Red State Subsidies

April 8, 2010
Sentiment for reducing government spending is rising, and the unstructured tea party movement is its most visible representation. However, Americans unhappy with overspending in Washington need to get more specific about where it thinks the federal budget ought to be cut.  

Although the tea party movement is somewhat amorphous, most self-proclaimed tea partiers probably have their roots in conservative beliefs and/or the Republican Party. Most are probably in more conservative “red” states. 

Harvard’s Jeffrey Frankel recently pointed out that blue states are actually more likely to be subsidizing red states when it comes to federal taxing and spending. Looking at the Tax Foundation data Frankel used to arrive at his conclusion, we see that heavily blue states like New Jersey, Connecticut, and Delaware receive significantly less than a dollar in federal subsidies for every dollar paid in taxes. On the other hand, red states like Alabama, Louisiana, and Alaska receive much more than a dollar in federal largesse for every dollar paid in taxes.
Frankel cites such government programs like defense and farm subsidies as examples of why red states fare better. He also cites rural subsidies for telephone service, electricity, and if President Obama has his way, broadband. (See these essays for more on farm subsidies and rural subsidies.)
Putting a big dent in Washington’s spending appetite is going to require that subsidies for all parts of the country be cut. I’d love to see red state tea partiers in particular start challenging their members of Congress on types of federal spending that particularly subsidizes their own states.   



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