Red States, Blue States, and Federal $$$

Steven Dutch, Natural and Applied Sciences, Universityof Wisconsin - Green Bay
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One of the more blatantly self-serving pieces of statistical nonsense making the rounds on the political blogosphere is the discovery that States that vote Democratic are net donors of taxes while Republican States tend to be recipients. Or, as TaxProf Blog put it "Red States Feed at Federal Trough, Blue States Supply the Feed."

The states getting the most bang for each tax dollar paid are:

1. D.C. ($6.17)
2.North Dakota($2.03)
3. New Mexico ($1.89)
4.Mississippi($1.84)
5.Alaska($1.82)
6.West Virginia($1.74)
7.Montana($1.64)
8.Alabama($1.61)
9.South Dakota($1.59)
10.Arkansas($1.53)

TaxProf Blog goes on:

"In contrast, of the 16 states that are "losers" -- receiving less in federal spending than they pay in federal taxes -- 69% are Blue States that voted for Al Gore in 2000. Indeed, 11 of the 14 (79%) of the states receiving the least federal spending per dollar of federal taxes paid are Blue States. Here are the Top 10 states that supply feed for the federal trough (with Blue States highlighted in bold):"

States Receiving Least in Federal Spending Per Dollar of Federal Taxes Paid:
1.New Jersey($0.62)
2.Connecticut($0.64)
3. New Hampshire ($0.68)
4. Nevada ($0.73)
5.Illinois($0.77)
6.Minnesota($0.77)
7. Colorado ($0.79)
8.Massachusetts($0.79)
9.California($0.81)
10.New York($0.81)

For some weird reason, TaxProf highlighted Republican States in the first list but Democratic States in the second. I highlighted Democratic States in both.

Several things about a claim like this make me suspicious. For one thing, quoting the extremes of a table instead of the entire table (which would have required scarcely more page space) is pretty suspect. Also, the lack of any kind of statistical analysis raises red flags. Finally, anything that so neatly ratifies a political agenda is inherently suspect, so I looked at the data. The 2010 Statistical Abstract of the United States supplies population data (Table 12), Federal expenditures by State (Table 467), and Presidential Election Returns (Table 389). Two things leap out from the two lists. One, pretty obvious, is that the District of Columbia will produce absurd figures because pretty much its entire economy is the Federal Government. The other, a lot more significant, is that the "winning" states are all small and the "losing" states are mostly large.

So let's compare Federal expenditures per capita with population. There is indeed a pretty significant negative correlation (Correlation coefficient -.158). The average per capita Federal expenditure is $8272. The three outlying states above $12,000 are Virginia and Maryland (slopover from D.C.) and Alaska. The lowest State is Nevada (a bit of a surprise, what with Area 51 and all). By the way, the District of Columbia is such an outrageous outlier in all cases that I'm confining my analysis to the 50 states. On the chart above, D.C. plots at 592 (thousand) and $73,458 per capita.

This is not that surprising. A Post Office in North Dakota will represent more dollars per capita than an identical post office in New York. Interstate 90-94 across Montana and I-5 up the length of California are about the same length, but the Montana interstate represents a lot more dollars per capita. It's simple economy of scale. And unless you want to truck goods from the West Coast to Chicago on two-lane roads, you have to build highways across some small population, large area states.

But how do they vote? This is a graph of Federal per capita spending versus percent republican vote 2000-2008.

Well, there's a slight positive correlation (.045) but hardly anything dramatic. Certainly nothing to support the idea that Republican States are disproportionately slurping at the Federal trough. Note that fiercely Republican Utah at extreme lower right is also one of the states with lowest per capita Federal spending.

What Are They Spending On?

The really nice thing about the Statistical Abstract of the United States is that it breaks down Federal expenditures into four categories:

More than half of all Federal outlays are direct payments, and they amount to 5.5 times the total amount paid in salaries.

If people are going to vote their pocketbook, we might expect to see a strong correlation between voting and direct payments. Let's check that out. First let's check population.

The average per capita is $4462. But look at how those hogs in California .... wait a minute ... California (farthest right) is below average?  And those latte snorking liberals are not very much above rough, tough, ruggedly individualistic Texas (second from right). The two lowest states are Alaska and Utah. The highest, for reasons that escape me, is Ohio. The overall correlation is slightly negative.

Below is the graph of direct payments and voting.

The trend is slightly negative (-.068). It runs directly counter to the claim that Republican States are sponging off Democratic States. But it also doesn't exactly make a strong case that people vote Democratic because they hope to gain personally.

Somewhat unfairly, I lumped the other spending categories as "infrastructure." I'm fully aware a lot of the direct payments were earned fair and square, and many, like Social Security, are simply repayments of what people paid the Government in the first place. Also, a lot of the other categories have dubious value to the society. Nevertheless, direct payments go to individuals, and procurement, grants, wages and salaries go toward society-wide uses. So let's look at infrastructure.

Average per capita expenditure is $3884. California and Texas are slightly below average, the two high states are Alaska and Virginia.

There's a weak positive correlation (.080)

 

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Created 25 May 2010; Last Update 24 May, 2020

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