Memo to Gov. Cuomo: It’s time for Congress to stop robbing New York state
This week, New York state passed a painful austerity budget, slashing billions of dollars in programs from hospitals, schools and other programs without raising taxes.
Governor Andrew Cuomo has made the argument that the Empire state is already taxed to the point of exhaustion, and that we have to make cuts rather than increase revenue.
But he’s wrong. There is a massive source of new revenue out there that is going untapped, one that New Yorkers desperately need.
I’m talking about the Federal treasury. And no, I’m not suggesting that Gov. Cuomo advocate for a hike in the Federal income tax.
But he should demand an end to the massive and shameful redistribution of taxpayer wealth.
The system now in place results in heavy taxation in states such as New York, New Jersey and California, with a wildly disproportionate amount of that money flowing into other low-tax states, such as Alaska and Wyoming.
According to the most recent parsable data that I could find — for 2004 — the average New Yorker paid $7,940 in Federal taxes.
But in that year the Federal government only spent roughly $6,200 per person in programs here, everything from Medicaid reimbursements to road and highway building to education funding.
What happened to the additional $1,700 per capita? It went elsewhere, paying for programs and infrastructure in other states.
Some states have it even worse than New York. New Jersey receives back only 61 cents for every dollar that their workers pay in Federal taxes.
Connecticut — the most highly taxed state in the nation — receives back only 69 cents on the dollar.
There was a time when this redistribution of wealth made sense. America was a frontier nation.
Wealthy eastern states were helping to build the infrastructure — everything from the Tennessee Valley Authority to Hoover Dam to interstate highways — in parts of the country that were underdeveloped and struggling
But that era is long since over. Many of the states that are now being stripped of Federal tax dollars, including New York, Illinois, California and New Jersey, are in crisis.
We desperately need every tax dollar as we rebuild our economies, our cities, our schools and our infrastructure.
There’s another, urgent reason to stop this unfair redistribution of wealth: It would allow our cheated states to lower state income taxes to more equitable levels.
Because states such as Alaska, Mississippi, and New Mexico receive a lavish bounty in Federal spending (roughly $2 for every $1 that they pay in Federal taxes) they don’t have to raise state taxes to pay for their programs.
Why should they, when we’re picking up the tab? Alaska — one of the biggest recipients of Federal cream — doesn’t even have a state income tax.
Which means that a state like New York is forced to compete for jobs and businesses with low-tax, high-benefit states — and we are forced to subsidize them in the process.
As Western New York crumbles, and once-proud cities like Buffalo continue to decline, this has to end. We can no longer afford to build roads and high speed data lines and dams in other states, while our own crumble.
Governor Cuomo has proved with this state budget that he can win big fights.
It’s time for him to rally New York state’s Congressional delegation — Republican and Democratic — and demand that New York state receive at least 90 cents on the dollar for our contribution to the Federal treasury.
The other ten percent should continue to go to non-state-specific spending, such as national defense, and border security. That seems only fair, and responsible.
But it simply doesn’t wash for one out of every five Federal dollars taxed in New York to be siphoned away.
The stakes here are high, maybe even “transformational,” to borrow one of the governor’s favorite words.
According to my back-of-the-napkin-very-rough calculation, bringing our return-on-investment up to 90% would mean an additional $27 billion in Federal spending each year for the Empire state.
To put that in context, it’s nearly three times the amount of the state budget cuts that Albany just approved.
Sure, other states would feel the pinch if we bring more of our Federal dollars home.
But if they really want all those programs, all those new roads and bridges, teachers and hospitals, they can boost their own state income taxes and pick up the bill themselves.
PNE, of course, there IS the minor problem that after we have lowered our wages for manufacturing and government service jobs to third world levels, there will be no one left to keep Walmart, McDonalds, Home Depot, etc., etc., afloat, which, when they collapse, could put a bit of a dent in all of those WSJ readers’ portfolios. The truly wealthy should come out OK in the end though, just as they do the whole third world over.
Paul, I’m just guessing here, but I suspect that what puts New Mexico, Alaska and West Virginia in the top five is a combination of fuel depletion allowances (corporate welfare) and poverty, while Mississippi and Louisiana pull in the big federal dollars on poverty alone. Someone please correct me if I’m missing something here.
It is odd that many working people have been convinced that if they lower their standard of living and let Bill Gates and Warren Buffet spend more of their own money however they want, that this will somehow make things better. They may be assuming that it is the other guy who is going to be deflated and not them. Same with the business class, as Walker points out. Who is going to buy the stuff they sell?
Bret said: “Those problems are no more “fixed” today than they were when LBJ decided he had the answer.”
But Bret, they are more fixed. The poverty rate is lower than it was in 1960. It declined after the Great Society was implemented. It has risen as social programs began taking hits. These are facts.
Philosophically, it’s great to believe in individual responsibility, and I applaud you for adopting foster kids. But (to take a detour) you wouldn’t have been in a position to do that, I’m assuming, without a government-funded retirement plan (which you earned, no doubt) and your wife’s government job. And back in the good old days before the New Deal and Great Society, there wasn’t enough individual responsibility to keep old people from eating cat food and Appalachian and Southern children growing up in third world conditions. Government, no matter how much you may oppose the idea philosophically, did help people’s lives.
This is really getting into a very interesting set of questions. How does one instill a sense of personal responsibility in others? Obviously the parents are in the best position to do so, but if the parents don’t, then what? Or if the parents try, but fail?
There may very well be a “culture of dependency” fostered by growing up on welfare, but is it any worse than the culture of poverty fostered by inadequate nutrition and a bleak economic landscape? Perhaps we should celebrate the entrepreneurial initiative of drug dealers who break free of the culture of dependency by virtue of the power of the marketplace. A similar reliance on the marketplace flourished during Prohibition, and raised a number of Americans out of poverty. But I digress…
It would make an interesting study to compare the rates of children escaping from an impoverished childhood through individual initiative in countries with different levels of spending on the poor. Anyone know if such work exists?
“Paul, I’m just guessing here, but I suspect that what puts New Mexico, Alaska and West Virginia in the top five”
Walker maybe it is smart to put more federal dollars into states that have the natural resources that the rest of us need?
Do we want to wean ourselves off foreign oil or not?
Most folks nowadays don’t seem to have any problem with spending federal dollars (including dollars we don’t have) to try and create jobs. Isn’t that exactly what you are guessing might be going on there? Or do you just not like those kinds of jobs?
Well, first, why is corporate welfare OK while welfare for people is an abomination?
Second, is it just possible that the fact that the oil companies are raking in record profits means that we really don’t need to subsidize them so much?
And if we were serious about weaning ourselves from foreign oil, why did exclude SUV’s and pickup trucks from the CAFE standards?
And finally, if we would just let oil get more expensive, rather than subsidizing it, the increased price would cause reduced consumption, which would do more than anything else to reduce our need for foreign oil.
In short, it’s not so much that I suspect those tax dollars are being spent on “jobs I don’t like” as that they’re being used to create excessive profits. Remember, American companies are sitting on record hoards of cash.
Now I’m sure someone reading this is going to say “make oil more expensive? Are you crazy?!” But don’t forget the “magic of the marketplace!” Make oil more expensive, and the market will respond with more and more efficient vehicles. Result? Less dependence on foreign oil, AND we’d be on the leading edge of efficient engine design.
I think what we are saying is that our congressional delegation is not doing its job in bringing home the pork.
But it’s really hard to bring home that much pork, you stick a small military base in Nebraska and bam you get a big boost to the per-capita federal spending in Nebraska. With high population states like NY you would need hundreds of military bases to make the same dent. Also we don’t always welcome the things that the federal government wants to do in spending its money, where some other states take anything as long as it brings in money.
Would the NYC region want a giant military base located down there including a live ammunition bombing ranges? How about a base to house our nuclear bomber fleet?
“Well, first, why is corporate welfare OK while welfare for people is an abomination?”
It’s not. You call it corporate welfare others call it “stimulus” same thing.
“Second, is it just possible that the fact that the oil companies are raking in record profits means that we really don’t need to subsidize them so much? ”
The most efficient and profitable companies are the ones you want to help create more jobs. And since we need more domestically produced energy it is a no brainer.
“And finally, if we would just let oil get more expensive, rather than subsidizing it, the increased price would cause reduced consumption, which would do more than anything else to reduce our need for foreign oil.”
And the resulting high energy prices would unfairly hurt the lower income people.
Walker, almost everything is made from oil or using oil. It is not just about gas prices.
“AND we’d be on the leading edge of efficient engine design.” We are now, even with record high gas prices nobody wants to buy them. You can’t force people to buy what they don’t want.
Now, I wonder if the massive bailout given to banks largely located in NYC will impact our per-capita federal dollars. I did notice that the bonuses on wall street this year are projected to be the biggest in history, bigger than in the go go 90’s bigger than in 2005 at the height of the bubble. Given that, given all of those billionaires and multimillionaire Wall Street guys making more than they ever in the past it might be a hard sell to say that New York needs more federal dollars than Mississippi the poorest state in the Union.
Paul,
“You call it corporate welfare others call it “stimulus” same thing.” But when Democrats call spending on Education “stimulus” and/or “investment,” Republicans call it “excessive government spending.”
“The most efficient and profitable companies are the ones you want to help create more jobs.” _Are_ they creating jobs with those record profits, or just creating record executive pay and stock dividends? Apparently most US companies are sitting on their cash, or buying back shares, to elevate their share prices (read: fatten executive comp).
“You can’t force people to buy what they don’t want.” Well, Paul, yes you can. It’s called the CAFE standards, Corporate Average Fuel Economy regulations. ( http://en.wikipedia.org/wiki/CAFE_standards ) Actually, it’s similar to the light bulb efficiency standards law that Bush signed that Republicans are busily trying to hang on Obama.
As for “high energy prices … unfairly hurt[ing] the lower income people,” yes, that’s true, but if we didn’t keep building millions upon millions of gas guzzlers, poor people wouldn’t be stuck driving them every time fuel prices spike and rich folk go trade in their Hummers for hybrids. So in the long run, even the poor would be better off. We went through all this in the seventies, but apparently we didn’t learn a thing.
Mervel, NYC wouldn’t want a nuclear bomber base, but that’s not the issue because NYC has a great private-sector economy. However, they stole our nuclear bomber base at Plattsburgh, remember? But kept open many bases at points south and west.
“”You call it corporate welfare others call it “stimulus” same thing.” But when Democrats call spending on Education “stimulus” and/or “investment,” Republicans call it “excessive government spending.””
None the less it is money spent to create jobs. Personally I don’t care what you call it, but I suggest we “invest” in the best places that it can create jobs, preferably in the private sector where they will also help pay into the federal treasury .
“_Are_ they creating jobs with those record profits, or just creating record executive pay and stock dividends? ”
Both, and again they all add revenue to the federal treasury.
Thanks we can discuss this more tomorrow if we still have interest.
“Personally I don’t care what you call it, but I suggest we “invest” in the best places that it can create jobs, preferably in the private sector where they will also help pay into the federal treasury.”
Paul, there are long-term and short-term investments. American business has become terribly focused on the short-term thanks to their executive compensation practices. Education spending is an incredibly important long-term investment with a huge pay back ten to twenty years out. AND it adds to the tax revenues now (teachers pay taxes), while, given the number of companies that turn massive profits but pay little or no income tax, one can’t make the same assumption about money spent to subsidize highly profitable businesses.
OA, just how do you define “fixed”? Appalachin/Grapes of Wrath type poverty doesn’t exist to speak of anymore for those who are on the gov’t dole. I know we have “poverty” but our impoverished tend to own several televisions, a satellite dish, a pool, a couple of ATV’s, a decent car or 2, have plenty of time to surf porn and grow pot. Those are the poor poverty stricken folks in my area. So in that sense, the Great Society did work. But the costs are staggering and it hasn’t stopped the growth of the programs or the number of programs. It hasn’t slowed the application for welfare or assistance in it’s various forms, in fact we’ve increased the forms of assistance. That’s all well and good, we should be helping those that are unable to help themselves. We should give a hand up to those that need it temporarily. But there should also be a goal to get them off assistance ASAP, to root out the fraud, to get some work out of those who refuse to.
You and I differ on our assessment of what a successful program is. I accept that and I understand where you are coming from. But we’re getting to the point where we’re going to have to say “Enough!” with massive, enormously expensive gov’t programs that breed off shoot programs and pull more and more dollars from the The Forgotten man- the taxpayer.
“This is really getting into a very interesting set of questions. How does one instill a sense of personal responsibility in others? ”
I don’t how to do it, but refusing to put people in a position where they HAVE to develop personal responsibility or maybe go a little hungry isn’t working either. We can help those that truly need it, but we can’t continue to help those that refuse to try and help themselves.
Just a thought on those “excessive profits” that get complained about- The tax laws are written by our Congress. That’s the mechanism that allows corporations like GE to make hundreds of billions in profits and pay ZERO tax on it. The laws were written by Democrats AND Republicans to shelter their buddies, and themselves, form taxes. The wealthy take advantage for those laws and I suppose all of us would too. So it seems to me that we need to rid ourselves of the slimy politicians that wrote these laws and refuse to change them. A simple flat tax with no deductions or very limited deductions and a no tax bottom level would seem to be the answer to me. Say it was 15% and those earning under $25K were exempted from it. That gives the Federal Gov’t a base amount of money to work with and that’s as much as they should get barring national emergency.
Seems simple to me. The better the country does, the more the gov’t gets. That would encourage gov’t to support business here I would think.
oa good point.
Indeed the West and South have done very well in bringing home the military pork.
But looking at Brains original post, I don’t think that getting NYS a better cut of federal spending is something that Gov. Cuomo can impact. To really balance our needs to get the 90cents on the dollar that he is talking about which is a good goal in my opinion, you need to have a more effective congressional delegation. It will always be an uphill battle just due to the fact that many New Yorkers earn in a way that we pay more in Federal Income tax than states without the big big earners do, but we could do better in getting some of this back.
For example this whole homeland security hardening the Northern Border idea is really about bringing home federal dollars to NYS. Those are the kind of federal spending projects we are talking about to really drive the per-capita federal spending amount up in NYS. The rooftop highway would be another, expanding Fort Drum would be another, I guess more Wall Street Bailouts would also work?
Also old people and sick people help, preferably older and also sick; the largest federal spending programs send money to do this so the more of those people you have the higher per-capita federal spending will be.
Now that I think about it; I don’t know if getting a bunch of federal spending back is always a net positive for the state, what is it saying about your state?
Yes, Mervel, I think you’re onto something– let’s go for the Mississippi solution! Our new Governor’s new budget puts us right on track to rake in the big federal poverty dollars. Especially when those education cuts really take full effect in ten years or so.
Bret said, “the Great Society did work” and “That’s the mechanism that allows corporations like GE to make hundreds of billions in profits and pay ZERO tax on it. The laws were written by Democrats AND Republicans to shelter their buddies, and themselves, form taxes”.
Thank you. We agree twice. By the way, one of Obama’s big advisers is tax-evading GE CEO Jeffrey Immelt.
From the Huffington Post
“The richest 25 hedge fund managers made a bit less money last year.
But don’t cry too hard. Collectively, this privileged class of traders did quite well for itself — raking in some $22 billion in compensation, according to AR Magazine.
Topping the charts in hedge fund pay was John Paulson, who reportedly earned $4.9 billion…”
From Wikipedia: “In December 2009, the New York Times reported that Paulson had profited during the financial crisis of 2007 by betting against synthetic collateralized debt obligations (CDOs). To help protect these bets, Paulson and others successfully prevented attempts to limit foreclosures and rework mortgage loans…
Paulson’s firm in figured in court fillings when the SEC sued Goldman Sachs: “It is alleged that Paulson selected a portfolio of CDOs that were likely to default, against which Paulson & Co. had already sold short or would sell short.” (Wikipedia)
Paulson was worth approximately $12.4 billion as of the end of calendar year 2010. He is representative of the folks that our supposedly Democratic new Governor chose not to seek additional tax revenue from in the new budget of which he is so proud.
bret writes (my emphasis):
wow. i’m going to go out on a limb here and guess that that’s way off base, and a really horrible thing to say reflective of a perverted worldview to boot. but hey, to be fair, lemme ask, bret, do you actually know any of the people you’re talking about? i confess there aren’t a lot of poor people i know very well, but the ones i do know are nothing like you describe.
This is an example of the Ronald Reagan’s infamous “welfare queen” meme:
“During his 1976 presidential campaign, Reagan would tell the story of a woman from Chicago’s South Side who was arrested for welfare fraud:
‘She has eighty names, thirty addresses, twelve Social Security cards and is collecting veteran’s benefits on four non-existing deceased husbands. And she is collecting Social Security on her cards. She’s got Medicaid, getting food stamps, and she is collecting welfare under each of her names. Her tax-free cash income is over $150,000.’ ” (Wikipedia)
Talk about class warfare. Examples such as this may exist, but to characterize the poor this way generally is inaccurate and irresponsible.
Poor people in the US do have some consumer items because they can rent them for outrageous prices. However most poor people in the North Country do not have nice things, the ones I know live in very substandard housing, have to go to food pantries to help feed their children and have no real security in this life. A family can usually get between 150-350 in food stamps, some rental assistance, HEAP and rarely cash assistance. The total per month is probably around 500-900 per month total. It is hard to raise a family on that. Some do abuse the system, most do not. Many grew up in severe poverty and are raising their children in poverty. Most poor in the North Country and in the US are women and children.
Poverty programs are not the problem. Most federal spending does not go to poor people.
HT-yes, I do, quite a number of them in fact. I also know more that aren’t quite as bad as the examples I mention but I don’t know of any adult going hungry or living in a box other than by choice. Bleeding hearts are no answer to the issue. There is no dignity or character in being on assistance. I know plenty of people, even relations, that get HEAP, Medicare, Disability, Food Stamps etc that drive nicer cars than we do, have funds to go to the Mall, get nails glued on, go tanning, go to the casino, etc.
The people that need help are the working poor. They’re trying. They’re working. The ones that could work but refuse to and game the system? Let them starve. Take their kids, and let them starve.
Bret, so what proportion of the poor who you know personally would you let starve?
And let’s say we did that, and hunger motivated them to go in search of employment. Who do you know who would hire them. If they tried, hard, to find work, and no one would hire them, what would you do then?
A high portion of people who get food stamps and HEAP are working.
Now just because a family is poor does not make them any more noble than anyone else, there are immoral people among the poor just as there are among other groups. People do game the system, but that will happen in any situation.
There are two programs out there that really do help the working poor those are HEAP and Child Health Plus. Both are great programs and needed in the North Country. Many people simply can’t afford health insurance no matter how hard they work and Child Health Plus lets them buy insurance for their kids at affordable prices.
Some of this stuff is simply generational. It is how you were raised and your grandma was raised and sometimes people see no other life they can have.
Bret’s favorite song?
http://www.azlyrics.com/lyrics/deadkennedys/killthepoor.html
not to put too fine a point on it, but this is kind of insane. bret’s policy solution is to just break up families, never mind that that would surely be more expensive (b/c the state would then have to somehow arrange for the care of the children). is that what a real conservative is supposed to think about this?
Walker, if they are TRYING to find work, if they show that they aren’t just gaming the system, fine, help them out. I’m talking about the slugs that haven’t done a thing for themselves, that are scamming the system. I have just as much compassion for someone that’s trying as anyone else. I’ve been hungry and poor, it’s not some mental exercise. And for the elderly I have no hesitation for helping some poor schlub that actually believed SS and Medicare would take care of them in their golden years. That was a lie told to them and they bought it through no fault of their own.
Maybe I’ve had the bad luck to be exposed to more of these people than some of you. That’s possible, but it’s not a reason to continue a cycle that teaches and even encourages people to live off their neighbors. Just TRY to contribute, that’s all I’m asking for, just TRY.
HT- do you want to end the cycle or not? Sometimes you have to invest funds to stop waste. I am intimately familiar with the costs to the kids and families and the whole Social Services system. It’s not cheap, but turning out more and more people that don’t know they can do better, that have kids they never teach they can do better, is not an answer. It’s an investment in failure and one that will cost more and more and more as time passes. A conservative would look at the issue and see it’s doomed to failure.
The bigger picture is creating an environment where jobs are created, preferably decent jobs, though I doubt we’ll see the days of our fathers return. You aren’t going to encourage growth by creating stifling taxation and an immense gov’t that requires ever more dollars from our pockets, dollars that our gov’t is devaluing even now, costing us more and more to maintain our standard of living.
What we need to do is find a balance point between our social safety net and giving away the farm.
“Paulson’s firm in figured in court fillings when the SEC sued Goldman Sachs: “It is alleged that Paulson selected a portfolio of CDOs that were likely to default, against which Paulson & Co. had already sold short or would sell short.” ”
Big surprise. I wouldn’t sell short on something that I thought was going to gain in value. That is the whole point. Nothing mysterious here.
I can’t believe this discussion is still alive! Walker, what is the point of that whole comment? I am just glad that this guy has his business and his home (2 actually) in New York!