Live from Katz’s: CNBC Toasts Texas Economy – and Leaves a Few Things Out

CNBC Names Us Best State For Business, Doesn't Consider $18 Billion Deficit


As the CNBC crew packed gear at Katz’s Deli on Wednesday afternoon, ready to knock off after a long day of recognizing Texas’ supposed status as the nation’s number one place for business, I noticed a decidedly less happy figure in the doorway. Ryan Cruckshank-Dittmar had also arrived at the Austin restaurant—looking for work.

“I’m a college graduate, I’ve got two degrees, but I still can’t find anything to apply my degree,” he told me. “I can only find work in the food industry.”

He’s been looking for something long-term for the last year and half, but he’s only found gigs delivering pizza and the like. “I’m open to almost everything,” he sighed.

Such ill fortune had little place in this daylong celebration of America’s most wondrous economy. CNBC had named Texas the best state for business on Tuesday, then decided to commemorate the honor by filming at Austin’s only New York deli. Among Subway maps and Yankees memorabilia (welcome to Texas!), owner Marc Katz, whom you may remember from his losing bid for lieutenant governor, seemed to treat the event as an extended advertising opportunity for both the cowboy state and his own East Coast-style restaurant.

“Why do you think we’re the best?” Katz shouted to CNBC correspondent Scott Cohn. “It’s not just because Katz’s never closes! Actually in this economy, Katz’s never forecloses!” The restaurant was largely empty at the time, creating an echo chamber of Katz’s laughter.

Texas won the honor despite its looming $18 billion projected budget deficit for the next budget cycle, 2012-2013. CNBC seemed unaware of our fair state’s fiscal approach—we work in two-year cycles rather than simply writing a budget for the year ahead. On its website, CNBC shook its head at the “a Texas-sized, $4.6 billion budget shortfall.” It’s hard to know how we would rank had they examined the budget we’re actually going to be working on next session, with a deficit more than four times that large in a situation distinctly and uncomfortably similar to California.

The whole thing didn’t concern Cohn much. “Everything’s relative to the other states, and every state has budget problems,” he said.

Katz certainly doesn’t seem concerned. “If we fall into the excuse that it’s the economy, we have a reason not to do well,” he told me. “I am the only variable—not the Texas economy, not the legislators, not the executives.”

If only Cruckshank-Dittmar had known. In fact, Katz, like former Sen. Phil Gramm before him, says the economic troubles will only come if we worry about them. “If we talk ourselves into a recession,” he says, “we’re going to have one.”

But despite his enthusiasm, even CNBC is concerned about Texas’ education funding. Its rankings put Texas 30th out of the 50 states in its approach to education, based on how much it spends and our students test scores. According to Cohn, college entry tests, like the SATs and ACTs, play a major role in that ranking. “That’s an area where Texas lags,” he told me. Here again, we’re lagging much more than CNBC seemed to realize.

Rick Perry, whose campaign touted the event as a celebration of the governor’s economic mastery, told CNBC, “We have more kids take the SAT than any other state in the nation. A high percentage of our kids take the SAT.” The Houston Chronicle already knocked down those assertions—turns out we’re actually 45th out of 50 in combined SAT scores—and evidently CNBC did its homework on this one. Cohn said the state’s education spending, not to mention the low scores, set Texas back.

But not by much, evidently. CNBC still says this is the best place to be for business. But then again, this is the station that brought you Jim Cramer’s Mad Money show.