In November, after securing a tax break for his wealthiest constituents in the House version of President Bidens Build Back Better plan, Rep. Josh Gottheimer (D-NJ) used a familiar argument to defend raising the cap on the state and local tax (SALT) deduction. Thanks to this bill, we scored a big round against the Moocher States and we will cut taxes for families across New Jerseys Fifth District.
It was not the first time that Gottheimer, or other elected Democrats, had discussed federal revenue in this way. Yet the concept of moocher states is about the most tone-deaf Democratic message since Hillary Clinton uttered the phrase basket of deplorables. Directed at red states that voted for Trump, the framing is embarrassingly elitist, cutting against the spirit of inclusive social and economic development that has defined the Democratic Partys better legacies. For a party agonizing over how to appeal to voters outside its loyal constituencies, it threatens to undermine any outreach to less prosperous regions and distract from the considerable investments that the American Rescue Plan and the recently signed bipartisan infrastructure framework contain.
This discourse had been brewing long before Trump signed the Tax Cuts and Jobs Act of 2017, though the TCJA sharpened the rhetoric. To offset a portion of lost revenue in an otherwise grossly regressive law, congressional Republicans capped the SALT deduction at $10,000, which increased taxes on upper-income homeowners in blue-leaning states, where taxes are much higher than in other parts of the country. Resentment in affluent middle and upper-class districts, particularly in New York, New Jersey, and California, may have helped fuel the blue wave in the 2018 midterms, when Democrats assailed the cap and emphasized, correctly, that key blue states already pay more in federal taxes than they receive back in benefits through the federal budget.
The concept of moocher states is about the most tone-deaf Democratic message since Hillary Clinton uttered the phrase basket of deplorables.
While the SALT changes sparked outrage in Democratic-leaning states (New Yorks then-Gov. Andrew Cuomo called it political retaliation through the tax code), the growing awareness in Democratic ranks that blue states subsidize red states can be traced back to the late 1970s. Research on the federal revenue generated by the states began in the late 1970s in the office of New Yorks Democratic Sen. Daniel Patrick Moynihan, and was later continued by the Taubman Center for State and Local Government at Harvard. Annual reports by the Rockefeller Institute of Government and WalletHub have been at the forefront of this discussion, using frameworks that distinguish givers and donors from getters and dependencies.
These reports and other economic data illustrate that high-population blue counties, along with the Northeast and West Coast more generally, have been engines of growth, while most of the South and Midwest receive higher levels of federal aid. Conservative states that arent dependencies typically have quite small populations or have benefited from local booms in energy production, as in North Dakota. Texas, the largest red state by population, also benefits from oil and gas, in addition to a more diversified economy and multiple thriving, large cities. (It is perhaps not a coincidence that the Republican co-sponsor of Democratic Rep. Bill Fosters Payer State Transparency Act is from Texas.) Bluer states with older populations, such as Maine and Vermont, do receive more aid per capita through Medicare.
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While blue and red states are far from being perfectly polarized between donor and dependent states, liberal critiques of the general imbalance raise important points. Between ideological opposition to taxing local elites and a broadly low-income tax base, red states have fewer means to raise revenue for public schools, infrastructure, social services, and other forms of public administration. As much as most Republicans remain committed to the Norquist-and-Koch-inspired long game of destroying the foundations of the welfare state and economic democracy, they seem content, if not motivated, to milk higher earners in liberal regions to make up for perennial shortfalls.
In a certain light, one can understand the feeling of expropriation. But anger at Republicans trail of hypocrisy and deceit when it comes to tax and fiscal policies should not be translated into a politics of sectional stinginess, in part because we know how a similar dynamic turned out during the Progressive Era.
As white supremacist rule consolidated across the South in the two decades that followed Reconstruction, the main antagonism between the Republican-dominated North and the newly minted Democratic Solid South shifted from Black civil rights to national economic policy, which was based on high protectionist tariffs and the gold standard. Before passage of the 1913 federal income tax, the tariff regime was the leading source of federal revenue. By effectively compelling Americans to buy domestic products that were primarily manufactured in the North, the economies of Northern states continued their rapid development while much of the South languished.
It should be clear that gloating over regional economic success is not a perceptive political strategy but its antithesis.
Southern Democrats railed against the tariffs through the 1890s and early 20th century. Notorious white supremacist politicians, including North Carolinas Claude Kitchin, Alabamas Oscar Underwood, and Texass Joseph W. Bailey, linked their demand for a progressive federal income tax with the fight to lower tariffs. As historian Robin Einhorn has shown, Northern Republicans understood these Southern efforts as a post-Confederate attempt to take revenge against the North.
While Southerners appealed to economic populism in their attacks on Northern industry, Republicans defended capital accumulation in the manufacturing core as a result of prudent Northern thrift. National prosperity, they argued, was the result of industrious, upright constituents and a respectable middle class. Democratic efforts to pass an income tax were tantamount to highway robbery by rebel soldiers. Republicans, then, were implicitly justifying the regional imbalance of wealth distribution on account of the distinct character of each section, and thus, one could surmise, the morality and intelligence of a regions population.
For various political and economic reasons, the defense of high tariffs became untenable, and moderate and conservative Republicans under the Taft administration laid the groundwork for a federal income tax targeting the very wealthiest in order to preempt more progressive legislation. But the political victory would ultimately be President Woodrow Wilsons, whose election in 1912 was achieved through an emerging coalition of Northern industrial workers and Southern populists that would establish the electoral foundation of the New Deal. As a result of the 1913 legislation, New York alone paid more income tax than the entire South until the Second World War. By the Great Depression, the Democrats under Franklin Roosevelt had firmly become the party of progressive, redistributive economic policy. Tackling an economic crisis of vast dimensions allowed little room for overt sectionalism from either side, but more significantly, the old Republican appeal to protectionism was a dead end for the GOP to rebuild power.
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This history provides a few lessons for blue-state Democrats who are tempted to ridicule conservative states for their comparative economic weaknesses. It should be clear that gloating over regional economic success is not a perceptive political strategy but its antithesis. Todays dichotomy between deindustrialized rust belts and hinterlands and prosperous metropolitan hubs does not need to be agitated further with rhetoric that moralizes about federal contributions and local dynamism. This is especially true when the thriving states in question have been troubled by widening inequality, an affordable-housing crisis, and other inequities, just as Republican-dominated states before the New Deal realignmentmany of which are now bluewere similarly haunted by great disparities in wealth.
Liberals may be loath to admit it, but the idea of moocher states also echoes Ronald Reagans racist concept of welfare queens. While leading Democrats denounce racism, they have repeatedly faltered when it comes to addressing its structural causes. The reality is that, whether in the Midwest or the South, many reddish states contain significant Black and brown populations that loyally vote for Democrats but have seen little effort at the national-party level to both turn the tide of economic disinvestment and counter Republican efforts to gerrymander districts and slash social assistance.
These groups cant be blamed for the anti-government and reactionary politics that have prevailed in their states. While Bidens economic agenda, if fully realized, will help remedy the low-wage economy of poorer red states, action on voting rights has all but stalled in the Democratic Congress due to the lack of filibuster reform in the Senate. Meanwhile, structural factorsurban density, better infrastructure, and greater embeddedness in the global economyhave made the economic recovery more evident in blue states. Thus, moocher states rhetoric, even if aimed at Mitch McConnell and other Republicans, effectively writes off the social and political worth of people whose democratic rights are under severe threat, and who are still struggling to find security in a pandemic with no end in sight.
Moocher states rhetoric effectively writes off the social and political worth of people whose democratic rights are under severe threat.
Moreover, disparagement of states that receive more revenue than they generate does nothing to ameliorate Democrats mounting geographic disadvantages in the Electoral College, the House of Representatives, and state legislatures. Instead, taunts about moocher states effectively vilify entire state populations, which only provides more grist for right-wing populists who attack coastal and globalist elites. And they remind people in less dynamic and stagnant localities that the core regions of blue-state America have continued to pull ahead of the rest of the country since the Great Recession, all while deflecting attention from Republicans zealous drive to gut voting rights and consolidate one-party rule where they dominate.
Democrats like Gottheimer might fashion themselves as middle-class champions, but they end up attacking the dignity of poor and working-class people of all backgrounds in their quest for an equitable balance of payments. As movements for immigrants, racial justice, and climate policy continue to organize, rhetoric that separates deserving from undeserving Americans is likely to confound and alienate the Democratic base. More important, the Democratic effort to solve the moocher state problem boils down to a massive tax cut for wealthy blue-state residents, which just confuses the picture even more.
Blue-state tribalism, whether of Gottheimers flavor or a more liberal variety, is simply not at the center of the working-class and leftist politics that animates younger people across the country. And while Republicans show no substantive sign of combining far-right identity politics with economic populism, they will gleefully pounce on any Democratic measure that appears to disproportionately favor not only blue states but blue-state elitesespecially if it contradicts progressives vocal efforts to push the party toward social democracy. Elected Democrats itching to follow on Gottheimers rhetoric should remind themselves of why they want to govern and whom they want to represent. If they dont conclude that the idea of moocher states should be banished from liberal politics, there are even bigger problems in the Democratic Party than progressives thought.