It is incredibly ironic that “Red” states, which historically vote Republican, have actually taken more from the Federal Government than “Blue” states, which historically vote Democratic.  For example, Rhode Island, a blue state, received only $.89 for every $1 dollar in federal taxes paid; whereas, Alaska gets $1.82 from the federal government for ever $1.00 paid in.    This has been true for quite some time and yet has been ignored by most conservatives.  Those who do address the issue always claim that it is all the more reason for less government so that states and can stop feeding at the federal trough.  Arizona is one of these states receiving $1.19 in benefits for every $1.00 paid out.

However, there is usually a very good reason for many of the states to feed at the trough.  It is due mainly to local and state politicians, again who tend to be conservative, that have run their economies into the ground.  In other words, these states often have no other recourse and so have to turn to the Federal Government for assistance.  That is precisely the role for which the Federal Government was created.

It isn’t just the taxes paid versus support received ratio that is ironic.  The New York Times is reporting in 2010 that close to $2 of every $10 of income in the U.S. came from Federal Funding such as jobless benefits, food stamps, Social Security and disability, etc.  This means that Federal programs are providing 20% of the income within the U.S.  And again, conservatives only argue louder that this shouldn’t be and we should shrink government.  Sadly the percentage keeps growing.  Arizona’s reliance on Federal Funds increased over 5% from 2007 to 2010.

On one point I would agree with conservatives and that is that states shouldn’t be this dependent.  While its nice to know we have that safety net to fall into, it is still a good idea not to depend on it too much.  That is, sadly, impossible and the conservatives have put the states into this unfortunate position.

How did they get us into such a mess?  Well deregulation of the banking industry was one of the things they were responsible for (and to be fair so were some conservative democrats) and that lead directly to the housing bubble crash and the resulting Recession.  While the states were flush with cash, instead of paying down their debts or investing it in state infrastructure and services, local and state conservatives decided it was a banner day to decrease taxes.  A lot of money flowed back out to businesses and voters.  Some people spent those funds but those who received the most, quietly deposited it in safe accounts and sat on it.

To make matters worse, the state also did not take any of that cash and put it away for a rainy day.  For example, many states under funded their unemployment benefit accounts.  As a result when people started losing their jobs in the Recession the states were caught flat-footed.  This meant more borrowing, more shifting of funds from one area to another, and more reliance on the Federal Government instead of less reliance as the GOP wanted.

As the states’ deficits increased, Governors started to get creative.  In AZ, Gov. Brewer cut off funds to those who desperately needed vital organ transplants so she could use them as a bargaining chip to reduce the population receiving Medicaid.*  In TX, they borrowed from “Peter to pay Paul” and declared victory with a balanced budget.** In other states that might have actually had a balanced budget such as Wisconsin, a Republican Governor Scott Walker gave a huge tax cut to businesses that caused a deficit crisis and with that he was able to bust up state workers’ unions.***

On a national level, the GOP held the extension of unemployment benefits to 9 million Americans hostage forcing the White House to compromise on the extending the Bush Tax Cuts, which ironically gave mostly to the wealthiest 1%.  And all of that was going on as states were closing down agencies and services.

So what other options are there?  What is the GOP offering as real sources of income to replace what the states have become so dependent on?  To date the GOP has only suggested that taxes be lowered for the wealthy and that somehow this will be translated into income for the average American. So tax cuts, not to the middle class, which is rapidly shrinking, nor to the poor, which is rapidly growing, but to the wealthy and to corporations.

Unfortunately, history has proven time and time again that this “vodoo trickle down” economic theory simply doesn’t work.  The Reagan era proved it to most people.  However if you need another example, take a look at the amount of cash that businesses and wealthy individuals are sitting on.  According to the Washington Post, in mid-2010 companies were sitting on approximately $2 trillion in cash refusing to invest it or expand because consumer confidence and spending is too low.

Now to top it all off the GOP is refusing to increase the debt ceiling and this is making investors (i.e., those people sitting on trillions of dollars) even more nervous.  It is also making other countries that have invested heavily in U.S. bonds, such as China, nervous too.  As a result the stock market has not been faring well.  Once again the investments of the beleaguered middle class will not fare well if the stock market continues to be based on worries over the debt ceiling.  Likewise, consumers, not just in the U.S. but everywhere, have a wary eye on the news and are holding back from spending.

You may be starting to get the picture that things are looking bleak.  You would be correct.  I also hope you’re getting the picture that everything GOP politicians are doing is only making things worse.  Arizona voters will have to wake up some day and realize who really has their best interests at heart and it won’t be Gov. Brewer and her Republican colleagues .  In fact , it never was.

Notes:

*Read my articles on this disgusting ‘bargaining’ engaged in by Gov. Brewer.   Nothing like using humans as bargaining chips, eh?!

**TX Gov. Rick Perry pushed back a pay out to the state’s schools to the next fiscal year and had the accountants use very optimistic (read that, insanely optimistic) predictions for the increase of real estate values to increase income.  That’s like me saying I only made $50,000 the first 6 months of the year but I am optimistic and report that I will make a million over the next 6 months.  Is it possible?  Sure if I win the lotto.  Is it probable?  No.  Same thing with TX real estate.  

***There’s tons of good articles on the Internet about Gov. Walker’s shenanigans. 

Sources:

http://www.thefourthbranch.com/government-spending/

http://taxprof.typepad.com/taxprof_blog/2004/09/red_states_feed.html

http://www.nytimes.com/2011/07/11/business/economy/as-government-aid-fades-so-may-the-recovery.html?_r=1&hp=&pagewanted=all

http://www.taxfoundation.org/research/show/266.htmlhttps://drangedinaz.wordpress.com/2011/01/28/sickest-and-poorest-will-balance-az-budget/ 

http://thinkprogress.org/economy/2011/07/06/261752/perry-budget-accounting-gimmicks/

http://www.washingtonpost.com/business/purves-says-us-investors-nervous-about-debt-ceiling/2011/07/05/gHQAReXmzH_video.html

http://www.washingtonpost.com/business/purves-says-us-investors-nervous-about-debt-ceiling/2011/07/05/gHQAReXmzH_video.html

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Comments
  1. it’s a bit like how rethuglican politicians keep touting family values – and then get caught doing meth with gay sex workers

    • drangedinaz says:

      Yes, it’s definitely an example of Republican thought processes where they do things to make what they despise come about. It’s also a great example of Cognitive Dissonance.

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