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PaperclipPerfector  3mo ago (text post)   3830 thread views

Small-Scale Question Sunday for August 18, 2024

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A large portion of how the US federal governments get states to enforce various national-level rules and standards (despite the anti-commandeering doctrine) is by threatening to withhold various federal funds. So, how hard would it be for a state to basically say “screw it” and try going without federal funds? Or a county (or similar) to try going without federal or state funds?

(I ask because this was a proposal put forth by Auron MacIntyre with one of his guests in a video (IIRC) last month as part of a broader discussion the need to build “parallel institutions.” It might just be that I’m living in a state with one of the worst economies in the US, and that I’m receiving something like ~$3k per month in various forms of federal and state aid (the single largest component being Medicaid covering my meds), but this doesn’t seem very plausible to me. (In the video, there was mostly some vague acknowledgements that it would require “belt-tightening,” and the closest Auron got to addressing the disabled was a comment about convincing people “you don’t need welfare, the church will provide.”))

There are still states holding out on the Obamacare Medicaid expansion funds, which the states are only on the hook for 10-ish percent. And IIRC SCOTUS loosely capped the amount of allowed funding coercion. So it does happen, but nobody seems to be turning down highway funding these days.

Alaska has a huge net taker rate.

Louisiana went without federal highway funding for years to have a lower drinking age, although that ended in the nineties. Texas also refuses some federal HHS dollars over something to do with contractor stances on abortion(it boils down to planned parenthood getting the money but the statement in the rule is different).

The real question is 'can states which are net payers on some tax or other stop paying the tax when refusing federal dollars', to which the answer is likely no- Louisiana didn't even try to stop paying the federal gas tax.

The real question is 'can states which are net payers on some tax or other stop paying the tax when refusing federal dollars', to which the answer is likely no

My understanding was that the argument is to keep paying federal taxes while getting nothing back, and figuring out how to make it work through "parallel institutions" and "belt-tightening," though I imagine they were mainly thinking of right-leaning states with better economies than Alaska's.

Texas could, in theory, simply go without federal highway money, given the size of our budget surplus. Giving up federal money en masse would require getting rid of popular services, like CHIPS, unless we figured out a way to wriggle out of federal taxes and collect them ourselves.

The situation is likely similar for states like Utah, Wyoming, Oklahoma, etc.

unless we figured out a way to wriggle out of federal taxes and collect them ourselves.

Again, the idea isn't that the state "wriggles out of federal taxes" — it's that they keep paying them, and then collect the taxes for the now-defunded popular services themselves — your "parallel" system — on top of those taxes. Or else, yes, cut the programs.

So, it seems that you're saying that even for the red states with the best economies, the requisite "belt-tightening" necessary would simply be far more than most anyone is willing to endure (yet). Is that right?

Yes. Texas has the biggest red state economy and is the second wealthiest per capita(behind Wyoming), and is both not a low tax state and dependent on federal block grants to maintain its budget(the federal block grants are less than federal tax receipts from Texas- an independent Texas with the same economy could maintain services with a lower taxation level than current day- but they also make up like 1/3 of the state budget).

Again, states can go without their highway funding or family planning money or other small potatoes for a while if they’re otherwise fiscally healthy. But rejecting all federal funding is a bridge too far; even a strong GOP trifecta with gerrymandering can’t get rid of CHIP and Medicaid and section 8 and food stamps and cut infrastructure spending and etc etc.

While there’s room for taxation to go up in most red states, there isn’t room for tax receipts to rise by a third without massive economic growth.

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