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September 16, 2003

THE RED AND THE BLUE....I got to thinking about the recall the other day, and that got me to thinking about budgets and taxes, and that in turn got me to thinking about why the California budget is so out of whack.

Now, part of the reason is that spending went up too much in the late 90s, and part of it was the dotcom bust, and part of it is just the general creakiness of our tax regime. That's all true. But there's something else too, something that chafes just an itty bitty little bit.

Here's the deal. Give or take a bit, Californians pay a total of about $135 billion in state and local taxes. This is roughly 12% of total state income and makes California a fairly high tax state. Why are taxes so high here?

Well, one reason is that Californians pay about $255 billion in total taxes to the federal government but receive back only $195 billion in services. That's a difference of $60 billion.

In other words, California subsidizes other states to the tune of $60 billion a year. If even half that money were used here instead — for California roads, California schools, and California cops — we could have wiped out our deficit and lowered taxes at the same time.

So who's getting all our dough? Why, all those hard working, salt of the earth, traditionally valued red states, that's who. The same ones who tell us they represent "real" America and complain endlessly about our elitist values, our anti-business attitudes, and our socialistic tax system. In fact, it turns out that with only 12 exceptions the net contributors to the federal budget are blue states and the net sucker-uppers are red states.

How many different ways is this infuriating? Let's count:

  • The red staters complain endlessly about high taxes, but they sure don't seem to mind sticking other people with high tax bills.

  • The red staters are the ones on a crusade to shrink the evil federal government, but they seem plenty happy with that government as long as they're getting more than their fair share of it.

  • Red state politicians are sworn foes of the welfare state, but they sure seem eager enough to hoover up other people's hard earned tax dollars.

  • Red staters rant continually about how us socialists in the blue states are driving business away because of our high taxes. Well, maybe we could cut some of those taxes if the red states gave us back some of our money, eh? And in the meantime, even with our profligate business taxes we seem to have enough business left to subsidize their economies, don't we?

  • Income redistribution? Why, that's communism! Unless we're redistributing from blue to red, that is.

Basically, red America is living on welfare, and the payments are coming from us commie symps in blue America. And being the progressive sort that I am, I wouldn't even mind that so much if they'd just take our money and shut up, instead of taking our money and then venting endlessly about the corrupt, liberal, anti-American values of the people who make it possible.

But these guys don't want to cut taxes or shrink government, they just want to cut their taxes and shrink our government. Pretty nice scam, isn't it?

POSTSCRIPT: Yes, I know this rant doesn't apply to all red staters. But you know who I'm talking about....


Posted by Kevin Drum at September 16, 2003 02:20 PM | TrackBack


Comments

Brad Delong had a purple map, which shaded the states by how "red" or "blue" they were - they were all mostly purple.

Couldn't find that, but here's a
(sort of) county version:

Brad DeLong's county 'purple' map

Posted by: squiddy at September 16, 2003 02:30 PM | PERMALINK

Great argument, Kevin. Let's not forget, though, that we Californians have the largest congressional contingent in the country. The underlying story here is the abject failure of our elected representatives to bring home the bacon, or at least keep it here. Yes California gets screwed by having the same senatorial contingent as Wyoming, Vermont and Idaho. But with 53 members of the house, there really is no excuse for this pathetic performance. Regardless of party affiliation, job #1 for any politician is to take care of their constituents. With Pelosi in charge of the house democrats now, we might see some progress, though I won't be holding my breath.

Posted by: bling at September 16, 2003 02:36 PM | PERMALINK

Interesting post Kevin, but I'm wondering how this all really works out. Are there some general overriding programs that this money goes to that favors the red states in receipts (i.e. higher senior populations meaning more SS recipients, large amounts of federal land relative to general population)? I don't disagree with your basic premise (that much Conservative ideology is based on mistaken assumptions about libertarian self-sufficiency), but I'm curious about how the details may actually bear this out.

Posted by: Doug-E-Fresh at September 16, 2003 02:36 PM | PERMALINK

P.S. The correct Purple map. Sorry for that off-topic purple map stuff, I thought it was interesting.

But back to the topic at hand: Hell, yes Kevin! Thank you. CalAudit wins! Wow. $60 billion? I'll take that.

Posted by: squiddy at September 16, 2003 02:38 PM | PERMALINK


In other words, California subsidizes other states to the tune of $60 billion a year. If even half that money were used here instead — for California roads, California schools, and California cops — we could have wiped out our deficit and lowered taxes at the same time.


Good point. There's a simple solution to this, of course: reduce federal taxes way way down. The federal government wouldn't be able to "re-distribute" (so to speak) these taxes it takes from us Californians to give to the red-staters, if it didn't take it away from us in the first place. We'd have more money, to buy stuff (which, BTW, the state would be able to tax via the sales tax, thus increasing its revenue).


I therefore look forward to your blog entry advocating a drastic reduction in federal taxes.

Posted by: Name: at September 16, 2003 02:41 PM | PERMALINK

I'll nominate Alaska as the reddest of the red states. We not only gripe about "The Feds" while laughing all the way to the bank. We also complain about "our tax dollars" being wasted by the state. Except Alaskans don't pay any state taxes, beyond excises on booze, tobacco, and motor fuel. Counting the Permanent Fund Dividend, that's actually a net flow of revenue from the state to the citizens.

Damn gubmint!

Posted by: Grumpy at September 16, 2003 02:42 PM | PERMALINK

Who was the artist that had the song with the line about "Hayseeds on subsidies cussing women on welfare"?

Posted by: Doug-E-Fresh at September 16, 2003 02:47 PM | PERMALINK

I look forward to Kevin's rant when the Democratic candidates fail to advocate cutting ethanol subsidies in Iowa, and Medicare reimbursements in Florida and Arizona. What? No such rant will be forthcoming? Heavens, this must mean that CalPundit puts winning above other considerations. How shocking!

Posted by: Will Allen at September 16, 2003 02:50 PM | PERMALINK

Of course, it's frequently been liberal Democrats who've pushed for money to be sent to red states.

Consider that the GOP Congress eliminated most agricultural subsidies after taking over in 1994, but then Democrats used the issue against the GOP in congressional elections and many of them were put back in.

Or consider that largely urban blue states end up paying for the Social Security and Medicare entitlements of demographically older red states.

Just like with the "campaign finance reform" that Democrats pushed through, they've managed to shoot themselves in the foot. It's not the Republicans' fault.

Posted by: Ryan Booth at September 16, 2003 02:52 PM | PERMALINK

Name, we'd also have to snip the administration's credit cards. Or rather, the GOP would since the Democrats don't have a lot of clout.

Posted by: Barry at September 16, 2003 02:52 PM | PERMALINK

This is true Kevin and I have read this complaint from several other liberal columnists. But a question you don't address is why the people and representatives of big wealthy liberal states like CA, NY, MA and others continue to vote against their own interests. Why do so many of the representatives vote for farm subsidies and huge increases in federal education spending when their constituents are going to get short changed.

You take a Senator Ted Kennedy. There is no amount of federal education spending he would not support and probably say it is still not enough. But his state can easily afford to fund it's own school system and is more and more of a net donator with every additional dollar of federal education spending with added overhead to boot. And if I had to guess Senators like Kennedy and Boxer are also more than happy to support super sized deluxe farm subsidies as well. So I say to liberals who complain about this inequity, you are right NOW DO SOMETHING ABOUT IT!!!

Posted by: GaryL at September 16, 2003 02:52 PM | PERMALINK

Um, did you see the firm bill a republican congress with a republican president passed recently?

Posted by: Atrios at September 16, 2003 02:53 PM | PERMALINK

While I don't dispute your basic thesis that the blue states subsidize the red states, there's something else going on.

Over the years California voter iniatives have capped taxes (or required a super-majority to raise them) and increased entitlements/services/benefits. That is, any time you put an initiative in front of the voters that (a) lowers taxes or (b) increases government services it's likely to pass. The problem is that you can't simultaneously lower taxes and increase services -something's gotta give.

Everybody wants something for nothing, but there's no such thing as a free Latte.

Anyway, the point is that responsible leaders would ask "what services do we cut?" whenever they cut taxes and "how do we pay for this?" whenever they increase benefits or services. Initaitives are the equivalent of mob-rule and it's understandable why they would lead to the something-for-nothing syndrome.

I can't fathom what excuse the current resident of the White House has to offer, since he's playing the same something-for-nothing game. Cutting taxes without cutting spending is unsustainable and irresponsible. I can't understand for the life of me how people can call themselves conservative and sit quietly while we have $500 billion deficits.

Posted by: uh_clem at September 16, 2003 02:57 PM | PERMALINK

Bling -- the CA congressional contingent is toothless in the Senate/House conferences where budgets are ultimately hashed out. CA has two senators -- same as Idaho, Utah, Wyoming, etc....

You really should read "Sizing up the Senate: The Unequal Consequences of Equal Representation" if you're interested in this. One review of the books findings is here:

http://www.cwru.edu/pubs/cnews/2000/7-20/senate.htm

CA, NY, and other large population states have been getting screwed for as far back as we can see. This is not a short term phenomena, or based on the short-comings of our CA congressional delegation.

The fact is, in the US House of Lords (otherwise known as the Senate), big state dollars are stolen by small state Senators.

Posted by: boban at September 16, 2003 02:58 PM | PERMALINK

Kevin,
I had the same thoughts when I saw this map several weeks ago. But one thing to consider is that federal services are awarded, more or less, on a per capita basis, while the tax burden, even now, falls disproportionately on the rich. So the map might just reflect the high concentration of wealth in urban areas. Just a hypothesis to consider. . .

Not that the constant griping about taxes you hear from farmers in my home state (Idaho--$1.31) isn't very annoying.

Posted by: Matt at September 16, 2003 02:59 PM | PERMALINK

Name, we'd also have to snip the administration's credit cards.


Barry, how does that address my point?


It's truly ironic. Kevin's noticed that California is a net payer, and that the "red states" are net leeches. This situation is exacerbated by high federal taxes, but could be remedied by lowering federal taxes.


So who does Kevin blame? Red-state conservatives! The people who "complain endlessly" about taxes, in his words. Boy, they really bother Kevin, what with their advocating-something-that-would-help-his-state-and-hurt-their-own-state, and all. Those ungreedy bastards! It's all their fault. If only they'd drop their stubborn resistance to the cause of the problem, the situation in California could get worse, and Kevin would like them better (or something)(?).


Is there such a thing as "political masochism"?

Posted by: Name: at September 16, 2003 02:59 PM | PERMALINK

*farm*

Posted by: Atrios at September 16, 2003 02:59 PM | PERMALINK

Kevin, how do you slide so easily from state taxes to federal taxes. They are independent variables in the equation. California is a high tax state for STATE taxes. We also pay FEDERAL taxes and that is the imbalance that you map out.

This imbalance has nothing to do with the fact that the California legislature imposes higher taxes on its own citizens than most states while still going broke. It is like you are saying that if you house payment wasn't so high, you wouldn't be having your Jaguar repossessed. While that is true, it has nothing to do with the fact that you should have purchased a Honda, since you knew how much your house payment was. The same holds true with the incessant whining about Prop 13. Prop 13 was 20 years ago. If the state government can't even budget around well known limitation like that, then they can't budget anything.

None of this is an attack on your irritation at the people who complain about high taxation while getting more than an even amount of money from the government.

It would be interesting to see how much removing farm subsidies would change the equation. As far as CA go I would suspect that not much would change since it receives lots of farm subsidies, but some of the other states could change dramatically.

Posted by: Sebastian Holsclaw at September 16, 2003 03:01 PM | PERMALINK

To all you high taxed Californians...

Thanks,

Bozeman, MT.

Posted by: Frank Johnson at September 16, 2003 03:01 PM | PERMALINK

Is there a secessionist candidate on the recall ballot? I might vote for him or her.

Posted by: GFW at September 16, 2003 03:02 PM | PERMALINK

There is no reason to believe that a reduction in total outlays would alter the distribution of the tax burden. If I shrink the absolute size of a pie, I don't necessarily have to alter the distribution of the ingredients. Distribution is driven by other factors--in no small part to farmers, who are the biggest welfare queens in the land. Never has so much been given to so few for so little... except re-election.

Posted by: SavageView at September 16, 2003 03:03 PM | PERMALINK

One silver lining in the proposal that California increase its property taxes is that Californians will end up paying less in federal taxes (it is a Schedule A deduction after all). Coupled with a decrease in state income taxes, I might be ok with that.

Posted by: aregee at September 16, 2003 03:07 PM | PERMALINK

Name:

Can you tell me why you think it is that lowering the federal tax burden is the pertinent alternative here? It seems to me that there are many possible remedies for this state of affairs, of which lowering the rate outright is only one, and, as Savageview points out, not even a necessarily effective one. Yet you offer in a mocking post, as if Kevin is a hypocrit for not taking it to be the obvious solution.

Can you explain this to me?

Posted by: epist at September 16, 2003 03:09 PM | PERMALINK

There is no reason to believe that a reduction in total outlays would alter the distribution of the tax burden.


It wouldn't necessarily alter the distribution, no, but it would certainly reduce California's overpayment.


It's the difference between fractions and raw numbers.


It wouldn't be such a big deal if California paid for 80% of the entire federal budget if the entire federal budget was 7 bucks. That's the extreme case, but it illustrates the direction in which it's possible to travel. If people like Kevin want to.


The question is, does he want to? It's a very interesting psychological experiment we're gonna see played out. Does Kevin want to try to fix something he's complaining about by doing the most obvious thing which would do this, even though that would involve (gasp) reducing taxes? Let's watch....

Posted by: Name: at September 16, 2003 03:09 PM | PERMALINK

This situation is exacerbated by high federal taxes, but could be remedied by lowering federal taxes.

how?

lowering the tax rate across the board doesn't do anything to change how the tax money is distributed after it's been collected. now, if you want to apply different levels of federal taxes to different states... well, that would be fun.

Posted by: ChrisL at September 16, 2003 03:12 PM | PERMALINK

":Name" -- yeah, and reducing federal taxes would cut cancer in half, and double the length of my penis too.

You just flunked the Turing test again. Someone could easily program a computer to explain that tax reduction can solve any problem, and for all I know someone at the RNC already has done so, and you are it.

Posted by: zizka at September 16, 2003 03:14 PM | PERMALINK

seceed! the entire west coast should break away, we're politically, economically and socially capable of throwing off the shackles of federal false imprisonment.

and turn nevada into a DMZ where the 2 sides can meet for conventions, boozing and whoring!

Posted by: nova silverpill at September 16, 2003 03:15 PM | PERMALINK


Can you tell me why you think it is that lowering the federal tax burden is the pertinent alternative here?


Well, at the very least, it's not something Kevin should complain about if people suggest it, right? Again: his post is about California being a net-payer. He uses this as a springboard to rail against those darn red-state conservatives who complain about taxes.


This is like whining about the fireman who wants to douse your burning home with water. Yes you're right maybe there are a number of ways to put out that fire, but why on earth would you get most angry at someone who's suggesting something which would help?



It seems to me that there are many possible remedies for this state of affairs,


I agree, let's reduce farm subsidies as well etc. By all means.


of which lowering the rate outright is only one, and, as Savageview points out, not even a necessarily effective one.


All other things being equal, it is a necessarily effective one.


Even if California's share of the net-payer pie remains the same, if that pie shrinks, so does California's share. That means California's paying LESS TOTAL BUCKS to other states. Those LESS TOTAL BUCKS would help offset whatever CA's deficit is believed to be. (In this respect, it's not the fraction which is important at all, it's the TOTAL BUCKS.) Again, I'm assuming this is the goal, because after all it's what Kevin is complaining about.


Yet you offer in a mocking post, as if Kevin is a hypocrit for not taking it to be the obvious solution.


The two most obvious solution techniques I can think of are (1) reducing federal taxes and (2) eliminating welfare boondoggles in the area of e.g. farm subsidies. I'm for both of them. What about you?


As for Kevin, he's against (1) for some reason. At least, I assume, because he castigates people who suggest it as "complaining endlessly". Even though it would help remedy what he's complaining about. This ironic masochistic impulse is basically the only thing I wanted to point out.

Posted by: Name: at September 16, 2003 03:16 PM | PERMALINK

ChrisL:



lowering the tax rate across the board doesn't do anything to change how the tax money is distributed after it's been collected.


See my responses to others re: fractions vs. raw numbers. You're focusing on fractions but fractions are not so relevant here when we're talking about the absolute size of CA's deficit.


Posted by: Name: at September 16, 2003 03:17 PM | PERMALINK

Question about the map: What happens to the money that leaves the States due to military expenditures, foreign aid, etc?

Posted by: Matt at September 16, 2003 03:27 PM | PERMALINK

Name, your criticism of Kevin's post supposes that all those red-staters are the startled and unsuspecting recipients of bushel baskets of cash dumped in their front yards by tax-crazy Washington bureaucrats.

And that they'd happily give up those benefits if those same bureaucrats would just come to their senses and stop collecting the taxes that fund all those wasteful government-funded programs in their states.

Codswallop.

Those programs are in place because the red-staters and their elected representatives demanded them. Truth is, when the red-staters start moaning about excessive government spending, they mean spending on programs for other people!

Posted by: Quaker in a Basement at September 16, 2003 03:30 PM | PERMALINK

I presume that money spent on programs outside the US dont effect the balance of transfers at all. You subtract them from the pie before you dole it out.

Posted by: Sebastian Holsclaw at September 16, 2003 03:40 PM | PERMALINK

Name:

You are right that lowering the total federal burden will lower the amount of money California spends on other states, but Kevin isn't complaining that the money goes to the other states per se, he's complaining about 2 things:

1- The money goes to other states even at a time when California is experiencing a real and acute crisis, in a way in which many other net debttor states do not. and

2- That many of these debttor states are 'Red', or conservative states, and thus the source of much anti-tax rhetoric.

The principle problem is, of course, 1, and the solution you offer won't, on it's own, solve that problem. Indeed, without some alterations, a straight reduction in the federal rate will exacerbate California's problem, since their rate is pegged to the Fed's.

But never mind that, if the federal government reduces the tax rate, how does that help the California state government balance it's budget? It doesn't lead to any new revenues for the state (save the trickle down effect of consumption taxes collected on items that would have gone unsold under the higher federal rate).

Of course, if you combined a reduction in the federal rate with an increase in the state rate, then we might have an approach to solving Cali's fiscal crisis.

Is this what you are suggesting?

Posted by: epist at September 16, 2003 03:41 PM | PERMALINK

Name:

we were both wrong.

i was wrong to focus on the fraction. and you're wrong to assume federal income has any relation to federal expenditures - as the federal deficit shows.

Posted by: ChrisL at September 16, 2003 03:46 PM | PERMALINK

I propose that all residents of California be made exempt from all Federal Taxes.

Posted by: Will Allen at September 16, 2003 03:46 PM | PERMALINK

The point being made by Kevin, I think, is about the typical hypocrisy. All those people that want lower taxes AND expect the services that they use.

Two examples of this typical hypocrisy (both old, I'm sure others know more recent examples, one repub, one dem to show all sides do it) were: Newt Gingrich always railed about federal spending and yet his district received more money from the federal gov't than almost any other; Tip O'Neil wanted to reduce Defense spending but had no problem getting as much as possible for his district.

The point is if you believe something then you should do the hard things to achieve it. If you want lower taxes, YOU should expect less services from the gov't (things that affect you as well as others). As a liberal, I think many gov't programs make for a better/stronger country, therefore I support higher taxes (ok some of the time).

Posted by: JL at September 16, 2003 03:48 PM | PERMALINK

More fuel for the fire - funny how no one's blamed the ultra-partisan Texas Republicans for this:

Spending shifts to GOP areas

"WASHINGTON - The 1994 revolution that gave Republicans control of the House of Representatives moved tens of billions of federal dollars from Democratic to GOP districts, an Associated Press analysis shows.

"But rather than pork-barrel projects for new GOP districts, the change was driven mostly by Republican policies that moved spending from poor rural and urban areas to the more affluent suburbs and GOP-leaning farm country, the computer analysis showed.

"The result was an average of $612 million more in federal spending last year for congressional districts represented by Republicans than for those represented by Democrats, the analysis found."

***

"When Democrats last controlled the House and wrote the 1995 budget, the average Democratic district got $35 million more than the average GOP district. By last year, average federal spending in Republican districts was $612 million more than in Democratic districts."

***

""There is an old adage," said House Majority Leader Dick Armey, R-Flower Mound. "To the victor goes the spoils.""

etc., etc.

Posted by: Andy at September 16, 2003 03:55 PM | PERMALINK

Kevin says, "Income redistribution? Why, that's communism! Unless we're redistributing from blue to red, that is."

Kevin, that's why they're called the "red" states!

Posted by: civil-rights lawyer at September 16, 2003 04:01 PM | PERMALINK

On the same note, every area that's an actual target of terrorists, New York, LA, SF, DC etc.. vote democratic. SO one can say that it's the red states that are imposing heavy handed and inept foreign policy on the real targets of terrorists. Think Glenn Reynolds in Tennessee.

Posted by: Jeff Booker at September 16, 2003 04:03 PM | PERMALINK

1) For those of you who want more detailed analysis go to the website below. It has extremely detailed analysis related to spending -- military, medicare, social security, farm subsidies. Farm subsidies are not the big cause of the imbalance as some of you imagine.

http://www.ksg.harvard.edu/taubmancenter/publications/fisc/

2) The imbalance of payments is not explained or justified by California's wealth. California is a relatively wealthy state. It is also a relatively poor state. In other words there is a lot of income inequality here. The difference between a poor kid in Los Angeles and a poor kid in Phoenix is that the poor kid in Arizona is subsidized by federal tax dollars coming from California.

3) The problem (from CA point of view) is going to get worse. This is because much of the imbalance is driven by social security and medicare AND because CA's population is becoming relatively younger in relation to the remaining US. Social Security, in places like North Dakota, will DIE when we Californians decide that we're tired of supporting you. So be nice....

Together, these are strong arguments for a federal approach. Their is a free lunch for CA here. By providing services at the state level we can reduce taxes, increase spending on social programs that work, and balance the budget. CA should, and in due time will, demand that these subsidies end.

Posted by: boban at September 16, 2003 04:04 PM | PERMALINK

Let's consider the basic facts of life as taught in any first year public finance course. (I think that both Kevin and the drafter of the linked report understand this -- and mistakenly thought that most of the readers would understand it without making it explicit.)

Fact 1 -- Federal revenue from each state is (in a very general sense) driven by income.

Fact 2 -- Federal expenditures in each state are driven either by a combination of population and demographics, or by specific congressional action. Either you get paid by the head, or you spend money on something specific because you have the influence to get it passed. There are only a small number of real exceptions to this, such as highway expenditures which depend on the milage of federal aid highways in a state.

Fact 3 -- Per capita spending is by far the biggest and hardest to affect part of spending. This is what we call entitlements and it includes things like Social Security, financial aid and federal pensions.

Fact 4 -- This mismatch has, to some extent, been designed in since the New Deal and everyone who is involved in public finance who can do basic arithmetic understands it, even if they don't talk about it.

We tax by income but spend per capita. This system is intentionally designed to move money from high income states to low income states, and the red state legislators who manage to be smarter than a box o' rocks know this well. It has worked well by subsidizing poorer states like Alabama and Mississippi during the 40's, and has more than a little to do with the rise of the "New South". (Think about it -- just keep pumping money into the consumer economy of a depressed area, especially those inhabited by truly hard working people, and you can expect something to happen). From these facts though, you can derive some additional facts:

Fact 5 - The amount of pork your Congressional delegation brings home doesn't do diddly. Or, to put it differently, it's the per capita entitlements, stupid.

Fact 6 - Tax policy can mean more than spending policy. Progressive taxation can actually accellerate this tendency. But the odd kind of tax cuts that the Bush administration want don't help. The difference in income between, say Alabama and California is not there because there are more millionaires in CA, even on a per capita basis. It is from the generally higher level of middle and upper middle class incomes, and taxes on things like capital gains on higher priced homes and gas tax on higher priced gas. The kind of tax restructuring we have seen, with big cuts at the very tip top, and the regressive Social Security tax hitting those at the bottom may well actually hurt lower average income red state residents more.

Posted by: Claude Muncey at September 16, 2003 04:16 PM | PERMALINK

Quakerinabasement writes: Truth is, when the red-staters start moaning about excessive government spending, they mean spending on programs for other people!


You said it! All the more reason to lower federal taxes. Stop letting them get their grubby little hands on your money, in the first place!


epist writes: Kevin isn't complaining that the money goes to the other states per se, he's complaining about 2 things: 1- The money goes to other states even at a time when California is experiencing a real and acute crisis


If you say so (I'll take your word for it that you know what Kevin is "really" complaining about), but if federal taxes were lower this wouldn't be as much of a problem for CA. (That was, after all, my point.)


epist also writes: 2- That many of these debttor states are 'Red', or conservative states, and thus the source of much anti-tax rhetoric.


I know Kevin complains about this! My point is that it's self-defeating for him to complain about this. Ok, so the red-staters are big fat hypocrites. Fine! Take them up on their own rhetoric, then: do what they ask (lower taxes). It will help alleviate what Kevin is complaining about, and it will prevent them from living high on the hog while being such hypocrites. What's the down side? (unless for some reason one has a predisposition to lowering any sort of taxes anywhere at any time for any reason?)


epist again: if the federal government reduces the tax rate, how does that help the California state government balance it's budget?


More money in peoples' pockets = more purchases = higher sales tax revenue and more business in CA. Also we could talk about capital gains... if that were lowered, more transactions = well you get the idea....


epist -- It doesn't lead to any new revenues for the state (save the trickle down effect of consumption taxes collected on items that would have gone unsold under the higher federal rate).


In other words, it leads to new revenues for the state.


Of course, if you combined a reduction in the federal rate with an increase in the state rate, then we might have an approach to solving Cali's fiscal crisis. Is this what you are suggesting?


Yes, in fact, if necessary. A lower federal rate would leave states freer to raise taxes when needed for crises, with less pain for individuals. That is precisely what I'm suggesting. Thank you for giving me the opportunity to clarify.


JL writes: The point being made by Kevin, I think, is about the typical hypocrisy. [...] If you want lower taxes, YOU should expect less services from the gov't (things that affect you as well as others).


Right on! so again, all I can say is, why not make those hypocrites eat their words by lowering taxes?


I really can't understand it. Why, if I didn't know better, I'd think it's almost as if many of you have a predisposition to lowering any sort of taxes anywhere at any time for any reason! ;-)

Posted by: Name: at September 16, 2003 04:17 PM | PERMALINK

"...I wouldn't even mind that so much if they'd just take our money and shut up..."

This is exactly the sort of hate-filled contempt I constantly hear from so-called liberals. But did it ever occur to anyone that maybe those "rubes" in the "flyover zone" are voting conservative as a direct result of the wealth transfer? The reason this map looks as it does is that the federal tax regime transfers money from rich to poor. The states that receive more money do so largely because they have a lower per capita income. This wealth transfer comes with lots of strings attached, strings that are tied back to the liberal states that provided the money in the first place. Every federal dollar comes with thousands of rules, the overall effect of which is to stifle wealth creation and innovation. Every time a farmer, unemployed worker, or small businessman is skewered by a bureacrat wielding one-size-fits-all regulations, another conservative voter is created. Eventually, enough skewering happens that a tipping point is reached, and the light goes from blue to red. How can it be otherwise when "take our money and shut up" is the prevailing attitude among those who vote for representatives that primarily advocate these programs?

At the very least, you have to admit that it's not much of a campaign slogan.

Posted by: Neil at September 16, 2003 04:26 PM | PERMALINK

NAME:
I DO say that I support higher taxes, because I believe it funds things I believe in:

"As a liberal, I think many gov't programs make for a better/stronger country, therefore I support higher taxes (ok some of the time)."

Dems could agree with Repubs to lower taxes, but they can not lower federal spending (or increase taxes) even if they wanted to because the Repubs control the US House, Senate, and Presidency.

Posted by: JL at September 16, 2003 04:29 PM | PERMALINK

Is this REALLY so hard for you lefties to figure out???

It's the result of PROGRESSIVE TAXATION. States like New York and California pay a lot more in taxes because A LOT OF RICH PEOPLE LIVE THERE. States like North Dakota and Mississippi pay a lot less in taxes because NOT MANY RICH PEOPLE LIVE THERE. Duh.

But, by all means, we should make sure that rich states are not subsidizing poor states. Let's make sure Connecticut doesn't subsidize New Mexico. In fact, we should extend this to cities and towns, too. Because we certainly wouldn't to have, say, Grosse Pointe subsidizing Detroit. Or Scarsdale subsidizing the Bronx. Or Greenwich subsidizing New Haven. Or La Jolla subsidizing Compton.

Posted by: Al at September 16, 2003 04:29 PM | PERMALINK

TROLL EATER NO LIKE CAPS SCREAMERS! Go back to Instapundit or whatever hole you came from, losers. Or I will show you what hate-filled contempt really looks like.

Posted by: Troll Eater at September 16, 2003 04:58 PM | PERMALINK

Claude, boban--thanks for the background and links.

Posted by: Matt at September 16, 2003 04:59 PM | PERMALINK

Gee, Al, you've figured it out! All California needs to do to solve its financial crisis is stop making so much money!

Posted by: scarshapedstar at September 16, 2003 05:03 PM | PERMALINK

Well al, as a lefty who pointed out the same thing just four posts before you, I would suggest you figure out actually reading a thread before posting.

Neil, I would suggest the same to you as well. By far the biggest part of federal expenditures are per capita entitlements -- which generally mean that they come largely without the kind of restrictions you name. There are a lot of requirements on the discretionary programs, but they are actually a small part of overall expenditures.

Posted by: Claude Muncey at September 16, 2003 05:03 PM | PERMALINK

States like New York and California pay a lot more in taxes because A LOT OF RICH PEOPLE LIVE THERE. States like North Dakota and Mississippi pay a lot less in taxes because NOT MANY RICH PEOPLE LIVE THERE. Duh.


Of course Al, that also means that the federal dollar that those red states receive is worth far more than the federal dollar that blue states receive. And vice versa. It's sort of a wash.

Duh.

Wonderful rhetorical flourish. What grade are you in, pray tell?

Posted by: gfw at September 16, 2003 05:04 PM | PERMALINK

OK, Name, I think I almost have your position down, but just to clarify the last little bit- do you think the answer to Cali's problem lies in lowering federal taxes because of the trickle down effect (more consuption tax revenue at the state level) or because of the leeway it grants the states in raising their taxes? Or both? And if both, to what degree for each?

Just trying to get clear here. . .

Posted by: epist at September 16, 2003 05:04 PM | PERMALINK

Every federal dollar comes with thousands of rules, the overall effect of which is to stifle wealth creation and innovation.

then don't take it.

Posted by: ChrisL at September 16, 2003 05:15 PM | PERMALINK

Jesus. One link from Instapundit and the comments in every single thread are bloody useless all day long.

Don't you people have freeper threads to keep up with?

Posted by: Laertes at September 16, 2003 05:22 PM | PERMALINK


Me:"Every federal dollar comes with thousands of rules, the overall effect of which is to stifle wealth creation and innovation."

ChrisL: "then don't take it."

No problem, philosophically at least, but if people start to refuse federal dollars then they have probably become conservatives (at least by the modern definition of the word). That is not taking the money and shutting up.

In addition, many of the strings come as requirements to qualify for federal grants to the state government, such as the old 55MPH speed limit which used to be required in order to qualify for transportation grants. That sort of thing is bound to rub people the wrong way.

Posted by: Neil at September 16, 2003 05:27 PM | PERMALINK

Well, Name, starting listing the absolute reductions in federal outlays that you suggest. Would they have the effect of goring your particular ox. I thought not.

And, by the way, the issue is distribution, since your example is one merely of scale. Time for 101 again.

Posted by: SavageView at September 16, 2003 05:33 PM | PERMALINK

Hey, don't slander poor New Mexico, Gore by 500 votes or so and the winner -- by a few lengths -- of the subsidy horserace.

Posted by: Trotsky at September 16, 2003 06:08 PM | PERMALINK

Ah, Name. A cowardly little troll who won't post any identifying information. A shithead troll, as it were.
Shoo! Shoo! Go away little troll.

Posted by: Hadleyman at September 16, 2003 06:11 PM | PERMALINK

For several years I was a Yankee in exile in one of the reddest of red states, Louisiana. Great food, lovely people (as long as they weren't the ambitious ones). From what I could see, there were really two main civic values among the white population there. One: pay as little in taxes as you possibly could. Two: get as much from the government as you possibly could.

At least in the Midwest (and some other parts of the country, mostly blue) people expect to pay for the services they get.

Bush is the ultimate revenge of the Confederacy.

Posted by: Altoid at September 16, 2003 06:54 PM | PERMALINK

No problem, philosophically at least, but if people start to refuse federal dollars then they have probably become conservatives (at least by the modern definition of the word). That is not taking the money and shutting up.

well, the real modern definition of conservative (at least the elected kind) seems to be: taking the money on loan then pretending someone else made you do it. "the evil liberal made me violate my oft-stated principles in order to buy your votes! curses!"

the reason people aren't refusing to take the money is because they like the programs that provide it. that's why not even an all-Republican govt can cut them.

and the apparent scheme to force the death of these programs not by legislation but by gradual starvation seems not only underhanded, but frankly, elitist: "no, it doesn't matter if the public wants these programs or not - they're all wrong. we know what's best for the country, not the voters."

as proof of this, how well do you think a candidate would do if he actually ran on a "we'll cut taxes until your SS benefits are impossible to maintain!" ?

Posted by: ChrisL at September 16, 2003 07:17 PM | PERMALINK

"...platform"

(curses)

Posted by: ChrisL at September 16, 2003 07:18 PM | PERMALINK

Name:,

You prove the old adage that 'resentment is gratitude by a different name.'

"Goldarn federal money we keep getting, preventing us from creating wealth and innovating."

Maybe that is why conservatives rail so strongly against welfare queens - it is the trait they hate most in themselves.

Posted by: Tripp at September 16, 2003 07:30 PM | PERMALINK

Great argument, Kevin. Let's not forget, though, that we Californians have the largest congressional contingent in the country. The underlying story here is the abject failure of our elected representatives to bring home the bacon, or at least keep it here.

Reminder, we have the largest congressional contingent, but we don't have the largest representation per person. Californians are underrepresented compared to the people from tiny states.

--Kynn

Posted by: Kynn at September 16, 2003 07:43 PM | PERMALINK

This reflexive hogwash about "get the government off people's backs so they can innovate and produce" is just as annoying as the topic of the original post.

Perhaps the residents of the very thinly populated tax-eating states would care to explain how their economies and populations could even eke out a living without the massive federal subsidies they have received in transportation, education, health care, resource management (Army Corps of Engineers, anyone?) and on and on and on.

It's true that today the subsidies are mostly in terms of per-capita transfer payments. But historically the imbalance has been a lot more via government investment in public goods.

Claiborne Pell, the late long-serving Senator from Rhode Island, wrote a marvelous column about this topic many years ago, in which he pointed out that far too many of the "pull-yourself-up-by-your-own-bootstraps" types were born in federally subsidized hospitals, educated at heavily federally subsidized schools, drove on federally subsidized roads, ate from federally subsidized farms growing crops engineered by federally subsidized research and assured safe by federal inspectors, bought consumer goods transported on federally subsidized rails, took vacations using federally subsidized airports, and enjoyed federally subsidized medical care in their old age.

Cut taxes? Sure. Self-reliance, that's the ticket.

Morons.

Posted by: bleh at September 16, 2003 07:53 PM | PERMALINK

Yeah, the 'self-sufficiency' meme. It's nearly as bad as the 'If I could do it anybody can' meme.

Posted by: Tripp at September 16, 2003 07:58 PM | PERMALINK

I find it interesting that my home state of Indiana -- colored red on the map -- appears to be the only break-even state: $1 revenue for every $1 of taxes.

Although a Red state in the Presidential game, Indiana has one Democratic and one Republican Senator (Bayh and Lugar, respectively) and a Democratic Governor (Kernan, who just took over for Frank O'Bannon, who died Saturday of a stroke). Indianapolis' mayor is a Democrat too.

Maybe all that has something to do with it...

Posted by: Gregory at September 16, 2003 08:54 PM | PERMALINK

A lot of it has to do with racism. People in Mississippi can be ginned up against "federal spending" even though they benefit so disproportionately because they have been marinated in the notion that the government just gives money to blacks on welfare, that thats what federal spending is.

Posted by: Carol at September 16, 2003 09:27 PM | PERMALINK

It seems that there's a simple demographic component to all this. California receives less in entitlement payments than the average state receives, and that's not simply because the rich don't do as well under these systems as the poor do. That was true when California routinely received 100% or more of its tax payments back.

Anyone notice that California pays a disproportionate amount of corporate income taxes? Why would we credit those state by state--don't the stockholders live everywhere?

While we're complaining about our federal system, does anyone want to calculate the damage that the California/Northeastern states do to poor states by saddling them with unwanted regulatory burdens? Let's start by getting rid of the minimum wage in high poverty states and then move from there--we'll see what happens.

Posted by: Thomas at September 16, 2003 09:36 PM | PERMALINK

Let's start by getting rid of the minimum wage in high poverty states and then move from there

Probably everyone will move from there in search of higher wages.

Posted by: bad Jim at September 16, 2003 11:38 PM | PERMALINK

"Let's start by getting rid of the minimum wage in high poverty states"
then they'd all look like Mississippi

Posted by: Macario Sakay at September 16, 2003 11:42 PM | PERMALINK

You know, this is not just by state. I live in Denver. We are a red state that is blue (ie, Republican state, but we pay more taxes than we get back. Which surprises me).

I know that politically, Denver, while holding the majority of the people, and a lion's share of the Colorado economy, is often outvoted by the Rural parts of Colorado. I've never looked into how Colorado divies up its income, but I wouldn't be surprised if I pay more taxes vs services rendered in the City and County of Denver than my outstate brethren. But maybe not, I've never been curios enough to look into it.

Posted by: Timothy Klein at September 17, 2003 12:54 AM | PERMALINK


ChrisL: "and the apparent scheme to force the death of these programs not by legislation but by gradual starvation seems not only underhanded, but frankly, elitist"

Elitist? As opposed to saying "take our money and shut up" like you good liberals? Besides, the Bush administration shows very little sign of decreasing the size of government at all. Their stated aim with the tax cuts is to increase government revenue in the long run by reducing changing the structure of taxation in ways that will increase economic activity. Argue with their economic theories if you will, but you can't say their intentions are to minimize the government. They definitely want to change some government priorities, and they want to change the methods of administering some others, but they have come right out and said that they do not share the "starve the beast" philosophy of the Reaganauts.

As Nixon said, we're all liberals now. (OK, except maybe John Ashcroft.) It's just that some of us are supply-side, internationalist, Lexus-and-Olive-Tree liberals, and some of us are conservative-keynesian, inward-focused, bi-coastal liberals.

ChrisL:"as proof of this, how well do you think a candidate would do if he actually ran on a 'we'll cut taxes until your SS benefits are impossible to maintain!' ?"

Much better than a "we'll double your regressive FICA payroll taxes so dad can retire at 65 and live off of the young and poor" platform.

There's three possible choices with Social Security: cut benefits, raise taxes, or grow the economy while keeping inflation in check. The left only recognizes the first two. However, a combination of cutting future benefits for the currently young while streamlining the economy to allow for more rapid growht is the only solution that is politically, economically, and socially possible.

The fate of the Democratic Party is left as an exercise for the student.

Posted by: Neil at September 17, 2003 01:01 AM | PERMALINK

Their stated aim with the tax cuts is to increase government revenue in the long run by reducing changing the structure of taxation in ways that will increase economic activity. Argue with their economic theories if you will, but you can't say their intentions are to minimize the government.

I am going to try this at home. I am going to quit my job, because I will then have so much more free time to pursue making money. I'm sure I can charge my mortgage for a while, until my cuts kick in and make me rich.

I am sorry, this is not a philosphy. This is bull shit. They tried this in the 80s -- IT DID NOT WORK!!! They are either lying, or so stupid they need to be ran out of Washington never to be allowed to return.

Posted by: Timothy Klein at September 17, 2003 01:46 AM | PERMALINK

Today's Social Security is unsustainable. This is far greater known certainty than any climate studies. Either taxes will will be raised, or benefits cut, or both. SS is based on today's recipients getting Other People's Money.

Chile has a system where everybody must pay 10% of their income into their own retirement fund; they retire when they want, when they die they leave it for their children. They retire on Their Own Money. The US gov't should copy that success.

Virtually all entitlement programs could be, and should be, replaced with mandatory personal account schemes where people put their Own Money into the account (unemployment, health) and get it back when needed.


Name is right that reducing federal taxes will reduce the transfer from rich CA to poor red states. If Kevin really doesn't like that transfer, he should, logically, favor a reduction in the tax portion of the transfer.

Almost all voters want to lower their own taxes, but increase the gov't funding for their own favorite programs. This is the corruption at the heart of "democracy", and why most democracies historically descend into economic chaos, creating a climate for a popular (or less so) dictator to take over. Like Chile Allende/ Pinochet.

Using gov't to get OPM for one's own purposes should always be attacked. But most Dems mostly want to use OPM; so they have difficulty opposing that system. Now the (greedy, selfish) Reps are using the gov't-OPM system for different purposes--while their Rep rhetoric is against the system.

Well, Dems should start being against the gov't-OPM system. Especially welfare/ subsidies/ fat gov't contracts for the rich.

Posted by: Tom Grey at September 17, 2003 01:54 AM | PERMALINK

Reducing taxes will do nothing to stem the flow of money from the Red to the Blue. It will lower the dollar amount, but it is a proportion we are talking about here anyway. It will just put the Gov't closer to the point that it breaks.

Admit it: if any politician runs on the platform of cutting SS, Medicare, Medicaid, or the Military, they are dead. There is very little (read: NOTHING) else that could be cut that would make a difference. Cutting taxes only has a very mild stimulative effect on the economy. You can't just lower taxes, click your heals together, and say three times 'give me the boom times!' That is the worse kind of naivete.

Cutting taxes is no solution. It will only accelerate the problem. We are spending more than we make, RIGHT NOW, cutting taxes will only make it worse, as we are not going to lower our spending -- the American people don't want to. Tax cuts only pass muster because people aren't paying attention. We should eliminate the term altogher -- you don't cut taxes, you cut government services.

Posted by: Timothy Klein at September 17, 2003 02:16 AM | PERMALINK

I read about 3/4 of the posts and did not see anyone mention that incomes in California may be higher because the cost of living is higher. I mentioned this to Feinstein's aide when the Clinton tax hikes were debated and this fact was ignored. Later as high tech collapsed in the state, Feinstein finally mentioned that many California middle class workers were being driven from their homes by large accumulated taxes they couldn't afford, a little to late.

Look at Kevin's favorite politicians, Stark, Honda, Waxman, Feinstein, Boxer, Pelosi. All of them aspire to Kevin's desire to apply punitive income taxes on middle class Californians struggling in a high cost state. Kevin's demand is straight forward, he wants to equalize the cost of living across the states by driving out industry and workers from California to the low cost states, and its working.

But what does Kevin get from this strategy? The middle is driven out with taxes that reach 30% and higher. The extremely wealthy who can afford the tax bite stay. And the remainder are extremely poor immigrants who rely on cash labor. This is exactly the California that Kevin created in his 40 years of demanding that California's middle class be taxed into extinction.

Posted by: Matt Young at September 17, 2003 03:19 AM | PERMALINK

"It's just that some of us are supply-side, internationalist, Lexus-and-Olive-Tree liberals, and some of us are conservative-keynesian, inward-focused, bi-coastal liberals."

Neil, you're spinning yourself. Red state conservatives are not internationalists just because they support Bush's war and supply-side economics is so discredited even the Bush administration no longer uses it to defend their tax cuts. I'll agree with your "all liberals" quote to an extent. That *was* true in Nixon's day before fundamentalism became such a powerful force in the Republican party.

Posted by: dennisS at September 17, 2003 05:25 AM | PERMALINK

Nice post. As the proud resident of another "net-loss" blue states (New York!), let me say that I don't necessarily object to paying more than I get. (One day, I'll finish that post on "a semi-libertarian case for progressive taxation"). What twists my knickers is the hypocrisy of red-state whiners.

The very worst thing that could happen to the whiners is that New York, California, and the other blue states withhold their net contributions and force the red states to stew in their own rhetoric. Call it a twist on "Atlas Shrugged."

Posted by: Glen England at September 17, 2003 05:45 AM | PERMALINK

Just to clear up a point that seems to elude many conservatives on this thread. I (and I presume Kevin) don't mind that rich states subsidize poor states. According to my liberal world view that's the way it should be.
What I can't abide is conservatives who try to fight that world view while all the while benefiting from it. Yes they are hypocrites and hypocracy is always annoying, but that's the least of my worries. The problem is that these "small government" conservatives make it more difficult to help the poor through their rhetoric (just look at Alabama) while benefitting from the gov't themselves.
So no, simly cutting taxes accross the board wouldn't be a "success" in my view.

Finally, the argument that Blue state regulators attach all sorts of strings to the cash that ultimately keep red states down, is simply hilarious. If the federal funds are a net loss to the red states, then stop taking them. If they're a net gain, however, then stop making it so hard to get the same gain for the poor.

Posted by: WillieStyle at September 17, 2003 05:49 AM | PERMALINK

Kevin,
Welcome to the world of a down state New Yorker! We have the added benefit of our upstate breathren taking $ the same way our red state friends do. Thank goodness, at least,it seems the upstaters have finally moved into the "blue" category. If you want my money, please support justice and fairness.

Posted by: JPM at September 17, 2003 06:14 AM | PERMALINK

If you look around the table and you can't figure out who the sucker is, well....

I think your real complaint is with our federal system of government and more specifically with the 2 senate seats per states. Poor states are going to get their interstate highways whether people in Alabama or Mississippi are doing anything or not. But they are not going to be able to offset with enough revenues to break even.

Being willing to give the red states what they want(lower taxes) is the best way to decrease the total dollar amount of the inequity. It's also the best way to make them start voting Democrat again. They've got no incentive to vote Democrat because you're already defending their gravy train. Cut Medicare, cut highways, cut the number of bases, and these red states will be voting Democrat.

Posted by: Chad Peterson at September 17, 2003 06:35 AM | PERMALINK


Could one of you neocons tell me this; if blue or liberal states are not "business friendly" as conservatives love to spout, how come people from red states flock to our cities (Seattle, Portland, all of California, Boston, New York, Minneapolis) when they want to get jobs? How many people leave one of the blue states to move to run-by-republican states like Kansas or Nebraska or any other shithole people can't wait to get out of??

Posted by: isitstinky at September 17, 2003 07:05 AM | PERMALINK

Speaking as a heavily-taxed, dark-blue-state conservative Republican, all I can say to Kevin is: welcome to the VRWC. We'll send you the secret handshake and password with the card. You've accepted one of our central premises (never mind that the guy who basically invented these charts was a neocon-flavored liberal, Pat Moynihan).

Howard Dean's state is red on this map. Hmmm. Wonder how he balanced all those budgets?

The 'hypocrisy' point may apply to some in Congress, but not to Bush, Hastert, or DeLay, all from states that are blue here. And, of course, plenty of the big conservative and libertarian commentators out there live in states that are blue on Kevin's map, including most of the staffs of the Wall Street Journal and National Review, Rush Limbaugh, Bill O'Reilly, Sean Hannity, Hugh Hewitt, Mark Steyn, PJ O'Rourke, James Lileks, and Andrew Sullivan.

(I note that the map doesn't show DC, which of course is a massive recipient of federal aid).

Posted by: Crank at September 17, 2003 07:09 AM | PERMALINK

Elitist? As opposed to saying "take our money and shut up" like you good liberals?

no, not "opposed to", unrelated to.

it is elitist of the Rs to think they can sneak that bitter medicine into the mouths of the dumb drooling masses disguised as something tasty like a yummy tax cut: "come get it! here's your tasty tax cut!"

it's elitist because it denies the fact that people want these programs, despite the far-right blather about it being "bad" for us all. the Rs think they know what's good for us, and they're gonna impose it on us (in their sick fantasies) whether we like it or not.

There's three possible choices with Social Security: cut benefits, raise taxes, or grow the economy while keeping inflation in check. The left only recognizes the first two.

is that what Rush tells you? he's wrong, ya know.

Posted by: ChrisL at September 17, 2003 07:42 AM | PERMALINK

Just a little note on the farm bill. You can look up whos getting what on the Environmental Working Group website http://www.ewg.org/farm/progdetail.php?fips=00000&progcode=total&page=states

Its true that Iowa recieves the most overall, but if you look at the details our biggest recipient gets around $250,000 per year. Compare that to 110 million for Riceland Foods in AR or 27 million for Farmers Rice Coop in CA. There was an effort to cap these payments but it was scuttled in the Senate in a large part by the CA Senators. CA may get less overall, but there are a few entities that get a lot, who can put lots of pressure on their politicians.

Posted by: Scarafaggio at September 17, 2003 07:44 AM | PERMALINK

I don't understand how people can blithly suggest cutting federal taxes massively when the budget is $500billion dollars in the hole.

Posted by: Angelica at September 17, 2003 08:16 AM | PERMALINK

Angelica,
There are a couple rationales for cutting taxes when the deficit is large.

The first is that the tax cuts will stimulate the economy, getting us back to a surplus.

The second is that the deficit will drive us into a hole where we will have to cut SS and medicare.

I don't think the former will work, because the tax cut went to the wrong place to stimulate the economy.

The second might work, but it is a stealth tactic. If that truly is the plan, I'd like to see it brought out into the open.

Posted by: Tripp at September 17, 2003 08:26 AM | PERMALINK

"Basically, red America is living on welfare, and the payments are coming from us commie symps in blue America. And being the progressive sort that I am, I wouldn't even mind that so much if they'd just take our money and shut up, instead of taking our money and then venting endlessly about the corrupt, liberal, anti-American values of the people who make it possible."

First of all, there's plenty of people who are in the red states who aren't taking the money; some of them aren't too thrilled about the money transfers taking place, even if some of the people who are taking the money live in the same state as them.

Second, the availability of federal money to fund state projects skews the local decisionmaking process. Without the federal money, the locals have to decide whether the state or local project is worth raising their own taxes to fully fund. They might decide that it's not worth it, and pass on it. With federal money, the impact to the locals' taxes is reduced, and projects that they would have considered not worth pursuing without the federal money become worth pursing with federal money.

Result? Spending throughout the country on local projects is higher than the locals in any one area would prefer, if they were using their own money. Conservatives don't get as much traction as they normally would in trying to oppose such projects, because the voters they are trying to convince are confronted with a much smaller bill (never mind the bill that they're stuck with funding local projects in the other 49 states, they can't do anything about that at the state level anyway), and are much likely to let the project happen.

And the money transfers keep on, over the objections of plenty of conservatives whose only connection with the money is that it funds projects and people that happen to be in the same state as they live.

Posted by: Ken at September 17, 2003 08:59 AM | PERMALINK

And the money transfers keep on, over the objections of plenty of conservatives whose only connection with the money is that it funds projects and people that happen to be in the same state as they live.

I'm sorry but this is utter nonesense.
All those conservative districts have representatives who go to congress and try to get federal funds for their districts. Since Republicans took office the relative flow of additional funds into republican districts and out of Democratic districts has been astronomical.

These conservative representatives keep gettin re-elected. So the notion that conservatives in red states sit by helplessly as torrents of pinko-liberal funds flow into their districts is simply assinine. The truth is conservative voters want those services, they just don't want to pay taxes to get them.

Posted by: WillieStyle at September 17, 2003 09:07 AM | PERMALINK

Kevin... There's another straw man over there.

I guess you missed that one. Oh well. You can take aim at him next time.

Posted by: Jeff Wimble at September 17, 2003 11:36 AM | PERMALINK

Are there maps which color the states according to how "business friendly" they are?

Most of the net recipient states are states where the Republicans have supposedly been instituting business friendly policies like regressive taxation, low minimum wages, weak environmental protections, weak consumer protections, etc., and yet they don't generate enough business to pay their own way.

Posted by: Ranjit at September 17, 2003 11:44 AM | PERMALINK

Sure demographics, location of government facilities and some other things can be seen on this map. But I think it really highlights which states are home to the most productive parts of our economy. The finacial services in New York and the high-tech industry in California and Mass. It is always going to be the case that these industries (and their employees) are going to give more to the rest of us than they receive.

But I think the significant implication of this is that the conservative project to dismantle goverment is ultimately going to be more harmful to their homes in the heartland than the liberal elitists on the coasts. America's cities require a certain level of economic and political peace to continue to prosper. If the federal government withdraws from the provision of services to maintatin that peace, then the state and local governments will step in (California is already starting to see that with the child care and health care initatives).

These states will be able to afford to this, but other states that are net recipients of federal services will not be able to do the same. It will be the farmer in North Dakota and the rancher in Wyoming who will feel the effects of limiting medicare, social security, and farm subsidies. But I would not even bother to try to make this case in an election, it just will not be accurately communicated and be derided as "class warfare".

Posted by: Rich at September 17, 2003 12:21 PM | PERMALINK

"Just to clear up a point that seems to elude many conservatives on this thread. I (and I presume Kevin) don't mind that rich states subsidize poor states. According to my liberal world view that's the way it should be.
What I can't abide is conservatives who try to fight that world view while all the while benefiting from it. "

Well I assumed that Kevin was making a real point that I agreed with. Your point doesn't make much sense to me. The point seems to be that other people shouldn't complain about policies you agree with especially if they live in certain states that net benefit from those policies. So I guess it is okay for a New York or California conservative to oppose those policies but not a South Dakota or Nebraska conservative? I live in a "blue" county in a "red" state, so am I allowed to oppose those policies? It just seems like a fairly weak point. If it makes you feel better, there are actually many more conservatives in New York and California than in many of these rural "red" states, they are just in a minority in these states.

Posted by: GaryL at September 17, 2003 12:53 PM | PERMALINK

Aren't we also the fifth largest economy in the world? Are there any other states that rich?

I don't like supporting the Red States either since they loathe us California girls, but that's how a progressive tax is set up, no?

PS. I blogged this w/a link to my post about Red vs Blue states http://hackenbush.org/hackenblog/blogives/00000388.htm

Posted by: Ginger Mayerson at September 17, 2003 12:54 PM | PERMALINK

One factor that no one has mentioned is military spending. Military bases (with the exception of Texas) are skewed overwhelmingly to the red states on the map. Since the military presumably serves all Americans, this may skew the numbers substantially.

I also think that very high-income taxpayers, in the highest brackets, are disproportionately blue-staters, as a number of people have mentioned.

Finally, when it comes to our own incomes, whether we're red-staters or blue-staters (yawn), the great majority of us are selfish greedy bastards more than willing to rationalize our consumer desires as "true need". I could certainly use more dough, and couldn't care less whether the trough I fed at was federal, state, city, or private in origin. As long as there's more food for me. What about you?

Posted by: Daniel Calto at September 17, 2003 01:05 PM | PERMALINK

Well I assumed that Kevin was making a real point that I agreed with. Your point doesn't make much sense to me. The point seems to be that other people shouldn't complain about policies you agree with especially if they live in certain states that net benefit from those policies.

No, It's not okay to complain about policies I agree with if they benefit from said policies. It's counter-productive and hypocritical.

So I guess it is okay for a New York or California conservative to oppose those policies but not a South Dakota or Nebraska conservative?

Yes.

I live in a "blue" county in a "red" state, so am I allowed to oppose those policies?

If you live in a "blue" district then you're voting your convictions. If however, you live in a "red" district and complain about "big government" then you'd better vote against the incumbent or you're just another hypocrite at the trough.

It just seems like a fairly weak point. If it makes you feel better, there are actually many more conservatives in New York and California than in many of these rural "red" states,

no there aren't.

they are just in a minority in these states.

Thank goodness for that.

Posted by: WillieStyle at September 17, 2003 01:37 PM | PERMALINK

Kevin, your argument is interesting to say the least. It certainly does not help CA's situation that it isn't getting back from the feds what it puts in. If the Bushites funded Homeland Security as much as they should (promised) it would help Sacramento out. But it would not solve the problem.

The root of CA's problem is, of course, Proposition 13 and its legacy. Property values have skyrocketed in my home state since the '70s, and yet since 1978 localities have been unable to reap the benefits of this. There are some Rube Goldberg ways that the state has tried to get around the problem, from centralizing municipal budget funds in Sacramento to giving suburbs the gift of Mello-Roos. But the root of the problem remains in Proposition 13, which hamstrings school boards and cities. If the 2/3 requirement for passage of new taxes wasn't around, I'm sure that CA's budget problems would be manageable, in the single-digit billions range, along the lines of most other states.

CA did not overspend in the late '90s. What happened then was by and large a restoration of the massive cuts of the early '90s. When the state finally got its head back above water, the flood tide rose in again, and it didn't help that Texas energy companies held our heads under the water. So while the federal taxation issue is a good one to raise and discuss, California's problems are homegrown, as must be their solution.

Posted by: Robert in Seattle at September 17, 2003 01:39 PM | PERMALINK

The root of the problem is NOT Prop 13. Prop 13 has been a limit on INCREASING taxes for my entire political life. It puts a limit on increasing the budget, unless properties are sold (which they often are). This limit is very defined. In most budgets, when there are easily knowable and defined limits on income growth, you learn to restrain your spending habits accordingly. California did not do that.

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screw california, i'm from ("apparently") big blue...new jersey, giving like nobody else...but, you know, we don't need any help...newark, camden, trenton, irvington, east orange...they'll take care of themselves. i'll sleep well so long as i know that the troubled urban areas of north dakota and mopntana are free, due to my and my neighbors' contributions, of the problems that seem to only affect those darned blue states.

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