Mitt Romney says citizens who don’t pay income tax will never vote for him. But eight of the top 10 states with the highest number of nonpayers are red states.
Mitt Romney speaking to a room of millionaire donors: “There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what ….These are people who pay no income tax.”
Red States Addicted to Public Assistance
Red meat for Red states? Do you know what the irony of this position is? Red States are the ones that receive the lion’s share of welfare. They receive far more from the system than they put in. Who gets stuck with the bill? The people who voted for Obama.
The graph below shows what states pay into our welfare system and which states receive funds – notice anything striking? Notice the Red / Blue divide?
In fact, you can draw direct parallels to the debt crisis in Europe. Derek Thompson at the Atlantic explained it quite well in a recent article:
The difference between the U.S. and Europe is that when the Greek economy “pulls a Mississippi” (or perhaps I should say, when Mississippi “pulls a Greece”), the EU and the U.S. have 180-degree opposite reactions. Over here, we calmly write checks to Mississippi in the form of Medicaid and unemployment insurance, no questions asked. Europe has no comparable “Peripheraid” for its weak peripheral states. Instead, it has chaos.
Michael Cembalest, the JP Morgan analyst and author of the my favorite new chart about monetary unions– it’s not a crowded field, admittedly — passes along another clever graph which shows fiscal transfers (don’t worry, that’s just another word for money) between the rich California-Connecticut-Illinois-New Jersey-New York quintuple and poorer states like Tennessee. If similar, seamless transfers existed in the EU, the rich north would have to send to Portugal and Greece at least an additional 30 cents for every dollar they paid in taxes, year after year after year.
So what is the face of the chronic public assistance abuser? White, poor and southern.
Corporate Welfare State
If you think a lot of money goes towards public assistance, you wil be astounded to know he amount of money that goes towards supporting already profitable corporations.
Corporate welfare is the offer of special favors—cash grants, loans, guarantees, bailouts and special tax breaks—to specific industries or firms. The government doesn’t track the overall cost of these programs, but in 2008 the Cato Institute made an attempt and came up with $92 billion for fiscal 2006, which is more than the U.S. government spends on homeland security.
Below is a summary of some of the largest government subsidy programs (Source: The Wall Street Journal – Nov 8, 2011):
- The ethanol subsidy, benefitting mostly corn farmers and corporate fuel blenders in the Midwest, costs about $6 billion a year through an array of tax subsidies, tariffs and mandates while making fuel and food more expensive.
- The Federal Communications Commission recently approved spending up to $4.5 billion a year on a Universal Service Fund to bring broadband development to rural America. Broadband service is already rapidly expanding (with some $65 billion in private capital) absent the subsidies, but Internet providers and telecom firms pressed for the program. This is in addition to a $5 billion Broadband Technology Opportunities Program run by the Commerce Department.
- The Department of Agriculture’s Market Access Program helps advertise and promote the products of agribusinesses like the USA Poultry & Egg Export Council and Sunkist, the orange growers consortium that has received more than $800 million in the life of the program.
- Crop price supports for wheat, corn, rice, sugar and soybean farmers are supposed to help struggling family farms, but at least half the subsidies go to large and wealthy farmers and corporations. Congress can’t seem to wean the farm belt off these payments even though commodity prices and farm incomes are near an all-time high. Restricting those funds to farmers with incomes below $250,000 would save $30 billion over the next decade.
- Republicans love giving handouts to the nuclear industry. Over the years the feds have provided billions of dollars in loan guarantees and cut-rate insurance to nuclear plants, though even nuclear-utility executives say new plants may not make economic sense in a world of cheap and abundant natural gas. House Speaker John Boehner has backed a $2 billion Energy Department loan guarantee sought by USEC Inc. for a uranium-enrichment plant in Piketon, Ohio.
- The Export-Import Bank has a portfolio of $14.5 billion of outstanding loan guarantees to assist major U.S. exporters. More than 90% of the funds went to 10 corporations, including Boeing ($6.4 billion), General Electric ($1.043 billion) and Caterpillar ($424 million).
Moral of the Story
At the same time Republican Party talks about the evils of welfare, they are receiving the majority of welfare.