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Comment by cpursley | Hacker News Reader

> overtly willing to attack opposite-party state governments

It might be straight-up politics. But there is a real situation where state governments have been financially mismanaged. Should the "working class" person in Alabama without any retirement prospects be forced to bail out (via the Federal Gov't) the state of California's very generous pensions that were not fiscally sustainable in the first place?

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Alabama gets ~$3.50 form the federal government for every $1 it contributes in federal taxes. California gets ~$0.97 for every dollar it gives. So the real question is should Californians be bailing out Alabama all the time. Should states like South Carolina, Alabama and North Dakota just be left to die? I mean they are takers in even the best economic situation.

The answer is of course not, they are states populated by real people who live under the laws and economic system of the United States Federal government. The government should ensure that all people are entitled to enough funding to provide opportunity, health and justice. We don't just leave people to suffer regardless of who they vote for. At least we didn't used too.

I always find those numbers interesting. IIRC, they come from the Taxpayer foundation and generally stop at “zip code where the Feds send the check”.

Hypothetical example: The DoE wants to build a supercomputer from XBox 360s (ASCI RRoD). They select UNM as the lead contractor and write a check for $101M. UNM buys $50M in XBoxes from MSFT in Seattle, and another $50M for compilers and professional services from IBM in Armonk, NY. Did NM get $101M for their taxes, or $1M?

That might be meaningful if you could show that most of the federal money going to New Mexico was used for R&D as opposed to, say, social support programs. And then you could try to show that the money going to all of the other "taker" states was similarly being used on developmental projects as opposed to social support.

I'd bet on it not being used on R&D. In fact, I'm betting most of that money never even leaves the state of New Mexico. Those contractors building roads aren't being paid with monopoly money.

I could be wrong, but I doubt it.

That's one of the reasons I'm such a big proponent of lower taxes. The tax resource allocation scheme is fundamentally unfair as currently structured. There are other reasons I support lower taxes, but you don't want to get me started.

Note that often the ZIP code that is chosen is a result of senators pulling strings to get it awarded to their constituents, even for R&D–that's often new jobs.

Mostly congressmen, not senators. And that's what earmarks are.

> So the real question is should Californians be bailing out Alabama all the time

I would say yes since the brain drain California has cost on other poor states has been significant.

>Should the "working class" person in Alabama without any retirement prospects be forced to bail out (via the Federal Gov't) the state of California's very generous pensions that were not fiscally sustainable in the first place?

Multiple citations needed. Alabama takes back a lot more than they pay into the federal government (CA not so much). It's easy to appeal to the "working class" people, but those people have been getting much more federal support relative to what they pay in, while states like NY pay in substantially more than they get back.

The state of California is actually in a pretty decent financial position. In fact, the blue states are net contributors to the federal budget while red states are net negative (they take more resources than they provide back in federal taxes)

If there weren’t any blue states around to sign the red state welfare checks, they’d be in a pretty poor position.

According to Mercatus Center fiscal rankings, 4 out of 5 of the bottom 5 fiscal performers are run by democrats: illinois, new jersey, conneticut and massachusets. Kansas, a red state, is the outlier.

https://www.mercatus.org/publications/urban-economics/state-...

Mercatus is not exactly the most unbiased source that exists.

Its easier to be in better financial shape if you are taking in more federal funding than you are contributing via federal taxes. 8 of the top 10 states that take more funds than they contribute are red. Exceptions are Hawaii and New Mexico.

Good read on the matter:

https://www.theatlantic.com/business/archive/2014/05/which-s...

This spending constitutes things like social security checks and the upkeep of military bases and other facilities. It is not relevant to state budgets. And even if all the money went to a state general fund, the worst performers would not be significantly different.

In 2014 the federal government provided 40.9% of Mississippi's state budget. How is that not relevant to the state budget? As a percentage of state budget being provided by the federal government, 13 of the top 15 recipients are red states.

https://ballotpedia.org/Federal_aid_to_state_budgets

Very simple answer: blue states have bigger budgets so the % of aid they receive from the government seems smaller.

The Federalist has done an analysis of federal aid per resident:

>Against a national average of $1,935 in intergovernmental spending per American, red states receive just $1,879. Blue states get considerably more, at $2,124 per resident. Purple states see the least of their money returned to them per capita, at just $1,770. Measured in this way, the blue states are getting quite a bit more than the red or purple.

https://thefederalist.com/2017/11/17/red-states-tax-takers-b...

Was it intentional that you left out the parts of the article that show blue states pay more in, and receive less per resident relative to what they paid in? Because you completely misrepresented what is claimed by only highlighting the outlay per resident

It's hard to have much ability to impart good faith when you intentionally exclude the amount of money paid in by blue states. The money the federal government is paying to red states is (...mostly) coming from somewhere.

The article states that no state receives more than its residents and corporations pays in federal taxes. People pay money to the federal government and the government pays back some fraction of the money per state. So any notion that blue states are subsidizing red states is ridiculous. What's happening is that the wealthy blue states pay a lot under our progressive tax system and receive a lot in return on a per capita basis.

Your source has Massachusetts in the bottom 5, which lets you know right there it's laughable.

Never lived there myself, but I know for a fact they're consistently in the top 5 of contributors to the federal kitty of all states both nominally, and per-capita. They get almost nothing back compared to what they put in. They are, arguably, the largest contributor to the nation if we're considering individual burdens. And a top 5 contributor by outright total aggregate tax contribution.

Illinois and New Jersey, by total outright tax contribution, are also consistently in the top 5 of states that contribute to the federal government. (And I'm from Wisconsin. I hate Illinois. But facts are facts man.)

Hate to tell you, but your source is bogus as far as analyzing the biggest contributors to the national kitty.

You seem to think that Illinois, New Jersey and the lot must be in a great fiscal situation because they are "net contributors". As I explained in another comment, the money these states "receive" is mostly payments to individuals and has little meaning to their state budgets.

Paying out a lot more to the federal government than they receive back does not mean these states are doing well and others poorly. It really just a natural consequence of having a lot of high earners in a progressive tax system. The states in question have been racking up huge amounts of debt and/or have underfunded pensions funds, which is why they are consistently ranked lowly in terms of fiscal health. I am a little surprised you had you not heard of the financial problems coming out of Illinois, New Jersey and the like? There's even a dedicated Wikipedia article:

https://en.wikipedia.org/wiki/Illinois_pension_crisis

>Paying out a lot more to the federal government than they receive back does not mean these states are doing well and others poorly.

Sigh.

Even if we look at a list of states by GDP, Illinois, New Jersey, and Massachusetts would still be perennial top 10 states. Even a list of states by GDP per capita, they all still are perennial top 10s. Per capita, I would bet that Massachusetts is number 1? (Maybe NY might edge them out? But I'd definitely bet they're number 1 or 2.)

Listen man, I don't even like Illinois. I hate Chicago. But facts are facts. They make a $#!t ton of money. And not the easy way doing financial engineering like New York. They do it the hard way with a huge diversified economy. Few states are like that. It's just a fact man.

Are you going to say that GDP is not a good indication of what a state produces?

Their high GDP per capita is not going to fix their insolvent pensions or runaway spending. Illinois has a BBB credit rating (just above junk!). Are you really just going to ignore that because of high GDP? https://en.wikipedia.org/wiki/List_of_U.S._states_by_credit_...

There’s plenty of financial engineering in Chicago last I checked.

Mercatus is a Koch funded think tank -- hardly unbiased and a poor source here.

It would be better if you countered the statistical method used in the analysis. Otherwise your point is no better than someone saying "Soros donated to this think tank, therefore invalid".

Their "list" is basically just a list of states with debt, that completely ignores their ability to issue new debt and generate revenue (i.e. that people actually want to live in California and not Kansas), while ignoring the fact that many of these states with "balanced budgets" provide basically no services and are liable to getting wrecked in times of crisis. I mean, the fact that Kansas is so high on this list should tell you all you need to know.

>Their "list" is basically just a list of states with debt, that completely ignores their ability to issue new debt and generate revenue (i.e. that people actually want to live in California and not Kansas)

Do they? I'll grant you that nobody wants to live in Kansas. It had a net migration of −4.32% between 2017-2018. But California doesn't fair much better at −3.95%. People are also fleeing Illinois, Connecticut and Massachusetts (all in the bottom 5 as give by Mercatus) in record numbers.

https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ...

As people leave these state, it certainly does impact their ability to raise revenue, and this is compounded by how many blue states rely on progressive taxation.

>I mean, the fact that Kansas is so high on this list should tell you all you need to know.

But Kansas is a special case. Their pension funds were crippled by particularly bad mismanagement and corruption. The question you should be asking is why are the other bottom 5 blue states?

People are leaving California because of the housing crisis, which is undoubtedly a huge issue, but is an indicator of massive demand to live in California, not that people are fleeing the state due to fiscal mismanagement

Late reply, but the housing crisis is actually a major problem of supply, not demand. It's very time-consuming and costly to get anything built in California. Texas is experiencing positive net migration, and presumably those migrants demand Texan homes, yet Texan housing is much more affordable than California. Ditto for Florida.

You know that California bails out the majority of the rust belt indirectly via State taxes, right? Curious how you consider that in the equation.

As a mathematician I can tell you that game theoretically, Alabama is not able to bail out anyone. They use more money than they contribute to the country. I think a better example would be should Texas or Massachusetts be obliged to bail out California.

This kind of thinking leads down a sad, unproductive, and dangerous "me first" path. Let's avoid falling back into tribal thinking. This applies to states as much as countries (as seen in Europe right now).

If pensions or any other specific things are mismanaged - which IMHO is in fact the case in California - let's fix them together.

Edit: Apparently a lot of users on hn in Cali. I'm just throwing random states names out there.

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