California Gov. Arnold Schwarzenegger has made a habit these last several years of using his annual budgets and state-of-the-state addresses to rail against alleged inequities in how the Golden State is treated by Washington, D.C. His state, Mr. Schwarzenegger complains, receives only 78 cents in federal aid for every dollar it sends to Washington, but gets no relief from federal mandates. The implication is clear: California should get more of its “own” money back to help close its multibillion dollar deficits.
There’s a lesson for other states in Mr. Schwarzenegger’s pique, but it isn’t what you might think. Californians — and other states grappling with deficits — should take a hard look at their own spending habits, rather than lining up at the federal trough and exclaiming, À la Oliver Twist, “Please sir, I want some more!” Massachusetts is also a “donor” state that sends more money to Washington than it gets back, but that fact alone does not prove any inequity exists. Nor would doling out more federal largess to donor states put an end to budgetary problems, in Sacramento, Boston or anyplace else.
The main reason a state becomes a net donor of funds to Uncle Sam is because it has high average incomes relative to the rest of the nation. Individuals and businesses in Massachusetts, California and other wealthy states simply pay more in federal taxes, while government assistance programs and formulas are designed to help those areas most in need — usually concentrated in states with a higher percentage of rural and low-income populations.
The reality, of course, is that Massachusetts is better off with its relatively wealthy and well-educated population, even if that means making do with less from Washington.