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<< Kosovo v. Iraq | Main | Legal Monstrosity of Conference Committee >> September 19, 2003Funding Formulas Tilted to "Red States"For a while, I've been ranting (see here and here) about the fact that Bush "red states" receive far more federal spending on average than they pay in federal taxes. Calpundit jumped in recently but was backed off by one conservative critic who argued red states get more aid because they are poorer-- ie. have lower per capita average incomes -- and therefore need more social spending. Statistical Fallacy: And here you get a classic statistical fallacy-- having a lower AVERAGE income does not therefore mean you have fewer VERY POOR people needing social spending. An average can often disguise the presence of many very poor people and a few astronomically wealthy people. Hmmm, that sounds a lot like New York City and southern California, huh-- part of two "blue states" that receive far less in federal funds than taxes paid. Both states have massive poor populations that are screwed because their states receive far less of the federal bounty than they should. And the funding formulas in social spending make it worse. The problem is not just because military bases and other non-social spending goes to conservative red welfare states, but because even spending formulas for social programs are tilted towards "red states." How Medicaid Screws Urban Blue States: Check out this report from the General Accounting Office on how the Medicaid funding formula is tilted against California and other blue states like New York. Medicaid is based on formulas giving more matching grants to states with lower per capita income REGARDLESS OF THE ACTUAL MEDICAID NEED IN A STATE. As the GAO Report notes, "the formula [using Per Capita Income]...is a poor proxy measure for the components of funding ability—states’ resources and the size of and costs to serve their populations potentially eligible for Medicaid services." Medicaid reimursement is extremely complicated so it will take a while to wade through the numbers, but the affects are clear. As one example, the GAO report compares Wisconsin and California: Because the current Medicaid matching formula does not reflect the fact that Wisconsin has fewer people in poverty and lower costs to provide health care services to its population in poverty than California, Wisconsin’s federal matching aid enables it to spend more than twice what California could spend perFor about 30 states, the system works as its supposed to, helping high-poverty states get additional funding. The Losers: But the big losers in the funding program? New York, Florida, California and Hawaii are the big-time losers. With 31% of all people in poverty living in those states, they start out with "below-average funding ability before federal matching aid is added and move farther below the average after federal matching aid is added." So the bottom-line is that "blue states" are not screwed because they are rich and don't need federal spending. They need it. The formulas just are biased against them. BTW this is one more argument why "block grants" are bad. You should have the funding for Medicaid and other social programs dependent on individual need, not based on state funding formulas. The Medicaid matching funds system already distorts aid for health care by being partially targetted to state rather than individual need. Block granting the program would just make the system that much more inequitable. Posted by Nathan at September 19, 2003 11:08 AM Related posts:
Trackback PingsTrackBack URL for this entry: CommentsGood points all. Another response to the "red states are poorer" argument is that the red states vote for a party that opposes redistributive policies. So the first statement is that these "small government" states are taking more than their share of federal tax revenues; the response is that the excess represents social programs aimed at the poor; and the refined statement is that the anti-social program states are taking more than their share of social spending. Posted by: J. J. at September 19, 2003 12:40 PM Of course, you all make the additional statistical fallacy of assuming that just because a state went "red" in the last election, that means that the people of the state are overwhelmingly conservatives. As we all know, most Americans, especially poor Americans, don't vote. The poor Americans statistically less likely to vote are also statistically more likely to be Democrats. It's not germane to the discussion of whether block grants are bad (and I agree with you that they are, because they misallocate resources. I also think the government shouldn't be trying to allocate said resources in the first place, but if it's going to do so, the least it can do is allocate them to the people who need them most.), but it is important to any discussion of the fairness of crying foul when "red" states get more money than "blue" states. As usual, I have more on my blog. Posted by: Amy Phillips at September 19, 2003 02:32 PM I wouldn't argue that everyone in red states are conservatives-- only their elected leaders speaking on their behalf and complaining about "welfare moms" while pocketing defensee contracts and extra block grant money for their supporters. Posted by: Nathan Newman at September 19, 2003 03:08 PM I followed Calpundit's thread with interest, and am pleased to see your nuance here. It's not a discussion that lends itself to quick, clear conclusions. Many of the red states are rural, and receive various subsidies--for farming, say. But those benefits are spread out among the population evenly. But I think Amy unwittingly points to something particularly pointed underneath all this: the red states are poorer, but they also are more conservative--in some cases overwhelmingly so. Those conservative poor have been sold a bill of goods by this administration. But they're not voting their pocketbook, they're voting God. They don't support the President because they believe the wealthy really need tax cuts; they support him because they think the left is immoral. This is the greatest failing of the left over the past 23 years--allowing themselves to be branded immoral. Posted by: Emma at September 19, 2003 04:56 PM The left is just as guilty of branding the right immoral as the right is of doing so to the left. There are plenty of people who vote Democrat because they believe that Republicans are evil. I don't see how that really matters. And even if it did, as far as I can tell, there's no real way to stop it. No matter what lefties do, their opponents on the right are always going to tell people that they're immoral, and vice versa. I don't consider it a great failing when there's little or nothing they could have done to "succeed" in the battle for moral superiority in the public eye. Posted by: Amy Phillips at September 20, 2003 11:17 AM The left is just as guilty of branding the right immoral as the right is of doing so to the left. Not exactly. In terms of success in communicating their vision as the "moral" vision, Republicans have been dominant over the past generation. From 1932 through the civil rights era, Democrats dominated the "morality" issue. They successfully wedded economic justice and morality. During the 70s, as liberals were perceived as being out of control, the Republicans pinned them with a kind of social decay. That's very much been in place since the 70s. Where in the 1950s Democrats would have been called the "moral" party (and the Christian party), now Republicans would be identified that way. In a very real sense, the association of morality and politics is necessary to forge an agenda and push it through. The Democrats you cite who call Republicans evil are fringe players in national politics. Only recently have the Democrats as a party started to question this; during the 18 months following 9/11, they praised the President's "moral clarity" and endured abuse for their own "treasonous" perspective. When was the last time you heard a national Democrat declare that a Republican who didn't agree with him (her) was giving aid to the enemy? And yet Ashcroft and Rumsfeld (not to mention Delay and other Congressional Republicans) have both questioned Dems. You can only get away with that if you control the nation's moral compass. Posted by: Emma at September 20, 2003 08:44 PM Minor error -- you meant to write ...having a lower AVERAGE income does not therefore mean you have more VERY POOR people needing social spending... Posted by: Vance at September 22, 2003 08:06 AM Post a comment
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