How blue states subsidize red states
https://www.twincities.com/2018/11/14/robert-b-reich-how-blue-states-subsidize-red-states/
A Meals on Wheels cook moves trays down the line to be packaged in Savannah, Ga. (Josh Galemore/Savannah Morning News via AP)
By Robert B. Reich |
PUBLISHED: November 14, 2018 at 12:58 a.m. | UPDATED: November 15, 2018 at 12:28 p.m.
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Donald Trump and Republicans in Congress love to demonize government handouts. But their own red-state supporters depend on these handouts. And the handouts are increasingly financed by the inhabitants of blue states.
The federal program Temporary Assistance for Needy Families — what we used to call “welfare” — is now tiny. It provides cash assistance to less than 1 percent of Americans.
But the Trump administration is proposing to lump many other social programs under a new agency with the word “welfare” in its title, in order to make Americans think we’re living in a vast welfare state.
A recent White House report on imposing work requirements, for example, lumps Medicaid, food assistance and housing aid into a rebranded program called “noncash welfare.”
But defined this broadly, a large chunk of America relies on welfare — including a lot of people who wouldn’t like to think of themselves as being on the dole.
Add in disability benefits, unemployment insurance and medical benefits, and such rebranded “welfare” amounts to fully 17 percent of the average American’s income.
The term “welfare” is especially unpopular in red states that vote Republican and support Trump. But when you think broadly about all forms of government assistance, these same red states are often the biggest beneficiaries.
If you include price supports for agriculture, subsidies for land management and forestry, and federal money flowing to defense contractors, you’ll find that the economies of red states depend heavily on federal dollars.
But that’s not even the biggest irony. It turns out residents of blue states send more tax money to Washington than they get back in federal help, while residents of red states send less money to Washington than they get back in federal help.
In 2015, for example, New Jersey got back only 74 cents in federal spending for every tax dollar its inhabitants sent to Washington, according to the Rockefeller Institute of Government. New York got back 81 cents on the dollar, Connecticut 82 cents and Massachusetts 83 cents.
But when you turn to the red states, it’s the opposite. Mississippi received $2.13 for every tax dollar that its inhabitants sent to Washington. West Virginia received $2.07, Kentucky: $1.90 and South Carolina $1.71.
Taking the Trump administration’s expansive view of the meaning of “welfare” to its logical conclusion to include all those benefiting from federal spending, this means blue states are sending welfare to red states — the same red states that say they don’t like welfare.
Under the new tax law enacted by Trump and the Republicans, blue states will be giving even more “welfare” to red states.
That’s because the law sets new limits for the amount of state and local taxes that people can deduct from their federal taxable incomes. And since people in blue states pay much more in state and local taxes than people in red states, blue-staters will be paying that much more in federal taxes.
Which means an even bigger transfer going from blue-state residents to all those red-state Republican voters whose party despises handouts.
I want to be quick to add that most of us here in blue states don’t mind giving red states a bigger helping hand.
Truth be told, the vast majority of Americans also oppose cuts to programs that aid the poor, elderly and sick. Because most Americans figure we’re all in this together, we believe those of us who can do so ought to help out those in need.
We don’t regard the help as welfare handouts. We call it social insurance.
In fact, social insurance is needed and used by almost all of us. That’s why Social Security, Medicare and unemployment insurance are so popular. Even though the money to finance them comes mostly from taxpayers who aren’t currently dependent on these programs, we don’t begrudge their recipients because we assume that most of us will need these programs someday.
It turns out that even programs relied upon mostly by the poor end up helping a large portion of us, because roughly one-third of all Americans are poor at some point in their lives and therefore dependent on these programs.
So when the Trump administration attacks so-called “welfare,” it’s really attacking the things most of us need. And it’s artificially dividing the country into “us” and “them.”
In reality, voters in red states are as dependent on the federal government as voters in blue states. Truth be told, even more dependent.
Robert Reich’s latest book is “The Common Good,” and his newest documentary is “Saving Capitalism.” He wrote this column for Tribune News Service.
