Fantastic proposal. As you admit, it may not be reasonably likely to ever happen, but we should continue to explore the possibilities. You should send this to Elon Musk and JD.
I wish that I could get this article in front of them. My guess is that they have not even thought about this possibility. Federal dominance in domestic affairs is for all practical purposes now bipartisan.
I am skeptical about whether Trump's "Department of Government Efficiency" plan will actually make much of a difference. Inefficiency is not the real problem; it is over-centralization. Let the states worry about government efficiency for domestic programs.
I think Vivek Ramaswamy would immediately see the promise of my proposal though.
To make this happen, I think that the proposal would need to be a keystone of a Presidential campaign agenda so it is clear that the American people have given the President a mandate to implement these sweeping reforms.
I think that for this to work states would need to be allowed to restrict the access of new residents to social programs, capital and skilled labor are likely to move over time to low tax states (unless they get enough benefit from the public goods paid with those taxes) but the process is likely to take enough time to allow states to adjust, the movement of welfare beneficiaries could be extremely fast if some states abolish social spending while others keep it
Remember that for programs other than Social Security, Medicare, and DI, the states already have a great deal of discretion on benefit levels. This will not change.
Under my plan, the states can do whatever they want for all social programs. They just cannot completely exclude new residents from Social Security and Medicare.
My guess is that there will be a huge variety of variations in levels of benefits and taxation.
States already effectively do a temporary restriction on new residents for "out-of-state" tuition for public universities. Some of that makes sense, but taken to the extreme, that would be very bad.
I could particularly see that as a problem for housing and medical care for the homeless. People who do not work and may never work are more likely not to care about the local jobs base. But states already can do what they want in that domain. I can also see this being a bigger issue for the disabled as they are not allowed to work.
I am skeptical that the working poor and working class would flock to states with generous social spending if it means higher taxes, fewer jobs, and more expensive housing. At the very least, it is very much against their material interest.
Problem I see is that red states don't carry their weight when it comes to balance of payments. Conservatives in those states would be in for a rude awakening. Also, having lived in Alaska, that place would basically empty out. Historically national governments subsidize remote places like Alaska and Hawaii so that a population stays there and legitimizes sovereignty. https://rockinst.org/issue-areas/fiscal-analysis/balance-of-payments-portal/
Would you favor the federal government eliminating payments to the state governments, which is currently about $1.1 trillion per year? Or we could make federal income taxes significantly less progressive?
Thanks for the comment, but I am not really sure what "red states don't carry their weight when it comes to balance of payments." The linked article is not really about Red state policy.
Almost all states are mandated to have a balanced budget.
Yes, citizens in Blue states pay higher federal tax rates, but that is because the federal tax system is highly progressive, not because of Red state policies. Citizens in Red states generally have lower incomes so they pay lower tax rates, but again that is due to due to federal government policy, not Red state policy.
Yes, at one point Alaska and Hawaii were subsidized to increase population and legitimize sovereignty, but I don't think American sovereignty in those areas are at risk anymore.
I am not sure what would happen to the Alaskan population under my proposal as it is a bit of a geographical outlier. My guess is that the migration pattern of American citizens migrating from Blue states to warmer Red states will continue or accellerate.
Yes, if my proposal were passed Red State legislatures would have to make difficult choices regarding social programs and higher taxes. My guess is that they would prefer making that choice rather than have the federal government make it for them.
Look at the link. Balance of payments refers to federal $ to a state vs federal $ generated by that state. Red states are under water by that measure generally more than blue states. If you send programs back to the states, red states will have much more to make up.
And like I said, without federal dollars, Alaska will pretty much empty out. Lived there for 20 years and worked in various industries, all of whom were very dependent on federal $
You are misinterpretting what the linked article shows:
In the top right of the graphic it states:
"Balance of payments refers to the amount of federal spending distributed in a state (expenditures) minus the amount paid to the federal government by a state's residents and businesses (receipts)
The vast majority of this is federal expenditures to individuals (not state governments) and taxes paid by citizens (not state governments) to the federal government. All of this is determined by federal government policy, not state government policy.
My point is that citizens in Red states will likely be very happy to make those choices even if it means raising state taxes rather than the current system where they have no choice.
Your link is actually a good reason for citizens of Blue states to support my proposal. By your own "balance of payments" logic, they would come out ahead.
We disagree, but that's fine. Red states will not find themselves "happy", they won't realize what they had until it's gone.
You don't address this redistribution effect that heavily favors red states right now. Without that your argument is missing a big chunk of credibility.
Something tells me that you are not actually worried about protecting the citizens of Red states. And they will have plenty of opportunities to change their policies if they do not like the outcome. They also have the ability to relocate to Blue states with more expansive social programs.
You obviously want to maintain an expansive welfare state and force citizens of Red states to have it regardless of whether they want it.
If I were writing an article about geographical redistribution of income by the federal government, then you would be correct.
That, however, is not the topic of my article. If you want to write a Substack article on the topic, go right ahead. Post a link and I will be happy to comment.
While it is clear that a lot of governance needs to be returned to the states, there are couple of major issues how you formulate it:
- Commerce and the military depend heavily on reliable interstate commerce. Goods and People need to get from Los Angeles to Denver, etc. Seems unlikely that the (poorer) inland states would be willing and able to maintain the infrastructure needed.
- Lots of people spend their working years in high cost of living areas and retire to low cost of living areas. The elderly pay very little taxes and use lots of services. Without some sort of transfer mechanism Some states would have ether have to have high tax rates or drastically lower services.
- The nation as a whole has vested interest in the health and strength of each individual state. Some of the poorer states would not be able to maintain basic services. Their economies would collapse and they would become failed states. High crime and economic refugees would be a drag on other states.
Provision of interstate commerce is already enshrined in the Constitution, so I don’t see it being a problem. Inland states already maintain their infrastructure, although admittedly some do a better job than others. I live in an “poor” inland state, and the infrastructure is excellent.
Regarding retirees, yes, this is a problem, but I don’t see it being a deal breaker. As I mentioned in the article, states should not be allowed to deny retirement benefits to new residents. Florida and Arizona would likely get a new fiscal burden, but they both have fairly dynamic economies. Few other states have an excessive number of retirees, and retirees pay sales and property taxes.
Regarding your last paragraph, poorer Red states do not want high taxes or high social spending, while wealthy Blue states want both. That is unlikely to change. There are no poor states that want an expansive welfare state.
The states already has wide variations in Medicaid and anti-poverty spending and that has not caused economic collapse.
I don’t see how any of my proposals will lead to economic collapse and become failed states. The government does not cause economic growth, and the USA prospered under federalism for 140 years.
The federal government currently does very little to fight crime. That is overwhelmingly a local issue, and it will remain so under my proposal.
The reality is that most of the issue domains that you mention are already run by states without a problem. The states already maintain basic services.
Disagree with your politics, but I appreciate you thinking through all the aspects. I'd love to spend more time thinking about Washington state politics and less about national. A few objections that I think you elided:
Does Florida cut benefits or raise taxes? They'd need to cut to pay for Medicare and SSI, but that would royally piss off their voting base. They want a way to make NY pay for retirees who move there, but this leaves them...bankrupt?
How do we do disasters? Every state on their own? Again, Florida.
The Federal government is uniquely positioned to tax. If you double California taxation, as they would, it gives strong incentives to lie about residency, and strong incentives for some states to track citizens much more carefully/creepily.
Vice versa if collecting benefits. I'm going to live in California to retire with very long vacations to Florida.
Bonus proposal: add a VAT, federally run with local rates. Newish tax that each state has to debate and set rates on. Not residency based (mostly) and not subject to prop 13 in CA or no income tax in Washington.
Local media. Nonexistent in some states so no one will really know what's happening in state houses. Our city still has a local paper and I still find it hard to follow local politics sufficiently.
Florida can do what they want. That is the beauty of Federalism each state legislature and governor can do what they want, and they can change their mind if they get bad results.
As for natural disasters, yes. I think the costs even out in the long run and it gives incentives for states to plan ahead for the type of disasters that affect their region. I know that is not ideal, but I do not see a reason to make an exception in this domain. It is not like FEMA has been a particularly well-run organization.
As for lying about residency, that does not seem to be too difficult to catch. Remember that social benefits and taxes already vary quite a bit by state. The biggest change would be for retirees.
As for California retirees moving to Florida, that is why I added a clause to force states to honor retirement benefits for American citizens living in their state. Remember that Florida would also get benefits from retirees spending in their states and paying sales and property taxes. That would partially offset the cost.
I am not sure what the advantage of a new VAT would be. Why add a new federal tax when their spending declines so much? I would prefer to let the states decide. If we are talking about overhauling taxes, I would prefer a land value tax.
As for local media, I think transferring virtually all domestic programs to the states would reinvigorate state politics and encourage the media to cover it more. The federal government would exclusively be about foreign affairs, so it would decline in media attention. I don’t local media needs to be exclusively by newspapers.
I did not mention it in this article, but I think we can push federalism even harder by turning every metro area with a population over 2 million into its own state:
1) How would states handle recessions? Would they have savings they would need to draw on when revenue fell unexpectedly short? Is that realistic? Would Keynesian economics still be possible during recessions? I'm concerned your plan would cause longer deeper recessions by preventing government from spending, as I don't expect state governments will actually prepare for recessions adequately or respond correctly even if they can.
2) I think you underestimate the mobility of retirees and the poor. They will adapt and crowd states with social welfare benefits. If states can't deny or slash those benefits I don't expect them to be able to pay for the influx of people
Thanks for the comment. Those are all legitimate concerns.
1) It is really not part of my proposal because I do not think that states should be forced to do it by the federal government, but I think that it is wise policy for every state should have a "rainy day" where excess revenues are saved for the next recession.
I also think that states have to break the habit of rapidly accelerating spending during periods of economic growth and then cutting it during periods of recession (i.e. right when it has the worst impact). This is counter-cyclical.
So that is what I would do if I were somehow elected Governor.
The reality is that the cuts made during the recession are always far less than the increases made during the economic boom, so the cuts are nowhere near as deep as they seem.
I am also a big skeptic of stimulus packages. I think they work great for getting politicians elected and giving them excuses to ram through their agenda, but they do not help long-term economic growth. I go into more detail in this article.
2) Remember that for programs other than Social Security, Medicare, and DI, the states already have a great deal of discretion on benefit levels. This will not change.
The clause that prohibits states from denying Social Security and Medicare to retirees does not apply to social welfare benefits to non-retirees.
As for the elderly, the only two states that really have an excessive number are Arizona and Florida. Both have booming economies, so I really don't think this will be a huge problem. I am open to suggestions on how to deal with it, if the relocation of seniors does become a problem. People also want to live in states with low taxes and a growing economy, so I am not sure that everyone will flood generous Blue states. If anything, it will likely be the opposite.
A simpler solution to the deficit is just to require the federal government to run a surplus and not borrow except in extenuating circumstance. The surplus is used to handle emergencies and changes in the tax base.
Your solution has more advantages in the quality realm. It could increase quality of service although I don't see big advantages over other solutions in the pure savings realm.
The advantage of saving is that states currently require balanced budgets, which is not the case now for the federal government. It also makes it plausible for the federal government to run a surplus and gradually lower the national debt as a percentage of GDP.
As I mentioned in the article, a balanced budget on the federal level is part of the plan and I would also be in favor of a required 1% of GDP surplus during times of economic growth.
I am very leery, however, if the federal government shared the surplus with states. It will inevitably come with strings attached that undermine the concept of federalism.
If I understand your proposal correctly, the Federal government keeps all the revenue it is currently collecting, while shifting all the costs to the states. That looks great on the Federal books (trillion dollar surpluses!), but it means states must dramatically increase the share of income they currently take from their residents in order to cover the costs that have been shifted to them. The net result is a much higher share of GDP going to State and Federal governments combined. Perhaps the Federal government could reduce its share of national income by the amount of the costs it is shifting to the States in order to give them room to raise taxes to cover the new costs they have assumed. But then the Federal government would no longer be running a surplus.
Yes, that is exactly my proposal, except your last sentence is incorrect. Just add up the numbers to verify.
As I mentioned in the article, the amount of programs being transferred is so large that the federal government could cut federal taxes and still run a budget surplus. It is possible for the federal government to keep current tax rates and run a multi-trillion dollar surplus. I seriously doubt that they would do so.
Yes, if states want to maintain all the current federal programs, they would need to raise their taxes. That is very likely what Blues states will do and that is their right. Most likely Red States will not accept all the programs and will accept lower social spending in return for lower taxes. Everyone wins, because the elected state legislatures could choose their own path.
And the states would get revenue from FICA for Social Security, parts of Medicare and Disability Insurance.
Note also that in your paragraph towards the end that starts with "My proposal would allow", you mean to say California and Texas might 'secede', not 'succeed'.
Overall decentralization is a good idea. It would move more of the corruption from Washington to the state capitols where it should be easier to observe and counter. The next step would be to publicly finance elections -- you never want decisionmakers to raise money from those they are making decisions about. That's why corporate purchasing agents cannot accept gifts from suppliers.
Your problem remains the same one we face on abortion. This was a simple solution to that problem - let the people rule themselves. What do you do with people who are unwilling to leave well enough alone and let others under the federal umbrella have their own sets of laws?
It worked so well with slavery, for instance. Couldn't leave well enough alone to die out on its own, so we had to kill three quarters of a million men to create essentially the same system under another name after the war.
The progress on the abortion issue has been pretty amazing since it was freed from the strictures of Roe, with measures passing in very unusual places guaranteeing that very right. Give culture more time, and it'll ultimately reunify the body politic on this point. But will the forces of authoritarian control give it that time? And will they leave well enough alone on every other issue?
Fantastic proposal. As you admit, it may not be reasonably likely to ever happen, but we should continue to explore the possibilities. You should send this to Elon Musk and JD.
Thanks for your support.
I wish that I could get this article in front of them. My guess is that they have not even thought about this possibility. Federal dominance in domestic affairs is for all practical purposes now bipartisan.
I am skeptical about whether Trump's "Department of Government Efficiency" plan will actually make much of a difference. Inefficiency is not the real problem; it is over-centralization. Let the states worry about government efficiency for domestic programs.
I think Vivek Ramaswamy would immediately see the promise of my proposal though.
To make this happen, I think that the proposal would need to be a keystone of a Presidential campaign agenda so it is clear that the American people have given the President a mandate to implement these sweeping reforms.
So it is too late for 2025. Maybe 2029...
I think that for this to work states would need to be allowed to restrict the access of new residents to social programs, capital and skilled labor are likely to move over time to low tax states (unless they get enough benefit from the public goods paid with those taxes) but the process is likely to take enough time to allow states to adjust, the movement of welfare beneficiaries could be extremely fast if some states abolish social spending while others keep it
Remember that for programs other than Social Security, Medicare, and DI, the states already have a great deal of discretion on benefit levels. This will not change.
Under my plan, the states can do whatever they want for all social programs. They just cannot completely exclude new residents from Social Security and Medicare.
My guess is that there will be a huge variety of variations in levels of benefits and taxation.
States already effectively do a temporary restriction on new residents for "out-of-state" tuition for public universities. Some of that makes sense, but taken to the extreme, that would be very bad.
I could particularly see that as a problem for housing and medical care for the homeless. People who do not work and may never work are more likely not to care about the local jobs base. But states already can do what they want in that domain. I can also see this being a bigger issue for the disabled as they are not allowed to work.
I am skeptical that the working poor and working class would flock to states with generous social spending if it means higher taxes, fewer jobs, and more expensive housing. At the very least, it is very much against their material interest.
Problem I see is that red states don't carry their weight when it comes to balance of payments. Conservatives in those states would be in for a rude awakening. Also, having lived in Alaska, that place would basically empty out. Historically national governments subsidize remote places like Alaska and Hawaii so that a population stays there and legitimizes sovereignty. https://rockinst.org/issue-areas/fiscal-analysis/balance-of-payments-portal/
Would you favor the federal government eliminating payments to the state governments, which is currently about $1.1 trillion per year? Or we could make federal income taxes significantly less progressive?
Both together would eliminate the problem.
Thanks for the comment, but I am not really sure what "red states don't carry their weight when it comes to balance of payments." The linked article is not really about Red state policy.
Almost all states are mandated to have a balanced budget.
Yes, citizens in Blue states pay higher federal tax rates, but that is because the federal tax system is highly progressive, not because of Red state policies. Citizens in Red states generally have lower incomes so they pay lower tax rates, but again that is due to due to federal government policy, not Red state policy.
Yes, at one point Alaska and Hawaii were subsidized to increase population and legitimize sovereignty, but I don't think American sovereignty in those areas are at risk anymore.
I am not sure what would happen to the Alaskan population under my proposal as it is a bit of a geographical outlier. My guess is that the migration pattern of American citizens migrating from Blue states to warmer Red states will continue or accellerate.
Yes, if my proposal were passed Red State legislatures would have to make difficult choices regarding social programs and higher taxes. My guess is that they would prefer making that choice rather than have the federal government make it for them.
Look at the link. Balance of payments refers to federal $ to a state vs federal $ generated by that state. Red states are under water by that measure generally more than blue states. If you send programs back to the states, red states will have much more to make up.
And like I said, without federal dollars, Alaska will pretty much empty out. Lived there for 20 years and worked in various industries, all of whom were very dependent on federal $
You are misinterpretting what the linked article shows:
In the top right of the graphic it states:
"Balance of payments refers to the amount of federal spending distributed in a state (expenditures) minus the amount paid to the federal government by a state's residents and businesses (receipts)
The vast majority of this is federal expenditures to individuals (not state governments) and taxes paid by citizens (not state governments) to the federal government. All of this is determined by federal government policy, not state government policy.
I did look at the link.
My point is that citizens in Red states will likely be very happy to make those choices even if it means raising state taxes rather than the current system where they have no choice.
Your link is actually a good reason for citizens of Blue states to support my proposal. By your own "balance of payments" logic, they would come out ahead.
Win-win.
We disagree, but that's fine. Red states will not find themselves "happy", they won't realize what they had until it's gone.
You don't address this redistribution effect that heavily favors red states right now. Without that your argument is missing a big chunk of credibility.
Something tells me that you are not actually worried about protecting the citizens of Red states. And they will have plenty of opportunities to change their policies if they do not like the outcome. They also have the ability to relocate to Blue states with more expansive social programs.
You obviously want to maintain an expansive welfare state and force citizens of Red states to have it regardless of whether they want it.
At least be honest in your arguments...
If I were writing an article about geographical redistribution of income by the federal government, then you would be correct.
That, however, is not the topic of my article. If you want to write a Substack article on the topic, go right ahead. Post a link and I will be happy to comment.
It's too bad you can't take criticism in good faith. I was going to follow your substack but it's not going to be worth my time obviously. Good luck
While it is clear that a lot of governance needs to be returned to the states, there are couple of major issues how you formulate it:
- Commerce and the military depend heavily on reliable interstate commerce. Goods and People need to get from Los Angeles to Denver, etc. Seems unlikely that the (poorer) inland states would be willing and able to maintain the infrastructure needed.
- Lots of people spend their working years in high cost of living areas and retire to low cost of living areas. The elderly pay very little taxes and use lots of services. Without some sort of transfer mechanism Some states would have ether have to have high tax rates or drastically lower services.
- The nation as a whole has vested interest in the health and strength of each individual state. Some of the poorer states would not be able to maintain basic services. Their economies would collapse and they would become failed states. High crime and economic refugees would be a drag on other states.
Thanks for the comment.
Provision of interstate commerce is already enshrined in the Constitution, so I don’t see it being a problem. Inland states already maintain their infrastructure, although admittedly some do a better job than others. I live in an “poor” inland state, and the infrastructure is excellent.
Regarding retirees, yes, this is a problem, but I don’t see it being a deal breaker. As I mentioned in the article, states should not be allowed to deny retirement benefits to new residents. Florida and Arizona would likely get a new fiscal burden, but they both have fairly dynamic economies. Few other states have an excessive number of retirees, and retirees pay sales and property taxes.
Regarding your last paragraph, poorer Red states do not want high taxes or high social spending, while wealthy Blue states want both. That is unlikely to change. There are no poor states that want an expansive welfare state.
The states already has wide variations in Medicaid and anti-poverty spending and that has not caused economic collapse.
I don’t see how any of my proposals will lead to economic collapse and become failed states. The government does not cause economic growth, and the USA prospered under federalism for 140 years.
The federal government currently does very little to fight crime. That is overwhelmingly a local issue, and it will remain so under my proposal.
The reality is that most of the issue domains that you mention are already run by states without a problem. The states already maintain basic services.
Disagree with your politics, but I appreciate you thinking through all the aspects. I'd love to spend more time thinking about Washington state politics and less about national. A few objections that I think you elided:
Does Florida cut benefits or raise taxes? They'd need to cut to pay for Medicare and SSI, but that would royally piss off their voting base. They want a way to make NY pay for retirees who move there, but this leaves them...bankrupt?
How do we do disasters? Every state on their own? Again, Florida.
The Federal government is uniquely positioned to tax. If you double California taxation, as they would, it gives strong incentives to lie about residency, and strong incentives for some states to track citizens much more carefully/creepily.
Vice versa if collecting benefits. I'm going to live in California to retire with very long vacations to Florida.
Bonus proposal: add a VAT, federally run with local rates. Newish tax that each state has to debate and set rates on. Not residency based (mostly) and not subject to prop 13 in CA or no income tax in Washington.
Local media. Nonexistent in some states so no one will really know what's happening in state houses. Our city still has a local paper and I still find it hard to follow local politics sufficiently.
Thanks for the comment.
Florida can do what they want. That is the beauty of Federalism each state legislature and governor can do what they want, and they can change their mind if they get bad results.
As for natural disasters, yes. I think the costs even out in the long run and it gives incentives for states to plan ahead for the type of disasters that affect their region. I know that is not ideal, but I do not see a reason to make an exception in this domain. It is not like FEMA has been a particularly well-run organization.
As for lying about residency, that does not seem to be too difficult to catch. Remember that social benefits and taxes already vary quite a bit by state. The biggest change would be for retirees.
As for California retirees moving to Florida, that is why I added a clause to force states to honor retirement benefits for American citizens living in their state. Remember that Florida would also get benefits from retirees spending in their states and paying sales and property taxes. That would partially offset the cost.
I am not sure what the advantage of a new VAT would be. Why add a new federal tax when their spending declines so much? I would prefer to let the states decide. If we are talking about overhauling taxes, I would prefer a land value tax.
https://frompovertytoprogress.substack.com/p/can-a-land-value-tax-make-housing
As for local media, I think transferring virtually all domestic programs to the states would reinvigorate state politics and encourage the media to cover it more. The federal government would exclusively be about foreign affairs, so it would decline in media attention. I don’t local media needs to be exclusively by newspapers.
I did not mention it in this article, but I think we can push federalism even harder by turning every metro area with a population over 2 million into its own state:
https://frompovertytoprogress.substack.com/p/an-american-republic-of-citystates
This would make the entire Seattle metro area its own state.
1) How would states handle recessions? Would they have savings they would need to draw on when revenue fell unexpectedly short? Is that realistic? Would Keynesian economics still be possible during recessions? I'm concerned your plan would cause longer deeper recessions by preventing government from spending, as I don't expect state governments will actually prepare for recessions adequately or respond correctly even if they can.
2) I think you underestimate the mobility of retirees and the poor. They will adapt and crowd states with social welfare benefits. If states can't deny or slash those benefits I don't expect them to be able to pay for the influx of people
Thanks for the comment. Those are all legitimate concerns.
1) It is really not part of my proposal because I do not think that states should be forced to do it by the federal government, but I think that it is wise policy for every state should have a "rainy day" where excess revenues are saved for the next recession.
I also think that states have to break the habit of rapidly accelerating spending during periods of economic growth and then cutting it during periods of recession (i.e. right when it has the worst impact). This is counter-cyclical.
So that is what I would do if I were somehow elected Governor.
The reality is that the cuts made during the recession are always far less than the increases made during the economic boom, so the cuts are nowhere near as deep as they seem.
I am also a big skeptic of stimulus packages. I think they work great for getting politicians elected and giving them excuses to ram through their agenda, but they do not help long-term economic growth. I go into more detail in this article.
https://frompovertytoprogress.substack.com/p/a-better-stimulus-package
2) Remember that for programs other than Social Security, Medicare, and DI, the states already have a great deal of discretion on benefit levels. This will not change.
The clause that prohibits states from denying Social Security and Medicare to retirees does not apply to social welfare benefits to non-retirees.
As for the elderly, the only two states that really have an excessive number are Arizona and Florida. Both have booming economies, so I really don't think this will be a huge problem. I am open to suggestions on how to deal with it, if the relocation of seniors does become a problem. People also want to live in states with low taxes and a growing economy, so I am not sure that everyone will flood generous Blue states. If anything, it will likely be the opposite.
A simpler solution to the deficit is just to require the federal government to run a surplus and not borrow except in extenuating circumstance. The surplus is used to handle emergencies and changes in the tax base.
Your solution has more advantages in the quality realm. It could increase quality of service although I don't see big advantages over other solutions in the pure savings realm.
The advantage of saving is that states currently require balanced budgets, which is not the case now for the federal government. It also makes it plausible for the federal government to run a surplus and gradually lower the national debt as a percentage of GDP.
As I mentioned in the article, a balanced budget on the federal level is part of the plan and I would also be in favor of a required 1% of GDP surplus during times of economic growth.
I am very leery, however, if the federal government shared the surplus with states. It will inevitably come with strings attached that undermine the concept of federalism.
If I understand your proposal correctly, the Federal government keeps all the revenue it is currently collecting, while shifting all the costs to the states. That looks great on the Federal books (trillion dollar surpluses!), but it means states must dramatically increase the share of income they currently take from their residents in order to cover the costs that have been shifted to them. The net result is a much higher share of GDP going to State and Federal governments combined. Perhaps the Federal government could reduce its share of national income by the amount of the costs it is shifting to the States in order to give them room to raise taxes to cover the new costs they have assumed. But then the Federal government would no longer be running a surplus.
Yes, that is exactly my proposal, except your last sentence is incorrect. Just add up the numbers to verify.
As I mentioned in the article, the amount of programs being transferred is so large that the federal government could cut federal taxes and still run a budget surplus. It is possible for the federal government to keep current tax rates and run a multi-trillion dollar surplus. I seriously doubt that they would do so.
Yes, if states want to maintain all the current federal programs, they would need to raise their taxes. That is very likely what Blues states will do and that is their right. Most likely Red States will not accept all the programs and will accept lower social spending in return for lower taxes. Everyone wins, because the elected state legislatures could choose their own path.
And the states would get revenue from FICA for Social Security, parts of Medicare and Disability Insurance.
Admittedly I am not a Progressive, but I do not believe that my policies are zero sum.
What? I honestly have no idea what you are talking about. Please keep your comments to the topic of the article.
Worth thinking about.
Note also that in your paragraph towards the end that starts with "My proposal would allow", you mean to say California and Texas might 'secede', not 'succeed'.
Thanks. I was battling against spell-checking through that entire section. I guess spell-check won!
It is corrected now.
Overall decentralization is a good idea. It would move more of the corruption from Washington to the state capitols where it should be easier to observe and counter. The next step would be to publicly finance elections -- you never want decisionmakers to raise money from those they are making decisions about. That's why corporate purchasing agents cannot accept gifts from suppliers.
Your problem remains the same one we face on abortion. This was a simple solution to that problem - let the people rule themselves. What do you do with people who are unwilling to leave well enough alone and let others under the federal umbrella have their own sets of laws?
It worked so well with slavery, for instance. Couldn't leave well enough alone to die out on its own, so we had to kill three quarters of a million men to create essentially the same system under another name after the war.
The progress on the abortion issue has been pretty amazing since it was freed from the strictures of Roe, with measures passing in very unusual places guaranteeing that very right. Give culture more time, and it'll ultimately reunify the body politic on this point. But will the forces of authoritarian control give it that time? And will they leave well enough alone on every other issue?
I am not optimistic.