pol102:

“America’s fiscal union: The red and the black” | The Economist

The sequester is here! And this map is probably a good indication of what it means for you. The “redder” your state, the most likely you’ll be negatively affected by the sequester. Why? Because “redder” states get more money from the federal government than they send back in taxes.

I currently live in Mississippi. We’re going to be hit especially hard. Because, as this map shows, Mississippi runs a 254% deficit (as of 2009) in federal transfers. The state gets an estimated $2.47 for every federal dollar sent. 

Basically, think of the “redder” states as on a form of federal-to-state welfare. And since the cuts are going to all kinds of programs and services, they’ll likely hit those state hard. That means states like Mississippi will have two options: 1) Kick in more state revenue to make up for cut programs. 2) Lose the benefits of those programs. Since the many of the “redder” states are poorer than the “bluer” states (e.g. the median household income in Mississippi is $36,656 compared to $69,272 in Maryland), option #2 would simply mean falling further behind in terms of poverty, education, and health. But option #1 means collecting more taxes to make up the differences. And since states collect taxes less efficiently than the federal government, often through less progressive taxes, and will have to negotiate prices for goods and services from a weaker position, the pocketbook impact of taxes would be high. 

So let’s get our sequester on! Let’s find out just how little federal government voters really want. 

Feels like everyone’s heads have been spinning, to the point of fatigue, on the matter of the budget sequestration that went into effect with President Obama’s signature Friday night. It’s a nice change of pace, instead of arguing political benefits and machinations, to start getting some practical information about what sequestration will mean for the states.