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Lately I've had the opportunity to merge my pundit role with my old interest in economic geography, and I've been finding some things that seem very startling. Here's a striking chart about the flow of federal funds to and from poor states 1/
The state "balance of payments" is the difference between federal money spent in a state and federal tax receipts from that state. The 2017 numbers are from a Rockefeller Institute study 2/ rockinst.org/issue-areas/fi…
The 1981 numbers are from Tax Foundation: taxfoundation.org/federal-taxes-…. I'm not sure how well the methodologies compare, so use some caution with the comparison. But focus first on those 2017 numbers 3/
We say that we don't have "space-based" or regional policies in the US. But de facto the combination of national safety-net programs and unequal incomes means huge transfers to poorer states – many of which vote for people who claim to hate big government 4/
I mean, Mitch McConnell's Kentucky gets a net federal inflow of 20% of state GDP, paid for by places like New York and New Jersey. KY is as much a ward of the national government as East Germany or Southern Italy 5/
Why have these transfers grown? As I said, I'm not sure I trust the data comparison. But the growth of Medicaid, on one side, and the rising incomes and hence tax payments of the 0.1% – who tend to live in Manhattan, not Louisville – probably explain it 6/
Two morals: we really do have a political system in which regions bite the hand that feeds them; reversing regional decline is hard, because we already provide lots of de facto aid to declining regions, and it doesn't stop the decline 7/
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