No California business for you!

The rivalry between Texas and California is no secret, and it goes far beyond the fact that they are the two most populous states in the nation. While neither state is monolithic in terms of its political ideology—Texas has deep-blue Austin while some inland parts of California are a startling shade of crimson—the politics of each state has been marked by radically different ideologies. California's main power bases of economic and political power include two of the places conservatives most love to hate: San Francisco and Hollywood. Meanwhile, every single statewide elected official is a Democrat, and Democrats have dominated the state legislature, despite the roadblocks along the way. In recent years, the state government has sought to invest in projects like high-speed rail and solar energy, often taxing itself for the privilege Texas, of course, is just the opposite: a conservative ideological paradise funded substantially by the oil industry, with low taxes and a belief that government is the problem, not the solution.

Because of its ideological ramifications, the rivalry between Texas and California is more than just competition for bragging rights between the nations two heaviest hitters; rather, it is ground zero in an ideological proxy war between the progressive and conservative factions of larger-scale national politics. And in recent years, as the Lone Star State was experiencing its so-called "Texas Miracle" while California was limping along from budget crisis to budget crisis, it was far from uncommon for conservative ideologues to point to the contrast between the two as evidence of the success of conservative economic policy.

Unfortunately for them, the tide has turned on this view. First, the so-called Texas Miracle turned out to be a sham masked by a combination of rapid population growth, high oil prices and low wages. Ironically enough, it was billions of dollars in stimulus funds that was propping up Texas' budget solvency. When that ran out and the economic crisis finally showed its full effects, the state faced a crippling budget deficit of $27 billion, and was forced to make massive cuts to Medicaid and education to stay afloat.

California, meanwhile, has been on exactly the opposite trajectory. The voters, sick of the tax revolt that had been artificially maintained by the Republican minority, voted in a series of structural reforms that loosened the minority's stranglehold in Sacramento and followed that up by passing two tax measures to promote green energy and protect our schools from further cuts. Combined with the economic recovery that has been taking place nationwide, these changes were enough to put California's budget back in the black for the first time in many years, even as Texas suffers from high poverty, low wages and a drastically failing education system.

Join me below the fold to learn more about why the economic miracle in Texas was really a mirage.