Recently a reader, in partial response to my last piece, asked me why traditionally “red” states are more dependent on federal aid than blue ones. If this were true, it would certainly be shocking–conservatives are known for rejecting federal spending, especially when it comes to social programs.
Statistics published by the Tax Foundation appear to add credence to this claim. Their analysis reveals that Missouri, Louisana, Tennessee, South Dakota, Mississipi, Montana, Georgia, and Alabama–states conceived of as red because they cast their electoral votes for President elect Donald Trump–do have the highest rate of federal aid as a percentage of state general revenue.*
However, does this justify blaming Republicans for the redistributionist policies in these states? The answer to that question is a definitive “no.”
Notice what the Tax Foundation calls the actual metric they use. It’s a ratio called the “highest rate of federal aid as a percentage of state general revenue.” This means the eight previously mentioned states receive more federal dollars than what they’re generating from taxes at the state level.
But there’s a big problem here: this number doesn’t actually describe dependency. Just because the states in question raise less money than blue states in relation to the amount of federal aid they receive, it doesn’t mean they actually need to generate more state revenue to match the federal aid they receive. This is especially true if that means more taxes, more regulation, and slower or lessened economic development. As economist Art Laffer has pointed out, increasing taxes too much can actually reduce tax revenues overall.
Further, the metric is only one figure in a larger picture surrounding state spending and federal programs. It doesn’t distinguish between types or sources of funding, or grants that are mandatory versus those that are optional. It can’t fully claim to explain a state’s dependence on federal funding, despite the misleading suggestion–partially contained in their headline–that it does.
Thus, red states do not necessarily depend more on federal aid than blue states. Further, even if the metric were accurate, and these states were more dependent on the federal government, the implications wouldn’t mean much anyway. Governors seeking re-election aren’t likely to flat-out reject federal money promised to their constituents. In fact, they probably don’t even have the power to unilaterally do so.
Clearly, the idea that conservative states are more dependent on the federal government is a politi-myth–and it’s a myth that has been busted.
*Slate, Politifact, and Business Insider haven’t defined “red” exactly this way — they use 2004 and 2012 presidential election data instead of the 2016. Likewise it should be noted Politifact cites only a chart created by a un-credentialed non-expert as evidence supporting their claim, while Business Insider cites a loose collection of graphs offered by a personal finance company, Wallet Hub. As responsible readers, we ought to start asking for better and clearer levels of evidence–and evidence free of deceptive headlines.