Home > Uncategorized > The US Is Now Experiencing Its Own, Bizarro-World Version Of The Euro Crisis – Business Insider

The US Is Now Experiencing Its Own, Bizarro-World Version Of The Euro Crisis – Business Insider

The US Is Now Experiencing Its Own, Bizarro-World Version Of The Euro Crisis – Business Insider.

 

Today New Jersey Governor Chris Christie delivered a historic tirade blasting fellow RepublicanJohn Boehner for refusing to hold a vote on aid for Hurricane Sandy.

The raw anger and emotion was like something from out of a movie, but beyond the obvious points, Chris Christie brought up one fact about the US economy that really should get a lot more attention than it does.

Rich states like New Jersey, New York, and California (which frequently get blasted by conservatives for having high taxes and big government) pay a lot more in federal taxes than they get back from the federal government. While Republican states, with their low taxes and small governments, get more back than they pay in.

This map demonstrates that phenomenon. The ones shaded blue pay in more than they get back. Texas is the only “blue” state here that doesn’t vote Democratic.

fiscal transfer

Ezra Klein

Anyway, it’s the system of intra-state transfers that makes the United States a functioning union, and it’s the reason that we’re not like the Eurozone.

The US states and the various Eurozone countries are actually similar in that they can’t print their own money, and have to strive to balance their books, and if they don’t, markets may lose confidence in them. But the difference is that the rich states are permanently bailing out the poor states, a mechanism which doesn’t exist formally in Europe (it exists on an ad hoc basis).

Not only that, but there are mechanisms to balance things out, when there’s a slump.

Although Florida currently pays in more than it receives, during the collapse, it got a big benefit.

 

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