The New Liberal Federalism, Continued

A bunch of commentators, including our own Jesse Walker, have suggested that disspirited Democrats may now be ready to discover the virtues of federalism. A piece in Salon today runs with the idea, while in The Nation, Thomas Geoghean's notion of "governing from the Blue States" seems to be a variant on the same notion.

Comments

[deron]

Federalism in a 2 party system will always eventually be the hope of the party that is not in power.

[The White Anglo Saxon Protesta]

"Well the world don't move to the beat of just one drum.
What might be right for you, might not be right for some..."

[the left]

A strong central government (when we're in charge)!

[paul a'barge]

You folks wouldn't give Federalism the time of day when you could shove your extreme Liberal agenda down the throat of Red-State America.

You may like it now, but don't hold your breath. If you don't like a Conservative agenda, I suggest that you call a travel agent and mention something like Canada or France.

[native NYer]

I find it funny that the salon article has people saying they will gladly give up their priciples (every woman's right to choose, affirmative action) just because they lose one election.

Boy, those guys sure believe what they stand for!!

[E. Steven]

I don't know who it was who said it but when asked why he wouldn't just move to some foreign country some fella said, "I wouldn't want to be subject to our own foreign policy."

[Mo]

Paul,
You mean like those principled Republicans, that won't give federalism the time of day now that they're in power.

Heck, even though they're pro-federalism wrt abortion now, don't you think if Roe is repealed, they'll keep pushing until it's illegal federally?

If not, I have an Iraqi bridge to sell you.

[Neb Okla]

This was an intersting comment:

Speaking on "The McLaughlin Group" the weekend after George W. Bush's victory, panelist Lawrence O'Donnell, a former Democratic Senate staffer, noted that blue states subsidize the red ones with their tax dollars, and said, "The big problem the country now has, which is going to produce a serious discussion of secession over the next 20 years, is that the segment of the country that pays for the federal government is now being governed by the people who don't pay for the federal government."

The funny part here is that the people who pay for the federal government want it - and the people who don't pay for it, don't want it (or at least they used to not want it before they realized they didn't have to pay for it).

It may explain why R's have been less opposed to big government as of late.

[E. Steven]

For some reason this Liberal Federalism meme puts me in mind of Bob Dylan:

You say you disturb me
And you don't deserve me,
But you know sometimes you lie.
You say you're shakin'
And you're always achin',
But you know how hard you try.
Sometimes it gets so hard to care,
It can't be this way ev'rywhere.
And I'm gonna let you pass,
Yes, and I'll go last.
Then time will tell just who fell
And who's been left behind,
When you go your way and I go mine.

[Todd Fletcher]

"...the segment of the country that pays for the federal government is now being governed by the people who don't pay for the federal government."

This is BS. I understand the point: the red states get more in tax dollars than they pay, but I live in a red state, and I can assure you I pay taxes!

[The White Anglo Saxon Protesta]

Paul a'barge - In many ways, it is incorrect to speak of a conservative agenda. An agenda denotes a series of positive, forward moves or tasks. Conservatism, by its very nature, abhors change of any kind and seeks to hold the status quo. What is happening here is a massive advance to the rear with regard to both foreign policy and domestic affairs. This is a radically activist administration, as are those who support it. It may be right-wing, but it is certainly NOT conservative.

[tim]

I like it! I like federalism. First we let the states do things differently, than we watch as people live where things are run the way they like, I know that government isn't the biggest reason people live in a certain place, but the more power the states have to run things as they want, and differently from their neighbors the better.

[E. Steven]

I really think somebody could run a national campaign on the theme of "I'll let you do whatever the hell you want in your own state." Who wouldn't support that? Of course, certain things would still be a matter of Federal decision making, Foreign Policy being the most obvious, but also you might need to keep some environmental laws in place to prevent one state from befouling an entire region's air, ground or water. Otherwise, people should be free to live as they wish!

[Gilbert Martin]

"Speaking on "The McLaughlin Group" the weekend after George W. Bush's victory, panelist Lawrence O'Donnell, a former Democratic Senate staffer, noted that blue states subsidize the red ones with their tax dollars, and said, "The big problem the country now has, which is going to produce a serious discussion of secession over the next 20 years, is that the segment of the country that pays for the federal government is now being governed by the people who don't pay for the federal government.""

I say O'Donnell's premise is flawed to begin with. Firt, the blue states aren't really blue. A county map of the country shows that most of the blue state territories outside of the large cities are actually red.

Second, the top 50% of income earners, wherever they live, pay 95% of the federal income taxes. O'Donnell would have to prove that the majority of that particular group of people residing in the blue states are liberals/democrats and voted for Kerry. I doubt that all those people in New York making big bucks on Wall Street are in that camp.

All those blue staters in the bottom 50% income earner category aren't subsidizing anything.

[digamma]

As long as New York City has to face terrorist blowback from the foreign policy of red-staters, this idea leaves me pretty cold.

[Mo]

Gilbert,
I think you'll find that the blue counties in the blue states are where the bulk of the money comes from anyways. The blue areas are the urban areas, the urban areas are where most of the money is generated. So even if you buy the whole "islands of blue in a sea of red" crap, the islands of blue are paying for the majority, even in red states.

[b-psycho]

Eh, maybe if we can pounce on the issue just right we can wrench some concessions out of the Dems while they're being depressed, carving out a backdoor for when the pedulum swings again. Hell, anything's worth a shot now, how much lower can a limited government agenda go?

[Gilbert Martin]

"Gilbert,
I think you'll find that the blue counties in the blue states are where the bulk of the money comes from anyways. The blue areas are the urban areas, the urban areas are where most of the money is generated. So even if you buy the whole "islands of blue in a sea of red" crap, the islands of blue are paying for the majority, even in red states."

Not unless you can prove that the majority of the specific individuals who are in the top 50% of income earners in those blue locations voted for Kerry. As I said, the top 50% of income earners pay 95% of income taxes.

I doubt that all those bond traders and stockbrokers working for Merrill Lynch and Goldman Sachs in New York were voting for a liberal Democrat blowing hot air about tax cuts for the "rich".

[Maggie]

Digamma, you notice where all those Marines are coming from bro? How about the ones taken hostage last year? Blue staters? Nah, you whine, b---h, and moan while Red Staters are on the front lines for your freedom - put that into dollar signs.

[Gilbert Martin]

In fact the only REAL way to know which presidential canditates supporter's are subsidizing the other side would be to know how each federal income taxpayer voted and then add up the total dollars in taxes paid in by Bush supporters and those paid in by Kerry supporters and see which total was higher.

There are a whole lot of those metropolitan blue area voters who aren't paying any income taxes

[b-psycho]

Gilbert: what proportion of a stockbroker's income is affected by the regular income tax, rather than capital gains & dividend tax?

Serious question, not trying to be rude. I'm not sure, but it's at least partially plausible that some Wall Street types might rationalize that they can let class warfare as a campaign tool slide as long as it doesn't actually aim itself at the wider end of their wallet.

Besides, for all that Democrats like to portray themselves as The Party Of The Little Guy, their economic policies stomp on lower-income people, ironically.

[Dan]

So even if you buy the whole "islands of blue in a sea of red" crap, the islands of blue are paying for the majority, even in red states.

No. States don't pay taxes, and counties don't pay taxes. People do.

Here's an exercise for you: weigh people's votes in accordance to their share of the tax burden. You'll find that there is no "blue America" anymore -- even New York and California turn "red" if you look at who's actually paying those taxes. This is because upper-income people (a) shoulder almost all of the income tax burden and (b) mostly vote Republican.

So you're right that most of the tax money comes from blue counties. But since it comes from red voters in those blue counties, it's hard to see why the blue voters have grounds for complaint.

[Tim Higgins]

b-psycho,

I am not an expert, but it is my understanding that stockbrokers make their living off of salary and commissions (which are taxed as regular income) and not investment returns (which are taxed as dividends or capital gains). In other words, being a "stockbroker" means something different from being an investor. So, their income is affected by regular income taxes the same way pretty much everyone else's is.

I don't doubt that someone will correct me if I'm wrong, though.

[b-psycho]

Tim: would be a surprise to me if true. I always thought that most stockbrokers -- because of their knowledge of the market -- also invested themselves heavily, making a broker pretty much an investor by default.

[Gilbert Martin]

"Gilbert: what proportion of a stockbroker's income is affected by the regular income tax, rather than capital gains & dividend tax?

"Serious question, not trying to be rude. I'm not sure, but it's at least partially plausible that some Wall Street types might rationalize that they can let class warfare as a campaign tool slide as long as it doesn't actually aim itself at the wider end of their wallet." "

I don't really see what you're trying to get at. Are you saying a lot of Wall Streeters are naturally liberal in inclination as long as it doesn't cost them too much in cash?

I would say that since the fate of most Wall Street jobs is ultimately tied to the well being of the public corporations that is the basis of their profession, most of them would be more inclined to be for a business friendly, low tax and low regulation Republican view.

[thoreau]

My brother-in-law works for an investment company. How much income one derives from commissions vs. investments depends very heavily on your job description, from what he tells me. At various times he's made his money from one or the other source.

I don't know his political leaning, but his wife is most definitely a Republican.

[Tim Higgins]

b-psycho,

I am sure you are correct that stockbrokers also invest heavily, but I would be surprised if such a large percentage of their income was from investing that they were willing to overlook income tax policy. Even if this is the case, I am pretty sure the side (politically) that advocates income tax increases also opposed reducing dividends and capital gains taxes. Regardless of which of these categories a broker's income is derived from, his taxes will be lower under Republican policy.

[joe]

Dan, the income tax accounts for 1/3 of federal revenue.

A majority of workers pay more in payroll taxes (regressive, not cut by Republicans) than in income taxes. I guess they don't count.

Maggie, go shit in your hat. I see stories about military personnel from Massachusetts being killed every couple of weeks. And let's not get started on the racial composition of votes and deaths. I guess they don't count either.

[thoreau]

joe-

Good points about both the payroll taxes and the deaths in Iraq. I've heard claims that rural kids disproportionately join the armed forces, and I've heard claims that urban minorities disproportionatly join the armed forces. Perhaps both groups join the armed forces in numbers disproportionate to their percentage of the population, and it's white urban and suburban kids who don't join.

Hmm, this sounds like every white suburbanite's worst nightmare: Hicks and minorities with automatic weapons working together...

[SDN]

Related to Maggie's point is how much of that "red state imbalance" is because of what percentage of that money is for military bases located in red states, because we don't run the ROTC off campus the way Harvard does. And, Joe, the shit's between your ears: Maggie didn't say that NO blue state troops were getting killed, just that most troops (killed and otherwise) weren't from blue states.

[Dan]

Dan, the income tax accounts for 1/3 of federal revenue.

In 2003 the U.S. government had $1,782,342 million in total of revenue, of which $793,699 million came from personal income tax. That's 45%, not "1/3". Corporate income tax pushes that up to 52%. You're correct that payroll tax is flat, but the "red money" advantage from that 52% is still enough to make up the balance and cancel out the supposed blue->red money flow.

But hey, you may be on to something. Sounds like you Democrats ought to support abolishing the Social Security system entirely and implementing state-level systems in its place. That way you get to keep all the money those wicked red-staters are taking from you, right?

[Gilbert Martin]

"Dan, the income tax accounts for 1/3 of federal revenue."

What is your source for that number? I think the percentage is higher than that.

"A majority of workers pay more in payroll taxes (regressive, not cut by Republicans) than in income taxes. I guess they don't count."

Payroll taxes (FICA) payments, unlike federal income tax payments, entitle the payor to collect retirement benefits from Social Security in return.

Upper income workers pay a lot more in payroll taxes (in dollar terms) than lower income workers do in addition to paying most of the federal income taxes.

Additonally, the social security benefit payment formulas are "progressive" in the sense that lower income workers get a higher dollar benefit payment in return relative to the amount of payroll taxes they have to pay in than upper income workers do.

So the lower income people are still be subsidized any way you slice it.

[Mo]

SDN,
Military bases aren't built because of where the recruiting is, they're built for strategic, land or pork reasons. I remember the Republican Congress closed more bases in California, proportionally, than other states IIRC. I doubt it was because we were insufficiently patriotic.

[thoreau]

One would think that the blue states would have more military bases than the red states, or at least more naval bases. Half of the east coast plus the entire west coast is blue. Hawaii is blue.

Then again, half of the east coast, the entire Gulf coast, and Alaska's huge (and strategically located) coastline are all red. OK, never mind.

[Sarnath]

I am amused that after all the red-state/blue-state debunking that has gone on, people still use those terms in the same way as before.

[JD]

Dan is quite correct: states don't pay taxes. A rich Iowan pays a lot more in federal taxes than a poor New Yorker. If New Yorkers pay more on average, it's because they're richer on average. Funny how Democrats are all about the rich paying their "fair share" via progressive taxation - until the commoners get uppity.

And reading Geoghegan's article just about made me nauseous. A more naked appeal to self-interest I've never seen: vote Democratic because we'll make your evil boss give you more vacation time! At least he admits it. It reminds me entirely too much of the old saying that a democracy only lasts until the people discover they can vote themselves money from the public treasury...except that Geoghegan wants them to vote themselves money out of other people's pockets.

[joe]

Dan,

Since there is a cap to the earnings subject to the payroll tax, it is not "flat." It is regressive. The best way to solve this situation is to remove the cap and lower the %, but the right half of the country seems to lose its interest in flattening taxes when it doesn't involve shifting the burden downward.

[Tim Higgins]

joe,

Social Security: taxes withheld from first $90,000 in 2005, so yes there is a cap on taxed earnings. However, the social security benefit earned is 90% of roughly the first $7,200 in earnings, 32% of the next $36,000, and 15% of the rest. Also, those earnings which aren't taxed also aren't considered in calculating the benefit. So, Social Security in fact is a progressive tax.

Medicaid: the same percent of pay (1.45%) is assessed to all earnings, so it is neither regressive nor progressive.

So, in total, payroll taxes are also progressive.

[cdunlea]

"but I live in a red state, and I can assure you I pay taxes!"

Yes, but your taxes likely as not are returned 100% to your state by the federal govt in goods and services, whereas mine (from blue state Massachusetts) go somewhere else; 21% of my federal taxes, to be precise.

"So you're right that most of the tax money comes from blue counties. But since it comes from red voters in those blue counties, it's hard to see why the blue voters have grounds for complaint."

If that were true, Massachusetts, New York, Connecticut and New Jersey would have overwhelmingly elected Republican legilatures, since big-dollar political donors and these big-dollar voters would be the same people. The fact is that the governments are at best split, so the George Soros types are out here somewhere raising cash for Dems.

Finally, as a 100% commissioned broker, I pay a lot of tax money out against my 1099. But I for one wouldn't mind so much if I actually got something back in services. It's bad enough I don't, but worse that the money goes to support trailer trash in the bayous, who then vote for a guy all too willing to send more of my money overseas to rebuild Iraq while federal aid for the local schools get cut.

[Gilbert Martin]

"If that were true, Massachusetts, New York, Connecticut and New Jersey would have overwhelmingly elected Republican legilatures, since big-dollar political donors and these big-dollar voters would be the same people. The fact is that the governments are at best split, so the George Soros types are out here somewhere raising cash for Dems."

Faulty logic, dcunlea.

First, not all high income people donate big bucks to politicians.

Second, big political contributions do not reliably translate into votes. Soros found that out. He thought he could buy the Presidency for Kerry.

The vast majority of people in the blue metro areas are not high income people and are not the ones paying the preponderence of income taxes.

As I said before, the only REAL way to find out which candidates supporters are doing the subsidizing would be to know exactly how each taxpayer voted and match that up with IRS records of how much each person paid in taxes. Then you'd have to add up the totals for each side and see what the grand totals were for each.

[Ruthless]

States' Rights and their right to secede are fairly obvious in the Constitution.
In practice, it's hopeless. Our Civil War was so wrong on so many levels.

So, many of us can see Point B. Here we are at Point A.

How do we get from A to B?
I'm not going to predict except to say it will be a complex route. See the Santa Fe Institute web site for more about complexity.

[joe]

Tim,

You demonstrated that the BENEFITS of Social Security are progressive. This is irrelevant to the question of whether the taxes themselves are progressive.

Looking at the recipients of federal nonSS spending would cause one to conclude that the income tax is flat or regressive. When discussing the pro/regressiveness of a taxes, it only makes sense to limit the discussion to the taxes themselves. You can broaden the discussion to demonstrate anything you want.

[Tim Higgins]

joe,

quite right, although considering that without social security and medicare benefits there would be no social security and medicare withholding, I am not sure how much sense it makes to make that distinction. While I think income is a decent proxy for the benefit one enjoys for the cost of paying taxes (thus making a flat tax "neutral" rather than either -gressive), it is obvious that assessing a "flat" tax for medicare benefits makes it a progressive program (the value of the benefit I receive does not increase with income), and over-weighting lower pay while not taxing disregarded pay in social security still makes it a progressive program.

In any case, I don't advocate flat taxes, but I don't really see what your objection is to the fact that those who do advocate them also would oppose the program you suggested. How are the two positions inconsistent with one another?