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Wednesday, August 31, 2011

Red State Welfare Queens Revisited

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I can't figure out why Democrats and liberal commentators don't talk about this more. Especially now, with the Republican Party scrambling to cut pretty much all federal spending. But, for the most part, they aren't. It's not difficult to understand; red state economies are subsidized with blue state money. In other words, the average red state takes more federal tax dollars than it pays in, while blue states take less. I've written about it before. If we wanted to talk about welfare queens living off the largesse of federal government, Republican states are the queens we'd be discussing.

So what does this say about the economics of Republican state governments? Not good things. The ten poorest states in the nation in 2009 were all red states. What happens in red states is the Republican race to the bottom, where they cut services and spending to lower taxes, in hopes of attracting businesses and jobs. But low taxation isn't the only thing businesses are looking for. They want good schools -- not only for their own kids, but because good schools mean good workers. They want a strong infrastructure to maintain their distribution and supply chains. They want local consumers to buy their products or services. Red states offer none of these things and that is a direct result of the "tax cuts are everything" approach to economics.

All of this comes to mind because of a takedown by Robert Reich of Texas Governor Rick Perry. Perry wants "big government" out of our lives (except for the sex police, of course) and has advocated what Reich calls "fiscal secession" from the federal economy -- i.e., each state is on its own, financially. Leaving aside Perry's hypocrisy here, this would be a disaster for voters in most Republican-dominated states.


This might be a good deal for Texas. According to the most recent data from the Tax Foundation, the citizens of Texas receive only 94 cents from the federal government for every tax dollar they send to Washington.

But it would be a bad deal for most other red states. On average, citizens of states with strong Republican majorities get back more from the federal government than they pay in. Kentucky receives $1.51 from Washington for every dollar its citizens pay in federal taxes. Alabama gets back $1.66. Louisiana receives $1.78. Alaska, $1.84. Mississippi, $2.02. Arizona, $1.19. Idaho, $1.21. South Carolina, $1.35. Oklahoma, $1.36. Arkansas, $1.41. Montana, $1.47, Nebraska, $1.10. Wyoming, $1.11. Kansas, $1.12.

On the other hand, fiscal secession would be a boon to most blue states. The citizens of California -- harder hit by the recession than most -- receive from Washington only 78 cents for every tax dollar they send to Washington. New Yorkers get back only 79 cents on every tax dollar they send in. Massachusetts, 82 cents. Michigan, 92 cents. Oregon, 98 cents.

"The federal government is like a giant sump pump -- pulling dollars out of liberal enclaves like California, New York, Massachusetts, and Oregon -- and sending them to conservative places like Montana, Idaho, Oklahoma, Arizona, Wyoming, Kansas, Nebraska, and the Old South," he goes on. "As a practical matter, then, Rick Perry's fight to save America from Washington is really a secret plan to save blue states from red states."

And further, drastically reducing spending hurts taxpayers in all states. Everyone gets something back, some just get more than others and some get more than they paid. But cutting spending to states means that, of all those tax dollars your sending off to Washington, you get less back in terms of government services and things like employment. If you're in a red state, this means you're screwed. Your roads and bridges will continue to crumble, your schools will become worse, your consumer base will have less money. And businesses won't want to have anything to do with you. But don't worry, no one will have the money it takes to pay for an abortion, so you've solved the big problem, right? This isn't just a Rick Perry idea, this is a Republican idea. Anyone who thinks the Governor of Texas is an original thinker hasn't been paying attention.

So why should blue state liberals care about this? For one, we're good people and watching Americans in other states slowly destroy themselves is painful. But another reason is that, as much as people like Perry like to pretend otherwise, we're one economy as much as we are one nation. And we don't need a bunch of third-world red states dragging the rest of us down.


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