It's Wednesday, and you know what that means: time to tweetstorm my latest print column! washingtonpost.com/opinions/democ…
As always, this tweetstorm will not reprise the column! It will discuss only things that are not mentioned in the column So you should read the column too.
I will, however, sum up the nut key takeaway: rich blue states face a mounting tension between their goals for a big, progressively funded federal government, and their local self-interest.
Question 1: You said that the SALT (state and local tax deduction) represented a subsidy to rich blue states! But blue states are subsidizing red states!
Answer: Well ... kinda. In fact, the "blue state subsidize red states" narrative is too reductive, and not fully backed up by the data, as I pointed out a few months back: bloomberg.com/amp/view/artic…
But yes, there are a disproportionate number of red states getting subsidy, and a disproportionate number of blue states paying subsidy. To judge by the folks tweeting/commenting at me, a lot of people think this transfer represents "republican welfare", like farm subsidies.
And hey, I am second to none in my hatred of farm subsidies. But they're a couple of tens of billions of dollars a year. The federal government spends trillions a year. This is a rounding error.
Where does the money go? It goes to federal employment, transfer programs (social security, medicare/medicaid, unemployment insurance), and the military, though CA and HI are also big beneficiaries of that last. Also disaster relief and some federal contracting, mostly in MD & VA
Which of these programs do progressives complaining wish to cut? Yes, I know, the military. Won't fundamentally change the imbalance, which stems from 1) a progressive tax code and 2) progressive redistribution of that tax revenue. Poorer states get more.
In fact, Joshua McCabe has made a convincing argument that the blue states are getting far too big a subsidy: nationalaffairs.com/publications/d… They're richer, so they have much larger fiscal capacity than red states, and they're the ones who can afford to pay.
Which is the point of the column: if you want a more progressive tax code that takes a lot more money from the rich, and redistributes it to the less well off, you are arguing for a much bigger net transfer from blue to red. Something the left hasn't reckoned with.
They are theoretically in favor of higher taxes, and also, in many cases, extremely averse to seeing money flow out of their states to Republican areas of the country.
Question two: You didn't acknowledge that progressive policies are what made blue states rich!
Answer: well, no, I didn't "acknowledge" this, because it is not a fact; it is your opinion. The causality could just as plausibly run the other way: the richer you are, the more government you can afford.
Also, I'd argue that denser places need more government, because it takes more law (and more common systems like complicated sewers and water treatment) to let large numbers of people safely rub along together cheek by jowl.
But New York has been richer than much of the rest of the country for centuries, long before the place became progressive. California has been booming for decades.
Wealth is the result of a complex array of forces, like geography (note how many of these cities are seaports), path dependence (rich places often get richer) and historical luck (why did Wall Street end up in NY and not Boston?). So, no, guys, "You didn't build that".
I pause to note that when we're talking about states rather than people, the left suddenly sounds like the most rock ribbed Republican. Their wealth is entirely the result of their hard work and sterling personal choices and values. The red states are ungrateful moochers!
This should give each side some insight, and even some sympathy, into the views of the other side. It won't, mind you, but it should.
Question 3: Look at this line: "President Barack Obama called for raising taxes only on families making more than $250,000 annually — that being, apparently, what it now takes to call yourself “rich.”
What kind of silver-spoon baby are you! $250k a year *is* rich!
What kind of silver-spoon baby are you! $250k a year *is* rich!
Answer: I apologize if this was unclear, but you are agreeing with me! I was making fun of the idea that families making $240k a year are just ordinary middle class folks.
Now, many of my readers in New York and San Francisco and Washington and Boston and Los Angeles are even now racing to their keyboards to tell me about how they make $250k a year and they're not even a little bit rich.
What with day care, and a few after school programs, and trying to save for retirement, and the mortgage on a house in a district with decent test scores and an AP program ... they're just barely scraping by! Do you know how much Ivy League tuition costs? To which I say...guys.
I get that you're not rich compared to the neighbors who resemble you. You don't have a 10,000 square foot mansion, or a ski chalet in Tahoe. The thing is, your neighbors are really rich too.
You can afford to pay for homes in the best school districts, however uncomfortably. You can afford to live in the most expensive cities in the world, which is, yes, a consumption choice, not a basic necessity. Most people don't have those options. Because they're poorer than you
If you think that the unusually prosperous have to pay a disproportionate share of the cost of government (and I personally do think this), then I have some bad news for you: you are the unusually prosperous, which means you are going to have to pay.
The good news for you is that since so much of your personal income is poured into attempts to secure a zero-sum competitive edge for your kids via the educational system, higher taxes on everyone will probably reset the prices for everyone, leaving your position mostly unchanged
The bad news is that since so much of this competition takes place via real estate purchase, the resulting downward reset of prices will probably leave you upside down on your mortgage.
Anyhoo, yeah, sorry, blue-state professionals are rich. I know you don't feel rich. The funny thing is that most of the folks you think of as "really" rich don't feel rich either, because they also blow a bunch of money on positional competition that leaves their finances shaky.
If you want to feel rich, go talk to some ordinary folks working lower-middle class jobs and ask them how many choices they had about where to live, and where to send their kids to school. Or just ask them how many times in their life they've been on an airplane.
