Skip Estes: No, ‘Blue States’ Do Not Bail Out ‘Red States’
Writing in The Hill, ALEC Legislative Manager Skip Estes explains the poor logic behind the claim that “blue states” are constantly bailing out “red states.”
The states with the highest personal income per capita are Connecticut, Massachusetts, New York and New Jersey. The states with the lowest personal income per capita are Mississippi, West Virginia, Alabama, New Mexico and Kentucky. These are the exact same states with the lowest and highest balance of payment ratios, respectively. It is hypocritical to decry the tax code for taxing high-income states more than low income states while intentionally designing tax policies with that effect.
The other side of balance-of-payment ratios is federal spending. Some of the most expensive federal programs are Medicaid, Supplemental Nutrition Assistance Program (SNAP), Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Each of these is “means tested,” meaning recipients must earn below a certain income threshold in order to receive federal assistance. Low-income states receive more federal money than high-income states by design because of means-tested federal poverty programs. As these programs expand and become more generous, the gap between state balance-of-payment ratios will only increase as federal taxes and spending increase to pay for means-tested poverty assistance.