for a second special session, but 11 of the 12 Senate Democrats boycotted the session and refused to attend.

On Saturday, February 1, 2003, the Columbia space shuttle broke apart on reentry, killing all seven crew members. Debris from the shuttle fell over much of northern Texas. Over the next several months, much of the debris was recovered through the efforts of many government agencies. Disaster also struck the southern coast of Texas when Hurricane Claudette hit on July 15th.

In late 2007 rainfall throughout Texas began declining. By 2009 Texas was suffering through it worst drought since the 1950s. South central Texas was the most affected and 77 of Texas' 254 counties were in "extreme" or "exceptional" drought conditions, the most severe levels on the U.S. Department of Agriculture's index. The drought caused over $3.6 billion of crop and livestock losses. Many cities were forced to implement mandatory water restrictions.

Hurricane Claudette coming aground in Texas. (Courtesy NASA and Space Science and Engineering Center, University of Wisconsin-Madison)

Towards the end of 2007 a mortgage crisis threatened the financial services industry. Because thousands of mortgages had been sold to unqualified buyers the secondary market for mortgages collapsed, housing prices fell and banks were faced with billions in loans that could not be collected. Major banks and other financial services companies faced insolvency and thousands of families faced foreclosure. The United States government stepped in to provide billions in financing for the largest banks and financial services companies while many other companies were forced into bankruptcy. The crisis caused consumer spending to collapse in 2008 and all sectors of business were faced with declining sales and revenue. As a result many business were forced to lay off workers and the economy was further weakened. Particularly hard hit were the major domestic automakers. General Motors required billions in government money to survive and Chrysler was sold to the Italian automaker FIAT. In 2009 the U.S. Congress passed the American Recovery and Reinvestment Act, which provided almost $800 billion dollars in funds to help strengthen the economy.

Additional Resources

	Find out more about the drought in Texas.
	Find out more about the collapse of Enron.

Study Guide Questions

Why was the election of George W. Bush as president so controversial?
How did the national recession in 2001 and 2002 affect Texas?
What were some positive economic signs in Texas during this time?
What caused the Enron collapse and what was the reaction of the U.S. Congress to its collapse?
What natural disaster and economic crisis occurred in Texas from 2007-2009?

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