Rick Perry's Plan to Help Blue States and Big Corporations
Robert B. Reich

Of all the nonsense Texas Gov. Rick Perry spews about states' rights and the 10th amendment, his dumbest is the notion that states should go it alone. "We've got a great Union," he said at a Tea Party rally in Austin in April 2009. "There's absolutely no reason to dissolve it. But if Washington continues to thumb their nose at the American people, you know, who knows what might come out of that."

The core of his message isn't outright secession, though. It's that the locus of governmental action ought to be at the state rather than the federal level. "It is essential to our liberty," he writes in his book, "Fed Up! Our Fight to Save America from Washington," "that we be allowed to live as we see fit through the democratic process at the local and state level."

Perry doesn't like the Federal Reserve Board. He hates the Internal Revenue Service even more. He's even against federal income taxes. If he had his way, taxpayers would pay states rather than the federal government for all the services and transfer payments they get.

This might be a good deal for Texas. According to the most recent data from the Tax Foundation, the citizens of Texas receive only 94 cents from the federal government for every tax dollar they send to Washington.

But it would be a bad deal for most other so-called red states. On average, citizens of states with strong Republican majorities get back more from the federal government than they pay in.

Kentucky receives $1.51 from Washington for every dollar its citizens pay in federal taxes. Alabama gets back $1.66. Louisiana receives $1.78. Alaska, $1.84. Mississippi, $2.02. Arizona, $1.19. Idaho, $1.21. South Carolina, $1.35. Oklahoma, $1.36. Arkansas, $1.41. Montana, $1.47, Nebraska, $1.10. Wyoming, $1.11. Kansas, $1.12.

On the other hand, fiscal secession would be a boon to most blue states, those with strong Democratic majorities. The citizens of California -- harder hit by the recession than most -- receive from Washington only 78 cents for every tax dollar they send to Washington. New Yorkers get back only 79 cents on every tax dollar they send in. Massachusetts, 82 cents. Oregon, 98 cents.

In other words, blue states are subsidizing red states. The federal government is like a giant sump pump -- pulling dollars out of liberal enclaves like California, New York, Massachusetts and Oregon, and sending them to conservative places like Montana, Idaho, Oklahoma, Arizona, Wyoming, Kansas, Nebraska and the Old South.

As a practical matter, then, Rick Perry's fight to save America from Washington would actually save blue states from red states. So is Perry a closet liberal?

Hardly. Perry's approach would also pit each state against another. That's already happening when it comes to competition for jobs. As a result, state money that might otherwise be spent on schools or infrastructure has been funneled to corporations.

As governor, Perry has so far doled out $440 million of Texas tax dollars to companies that relocate in the state. His office says the cash subsidies have attracted almost 59,000 jobs so far.

This may be good for Texas but not for the states that lose the jobs lured there. Such handouts just rob Peter to pay Paul. Corporations are enriched by the state tax dollars that bribe them to relocate, but America as a whole doesn't gain new jobs. It's just a giant zero-sum game.

Worse yet, the tax dollars used in these kinds of bidding wars can turn into political slush funds for governors. Perhaps not coincidentally, the Dallas Morning News reported last October that more than $16 million of Perry's handouts had gone to companies with substantial links to some of his biggest campaign backers.

How responsibilities should be divided up between different levels of government is an important question. America has been struggling with it since our founding.

But one of the main reasons we relay on the federal government -- and don't pay attention to how much the citizens of our own state get back for every tax dollar we send to Washington -- is the idea that we're all in this together. E Pluribus Unum.

Making states rather than the federal government the locus of public action would pull us apart. The only beneficiaries of such zero-sum games would be the biggest companies that can play one state off against the other.