Red vs. Blue

Atrios points out that Red states are stealing from blue states. So I went to the full report Atrios cites, added some color-coding, and made some graphs. While the subsidies are much larger in the Red states (those that in principle dislike government subsidizing anything), they are not quite as bad as I thought. I suspect the explanation is that our system is designed to favor smaller states by giving them disproportionate representation in the Senate (two per state) and the Electoral College (1 per member of Congress, so a three vote minimum). Still, the citizens of conservative states don’t seem particularly opposed to federal largesse (It’s always fun to listen to Ted Stevens of Alaska–a top beneficiary–rant and rave against the govenment).

It looks like there’s something funny in the graphs because you might expect that everything has to average out to one. My guess is that they are using income taxes paid by each state and transfers made to each state. Since the government has other sources of revenue (e.g., tariffs), it can pay out more than it collects in taxes. Overall, a small majority of Blue states get less than $1.00 returned back per dollar put in, while the vast majority (27/31) of Red states break even or better. (Click on each image to get the full size version).



UPDATE: Commenter Ross raises the obvious (to him, not me): “Do you think the discrepency between revenues and spending/ transfers to the states may represent deficit?” To which I answer, of course! Although the deficit wasn’t at today’s level in 2001, this is surely the biggest part of the explanation.

UPDATE: Oops, Gore won Oregon. Luckily, since Oregon is dollar for dollar even, it doesn’t really change the basic point.

UPDATE: Atrios points out correctly that these are per-capita figures and that population-weighting could change the picture (see the comments for that and for my response). He or she is right, but the most populous blue states tend to be net payees to the other states (and also tend to be blue), so they will still be net losers. How much so? Atrios did the work that I didn’t do:

“So, I went to the raw data on all of that and wasted too many a few minutes punching it in. In total, “blue” states get 94 cents for every dollar they send to the Feds, and “red” states get $1.08.”

By my earlier logic, Atrios should have come up with a bigger gap than I did, but he didn’t. It may be accounted for by me excluding DC (a huge per capita beneficiary), while Atrios may have counted DC as blue; Atrios probably also correctly counted Oregon as blue. Maybe I’ll look into it over the weekend.

Food for thought: does all of this mean that we should lower taxes in Blue states and lower spending in Red states?

UPDATE: Red vs. Blue Income Numbers here; a brief argument for why liberalism causes economic growth here.