Has the Time Come to Break Up the Union?
Posted: June 25, 2012 Filed under: U.S. Economy, U.S. Politics | Tags: federal aid to states, federal taxes, fiscal transfers, Medicaid, seceding from the union, unemployment insurance 41 Comments
Via Matt Yglesias at Slate, this map–originally posted at The Economist last year– shows fiscal transfers from wealthier states to poorer ones by means of taxes collected by the federal government and then distributed to states as Medicaid, unemployment insurance, and so on.
As Yglesias points out many of the states that get more back than they put in in taxes tend to be more conservative, but that’s not always the case. States that are lower in population also pay less in taxes and get more back. For example, North Dakota and Iowa are experiencing a great deal of growth and prosperity at present, but they still get more held from taxpayers in more populous states like New York, Connecticut, and Massachusetts.
Yglesias points out that the situation here in the U.S. is different from the Eurozone:
Two key points I would make about this in relation to the eurozone are that these transfers are both really big and extremely persistent. Mississippi and Alabama have lagged behind the rest of the nation in economic development for a very long time and I see no particular reason to believe they’ll ever catch up.
Making the obvious mental leap, Derek Thompson writes at The Atlantic:
Unlike the United States, the euro zone collects a teensy share of total taxes at the EU level and has no legacy of permanent fiscal transfers from the richer countries, like Germany, to the poorer countries, like Greece.
Would wealthy, populous states like New York and Texas be better off establishing their own currencies, Thompson asks?
On their own, they could spend a lot more. Today, the states can’t borrow money. But on their own, the richer ones might be able to borrow cheaply enough to eventually run persistent small deficits to make up for whatever infrastructure, education, and per capita health care spending they were receiving from Washington. Once they got in on NAFTA, they could trade freely with the other states as the dollar zone disintegrating into history.
Perhaps the northeastern states should secede and form their own union. Quite a prosperous country could be made up of MN, IL, IN, OH, PA, NY, MA, NH, ME, VT, DE, RI, and CT. Only IN, VT, and ME would be on the poor side. Other areas of the country could form their own coalitions.
Perhaps a more interesting question is whether the possibility of this happening might stimulate enough concern among conservatives in Congress for them to stop fooling around with the wars on women and science and start doing something about the real problems we’re facing in this country?
Desperate times call for desperate measures.
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Mona (aka Wonk the Vote)
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What’s even more disgusting is that these states send state senators to muck up policy. Most of them have less people than NYC but they get two senators each.
If Texas were going to be an independent country, it should have been when the plans for OPEC were drawn up on the University of Texas campus. We would have been Saudi Arabia income wise but now it’s a bit late 🙂
Louisiana would be rich if we got our oil leases. The Feds take it all. Texas has a better deal than we got.
Texas could still be a separate country or they could band together with Louisiana, Arkansas, and Georgia, and maybe Florida.
I’d only secede if we could go back to the Republic of West Florida and get rid of the northern half of the state which is basically KKK land. The only part I want to keep is the French part.
If you secede, you could take the oil leases.
By the way, Scalia melted down completely again in his SB1070 dissent. That dude has freakin’ lost it.
I really think he needs psychiatric treatment. Did he talk about broccoli?
Alito was pretty nutzoid too. All the Opus Dei members should be thrown off for belonging to a terrorist group.
If it was someone other than Scalia, I would suspect a brain tumor.
Antonin Scalia, ranting old man
The conservative judge turned a dissenting opinion into a screed against Obama. Why he needs to hang it up
http://www.salon.com/2012/06/25/antonin_scalia_ranting_old_man/singleton/
I can think of a few holes on right blogistan where he’d be fit in along with all the other spewing assholes.
Too bad he failed to mention his disdain for “dry legalities” during the confirmation process. That’s like item #1 in the pamplet “Is Supreme Court Justice really the job for you?”
pamphlet
Right now would be a great time for Montana to flip the bird to the SC and continue enforcing their campaign finance laws. That’s a constitutional crisis whose time may have arrived.
That’s a great idea. I think it’s time for the states to start fighting back.
Would you have felt that way in the 1960s?
I can’t believe they think an institution is deserving of free speech. Totally nuts.
I love Jim Hightower’s position on Citizen’s United: I’ll believe corporations are people when Texas executes one.
http://www.politico.com/politico44/2012/06/warren-blasts-mitt-at-obama-fundraiser-127269.html
Blame it on James Madison. It’s the clear language of the First Amendment:
There’s nothing in that language restricting it to natural persons, and I’m really nervous about attempts to do so. Should MSNBC be denied freedom of speech if they annoy some future Republican administration, because their corporate parents (Comcast and GE) are not entitled to First Amendment protections? How about the New York Times Corporation?
The other problem is that restricting corporate/institutional advertising does nothing to diminish the excessive influence of wealthy individuals, like the Koch brothers, Scaife, or Penny Pritzker for that matter.
I think the Court’s fundamental error was equating political donations with protected speech and thereby setting the precedent that made Citizens United possible.
Good point. Political donations is basic influence peddling and rent seeking. However, when James Madison wrote this US businesses were family and person owned and the limited liability corporation made up of faceless groups of uninvolved people was not yet invented. It was a few years down the line before the first state would come up with that. Individual proprietorships and partnerships are basically responsible to laws like people are. Investors are above the law. There is something very different about that.
I can’t believe unlimited money is considered “speech.”
I don’t believe that’s true. Limited liability corporations existed in Ancient Rome (and any educated man of the 18th Century would have known that). Church and town corporations were common in Europe from the late Middle Ages on, and chartered commercial corporations such as the Dutch East India Company and the Hudson’s Bay Company were already well-known. The British East India Company was organized in 1600 and conducted its first public stock offering in 1613. Stockholders in these ventures were explicitly granted limited liability by royal decree. The London Stock Exchange had been in existence since 1698. Stockbrokers were plying their trade in New York in the 18th Century, although they didn’t formally organize the NYSE until 1792. The notion of corporate personhood wasn’t completely formalized in US law until the Supreme Court did so in 1819, but Madison certainly would have been familiar with the notion of corporations as legal entities distinct from their shareholders.
Um, no, propertius. Yes, there were corporations before the modern form we’re familiar with, but the stockholders were few in number, held truly responsible for the company (i.e. if it screwed someone over and got caught, they were personally liable), and the incorporation was explicitly for some national goal, such as colonizing the East Indies. That’s why they received royal charters. Also, the incorporation process was very expensive and open only to the hugely wealthy or powerful.
The modern concept of a corporation, in which thousands of shareholders put in small amounts of money and have no real responsibility, really is fairly recent. Mostly since the Civil War, if I remember right. Maybe slightly before that, but post-Madison, by and large.
He really could not have foreseen the current pay-to-play corporate politics. And judging by how opposed he was to corruption on a people level, I doubt very much he would have been okay with it on a much bigger level.
And that’s my point. If you’re aiming at Citizens United or at “corporate personhood”, you’re going after the wrong target and the collateral damage will be enormous.
Montana responds to the Supreme Court.
Excellent!
From Treehugger, via Media Matters: http://www.treehugger.com/fossil-fuels/fox-news-got-gas-prices-hilariously-wrong.html You’re going to LOVE this – gas prices, according to Factless Fox could reach $8 a gallon by the end of summer. Guess their crystal balls (or voices in their heads) were broken.
Sheesh, I just paid $3 a gallon here to fill up the mighty mustang.
The cheapest around here is $3.45, but it’s a college town and gas price gouging is commonplace.
It’s amazing what a Depression will do to reduce demand, isn’t it?
Frankly, I don’t think the conservatives in Congress would care one way or the other. Most of them are either rich and aren’t affected by anything that happens anyway and with the changes in the migration pattern that this would cause, they’d probably only consolidate their power further. Interesting, though, how many people were upset by Perry and secession, I wonder if they really meant it or if it’s something they could get over.
The ones from the poor states would start caring if we rich states stopped funding them. They still need votes to keep their jobs.
Yeah, but all the crazy people from the blue states would rush to these states to create the unregulated wage slave paradises they’ve always dreamed of, while everyone else would flee. They’d stop trying to colonize NH and run to colonize these new countries instead, and with the True Believer Army they’d be safe for a while. And most conservative politicians primarily want to cash in, once they’ve put policies in place to shore up their own interests and rob everyone blind, they wouldn’t care if they got turned out of office, which they probably wouldn’t be anyway thanks to our friends, the wedge issues.
I realize we’re all joking here, but let’s see where this idea really leads.
One has to wonder how “rich” the “rich” states would remain if they had to import even more of their oil from “foreign” sources, in addition to a lot of coal and most of their food. A “Northeast Confederacy” would be almost wholly dependent on imports from foreign sources for nearly everything. Since manufacturing in the Northeast has also declined significantly, that would leave it even more dependent on the FIRE sector than it is now. I think the events of the past few years would be enough to make anyone question whether such an economy could sustain itself for any length of time – all claims of the globalization fanatics notwithstanding. Probably the best hope for the Northeast would be to try to join Canada – and then grouse about being taxed to fund Alberta and Saskatchewan.
The flip side of all this, of course, is that tax revenues from these states are low because they’re poor and Federal income taxes are graduated. This could lead one to ask why the wealthy states maintain what are effectively impoverished and exploited colonies in the middle of the country – colonies whose resources are extracted with little or no wealth accruing to their inhabitants. And, of course they get to be insulted by their elite colonizers much as the Irish and Scots were insulted by the English, or as Africans and Asians were insulted by their European colonizers.
It’s interesting to see how far things have changed since 1964: LBJ mocked Goldwater as a dangerous lunatic (and most of the country agreed with him) for joking that the Northeast be cut off from the rest of country and allowed to float away. 48 years later, “progressives” like Yglesias and Thompson can float essentially the same proposal (albeit from the other side), and nobody’s suggesting they be sent to funny farm.
Yes, of course this was intended as a lighthearted post, but Yglesias and Thompson didn’t float the idea of the northeast states becoming a separate country. I did that. I suggested breaking off the states beginning with IL and moving east. But I’m used to people not bothering to read my posts.
I believe that Illinois, Indiana, Pennsylvania and Ohio still have manufacturing, and all but Indiana have coal. If you included Minnesota, Wisconsin, and Michigan, there would be even more manufacturing regions, but I figured those states’ economies have already been destroyed by their Republican governments. It probably would make sense to include them.
With NY, MA, and Delaware, the area would also have control of much of the country’s finance sectors as well as impressive IT and and medical centers.
It’s also not true that states in the middle of the country are poverty stricken. The states that get the most federal assistance are in the South and Southwest. There would be enough prosperous states that the country could be broken into 4-5 regions. A number of social scientists have suggested this will happen anyway if the financial crisis continues to worsen.
The least prosperous region would probably be the old confederacy though.
You’d be surprised how prosperous some people and areas are down here. Funny thing is that they never seem to make it to our tax roles. They rely almost solely on sales taxes down here. Property is completely off limits for any kind of real taxation. There’s a lot of resources and money around here. It just never gets to the public. We’ve got the huge growing cities too–like Houston, Dallas, Atlanta, Miami–but again, some how the value never manages to ‘trickle’ down on very many people and they refuse to pay for even the most basic infrastructure. Also, the corporations tend to ship their value up north. There’s still a plantation economy down here in many ways.
Actually, I wouldn’t – big income disparities are characteristic of colonies with extractive industries aren’t they? Don’t they tend to have a small number of extremely wealthy people and a very large majority of poor people with essentially no middle class and a lot of institutional corruption? And, of course, the wealthy tend to favor reliance on regressive taxation (sales taxes vs. income taxes) as well.
It’s interesting to overlay that map with this one:
http://nationalatlas.gov/printable/printableViewer.htm?imgF=/images/WALL/fedlands.gif&imgW=528&imgH=451
and note the correlations (and lack thereof). Federal and tribal lands are exempt from state and local taxation and income from Federal tribal trust lands is exempt from Federal taxation as well. The large Federal presence in the West tends to skew the economic base something fierce. Nevada is something of an exception, thanks to Vegas and Reno.
A lot of this is historical accident – in its early years, the Federal government was funded largely by sales of Federal lands to private entities so there’s very little Federal land remaining in the eastern states.
Nowhere near enough coal production there to keep the Northeast going. The Northeast has only one state among the top 4 coal producing states (Pennsylvania). Wyoming produces more coal than the rest of the US combined. The US produces 1.2 billion tons of coal per year – a mere 68 million (5.7%) of that comes from Pennsylvania.
By the way, Indiana is most definitely a coal-producing state – about half as much as Pennsylvania (mostly from surface mines). However, it consumes considerably more than it produces. A “Northeast Confederacy” would need to import about 80% of its coal.
BTW: Why do you think the Northeast should get Indiana – isn’t that one of those nasty tax parasite states? 😉
Then there’s uranium (electricity production in the Northeast is primarily nuclear). The US currently imports 86% of the uranium used for power generation. That figure would be nearly 100% for a “Northeast Confederation”, since most US uranium mines are in the West and South. There are deposits in Pennsylvania and New Jersey, but I don’t think they’ve ever been exploited. The largest known reserves in the US are in, you guessed it, Wyoming.
Petroleum? Natural Gas? I guess that depends on how you feel about fracking and oil shale.
In any event, the energy outlook for an independent Northeast looks pretty grim to me. The phrase “freezing in the dark” comes to mind.
BB, count me in for Coasts-n-Canada. I keep thinking, like the old cartoon, that we should abandon that whole central blob of Jesusland to their fate. The West Coast, the north Midwest, and the Northeast should join Canada.