Why do inequality-obsessed Californians want to feed at the federal trough?

A bunch of Facebook friends who (a) live in the Bay Area, and (b) are constantly harping on how income and wealth inequality are America’s most critical problems, have been expressing panic regarding articles such as “Congressional Republican threats to Caltrain funding could cripple Bay Area’s growth”:

Caltrain is seeking $647 million in federal funds, but the state’s entire Republican Congressional delegation sent Secretary of Transportation Elaine Chao a letter demanding that she freeze funding until California did a new audit of high-speed rail.

I asked “The Bay Area isn’t sufficiently wealthy and productive to pay for its own trains? Why does a Walmart employee in Alabama have to pay for a Google or Apple executive’s train?” This led to the following exchange:

  • Inequality decrier: You have it reversed, California pays more in federal taxes than it gets back. California -today – is subsidizing Walmart’s employees in Alabama by paying for things like food stamps that a large fraction of Walmart employees get as benefits.
  • Me: Somehow the state is still rich. So if one of your concerns is income inequality wouldn’t you to want to see as much federal spending as possible directed to needier (more “vulnerable”) states?
  • Inequality decrier: The funds that are being withheld for this project are to upgrade commuter train service to SF – we have a huge problem with traffic, and investing in solutions is the smart thing to do. California (and Oregon) had the most robust economic growth of any state in 2016 and is the wealthiest state by far, there’s a reason for that: the State’s policies have led to world-beating industries over and over again. Consider branching out beyond the Murdoch’s Fox News for your views on California. [plus a bunch of stuff about how Kansas, having implemented Republican-proposed policies, is suffering an economic decline]
  • Me: All the more reason for wealthy California to pay for its own train and leave scarce federal funds to help the vulnerable in Kansas! Maybe there is some $600+ million project the Feds could find in Kansas that would boost their economy.
  • Inequality decrier: You’re saying that California should not receive federal highway funds even though we pay taxes for just that purpose? In what bizarre, delusional world does that make sense? And where have I heard the phrase ‘no taxation without representation’ before?
  • Me: If we can agree that inequality is a problem then none of the richer-than-average states should be favored with huge federally-funded infrastructure projects. (My own home of Massachusetts would be similarly excluded.) When equality has been achieved then the federal spigots can be turned back on!
  • Inequality decrier: Federal highway funds don’t exist to solve inequality. There are real investments that need to be made for our country to work. One of the reasons that California has done well is that we make infrastructure investments, this one serves silicon valley, one of the most productive regions in the world. Worse, using federal funding to settle political scores, which this pretty clear is, is destructive of the nation as a whole.
  • Me: As noted originally, if Silicon Valley is so productive, why can’t they pay for this train so that federal dollars are freed up to be spent in a struggling region of the U.S.? If inequality is not a concern, of course, we could go in the opposite direction. Give all of the money to New York, LA, SF, and DC because they are the richest and therefore most productive.
  • Inequality decrier #2: California pays more than their due, and red states take far more than their contributions. It is Californians that are subsidizing Red States, not vice versa, as you claim.

First, I’m not sure about these calculations that California is subsidizing other states. When Medicaid dollars are spent to buy pharmaceuticals in Alabama nearly all the money may find its way to a San Diego pharma company. However, let’s assume for the sake of argument that California is subsidizing these other states. If inequality remains, shouldn’t the subsidy be increased? If the individually wealthy should be hectored with demands that they pay their “fair share” why not collectively wealthy folks such as those in Silicon Valley?

Readers: Can the above Californians be considered logically consistent? How can they simultaneously decry inequality, think of themselves as tremendously financially successful, and try to maximize their share of federal handouts?

[At least some of my neighbors in Massachusetts express a similar desire to receive funding from less wealthy Americans. “Boston arts leaders signal alarm over possible federal cuts” (Boston Globe):

The heads of Boston’s largest art museums have joined a wave of local arts leaders arguing for the importance of federal funding after recent reports that the White House could be seeking to ax the Corporation for Public Broadcasting, the National Endowment for the Arts, and the National Endowment for the Humanities.

Meanwhile the New England Foundation for the Arts is lobbying on Capitol Hill and enlisting board members to speak with people close to the Trump administration.

“There is too much at stake here,” said Cathy Edwards, executive director of the New England Foundation for the Arts. “The cultural sector is a major employer. Arts jobs are real jobs, and to pull back on this sector of the economy now just makes no sense.”

In Massachusetts, the NEA provided nearly $920,000 in fiscal year 2016 to the Massachusetts Cultural Council for grants and services. That’s in addition to the roughly $2.7 million the endowment made in direct grants to arts groups, and the roughly $1 million it provided the New England Foundation for the Arts.

Anita Walker, executive director of the Massachusetts Cultural Council, said NEA grants are essential to many of the estimated 62,000 Bay Staters who work in the arts for another reason, as well.

Any time that an insurance company (or Medicaid/Medicare) pays $200,000/year or $375,000/year for a drug made in Massachusetts (examples), there is a large wealth transfer from the rest of America. Why can’t we fund our own arts?]

19 thoughts on “Why do inequality-obsessed Californians want to feed at the federal trough?

  1. I liked the idea that the sole reason of paying federal taxes was to get all the money back via federal funding programs.

    As a specific proposal from the Federal government, California should enroll into a special border infrastructure development and human resource transfer program, named after Hon. D.J. Trump.

    Also, as a reaction to a nearly obligatory ‘no taxation without representation’ misrepresentation, may I suggest that Californians double their federal tax rates for the privilege of having 4 senators instead of 2.

  2. I can’t speak for California or the Bay Area, but the issue could be the ability to raise revenue / tax.

    Toronto, for example, has a number of transit problems – significant road congestion, a growing population, and limited public transit development since the completion of the Bloor-Danforth subway in the 1960s.

    Although it is relatively affluent, its revenue is largely limited to property taxes – it is hard for Toronto to fund public transit expansion. The province recently blocked the city from introducing road tolls on two city-owned highways ( https://www.thestar.com/news/city_hall/2017/01/27/councillors-blast-short-sighted-decision-to-block-tolls-on-gardiner-dvp.html ).

    As its tools for raising taxes are limited, Toronto has to seek handouts for transit infrastructure from other levels of government.

  3. I’m sure Google/Facebook/Apple have enough $$$ in the bank to cover upgrading the train, and maybe adding some subway lines to their campuses to boot. The Feds should cut a deal with Apple to let them re-patriate some of their foreign earnings if they’ll spend it on Bay Area mass transit infrastructure.

    I regularly commute past Apple’s giant donut, and am dreading the traffic jam when it opens next month.

  4. @Richard: Toronto can introduce extra property levies on foreign owners, like Vancouver did. The foreigners won’t complain because 1) they can’t vote, and 2) they don’t want anyone looking into the source of their money.

    Maybe California can do the same too?

  5. Upgrade the infrastructure of Silicon Valley with hillbilly money so the IT giants can continue to hide their profits offshore at greater leisure. Seems fair.

    Should states subject to Californian boycots, like Indiana, North Carolina and others, have to pay for the infrastructure of Sand Hill Road billionaires and their princelings? To make the company-sponsored Uber rides smoother, one supposes. Also seems fair, and it implements a small measure of social justice too.

  6. If the entire system of paying taxes to the feds only for them to skim off part of it to pay federal employees at some agencies and then return amounts of it back to the states to spend is absurd. Quit taking the money, keep at the state level and just pay for your projects directly.

  7. @tom – it would obviously have to be Bill Nye the Science Guy. He would play the perfect tv engineer on top of which he is a science guy.

  8. Mixing topics which are relatively unrelated makes a muddle of both; perhaps that’s the intention. If not, it would be more clear to address each issue separately and then note their potential interactions.

    Just because a person is concerned about about one issue (e.g. inequality) does not mean that every government policy they approve of must address that one issue. Just because there are federally funded roads does not mean that a Walmart worker in one state is paying for the roads in another state.

  9. Yes, we in the Bay Area should pay for the Caltrain upgrade. However, because of how the Bay Area is structured and taxes, there’s no straightforward way to do that within our current government. Yes, we need to fix that. That is unlikely to happen quickly. Also, there are numerous rich old landowning Californians who don’t want the economic growth that comes with improved infrastructure.

  10. Yz: So the Bay Area, despite being Deplorable-free, is politically paralyzed? What kind of a model is that for Rust Belt and Southern voters of inferior mental capacity and education whom Californians like to lecture on what are the proper choices?

  11. Isn’t there a rather severe homeless problem in the Silicon Valley/Bay area? (Speaking of income and wealth inequality.)

    Has anyone considered addressing that or does the train take priority?

  12. Yes, we are politically paralyzed
    It is not a good model, though I lack the experience of living in other areas to be able to judge whether it’s better or worse than average. People do seem to keep coming here, despite the dysfunctions.

    Tony: SF created a department of homelessness services last year. Im not sure what it will accomplish but at least the problem is being acknowledged.

    There is very strong local opposition to building more housing in most Bay Area communities, and also a lack of stated belief in supply and demand by some progressive politicians.

  13. I agree that the “above Californians” are not being logically consistent. But you’re assuming a contrived reductionist perspective. In actual politics, the choice is not between “federal gov’t funds regional mass transit and arts” and proportionate tax cuts. The choice is more about the particular balance of payoffs we allocate from an ever-expanding federal budget. Given a true option, I would prefer to have many classes of funding removed from the federal government and corresponding tax cuts. But if I’m choosing instead whether marginal additional budget is spent on growing the military 10% or providing a mix of better healthcare assistance to poor people and various art, transit, space exploration and other nice-sounding programs, I will choose the latter. Not because I think the government will be most efficient at doing all those things (though more treatment for mental health and substance abuse would probably have high ROI), but because inefficiencies on those things are preferable to spending that increases the risk we’ll go to war.

    That said, I could be wrong in my expectations of ROI on these and other investments. It would be great if government and democracy could encourage rational evaluation of those choices and educate people about their consequences. But we’re too taken up in the partisan battles to do much of that. Which does make me wonder if the nation is too big and diverse to have a coherent federal government.

  14. Also: though this wasn’t true 10 years ago, Apple and Google (and probably Facebook but I don’t know for sure) employees don’t require caltrain because they have shuttles, which have expanded dramatically in the last years, with some amount of political pushback and protest. The people who use caltrain work at smaller and/or poorer and less established companies. Some high school students also use caltrain to get to school.

    I’m also not sure that an upgraded, higher-capacity, less polluting caltrain would lead to more inequality than the status quo. I suspect it might be the opposite.

    Upon reflection, I’m not sure that “politically paralyzed” is really the right term used to describe the Bay Area. There is a strong disagreement and conflict among Bay Area voters about what kind of society we want to be. There is also some amount of disagreement about what the consequences of various policies would be, but I have a feeling that the actual disagreement about consequences (i.e. people being stupid) is less strong than disagreement about goals. I’m not aware of a comparable region that is objectively better at resolving similar challenges. So I’m not sure if “politically paralyzed” is the right term–we just might have policies that lead to outcomes that I think are bad.

  15. @Shimon: All government policies involve trade offs between various impacts. Even the very smallest government possible for our complex society would inevitably include policies working at cross purposes in some areas. Therefore, it is not necessarily logically inconsistent to support two government policies which work in opposite directions on some particular issue. One could logically understand and accept the negative effects of a policy in one area in order to obtain the positive effects from that policy in another area. The contradiction implied by this post is tenuous and not well supported by the evidence provided in the post or the discussion thread, but people often do not understand the very real and significant trade offs and contradictions involved in the government policies they support. However, argument by clever reductionist sound bite does not generally work to improve that understanding even if it does produce an occasional pithy insight (which is one reason I read this blog).

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