The Volokh Conspiracy
Mostly law professors | Sometimes contrarian | Often libertarian | Always independent
The national government and the states: A paradox
A compendium of state taxing and spending data by the business website WalletHub, discussed at length in a terrific analysis by John Tierney over at the Atlantic, opens a pretty fascinating window on the state of American federalism at this point in time.
If you compute the amount of money paid to the national government in taxes by residents of each of the 50 states and compare it with the amount of money each state receives from the national government, 11 states receive more than $2 back for every dollar they send to Washington, D.C.: South Carolina, North Dakota, Florida, Louisiana, Alabama, Hawaii, Mississippi, New Mexico, Kentucky, West Virginia and Indiana (55 percent).
(States shown in bold type in the above list and subsequent lists voted for Trump in the last presidential election; the number displayed at the end of the list is the average percentage of the vote that went Trump's way in the listed states.)
On the other side of the scale, these 14 states show a "deficit"; they receive less than $1 for each $1 paid in federal taxes: California, Massachusetts, Wyoming, Oklahoma, New Jersey, Utah, Colorado, New York, Kansas, Ohio, Nebraska, Illinois, Minnesota and Delaware (47.5 percent).
Similarly, using a somewhat more encompassing "dependency index" for each state, based not only on the amount of federal spending per capita in each state compared with every dollar paid in federal income taxes but also on (a) the percentage of a state's annual revenue that comes from federal funding and (b) the number of federal employees per capita, show that these are the states that are the 10 most "dependent" on federal funding: Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine and Indiana (57 percent).
And the least-dependent 10 are: New Hampshire, Connecticut, Massachusetts, Nevada, Kansas, California, Illinois, New Jersey, Minnesota and Delaware (42 percent).
It's strange, and quite counterintuitive (to me, at least): The reddest states—the ones whose citizens consistently vote to dismantle significant portions of the federal government machinery—are the ones that receive the most benefit, financially speaking, from that federal government, while, correspondingly, the lower the financial benefit a state receives the more likely it is to vote blue. South Carolinians—who receive nearly $8 for every $1 they send to the feds—want less involvement by the federal government in their lives? Even though it means they'll have to come up with that extra 7 bucks from some source other than the taxpayers in New York, California and Illinois?
I would have expected the relationship to run in the opposite direction, on the simple-minded theory that people vote with their pocketbooks. Obviously, there's a lot more going on here, with many factors that play into a state's voting patterns, and there's also a fair bit of noise in the data, and there may be no simple explanation for what's going on.
But regardless of the explanation for why the pattern exists, the fact that it does exist surely makes Ilya Somin's argument—that "federalism can help save the failing 'marriage' between the red and blue states"—both more attractive and, I think, more plausible as a path forward:
A political union need not be as close a relationship as a marriage usually is. Red and blue America may not be able to spend some time completely apart. But they don't have to do so many things together.
Today, the federal government has control over an extraordinarily wide range of issues, everything from health care to drug prohibition, to light bulbs and toilet flows. By decentralizing more power to the state and local level, or to the private sector, we can reduce the number of issues on which a one-size-fits-all decision has to be made. There will be less need to make painful compromises and concessions if each side can get their own way in their own state, locality, or private planned community.
A political family that doesn't have to do so much together can be a happier family with fewer dangerous zero-sum conflicts. It may not be quite like a successful marriage. But perhaps a less intimate form of political relationship is precisely what we need. People who are too different to be good spouses might nonetheless make good friends or relatives—as long as they don't have to do too many things together. Uncle Red and Cousin Blue might be a lot more likable if you didn't have to worry about them controlling too many aspects of your life.
If South Carolinians and Nebraskans and Oklahomans want less "interference" from the federal government, it doesn't take a great deal of imagination to think of the voters in California and New York and Illinois saying, "Fine—you go your way and we'll go ours. You want to have a lousy health-care system, starve your public schools, open up more coal-fired plants without any regulatory supervision, prohibit your doctors from even mentioning the word 'abortion,' round up all your illegal immigrants and lower drinking water standards? Be our guest! Just don't make us subsidize your lousy policies the way we have been up until now."
This becomes an even more convincing argument—a no-brainer, even—when considering that the blue states:
- contain nine of the 10 top-ranked universities in the country;
- comprise nine of the 10 states with the highest median household income;
- generate most of the technological innovation (measured by patent rates);
- have higher average life expectancy
and so on.
It's hard to imagine, given the degree of polarization we see around us, that we won't be hearing more arguments from blue staters pointing in this very direction. See, for instance, Kevin Baker's excellent open letter to red staters in the New Republic, suggesting that it's time for "Bluexit" (pronounced, I believe, "Bloo-ksit"):
You want to organize the nation around your cherished principle of states' rights-the idea that pretty much everything except the U.S. military and paper currency and the national anthem should be decided at the local level? Fine. We won't formally secede, in the Civil War sense of the word. We'll still be a part of the United States, at least on paper. But we'll turn our back on the federal government in every way we can, just like you've been urging everyone to do for years, and devote our hard-earned resources to building up our own cities and states. We'll turn Blue America into a world-class incubator for progressive programs and policies, a laboratory for a guaranteed income and a high-speed public rail system and free public universities. We'll focus on getting our own house in order, while yours falls into disrepair and ruin.
It does require something of an ideological turn-around—blue staters are not usually associated with the idea of states' rights and the advancement of true "federal"(as opposed to "national") power. But the time sure seems ripe for such a move now.
