California Governor Gavin Newsom weighed in on the question of bailing out states whose budgets have been blown up by the coronavirus pandemic.
Newsom told CNN’s “State of the Union” that a state bailout was not “charity” and that Congress has a “moral and ethical obligation” to help Americans across the country.
The House passed a $3 trillion coronavirus relief bill last week which contained almost a trillion dollars to bail out states. It also contained goodies for all — another stimulus check, help for renters, college debt relief, and cash for illegal immigrants.
“Pensions are driving a lot of this,” Senator Scott says. “[States] don’t want to raise taxes. They don’t want to make tough choices. Businesses have to do it. You have to. Families have to watch their budgets — but not the states.”
Governor Cuomo, for his part, has attempted to resurrect the old canard about the so-called blue states subsidizing the red ones, as measured by tax receipts vs. federal expenditures. “They’re not bailing us out,” Cuomo said of Florida and Rick Scott. “We bail them out every year.”
This is a cherished Democratic talking point, but it is not quite true.
The largest per-capita net-recipient states at the moment are Democratic states: Virginia, Kentucky, and New Mexico. The biggest “donor” states are Democratic, too: Connecticut, New Jersey, and Massachusetts. (NB: Estimates vary some from source to source, but New York is reliably pretty high on the purported net-payers’ list.) Some of those numbers are driven by entitlements and by the fact that the U.S. tax code is steeply progressive, i.e. by Democratic policies. And some of those numbers are driven by the fact that federal purchases, federal contracts, federal employees (hello, Virginia!), and federal lands are not evenly distributed throughout the country, which means that federal outlays do not land equally on every square inch of American territory — the federal government owns 85 percent of the land in Nevada but less than 1 percent of the land in New York State. There are a lot of financial firms in New York City and not very many Air Force bases, which affects the notional balance of payments.
The same dynamic is a big part of why Democratic states such as Maryland and Hawaii are on the net-takers’ list while Republican states such as North Dakota are net payers. California, once a donor state, is at the moment a modest recipient state, to the tune of about $12 a year per capita.
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