The Mismatch of Federal Funds Among States

Some Are Givers, Others Are Takers

I have always assumed that in our federal system, money was generally allocated in a way that could be perceived as fair. I assumed that on a state by state level, what we pay in taxes was approximately equal to what we receive in federal funds. As it turns out, there are a few states that receive far more than their fair share, while others do not get enough! It's surprising to me that despite the disparity, not a lot of people seem to notice. The chart below shows the federal payback for every one dollar spent.

Whoa South Carolina!

For every dollar spent in taxes, South Carolina receives about $8 while Massachusetts receives less than $1. This seems crazy, but it is actually rather simple to explain. For decades in the 20th century, the south was run by Democrats and many Democrats in Congress gained seniority from decades long tenures and were able to earmark huge sums for their states. As a result, states like South Carolina and Louisiana receive tons of federal funds.

One caveat to this is that some federal funds are distributed unevenly because they have to be. Programs such as SNAP go to low-income families, and southern red states tend to have the most people in poverty and so they receive the most aid. But this only explains a part of the difference. 

Interestingly enough, Republican states that argue for shrinking the government and cutting spending actually receive the bulk of federal funds. Look back at the chart and notice that some of the most conservative states appear near the top but many of the most progressive states are near the bottom. So despite the fact that red states depict blue states as "takers," the reverse is actually true. 

Government Shutdown: Signs of a Broken System

Why The American Government is Failing Us

As of earlier this week, the American government has closed it's doors except for functions which are deemed necessary because Congress has not approved the budget for the next year. This is a signal that something has gone seriously wrong with our country. Rather than reaching an agreement, the government has shuttered itself. Many people from other countries cannot even fathom the idea of their governments choosing to shut themselves down. Why should we?

My blog typically serves as a forum to discuss urban and demographic issues, but this is a reality that affects each and every one of us in the United States. Whether we like it or not, so many of our daily activities are supported by the federal government and if the shutdown persists it will lead to mounting problems in the country. Even now the shutdown is estimated to be costing somewhere around $50 million per day.

Why This Happened

The United States is one of the only developed countries in the world that does not offer universal healthcare to it's people. Every person, regardless of age, income or race should be allowed access to healthcare. It is a basic right. No person should be denied healthcare because they cannot afford it. Here is a map that shows all countries with universal healthcare. Notice again that we are one of the only developed nations that does not.

In 2010 the United States Congress passed the Affordable Care Act. This act was designed to increase health coverage for all citizens regardless of their income or preexisting medical conditions. In effect, this act was meant to add the United States to the list of countries offering universal healthcare. I repeat, this act passed through Congress and was later upheld by the Supreme Court. Universal healthcare is not a farcical idea, it exists in so many other places.

Fast forward to 2013. On October 1st of this year, the health care exchanges were set to open to allow people to enroll into the new healthcare insurance system. Coincidentally, this was also the deadline for Congress to approve a budget for the upcoming year. Republicans in Congress decided to agree to approve a budget only if the Affordable Care Act could be scaled back or repealed. That premise is ridiculous.

Legislation is passed with a purpose. Each law has a specific reason for enactment. The Affordable Care Act is intended to provide health insurance for everyone. The annual budget is intended to fund the government. These two things are completely unrelated. By tying healthcare to the budget, Republican effectively took two unrelated issues and put them together. By refusing to approve the budget, the government shut down. 

What Does This Mean

A government shutdown means that as of Tuesday about 800,000 federal employees were furloughed and important government services were shut down. Children who were supposed to start cancer treatment trials at the National Institutes of Health were denied care and all national parks and museums are closed. 

Republicans attempt to justify this shutdown by saying that we cannot afford universal healthcare and that the Affordable Care Act is wrong. Newsflash, we are again among the only developed nations not to offer this to our people. I would say that it is wrong not to offer people healthcare. Additionally, this legislation has already passed and been signed into law. It is completely undemocratic in nature to attempt to kill the law by defunding it. Don't we pay our lawmakers to do useful things for our country? It seems like they are failing.

A Budgetary Take

While I admit that nobody is truly certain about what the cost of the Affordable Care Act would be, here is an estimate by the Congressional Budget Office.

This projection actually shows that over the next 10 years this healthcare act could save the country over $153 billion. Some argue that the plan could actually increase the deficit. I am no expert and I believe nobody can say for sure.

But here is something. Every lawmaker in Congress is paid at least $174,000 per year and there are 535 lawmakers in the federal government. Just their direct salaries cost the country over $94 million per year. They also still are being paid during the shutdown that they ordered. If instead of worrying about the cost of the Affordable Care Act we eliminate Congressional salaries, I can assure you that over the next ten years we will save at least $1 billion.