Stephen Moore: Red states should revolt against the ‘blue-state bailout’

Op-ed views and opinions expressed are solely those of the author.

Congressional Democrats are a runaway train with a drunk-on-power conductor in House Speaker Nancy Pelosi. No matter how much evidence pours in that the economy doesn’t need $1.9 trillion more in debt spending, the Pelosi locomotive keeps crashing down the track toward the financial cliff. Generations will have to pay for the joyride.

One of the worst features of the bill is the “blue-state bailout.” Twenty-one Republican governors and one Democrat are protesting the “biased” formula for allocating some $400 billion to the states. South Carolina Gov. Henry McMaster complained that the bill “punishes” states that did the right thing by keeping their economies and businesses open during the pandemic.

Florida Gov. Ron DeSantis said the bill “loots” the red states to pay for Democratic governors who have locked down their economies.

DeSantis has good reason to complain. Florida has a slightly higher population than New York, but New York gets $2,799 per person, or twice as much money as the $1,355 per person that Florida receives. In other words: Floridians are paying for New York Gov. Andrew Cuomo’s incompetence. That is precisely what is happening because the main factor in determining how much money each state gets is not its population but how high its unemployment rate has risen.

The three states that get the most significant share of the money are New York, California and New Jersey. These are three of the most liberal states with Democratic governors. That’s not a coincidence.

Blue Pennsylvania gets more per person than red Ohio. Blue Massachusetts and red Tennessee are about the same size, but somehow, Massachusetts receives $1.5 billion more in handouts. Connecticut gets twice as much bailout money as Utah, despite the fact that they are about the same size in population.

The governors’ joint statement declares: “A state’s ability to keep businesses open and people employed should not be a penalizing factor when distributing funds. If Congress is going to provide aid to states, it should be on an equitable population basis.”

But it isn’t. The way Congress passes out money is akin to assigning the highest performing students an F and the lowest performers an A. Maybe this is what the left means by “equity.” The last shall be first.

Most red states have already balanced their budgets. So how will Republican governors use their free money?

Here’s a better idea: Rather than squander the money with more bureaucratic spending and the risk of inflating a financial bubble in their state budgets in the years ahead, devote every penny of these funds to finance tax reform and relief. Eight states have no state income tax. Those states are Alaska, Nevada, South Dakota, Washington, Florida, Wyoming, Tennessee and Texas.

It would be rough justice for the blue-state bailout. If Democrats take the red states’ money, Republican governors should make their states income-tax-free havens and steal the blue states’ families and businesses. The states without income taxes create twice as many jobs as the high-tax blue states.

If you think California, Illinois, New Jersey and New York are melting down now, wait until they have to compete against regions of the country in the South and the mountain states with no income taxes.

Will the last person in New York please turn out the lights?

Stephen Moore is a senior fellow at the Heritage Foundation and an economic consultant with FreedomWorks. He is the co-author of “Trumponomics: Inside the America First Plan to Revive the American Economy.”

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