GOV. RICK PERRY: “I don’t think the federal government should be involved in that type of investment, period. If states want to choose to do that, I think that’s fine for states to do that.”
KAREN TUMULTY: “And you have in Texas done that with the emerging technology fund. But your own state auditor said earlier this year that that fund is neither accountable nor transparent. The Dallas Morning News reported that that fund gave $16 million to companies that are connected to your campaign contributors. And like Solyndra, some of the emerging technology fund investments have gone bust. So how is this different in principle from the Obama administration’s efforts to pick winners in the future economy?”
PERRY: “Well, first off, the Texas legislature has full oversight of that committee. It’s approved it for -- I think since 2003. So every two years the Texas legislature looks at it and it’s had full oversight, and I can promise you the 54,600 jobs that have been created and the 14-plus billion dollars worth of investment that has come out of the Enterprise Fund in the state of Texas, those people that have jobs today in the state of Texas, they are absolutely happy that we’ve got a program like that. And 75 percent of my appointees never made a contribution to me, period.”
TUMULTY: “But you talk about oversight. The fact is that in some instances your appointees have overruled the regional boards that have tried to turn back some of these deals.”
PERRY: “Every one of those projects had the lieutenant governor, the speaker and the governor’s office. So there’s extraordinary amount of oversight in those programs, and we’re proud of them. I mean, we feel like those are part of the reason that Texas has led the nation in the creation of jobs.”
— Exchange between Texas Gov. Rick Perry and Washington Post reporter Karen Tumulty during the Washington Post-Bloomberg GOP debate, Oct. 11, 2011
Staunch conservatives characterize government-run investment programs as “corporate welfare.” Perry’s remarks suggests he thinks the initiatives are fine at the state level, but not for the federal government — an argument typically reserved for state’s rights issues.
The governor’s comments shed no light on his logic. We still don’t know how these programs can be wrong for one type of government and right for the other. At the end of the day, these funds work the same, investing taxpayer dollars in companies that can supposedly grow jobs and prosper.
Perry suggests his initiatives have been wild successes in terms of job growth. He also suggests that the state provides adequate oversight, regardless of whether his campaign donors stood to gain from investments. How accurate are his claims?
Perry and Tumulty were talking about two pools of investment money, the Texas Enterprise Fund and the Texas Emerging Technologies Fund. The enterprise fund has doled out $440 million over the past seven years, while the technology fund has awarded $334 million since 2005.
A stat sheet from the governor’s office shows that the enterprise fund provided work for more than 59,000 people. But a front-page article in Tuesday’s Wall Street Journal suggests many of the numbers on that list are grossly inflated.
Perry’s alma mater, Texas A&M, received $50 million for its Institute for Genomic Medicine, which was supposed to produce 12,000 new jobs. The Journal reports that only 10 people work in the new building.
The governor’s stat sheet itself shows that the enterprise fund has not been an out-and-out success. It lists nine companies that failed to produce jobs or revenue for the state.
One of the more embarrassing examples is Countrywide Financial, an institution embroiled in lawsuits stemming from its alleged role in the mortgage crisis that sent the economy into a tailspin.
Countrywide, now owned by Bank of America, received $20 million, the sixth-largest sum among all 89 enterprise grants. The company promised more than 3,800 jobs, but the governor’s office lists the firm as having produced none. Only four grant recipients promised more employment gains.
A “clawback provision” in the program requires companies to reimburse the state for jobs not delivered, but Countrywide has repaid just $8.5 million of its $20 million disbursement.
A 2010 report from the nonprofit political watchdog group Texans for Public Justice shows that 13 companies receiving enterprise funds failed to meet the job targets from their original contracts with the state. The governor’s office also terminated another six contracts for the worst-performing companies. All told, only 11 of 50 companies had met their goals as of 2009.
As for the issue with campaign donors, the Dallas Morning News reported last year that the Emerging Technology Fund awarded more than $16 million to some of Perry’s biggest contributors.
The governor’s office administers the technology fund and approves each award, which appears to present a conflict of interest. The lieutenant governor and House speaker must also sign off, but not until the governor has green-lighted the companies.
The News article notes that the 20-plus states with similar funds avoid using such a system in order to prevent corruption.
Perry told The News that it shouldn’t matter whether the award recipients supported his campaigns, as long as their projects were worthy of funding. It turns out that some of them were not.
The governor also denied knowing whether his donors had ties to the companies receiving money, even though applicants had to submit full financial disclosures with names of investors.
Perry’s remarks suggest that the legislature’s reauthorization of these grant programs proves adequate oversight. But reauthorizing old programs and feeding them more money is not the same as auditing them.
His campaign did not respond to a request for comment.
The Pinocchio Test
It’s hard to believe Perry had no knowledge that his donors might benefit from the grants that this state program provided. The governor cannot deny knowing about potential conflicts of interest when he’s part of the oversight team that he claims is doing such a great job.
During the debate, Perry pulled back from past denials, instead emphasizing that the vast majority of the award recipients had no connection with his campaigns.
The governor’s remarks from Tuesday don’t represent outright misrepresentations, but The Journal’s report shows that his jobs claims are likely exaggerated. The governor also does a poor job explaining how his state provides adequate oversight of the grant programs.
Perry earns just one Pinocchio, although he’d probably fare worse if we were fact-checking his statements from past news articles.