Red-State moochers: States' returns on federal taxes favor those who complain the most

by: Paul Rosenberg

Sun Apr 18, 2010 at 18:45

Living in a state that gets more federal money than it gives in federal taxes is a poweful political factor in influencing voting for a Republican for President

In response to Tuesday's Morning No, I took up the matter of treason in Oklahoma ("The Season of Treason"), in which I quoted from an AP story in the WaPo that Digby linked to, "Okla. tea parties and lawmakers envision militia ".  The last paragraph I quoted read [emphasis added]:

But the militia talks reflect the frustration of some grass roots groups seeking new ways of fighting recent federal initiatives, such as the health reform plan, which requires all citizens to have health insurance. Over the last year, tea party groups across the country have staged rallies and pressured politicians to protest big government and demand reduced public spending.

After which, I wrote:

If it's government spending they are all het up over, I repeat my admonition from last weekend that they just stop using it in their personal lives.

And since Oklahoma was the focus of this story, I checked out how much Oklahoma gets from the federal government.  I know the figures on these tend to lag a few years, and the most recent multi-year figures I could get quickly showed this:

Adjusted Federal Expenditures Per Dollar of Taxes
Over Time by State

Fiscal Years 1994-2003
State   1994   1995   1996   1997   1998   1999   2000   2001   2002   2003

Oklahoma   1.28   1.29   1.32   1.33   1.36   1.40   1.44   1.43   1.47   1.48

A rising trend that had Oklahomans getting $1.48 from the federal government for every $1 they sent to the federal government.

I knew Oklahoma wasn't alone.  I knew, in fact, that Red States have long been net takers, while Blue States have been net donors.  So I decided to take another look at that phenomena.  On the one hand, I took a look at some of the raw data myself, and on the other hand, I went looking to see what social and/or political scientists might have written about it.  And I hit paydirt with the 2006 paper, "Taxing, Spending, Red States, and Blue States: The Political Economy of Redistribution in the US Federal System" by Dean and Donald Lacy, then of Ohio State University. Dean, in the Department of Political Science, and Donald in "Community Development".  I discovered that Dean had since moved to Dartmouth, and when I contacted him, he sent me an update, "Why Do Red States Vote Republican While Blue States Pay the Bills? Federal Spending and Electoral Votes, 1984-2008"

These two papers get into considerable detail, showing fairly conclusively that this phenomena is not just a spurious artifact.  It's quite real--though just why it's the case is hard to say.  Here's a chart showing the correlations in 2000 [states colored to reflect 2004 vote]:

Several potential explanations are considered, and refuted by statistical analysis.  One potential explanation remains, which is basically that legacy New Deal/Great Society programs remain in place benefitting Republican voters who vote to oppose further expansions of federal spending that would not benefit them specifically.  I'll talk about that some below, after sharing various charts.  But first, I want to share what struck me as the most surprising finding--comparison showing the relative strength of the effect [emphasis added]:

if two voters are identical on income, party identification, opinions on abortion and gay marriage, evaluation of the economy, and opinion on fighting terrorism, simply changing the amount of money their state gets per tax dollar increases their probability of voting for Bush by .24. This effect is as large as changing their party from Democrat to Independent, changing their opinion on abortion from strictly pro-choice to strictly pro-life, or changing their opinion on gay marriage from support of gay marriage to opposition to any form of gay marriage or civil union. The change is significant even in a model that controls for voters' opinions on social issues and their party identification.
Paul Rosenberg :: Red-State moochers: States' returns on federal taxes favor those who complain the most
Here's a chart showing that the 2004 election shows a pattern quite similar to the 2000 election:

And from the second paper, here's a similar chart for the 2008 election:

Naturally, these findings directly contradict Versailles conventional wisdom, as the authors note at the beginning of the 2006 paper:

In the wake of the 2000 U. S. presidential election, pundits and journalists began writing much about the "Two Americas:" The red states on the Electoral College map that voted for Republican George W. Bush, and the blue states that voted for Democrats Al Gore in 2000 and John Kerry in 2004. The shading of the states on Electoral College scoreboards on election nights in 2000 and 2004 showed an unmistakable pattern: Bush won a swath of states through the South, Great Plains, and Rocky Mountains while his Democratic opponents won the Northeast, Great Lakes, and Pacific Coast. Boston Globe reporter Mike Barnicle, appearing on MSNBC after the 2000 election, dubbed the Bush states the "family values" states and the Gore states "the sense of entitlement" states. Former Clinton adviser Paul Begala responded that the Bush states were home to hate crimes, setting off a frenzy of op-ed pieces about the differences between Bush's America and Gore's America. Since then, innumerable books and op-ed pieces have taken up the claim of whether the United States is shaking on a political fault line (e.g., Fiorina 2004, Frank 2004)....

Mike Barnicle's characterization of the red and blue states provides an interesting and, depending on one's perspective, intuitive starting point for explaining Bush's margin of victory (or loss) across states in 2000 and 2004. It would seem to make sense that the states that lose money to the federal government would be more likely to vote for the candidate who promised to cut taxes and reduce the scope of government, and that the states that gain from the federal government would support the candidate who would protect or increase federal spending. If Barnicle is correct that Democratic states are "entitlement" states, then we should expect that the states won by Al Gore and John Kerry receive the most in federal spending compared to the tax revenues they send to Washington. In short, Democratic states may be net beneficiaries of federal government spending while Republican states may be net contributors to the federal government.

The evidence shows that such a story is exactly backwards. In a paradox of the Electoral College, Republican presidential candidates since 1984--when data are first available---have won most of the states that benefit from federal spending, while Democrats have won most of the states that bankroll the federal government. In every year during this 20-year period, between 25 and 32 states have gained more in federal spending programs than they have paid in taxes to the federal government, while the remaining minority of states has footed the bill. This political economy of redistribution plays out in the Electoral College as increasingly Republican states are increasingly dependent on federal spending. These curious empirical patterns hold under several different perspectives on the data, including controlling for state and individual-level conservatism on social issues, military spending per state, and the partisan balance of a state's governorship and representation in Congress.

Before I heard back about the followup paper, I began looking at income inequality compared to the flow of dollars for the 2000 election.  I found that for that election, income inequality had a stronger effect.  Here's the chart of state Gini Ratios (the standard measure of inequality) for households to Gore's margin (Bush margin in negative numbers), first with DC, then limited to states, allowing a more close-up view:

The data used was fomr 1999, as the 2000 census asked people about their incomes for the previous year.  The correlation for the above data was 0.54.  

Then a similar comparison with spending ratios, which had a correlation of just 0.32:


I brought this up with Lacy by email after I received his second paper, and he explained that the income inequaltiy ratio's impact had declined dramatically from 2000 to 2008.  The impact was much smaller in 2004, and almost nothing by 2008.

Here's what he wrote:

Income inequality and Republican margin were closely correlated in
2000.  That correlation declines over time until it disappears in 08.  
The correlation of vote with per capita income goes up across the three
elections from 00 to 08, as does the correlation of federal spending
ratio and vote.

The correlation between per capita income and vote disappears when
controlling for how conservative a state's population is on issues (see
the paper I sent), but the correlation between spending ratio and vote
does not.

Here are the correlations between Republican presidential vote margin,
per capita income, income inequality, and federal spending ratio for
'00, '04, and '08 (not controlling for the conservatism of a state's

             | rpmarg00  pcinc99 incin~99 ratio99k
    rpmarg00 |   1.0000
     pcinc99 |  -0.6224   1.0000
incinequa~99 |  -0.4909   0.2999   1.0000
    ratio99k |   0.3741  -0.7318  -0.1488   1.0000
             | rpmarg04 pcinc04k incin~04 ratio04k
    rpmarg04 |   1.0000
    pcinc04k |  -0.5829   1.0000
incinequa~04 |  -0.2598   0.1383   1.0000
    ratio04k |   0.3977  -0.6224   0.1038   1.0000
             | rpmarg08  pcinc05 incin~06 ratio05k
    rpmarg08 |   1.0000
     pcinc05 |  -0.5909   1.0000
incinequa~06 |  -0.0878   0.1320   1.0000
    ratio05k |   0.4549  -0.6479   0.1112   1.0000

As you can see, the income inequality correlations, rows identified as "incinequa~99," "incinequa~04," and "incinequa~06" in the first column decline precipitously in significance.

I've been juggling too many balls this week to give the topic of federal spending and voting behavior as much attention and analysis as it deserves, but since Thursday was tax day, I didn't want to wait till next week to write something about it.  The explanation that Lacy offers makes intuitive sense, but it's hard to see how it alone could suffice to have such strength, particularly given how confused people are about federal spending in general.  This appears to be yet another really basic fact of American politics that all the experts in DC know absolutely nothing about.  Or rather, that they know all about, but have 100% backwards.

What a surprise!

Can someone here please tell Rachel Maddow to give Dean Lacy a call?

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the table layed out (4.00 / 3)
   Adjusted Federal Expenditures Per Dollar of Taxes
   Over Time by State

   Fiscal Years 1994-2003
State 1994   1995   1996    1997    1998    1999    2000    2001   2002    2003
Oklahoma   1.28  1.29   1.32  1.33   1.36  1.40   1.44   1.43   1.47   1.48

And thanks for this Paul. The bullshit, complete bullshit, of the teabagger, rightwinger, anti-tax activist ass hats who wallow in imangryandiahveagun welfare is beyond the pale.

The rule is, if they are complaining about taxes like a southern politician, they are bathing in Federal Money. Swimming in gummint jobs, lazing around the pool smoking gummint scrip for not planting, or lighting up their cigars with federal handouts to the oil industry.


The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky

oops --worked in preview (0.00 / 0)


The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky

They LOVED It In Poughkeepsie! (0.00 / 0)
I hate when that happens!

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Open it upstate and then slay 'em on Broadway. (0.00 / 0)
The width changed. Next time I'll use a spacer.
Thanks for the article.


The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky

[ Parent ]
but- (4.00 / 1)
Individuals who are poorer and likely (directly) benefit more from govt. tax/dispersal ratio tend to vote more democratic, in both red states and blue states.

What to make of that paradox?

1980 Election story. (0.00 / 0)
Jimmy Carter: You know, Ron, you can fool some of the people all of the time, but you can't fool all of the people all of the time.

Ronald Reagan: And that you're first mistake, Jimmy.

Carter of course lost the election.  

Poor people? (4.00 / 3)
A lot of the federal money going to red states is military spending.  That may very well go to rich people.  There's something wrong when NY and NJ, for example pay tolls on roads built by those states pre-Eisenhower while southern and western states get the freebie interstates.

Christie, perhaps the dumbest governor in the 50 states, is trying to return stimulus money from NJ.  As anybody can tell from the chart, NJ and CT have the absolute worst ratios in the country.  Christie was also hesitant and late in applying for FEMA funding.  And he wants to increase real estate taxes, already the highest in the country, so he can reduce income taxes on those making over $500,000 per year.

Military contractors, military bases are all concentrated in the red states.  Productive parts of society are disproportionately located in the blue states.  

No, It's Not Military Spending (0.00 / 0)
As it says in the passage I quoted from:

These curious empirical patterns hold under several different perspectives on the data, including controlling for state and individual-level conservatism on social issues, military spending per state, and the partisan balance of a state's governorship and representation in Congress.

More specifically, from another passage:

It may be that Republican states receive most of their federal return on the dollar in the form of defense spending, especially given the relatively larger military presence in the South and Mountain West than in the Northeast or Great Lakes. To examine this possibility, I define two separate ratios of federal spending per tax dollar: One ratio for the amount spent by the Department of Defense per state, including military salaries and procurements, and another for the non-defense dollars spent per state. Putting both of these variables in the regression model, column 2 of Table 1, pushes the paradox of federal spending even further: There is no relationship between defense spending per state and the state's Electoral College vote. However, the relationship between non-defense spending and the vote becomes even stronger: States that benefit the most from non-defense spending (from retirement and welfare payments to farm subsidies to highway construction) give even higher margins to Republicans. For each additional 10 cents per dollar that the federal government spends in a state, Bush's 2000 margin increases by over 2.9 percentage points.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Interesting but (0.00 / 0)
What about non-Defense, defense spending. Los Alamos (Department of Energy comes to mind).  Also not poor people.

Btw, NM shows as red in both 2000 and 2004.  In 2000 it went for Al Gore by a narrow margin in 2004 Bush received the electorals.  There seem to be similar problems with the two other split verdict states of Iowa and NH in the charts.

NM election data from 2004 showed an awful lot of uncounted votes from native Americans.  My guess is that after a close loss in 2000 (300+ votes0, Republicans stole NM in 2004.

Medicaid formulas give a higher % federal match for some poor states automatically.  Race might be a factor in a few southern states (MS,LA,AL,GA,SC) but certainly not in the west.

A quick google on MS did not produce a breakdown of federal spending in that state.

[ Parent ]
Domestic Spending Isn't Just Poor People (0.00 / 0)
Social Security goes to everyone, for example.  Transportation spending, education spending.  I haven't seen the guts of the breakdown.  But you can download the paper yourself from the link provided & then know as much as I do.

NM is red because Bush "won" it in 2004, and that's the date that the colors are linked to.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]

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