The United States started as a fairly loose country with a lot of power in the hands of states, but over the evolution of the country, power has become more and more concentrated in the hands of the federal government.
In a healthy democracy, ideas can be experimented with and the consequences will be felt. By feeling the consequences of decisions, countries can then reverse course when things get worse, without harming other states which did not make the harmful decisions. The damage is fairly limited, and the reversal can happen smoothly.
As power has concentrated more and more with the federal government, tax dollars have become more and more concentrated in the hands of the federal government. Two consequences of this are that there are more subsidies for lower income states. This is seen as a way to raise people out of poverty, improve schools, and many other benefits to those states. But it also creates a drain on public money from wealthier states.
This has two main effects.
- Recipient states do not see the full detrimental effects of their misguided policies because they have a constant bailout from the federal government.
- Donor states do not see the full benefits of their policies because a lot of the surplus is siphoned off to states with inferior policies.
On one hand it is easy to think that this is a good thing from a liberal point of view, since most liberal states are donor states, we have higher levels of education leading to higher incomes, and from a high-minded viewpoint we can often feel like it is just fair for us to share our surplus with the lofty ideal that every American should have access to a high quality education and high quality health care.
This would work if everyone shared our viewpoint. But the world obviously does not work that way.
For states which consistently choose to fund programs which do not bring large benefits, they get a constant bailout from the federal government. People in these states then feel like they keep paying taxes but never get ahead. The reason they never get ahead is their state continues destructive policies but they are never allowed by the federal government to fall apart because of interstate transfers. Because people often feel this way in recipient states, it is clear to me that our current model of siphoning wealth from productive to unproductive areas does not work.
It also happens at a local level as dense urban areas pay more in taxes compared to the cost of infrastructure and suburban areas typically pay less in taxes compared to the cost of maintaining their infrastructure. This phenomenon happens at every level of government.
Now, there are obviously some programs which are truly beneficial, namely health care and education. Food stamps effectively fight poverty. Universal basic income like Alaska or formerly in Canada are effective ways of fighting poverty. But often these programs go in ways which are massive federal grants for infrastructure which might not actually be reasonable, particularly highway construction, which distorts incentives.
It’s a complicated issue.
But I’m coming to the conclusion that in time we will have presidents like Donald Trump come to power. Trump won’t be the last, and this is inevitable. The South will never change.
So we must accept that as long as we remain as tight knit as we are today it is just a matter of time before Medicare is cut. It is just a matter of time before OASI is slashed. It’s a mathematical fact that if we don’t change how OASI is funded that it will run out of money within a few decades.
Regardless of how things go, it is only a matter of time before a Republican President slashes health care programs to an extreme level. There is nothing we can do to prevent this.
There is nothing we can do to protect seniors in the South long-term from these policies being harmed.
So the best thing we can do is protect those of us who live in donor states. If and when this government slashes Medicare and Medicaid, I welcome it. 46% of federal government spending goes to health care and OASI. Another 7.8% of spending goes to income security, bringing it over 50% of government spending or $3.7 trillion. If our current government slashes these programs and moves that responsibility down to the states our deficit will be covered and they can slash taxes even further. Liberal state governments can then pick up the tab. We can increase state level taxes to cover the difference and by no longer having as much money siphoned out of our states to bailout states in the South we won’t have to raise taxes as much as you think. We can implement universal health care, saving businesses more money on payroll than they are spending on private health insurance plans. Out of pocket spending by employees will drop substantially, not necessarily to 0, but it will be lower than what we have now. This will save people money and be more resilient than our current system.
There is no realistic path to implement any form of universal health care as long as the filibuster survives. It will take a lot longer to finally get the filibuster abolished than it will be to implement universal health care at the state level somewhere. Let’s take the win where we can and push for universal health care in our state capitols.
I wish we lived in a country where we could implement these common sense solutions at a national level, but the reality is that we don’t and we never will.
The federal government can move health care, social security, income security, veterans benefits, commerce and housing credit, transportation, education and more down to the state level. Cutting out 75% of federal government spending down to a budget of only $1 trillion. Half of it military, half of it paying interest on the national debt.
The gap between rich and poor states will increase, and there is nothing we can do to stop it. As right-wing states complain that their states keep falling behind the solution will always be there for them. The solution is, has always been, and always will be for them to elect a better government. Their infrastructure will fall apart, and that’s just the way it is. The federal government might take over the interstate highway system and railroads, paying for their maintenance and operations through tolls, taking that burden off of state governments, but for the rest of the operations that is up to the states. We might keep FEMA around, but insurance without conditions is rarely a good idea.
So the best step for progressive politics might actually be to have Trump slash the federal budget. End Medicare, Medicaid, OASI, federal income security, and other programs. Liberal states come in and fill the void. Conservative states languish.
After that transfer is done and conservative states see their economies failing they will need to implement these programs themselves, and we shouldn’t let them just re-implement them at the federal level.
Perhaps we should even move immigration down to the state level as well. That’s how the European Union does it and it works well. States could choose reciprocity with other states which implement work visas or choose not to. This would encourage best practices and if a state chooses detrimental policies it will minimize the damage.
Adoption of the United States dollar should be optional. If a state wants their own currency to focus on manufacturing and export-oriented development… let that be on their own grave. Just don’t take my state down with you.
Again, in an ideal world this would not be a problem. But there are enough states which vote in politicians who push for ridiculous policies at the federal level and I am tired of it. Let states be laboratories of democracy again. The scales of efficiency of having work done at the federal government only works as long as we continue to have presidents and congresses who are thinking through their policies. We clearly do not live in a country like that.
In terms of foreign aid states could choose to fund initiatives together in blocs. This would be more robust because if a state enters or leaves the arrangement it won’t be the sudden death of the program.
In summary, I think moving social programs from the federal government down to the state level will be more economical, be more resilient, and a more desirable outcome than what we are dealing with right now.
Please poke holes in my argument. I want to be wrong, but I don’t think I am.