Government & The Economy

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Republican States Are More Dependent On Government

Republican States Are More Dependent On Government

That's according to a recent analysis from the personal finance site WalletHub, which ranked states based on how much they rely on Uncle Sam to support their state finances. 

To calculate states' dependence, WalletHub analyzed three metrics: how much a state gets in federal funding per every dollar it pays in federal income taxes, the percentage of state funding that comes from the federal government and the number of federal employees per capita, both military and civilian...

New Mexico is the most-dependent state in the U.S., according to WalletHub's data. The state gets $2.19 in federal funding for every dollar paid in federal income taxes. In contrast, New Jersey, which is the least-dependent state, gets only about 50 cents in federal funding for every dollar paid in taxes, WalletHub calculated. 

The analysis found that red states, or those that voted Republican in the 2012 presidential election, were much more likely to depend on the government than blue states. 

That's somewhat ironic, considering the Republican Party's general reluctance to support federally funded initiatives like Medicaid expansion, and its long-term dedication to across-the-board budget cuts to slash the federal deficit.

Republican Beliefs And Other Superstitions

Republicans subscribe to the disproven Trickle Down hypothesis:

An economic idea which states that decreasing marginal and capital gains tax rates - especially for corporations, investors and entrepreneurs - can stimulate production in the overall economy. According to trickle-down theory proponents, this stimulus leads to economic growth and wealth creation that benefits everyone, not just those who pay the lower tax rates. 

President Reagan's economic policies, commonly referred to as "Reaganomics" or supply-side economics, were based on trickle-down theory. The idea is that with a lower tax burden and increased investment, business can produce (or supply) more, increasing employment and worker pay. Reagan initially slashed the top income-tax rate from 70% to 50%. Trickle-down policy’s detractors see the policy as tax cuts for the rich and don’t think the tax cuts benefit lower-income earners. 

A contrasting theory, Keynesianism, is based on stimulating demand through government spending and other government interventions. An increase in government spending necessitates an increase in income-tax rates – the opposite of what trickle-down theory advocates. Trickle-down theory does not support government intervention in the economy. 

According to the trickle-down theory, if tax rates are lower, people have an incentive to work more because they get to keep more of the income they earn. They then spend or invest that income, and either of these activities will improve everyone’s prosperity, not just the prosperity of those in the highest income brackets. What’s more, in the end, the government may actually collect more income tax despite the lower tax rates because of the additional work performed. The Laffer Curve shows how this relationship works. If the government taxes 0% of income or 100% of income, it takes in no money. In between these two extremes, tax revenues vary because different tax rates encourage people to work more or to take more leisure time.

Conservatives want society, as a whole, to allow the rich to "keep more of their money." Riches are then supposed to trickle down to the rest of society. When it doesn't trickle down 1) the citizens are uneducated, 2) the citizens aren't properly trained, 3) technology is replacing workers, and/or 4) the citizens are just lazy.

Larry Summers recently addressed these falsities:

The core problem is that there aren't enough jobs. If you help some people, you could help them get the jobs, but then someone else won't get the jobs. Unless you're doing things that have things that are effecting the demand for jobs, you're helping people win a race to get a finite number of jobs. […] 

Folks, wage inflation in the united states is 2%. It has not gone up in five years. There are not 3% of the economy where there's any evidence of hyper wage inflation of a kind that would go with worker shortages. The idea that you can just have better training and then there are all these jobs, all these places where there are shortages and we just need the train people is fundamentally an evasion. [...] 

I am concerned that if we allow the idea to take hold, that all we need to do is there are all these jobs with skills and if we can just train people a bit, then they'll be able to get into them and the whole problem will go away. I think that is fundamentally an evasion of a profound social challenge.

Timothy Taylor elaborates on the decline in on-the-job training:

Here's some evidence from the recently released 2015 Economic Report of the President, by the Council of Economic Advisers, showing a decline in employer-provided and on-the-job training in recent decades...

Looking at the overall pattern, a decline in employer-sponsored and on-the-job training suggest that workers who wish to keep building their skills are getting less support from their employers.

Here again we have more Republican beliefs shown to be nothing more than self-serving blather and bullshit.

Tax Cuts Have Been Bad For The Middle Class

Opaque & Premature: Meet Milwaukee County Government

The Journal Sentinel reports:

County Executive Chris Abele on Monday vetoed an attempt by the County Board to seek a state or independent audit of county government...

Some supervisors have called for a broader review of county government, saying a greater range of efficiency moves should be considered. 

Abele described the audit attempt as a delaying tactic.

A delaying tactic ... um, duh! It's been proposed that a whole department's workforce be part-timed and/or terminated. Most would prefer to either avoid or delay unemployment. And, as far as efficiencies or bang-for-the-buck savings go, there might be other, better options available. The kind of thing that could be discovered and quantified by performing an audit.

So, what's the rush? The audit may even support Board pay cuts, it could also reveal other efficiencies and/or needed improvements. What doesn't Abele want the public to see? Why does this idea need to be fast-tracked?

18 supervisors (making roughly $50,000 annually) and their staff cost $6.5 million per year, in a budget of over $1.3 billion, which is less than one percent of the total budget.

Spending Cuts Already Made

The Deficit Reduction We've Achieved So Far
Obama Has Already Agreed To Spending Cuts
Republicans Forget Cuts Obama Has Already Made
The Spending Obama Already Cut

Walker Costing Wisconsin More

Taxpayers Pay More Under Walker Medicaid Plan

If the federal government keeps its current commitments, Gov. Scott Walker's plan for avoiding a full expansion of the BadgerCare program under the federal health care law would cost Wisconsin taxpayers roughly $250 million more through 2020, under preliminary estimates by the Legislature's nonpartisan budget office.

In addition to lower state costs, the full expansion of the Medicaid health program would also cover tens of thousands more people than the Republican governor's proposal...

"It's clear that Governor Walker has chosen an option that will cover fewer people and cost the state more in this budget and through 2020. His option would cost us a quarter of a billion dollars more (than a full expansion)," said Rep. Jon Richards (D-Milwaukee), who requested the memo...

The Fiscal Bureau estimated that a full Medicaid expansion would cost the state $67 million more through 2020 than it would to keep the state's current programs in place without change. Walker's proposal would cost the state $320 million more through 2020.

Weekend Reading

What If Obama Spent Like Reagan?

U.S Has Some Of The Lowest Energy Taxes In The World

4 States Considering Laws That Challenge Teaching Evolution

The Real Reason For The Decline Of American Unions

Milwaukee Journal Sentinel Should Take Tougher Stand On Mine

Why The Founding Fathers Loved National Debt

Home Depot Syndrome

Paul Ryan Breaks Down Under Wonkterrogation

Our Incredible Shrinking Government

Plain & Simple: This Is Class Warfare

Also: Battles Of The Budget

Wisconsin Government Spending

In Government Spending, Wisconsin Ranks Near The Middle

Republican Shrinkage

Republicans often repeat the line, "Most Americans want a smaller government."

A classic example of Republicans getting an inch and taking a mile.

Most people simply want efficient provision of services. The number of public workers is not important to most taxpayers. The quality of service per tax dollar is what concerns taxpayers most.

The idea that simply shrinking government for the sake of shrinking government is wanted and/or somehow optimal is false. Taxes, as a share of income, are at their lowest point in 60 years. It's difficult to argue government is wasteful when they have been continually doing more with less decade after decade.

And, whether the service is administered at the federal or state/local level doesn't really matter to most taxpayers. This distinction matters most to the politicos trying to maintain their fiefdoms. Taxpayers just want the service/program - regardless of which agency (state or federal) provides it.

Social Security, Medicare, police and fire protection, sewers, water, garbage collection, snow removal, roads and highways, trains, unemployment insurance, the court and judicial system - people want these services provided fairly and efficiently, they don't care which level of government performs the service. (Today - Thanksgiving - would be a good day to reflect on these programs which we collectively provide for each other.)

Republicans merely cling to this talking-point (we must shrink government) because it positions well alongside their never-ending "bad government" war chant. When it comes to the public sector, according to Republicans, less is always better.

Yet, for most citizens, less government means more inequality. Remember this the next time you hear some conservative blathering on about big bad government. The more government declines, the less services and programs (listed above) they can provide, and thus the quality of life of most citizens also declines.

Spending, GDP & Other Republican Fairy Tales

Republicans are trying to use fear to convince voters that government spending as a percent of GDP is growing and must be cut. "Spending is out of control! If we don't stop it, we're doomed!"

As the first graph below shows, over the last century, at various points, spending as a percent of GDP was at, near or above it's current level. It was much higher after the Great Depression and during World War II. 

Like then, we were now in the midst of an economic downturn second only to the Great Depression. And, we've been involved in war for the last decade. Overall, an extremely similar situation. 

Spending then was almost twice what it is now. And that spending, after the Great Depression, created the middle class. 

Today, the middle class is shrinking. Plus, we're spending a lot less to rebuild our economy. We should be afraid of austerity, not spending.

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It's great to hear all this talk of decreasing federal government spending...but, the fact of the matter is, most government spending is done at the state and local level. At the federal level, money goes to defense, Social Security and Medicare. At the state and local level, spending is on police, education, and libraries, amongst other necessities. Regardless, this spending is done because citizens like these programs and services. If we cut federal spending, that just means states have to pay more - which means, they have to tax more to pay for the services citizens want.

Crumbling Roads, Crumbling Democracy

Why is the economy continuing to only plod along? [But, yes, it is indeed better than it was 4 years ago.]

Why is unemployment looming stubbornly near 8 percent?

Paul Krugman explains:

"For future reference. In a depressed economy, with the government able to borrow at very low interest rates, we should be increasing public investment — the true cost of the resources is negligible, so the rate of return is very high, not to mention the desirability of creating jobs.

Here’s what has actually happened, as measured by the sum of state, local, and federal nondefense investment:

Doing it wrong."

And, yes, Republican obstruction of all Obama's and the Democrat's jobs legislation has a lot to do with this.

According to Republicans, borrowing is bad, even though the cost of money is about as cheap as it gets. There isn't a better time to invest our infrastructure - mass transportation, water and sewer ways, the electric grid, the greening of public buildings, repairing bridges and roads, etc.

Also, according to Republicans, government-induced demand is a bad thing, although no one else (I'm looking at you, private sector) is willing to spend any money at the moment. Yes, for those of you being foreclosed upon, losing your job, already out of work, behind on your bills, you're just going to have to tough it out until the market decides you're worthy of saving.

Run It Like A Business?

The Daily Show
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

According To Paul Ryan...Stimulus Spending Is Good...When Republicans Do It

Ryan defended stimulus spending in 2002 when Bush wanted it.

Paul Ryan's Stimulus Spending

Paul Ryan's Hypocrisy On Stimulus Spending

Weekend Reading

City Hall: Where The Jobs Aren't
Five Myths About The Middle Class
Government Cutbacks Separate This Expansion From Others
Half Of Americans Die With Virtually No Assets
How Uncle Sam Helped Mitt Romney Build His Fortune
Monopoly Greed
No One Pays The Estate Tax
3 Reasons Why Hosting The Olympic Is A Loser's Game
Wages Aren't Stagnating, They're Plummeting
Water Is The New Gold, A Big Commodity Bet

(Un)Real Job Losses

Rick Barrett informs, Impending Military Cuts Could Cost Wisconsin 11,000 Jobs.

Luckily, public sector jobs aren't real jobs (according to Republicans), so it doesn't matter.

For Further Reading:
Threats From Mounting Public Job Losses
Unemployment Rate Without Government Cuts: 1%

Government Is A Bargain

Excerpt:

"Few consumers have noticed, but the federal government has essentially been on sale, with taxpayers paying about 20 percent less than they used to for what Washington does. Yet unlike satisfied customers, taxpayers are increasingly fed up with the government they finance. This could make them downright surly when the price of government goes back up, which is a near certainty over the next few years.

A new report published by the Congressional Budget Office shows that the average household paid 17.4 percent of its income to the federal government in the form of taxes in 2009, the latest data available.

That's the lowest tax burden on record. It's about 20 percent lower than the federal tax burden in 1979, when the CBO's data series began.

Government services, instead of falling in proportion to the amount of revenue Washington takes in, have instead expanded.

Over the last few years, in fact, taxpayers have been getting the best deal in modern times, in terms of what they get from the government, and what they pay for it.

The bigger point, however, is that the federal tax burden has been falling at every income level."

Annualized Growth Of Federal Spending

Who is the smallest government spender since Eisenhower?