Senator Eliot Shapleigh - El Paso, Texas

Mar. 10--AUSTIN -- Throughout his tenure, Gov. Rick Perry has been bullish about taking credit for every uptick in the Texas economy.

But with the recession finally hitting Texas, Perry faces a potential problem in next year's re-election campaign: how to avoid the blame.

"Bad economies are bad for incumbents," said Jim Riddlesperger, a political scientist at Texas Christian University. "He can't claim he wasn't in office when the economy went bad. He's been there for a decade."

New economic indicators suggest that while Texas is faring better than other states, it is now losing jobs rapidly. And worse for Perry, economists project job losses could peak just as voters go to the polls for primaries in March 2010, when he's expected to face Sen. Kay Bailey Hutchison in a Republican battle royale.

Perry says he has taken steps to cushion the blow; Hutchison says he hasn't done enough.

"There are challenges ahead," said Perry spokesman Mark Miner. "The goal now is to guide the state through the current economic downturn and focus on what's worked to create jobs."

Rick Wiley, Hutchison's campaign manager, said Perry is "taking credit for things that have preceded him" -- no income tax and right-to-work status.

"It's every governor's job to try to woo business into the state," Wiley said, adding that Perry has failed to protect the state's future economy with adequate support for higher education.

Texas lost nearly 76,000 jobs in January. Economists project unemployment could reach 8 percent this year.

Regarding the federal stimulus package, Perry has said that the state should review the package carefully before accepting the money. He hasn't yet said whether he would reject any of it.

Perry has made Texas' economy a centerpiece of his administration.

In a speech to homebuilders on the Capitol steps last month, Perry said his administration's emphasis on low taxes, limiting lawsuits and subsidizing businesses that locate in Texas has paid dividends.

"I'm very proud of the fact that we've created more jobs than any other state," he said, citing figures that seven of 10 jobs in the country were created in Texas before the downturn late last year.

Miner pointed to Perry administration initiatives, including establishment of state funds to reward business and high-technology companies to locate and expand in Texas. He also cited the Texas Workforce Commission's job-training efforts and a fiscally conservative approach by Perry aimed at curbing state spending.

"Now is not the time to have out-of-control spending like we've seen in Washington," said Miner.

The Hutchison campaign blueprint anticipates accusing Perry of allowing the state budget to double during his time in office. Moreover, her campaign has prepared a list of defense-related and other jobs she has helped create as a senator.

While each will try to make the case that they've taken steps to help spur job creation, neither campaign is yet offering an extensive plan for reinvigorating the economy next year.

Politicians typically try to claim credit for good news that happens on their watch.

The difficulty for Perry, Riddlesperger said, is that the incumbent's claims of a booming economy are belied by the latest projections. Even the claim that Texas is doing better than other states will be little comfort to those who've lost their job.

"Most people are going to know the job situation is bad, that their mortgage situation is bad, and they're mad at the people in government for that," he said.

Perry and Hutchison will be vying for support among GOP voters, not necessarily the state as a whole, in the gubernatorial primary a year from now. So the Perry team believes his message of cutting taxes and boosting business will appeal to Republican activists who make up a big part of the GOP primary.

Hutchison hopes to expand the primary electorate to include moderate Republicans and independents with concerns about the economic downturn.

In making his case that his administration has boosted the economy, Perry told the homebuilders last month that his economic development fund has created 54,000 jobs since 2003 with taxpayer money to lure businesses to Texas.

Perry said the fund is one reason that Texas has been a leader in job creation. Not all the jobs have yet been created.

Perry gave $20 million to Countrywide Financial, the subprime lender that ran into legal trouble because of its predatory loans. Another recipient was Washington Mutual, which got $15 million before it foundered and federal regulators stepped in.

Perry aides say they're confident that despite the economic downturn, both companies will make good on their job-creation promises.