Do Red States Really Receive More Money than Blue States?

Blue States: Majority Democratic Party votes for presidential candidates
Red Sates: Majority Republican Party votes for presidential candidates
Purple States: Mixed between Republican and Democratic Parties when voting for presidential candidates

An often touted fact is Red States are "welfare states." That they take more money that Blue States.

We've come to accept this as a fact and I've even stated this as fact, as well.

But is it true? Where does this fact come from?

It's seen in many forms such as percentage of taxes collect vs. percentage of the state's budget that has federal subsidies.

This article does a great job of breaking down how this actually plays out, and it is a recent article:

https://www.marketwatch.com/story/states-that-voted-for-trump-depend-the-most-on-big-government-2019-06-19

But is this the most honest portrayal of how the federal dollars are spent?

What about federal dollars as a percentage of their total state budget? Wouldn't that be more fair?

Maybe.

Let's see how that plays out:

https://www.pewtrusts.org/en/research-and-analysis/data-visualizations/2018/where-states-get-their-money

And it comes to roughly this:

Yup, red states get more money as a percentage of their total state budget.

So this is an open and shut case, right?

Not so fast...

What about on a per capita basis? What about federal dollars given to each state on a per person basis? Would that not be the fairest representation of which states get the most help from the government?

Let's see which states get the most federal dollars, per capita using that same data:

Hmm...

But wait!

That's just "intergovernmental transfers from the federal government to the states." That amounts to only 15% of the federal budget! There's still 85% more of the federal budget left so how does it get to the states or the people in each states? Is this debate over?

Pew to the rescue, again. 62% of payments went to individuals in each of the states as part of benefits. Such as social security. That might explain some of the per capita issue because blue states have a higher median income than red states.

So, honestly, I think that solves all angles of this discussion. It's not a clear cut and dry argument and I've read arguments from both pro-Democrats and pro-Republicans - and they are both at each other's throats. We are more polarized than ever and using these misleading facts is not the best way to go about federal spending reform.

We are consistently over budget. Decreasing our spending while also have a truly fair tax system should be our goal. We are in desperate need of tax reform. We also need the White House and Capitol Hill to better serve the people.

the South should be nuked

You must be one of those "tolerant" and "loving" liberals I keep hearing about.

Originally posted by eThneoLgrRnae
You must be one of those "tolerant" and "loving" liberals I keep hearing about.

Originally posted by Tzeentch
the South should be nuked

That's racist. Over half the population of African Americans in the USA lives in the south.

Originally posted by dadudemon
We are consistently over budget. Decreasing our spending while also have a truly fair tax system should be our goal. We are in desperate need of tax reform. We also need the White House and Capitol Hill to better serve the people.

Fair tax system integrated with UBI, setup a system for a national health care system and boom winning.

Out of curiosity, does everyone on welfare get the same for the same type regardless of where they live. Like is unemployment payments the same in every state?

Originally posted by jaden_2.0
Out of curiosity, does everyone on welfare get the same for the same type regardless of where they live. Like is unemployment payments the same in every state?

It does vary by state. 🙂

Originally posted by jaden_2.0
Out of curiosity, does everyone on welfare get the same for the same type regardless of where they live. Like is unemployment payments the same in every state?

It varies by state and that's a good thing.

Unemployment is among the highest in Hawaii. It is much more expensive to buy basic necessities and food there for obvious reasons.

You don't need as much in Oklahoma or Nebraska because there are a lot more farms around here so food is not sourced very far, sometimes (sometimes).

Originally posted by snowdragon
Fair tax system integrated with UBI, setup a system for a national health care system and boom winning.

Seems to be a win win win. I do worry about a UBI. I am with Yang in that a UBI should be just enough to survive but not live very well. Something to encourage people to seek for more.

Originally posted by eThneoLgrRnae
You must be one of those "tolerant" and "loving" liberals I keep hearing about.

Originally posted by Tzeentch
the South should be nuked

That's pretty harsh.

Isn't the main angle of this argument that the money is earned by people in the blue states and then given to people in red states.

I do think your analysis is interesting to look at, but it seems to miss the crucial point that proponents of this argument focus on.

Originally posted by Artol
Isn't the main angle of this argument that the money is earned by people in the blue states and then given to people in red states.

I do think your analysis is interesting to look at, but it seems to miss the crucial point that proponents of this argument focus on.

There are 4 different perspectives presented. The one you talk about is the first one presented. A per capita argument is just as valid especially if you consider blue states have more people than red states, on average.

People can pick and choose which one of the arguments they choose to believe but my actual point is this which was the the closing "argument":

So, honestly, I think that solves all angles of this discussion. It's not a clear cut and dry argument and I've read arguments from both pro-Democrats and pro-Republicans - and they are both at each other's throats. We are more polarized than ever and using these misleading facts is not the best way to go about federal spending reform.

We are consistently over budget. Decreasing our spending while also have a truly fair tax system should be our goal. We are in desperate need of tax reform. We also need the White House and Capitol Hill to better serve the people.

Oh, I see, that argument is the one put force by Market Watch? Fair enough.

Which of the explanation fits most with your world view?

Originally posted by Tzeentch
I'm libertarian.

LoL. I seriously doubt that.

Ron Paul and his son Rand are both libertarians (and damn good ones too). Libertarians lean slightly to the right. You're no right-winger.

Originally posted by Artol
Oh, I see, that argument is the one put force by Market Watch? Fair enough.

Which of the explanation fits most with your world view?

Like all problems, it is multivariate.

For example, many red states are farm states. Just from this, we see two problems:

1. An argument can be made that the farm states should be subsidized by the Federal Government because it create a national security problem to depend heavily on other countries for food.

2. Ethanol is being strongly pushed as a renewable source of energy and has been since George Bush Jr. made a pledge. It's obviously got tons of dollars pushed into subsidizing the ethanol industry in farm states.

So are those red farm states REALLY to blame for forced national security interests and renewable energy goals? Also, many farmers are beholden to the trade wars going on so it is really the fault of the US farmers if the market is flooded with certain goods and prices (a la Rockefeller in the early 1900s to his oil competitors) out of their control? Should the government, who created the artificial problem, be responsible for addressing this?

Example 2:

Federal Bases and the fight for bases.

1. Part of those federal dollars goes to bases. Those bases count towards those figures. Those dollars can and do get injected into the local economies. Many red states have these military base (more land, in some instances).

2. Red states are more pro-military. This makes it easier to get certain pro-military initiatives pushed through. This makes their states more conducive to military operations and bases. They get more of these federal dollars as a consequence.

Hence why California was fighting so hard for that military base.

Example 3:

Just two states, New York and California, have a large amount of Fortune 500 companies. Texas is a purple state and is the only state that can rival the two.

1. This will throw off the dollar figures assuming these companies pay even a moderate to small share of stocks. That does seem to be the case.

2. These large companies are also major employers. More people employed and at higher salaries equates to less needs from the federal government such as Welfare. This is just simply application of the law of probabilities. When you dig deeper and look at states with higher numbers of Fortune 500 companies, you do see this trend. This is also part of why many red states are fighting hard for big companies to move to their states: more jobs, more money, more taxes, less reliance on federal funds, more Independence, more power among the 50 states.

We could get into Black and Latino populations also having an impact on these figures - whether Americans want to acknowledge it or not, Black and Latino populations are more likely to assistance from the state in various forms and this is part of those figures. I did not dig into these numbers on red vs. blue states so it could help either side of this argument.

Also, if you want to see a nice "correlation does not equal causation but holy shit, does this look suspicious" stat, look at states with higher Asian population numbers and compare it to the federal dollars spent on red states vs. blue states.

All of these and many more are reasons I think the entire argument is rather futile.

Originally posted by eThneoLgrRnae
LoL. I seriously doubt that.

Ron Paul and his son Rand are both libertarians (and damn good ones too). Libertarians lean slightly to the right. You're no right-winger.

That's not how that works.

Libertarians can be leftwing and rightwing.

Libertarianism exists opposite the axis of Authoritarianism.

Originally posted by dadudemon
Like all problems, it is multivariate.

For example, many red states are farm states. Just from this, we see two problems:

1. An argument can be made that the farm states should be subsidized by the Federal Government because it create a national security problem to depend heavily on other countries for food.

2. Ethanol is being strongly pushed as a renewable source of energy and has been since George Bush Jr. made a pledge. It's obviously got tons of dollars pushed into subsidizing the ethanol industry in farm states.

So are those red farm states REALLY to blame for forced national security interests and renewable energy goals? Also, many farmers are beholden to the trade wars going on so it is really the fault of the US farmers if the market is flooded with certain goods and prices (a la Rockefeller in the early 1900s to his oil competitors) out of their control? Should the government, who created the artificial problem, be responsible for addressing this?

Example 2:

Federal Bases and the fight for bases.

1. Part of those federal dollars goes to bases. Those bases count towards those figures. Those dollars can and do get injected into the local economies. Many red states have these military base (more land, in some instances).

2. Red states are more pro-military. This makes it easier to get certain pro-military initiatives pushed through. This makes their states more conducive to military operations and bases. They get more of these federal dollars as a consequence.

Hence why California was fighting so hard for that military base.

Example 3:

Just two states, New York and California, have a large amount of Fortune 500 companies. Texas is a purple state and is the only state that can rival the two.

1. This will throw off the dollar figures assuming these companies pay even a moderate to small share of stocks. That does seem to be the case.

2. These large companies are also major employers. More people employed and at higher salaries equates to less needs from the federal government such as Welfare. This is just simply application of the law of probabilities. When you dig deeper and look at states with higher numbers of Fortune 500 companies, you do see this trend. This is also part of why many red states are fighting hard for big companies to move to their states: more jobs, more money, more taxes, less reliance on federal funds, more Independence, more power among the 50 states.

We could get into Black and Latino populations also having an impact on these figures - whether Americans want to acknowledge it or not, Black and Latino populations are more likely to assistance from the state in various forms and this is part of those figures. I did not dig into these numbers on red vs. blue states so it could help either side of this argument.

Also, if you want to see a nice "correlation does not equal causation but holy shit, does this look suspicious" stat, look at states with higher Asian population numbers and compare it to the federal dollars spent on red states vs. blue states.

All of these and many more are reasons I think the entire argument is rather futile.

I totally understand your point about multivariance. But I am more wondering what your prescription is based on it. You say that the argument is futile, does that mean you think how it is currently is good and doesn't need to be changed? You are from Oklahoma, right? Do you believe the state of Oklahoma should get more, or that the people of Oklahoma should pay more?

Originally posted by Artol
I totally understand your point about multivariance. But I am more wondering what your prescription is based on it. You say that the argument is futile, does that mean you think how it is currently is good and doesn't need to be changed? You are from Oklahoma, right? Do you believe the state of Oklahoma should get more, or that the people of Oklahoma should pay more?

No, it is not optimal and it does need to change.

This is my point:

Originally posted by dadudemon
So, honestly, I think that solves all angles of this discussion. It's not a clear cut and dry argument and I've read arguments from both pro-Democrats and pro-Republicans - and they are both at each other's throats. We are more polarized than ever and using these misleading facts is not the best way to go about federal spending reform.

We are consistently over budget. Decreasing our spending while also have a truly fair tax system should be our goal. We are in desperate need of tax reform. We also need the White House and Capitol Hill to better serve the people.

Tax reform that is truly fair
Balance the budget and decrease spending
A government that represents the people (it does not, currently)