The Texas Republican claim of being pro-business and anti-regulation is taking increasingly expensive hits as state leaders target companies that conflict with their personal politics. Their actions could leave Texas taxpayers footing a bill worth $416 million.
Guns are the main offender. Last month, Citigroup got a letter from the Attorney General’s Office that said they had “a policy that discriminates against a firearm entity,” and that such a policy could not be strictly business related. As such, the banking company was forbidden from doing business with state entities in Texas.
The practice goes back to a 2021 law passed that bars companies from “discriminating” against companies that make weapons or process fossil fuels from participating in state contracts. Heralded as an anti-woke policy, it wages ideological war on businesses operating in Texas.
Governor Greg Abbott made his position clear in a February 10 tweet.
“Texas has a $2 Trillion economy,” he wrote. “We won’t be bullied or discriminated against by woke ESG policies. We dropped Citigroup from the group of banks participating in the biggest-ever municipal-bond transaction from Texas.”
Gun companies and the oil and gas industry are not people and cannot be discriminated against, but Texas Republicans’ desire to protect them from being slightly less rich is genuine. JPMorgan Chase, Goldman Sachs, Bank of America, and Fidelity Capital Markets have all received similar communications. These banks were responsible for underwriting 40 percent of Texas municipal bonds, putting the credit of the state in crisis.
A University of Pennsylvania study shows that taxpayers are going to be paying an extra $416 million thanks to the policy. As Republicans drive out banks for withholding support from gun manufacturers or investing in green energy on ideological grounds, there is less competition and less motivation for the remaining banks to offer lower loans. Over time, it can create a near-monopoly.
There’s good reason to believe that this style of governance will increase instead of stall out regardless of the cost. After the fall of Roe v. Wade and the near-total ban of abortion in the state, companies are having harder times finding skilled employees willing to move to Texas. Those that do have work forces in the state face repercussions if they help employees seek reproductive care elsewhere. While the financial effect of this has not been determined, it’s not hard to guess that many companies will simply not want to deal with the headache of the matter.
The much-feared Tech Exodus hasn’t happened yet, but recruiters are finding that workers have no interest in relocating to the state even if a company will pay 100 percent of the moving cost. In the fast-paced tech sector, this can quickly make Texas a backwater that lags behind the rest of the country and denies them the benefits of innovation.
To be clear, there is no evidence that punishing companies that promote green energy, refuse to support gun manufacturers, or help their employees receive reproductive care has any material benefit to the state. It is purely a means of exercising ideological control on the private sector at the expense of the taxpayers.
