Monday, May 06, 2002

Does Paul Krugman read Eschaton?


Seems like it...


But what's really outrageous is the claim that the heartland is
self-reliant. That grotesque farm bill, by itself, should put an end to all
such assertions; but it only adds to the immense subsidies the heartland
already receives from the rest of the country. As a group, red states
pay considerably less in taxes than the federal government spends
within their borders; blue states pay considerably more. Over all, blue
America subsidizes red America to the tune of $90 billion or so each
year.

And within the red states, it's the metropolitan areas that pay the taxes,
while the rural regions get the subsidies. When you do the numbers
for red states without major cities, you find that they look like
Montana, which in 1999 received $1.75 in federal spending for every
dollar it paid in federal taxes. The numbers for my home state of New
Jersey were almost the opposite. Add in the hidden subsidies, like
below-cost provision of water for irrigation, nearly free use of federal
land for grazing and so on, and it becomes clear that in economic
terms America's rural heartland is our version of southern Italy: a
region whose inhabitants are largely supported by aid from their more
productive compatriots.