Blue States Give, Red States Take
American business has a problem. On the one hand, traditional business interests are ardently pro-Republican, but on the other hand, Republicans are hurting business, and have been for some years now. Watch any TV business show these days and you’ll see what I mean.
Business executives appearing as guests on the business shows state as an article of faith that recent federal spending cuts are holding back the economy. The “sequester,” the across-the-board cuts in discretionary spending, is usually singled out for particular attention. In other words, among the traditional business class in America, the validity of Keynesian economics is a given.
Meanwhile, the Republican majority in the House of Representatives is working its 2014 budget plan through the Appropriations Committee, and the picture isn’t pretty. Because Republicans want to increase spending on defense, border security and the like, while keeping total spending on a downward trend, they need to slash farther into spending on things like education, health, financial oversight, environmental protection and nutritional programs for low-income families.
But here’s what really gets me: the states that produce politicians who fight federal spending are disproportionately also the states that benefit the most from federal spending. Despite the long-standing myth that liberal states and urban centers are drains on the federal budget, what with their welfare queens and illegal immigrants and wasteful mass transit projects, the fact is that liberal and urban areas are generally the highest net contributors to the federal budget.
New York State, for instance, sends the federal government more than $4,500 per person more in taxes and fees than it gets back in federal benefits. Alaska, with its anti-federal libertarianism, is the biggest net “taker” – Alaskans get almost $7,500 per person more in federal benefits than they pay in.
Kentucky, home of senators Rand Paul and Mitch McConnell, nets more than $3,000 per person from the feds. Alabama and Mississippi are among our biggest takers.
In other words, the states that are among the biggest beneficiaries of the federal budget are among the biggest gripers about the federal budget; whereas the states that are among the biggest contributors to the federal budget are among the least bothered by it. The correlation is significant. Here’s a chart of the 50 states, with net contribution (positive or negative) to the federal budget on the x-axis and percentage margin of victory (or loss) by President Obama in 2008. I used 2008 because the most recent figures I could find for net contributions to the federal budget were from 2007 – although those numbers don’t change very much from year to year.