From The Hill:
The COVID-19 pandemic and resulting economic shutdown have wreaked havoc on state budgets. Certain state leaders, including New York Gov. Andrew Cuomo and Illinois Senate President Don Harmon, have urged Congress for an injection of federal funds to save state finances. Senate Majority Leader Mitch McConnell (R-Ky.) rightly responded that such a policy would constitute a federal bailout of spendthrift, big government states at the expense of fiscally conservative states. Progressives glibly replied that it is actually “blue states” that bail out “red states.” This sophomoric switcheroo gets more than its fair play in the media but rests on several false equivalencies and bad logic.
Those arguing that “blue states” are the ones bailing out “red states” point to the federal “balance of payment” ratios, or federal tax dollars collected compared to federal money received, on a state-by-state basis. The states with lowest balance of payment ratios (collecting more federal taxes than they receive in federal funds) are Connecticut, New Jersey, Massachusetts and New York. The states with the highest balance of payments (receiving more federal funds than they collect in federal taxes) are Kentucky, New Mexico, Mississippi and West Virginia. Therefore, “blue states” are bailing out “red states” — or so they say.
Continue at The Hill
As usual, the real story is different.
Most of the Blue States have high income taxes and more high earners. Contrary to left wing propaganda, the wealthy pay a great deal of income tax.
So high populations of high earners results in higher amounts of tax revenue from Blue States.
As for the amount of Federal money that the States receive back, that is mostly a function of Federal spending — all done with borrowed money.
Many very expensive Federal projects are built in low-population Red States. This skews the numbers a lot.
So for the most part, the reason that *some* Red States get more Federal tax dollars than *some* Blue States is that the high-population Blue States are overtaxed and the Federal government spends too much on Red States.
And that’s the sandwich without the baloney.