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Hey America, You Owe New York!
Progressive Populist
by Nathan Newman
June 01, 2001

Well, now that the sympathetic rock benefits have ended, Bush and the GOP Congress have begun nickel-and-diming New York on paying for rebuilding in the wake of September 11.

Despite estimates of costs as high as $100 billion in direct and indirect costs from the disaster, Bush has declared that no new Federal help beyond the initial $20 billion is needed - even as the GOP has approved over $100 billion in tax breaks for big business and the wealthy.

Well, forget arguments about compassion or charity for the victims of September 11. New York should demand the rebuilding aid as a debt due by the nation, after decades of New York subsidizing the rest of the country. Every year, New York state's citizens have paid billions more in federal taxes than they received in federal spending.

In 1999, New Yorkers paid an average of $5,834 in federal taxes each, yet received back only $4944 in spending. In the last decade, the state de facto transferred over $160 billion to the citizens of other states.

Now, it's time for payback.

When New York was riding high in the 1990s, it was appropriate for its citizens to help out poorer states and pay for rebuilding after their floods and hurricanes. But with physical devastation and over 285,000 new workers displaced and unemployed in the state after September 11, it is rank ungratefulness for the Congressmembers from other states to begrudge a dime to New York now.

Since New York citizens regularly transfer $16-20 billion per year to other states, the $20 billion initially allocated so far for New York rebuilding barely evens the debt owed for this year alone. So this doesn't even count as "help"-- it's just avoids the Feds further draining the blood of a corpse. It literally does not even start to repay the hundreds of billions of dollars the state's citizens have transferred to the rest of the nation when they needed the help.

And it's not even clear that Bush and the GOP will actually pay out those initial funds. In the first weeks of November, on largely party-line votes, the GOP refused to force the full allocation of the initial funds promised to the state.

On the other hand, it's hardly surprising that Bush and Senate Minority leader Trent Lott fight to open the budget floodgates for corporate tax breaks and new defense spending, even while they leave New York's unemployed out in the cold. Defense spending goes overwhelmingly to states like Texas and Mississippi, the home state of Lott. Mississippi receives $1695 in defense spending for each of its citizens each year, while New York's citizens receive only $345 each on average in defense spending for jobs in their state. Overall in the last decade, Mississippi received $70 billion more in federal spending than its citizens paid in taxes.

It's amazing that a representative of Mississippi, which has been a prime beneficiary of New York's net transfers in that same period, would begrudge New York a dime in the wake of the September 11 tragedy.

But we've been here before.

When New York City ran into economic problems in the 1970s, the then-Ford White House famously told the city to "drop dead"-- they were on their own. At the time, the new Senator from New York, Daniel Patrick Moynihan, began highlighting the fact that forced cutbacks in social services and mass transit in the state and city were happening even as the federal government was taking far more in taxes than it provided in spending for the citizens of New York. Moynihan launched a yearly survey of which states were getting more in federal spending than they paid in taxes and which states, like New York, were subsidizing the rest.

Eventually co-sponsored with the Taubman Center at the Kennedy School, these studies highlighted the fact that high-poverty states like California and New York were not draining the national treasury. In fact, they were subsidizing the so-called individualistic heartland. If you look over the more recent studies (, the remarkable fact is that the states that supported George W. Bush for President are overwhelmingly the "welfare states", receiving far more in federal spending than they pay in taxes.

States who voted against Bush's "compassionate conservatism" are overwhelmingly net donors of funds to the Bush states. New York and New Jersey, who together share the direct costs of the World Trade Center attack through their co-governance of the Port Authority, have transferred a net $500 billion to other states in the last twenty years.

And it is clear that Bush and the GOP want to keep it that way. Unemployment insurance to help New York's unemployed is not on the table, but subsidies for the oil industry, new defense spending, and other benefits for the heartland welfare states are being handed out with abandon.

Given that states like New York will eventually end up paying the tab for this new deficit spending, by the time Bush is done with the budget, New York is not being helped at all. Those left without jobs and health care in the wake of the World Trade Center attack better get ready to pay off these deficits in the future to pay for Bush's giveaways to the corporations.

For all the fake compassion and breast-beating, Bush and company have just temporarily pulled back the fangs in anticipation of continuing to suck the state dry in the future. But enough is enough. If the Bushies are dead to compassion, then New Yorkers and all workers should demand economic relief for the unemployed as a debt owed for decades. America, you own New York!

Nathan Newman is a longtime union and community activist, a National Vice President of the National Lawyers Guild and author of the forthcoming book NET LOSS on Internet policy and economic inequality. Email or see

Posted by Nathan at June 01, 2001 11:23 AM