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Moocher State: South Dakota Receives $1.21 from Uncle Sam for Every $1 Paid In

An online friend writes that he’s having an argument with a right-wing radical about the blue-state subsidization of red states. The friend says his right-wing interlocutor tries to excuse South Dakota for its federal mooching by blaming the excess of federal expenditures over federal tax payments on the Indian reservations.

The primary point to make is that the interlocutor is trying to distract from South Dakota’s anti-government hypocrisy with racism. Our Lakota neighbors are as South Dakotan as the rest of us (arguably more so, since their ancestors in general moved here before ours did). We don’t get to segregate them from statistical analysis to avoid awkward truths about our inability to pay our own way.

But let’s look at the numbers:

The Rockefeller Institute of Government, whose interest in state-by-state federal revenues and expenditures can be traced back to Senator Daniel Patrick Moynihan’s response to President Gerald Ford’s portrayal of New York as a moocher state, says South Dakota receives $1.21 from Uncle Sam for every $1.00 we pay in to the feds. We’re far from alone in taking more than we give; in 2019, only eight states paid more in federal taxes than they got in federal benefits:

Rockefeller Institute of Government, balance of federal payments by state for 2019, "Who Gives and Who Gets?" retrieved 2021.04.22.
Rockefeller Institute of Government, balance of federal payments by state for 2019, “Who Gives and Who Gets?” retrieved 2021.04.22.

New York, New Jersey, Massachusetts, California, Connecticut, Minnesota, Colorado, and Utah all have a lot more high-income earners who thus pay big income taxes. The most generous states per capita are Massachusetts, New York, and New Jersey, where each resident pays in $1,439, $1,171, and $1,163, respectively, than each resident receives from Uncle Sam. Meanwhile, each of us poor South Dakotans (and in this mooching, all of us are poor South Dakotans) receives $2,037 more in federal benefits than we pay in federal taxes. So taxing the rich pays off for South Dakota!

RIG looks at these four big categories of federal expenditures:

  1. Direct payments to individuals. Three quarters of those expenditures are Social Security and Medicare. It’s not Indian populations that drive that figure up; it’s older populations. The average age of white folks is 58; the average age among American Indians is 26. The 20% of South Dakotans paying for groceries with Social Security and the 20% of South Dakotans kept alive and healthy by Medicare are not all Indians.
  2. Federal grants to state and local governments—Medicaid (including Medicaid expansion, which we’ve refused), highways, food stamps, education funding, which all goes to a lot more places than Pine Ridge and Eagle Butte.
  3. Contracts and federal procurement.
  4. Wages of federal workers, including all the soldiers and support workers at Ellsworth AFB.

According to RIG’s numbers, in 2019, South Dakota paid in $8.7 billion and received $10.5 billion, for a net take of $1.8 billion.

The entire budget for the Bureau of Indian Affairs in 2019 was $2.4 billion (none of which is paid out to individuals). If we received a slice of that budget proportional to our share of the national tribal population, we’d have gotten $38 million, 1.6% of the BIA budget and only 2.1% of our net “profit” in federal expenditures.

The excess of federal expenditures in South Dakota over federal revenues from South Dakota is roughly equal to the $1.83 billion of federal dollars supporting our our Legislature wrote into our next $5.09-billion state budget. Darn little of that money is going to the reservations.

The farm subsidies Kristi Noem’s white brothers keep collecting aren’t going to the reservations.

The $1.25B in CARES Act money and the new cash coming in the American Rescue Plan isn’t going just to the reservations. The ARP sends $195 billion in direct relief to states, $130 billion in direct relief to local governments, and only $20 billion to tribal governments.

The point is simple: the 62% of South Dakotans who voted for the continued dismantling of the federal government last November would see their own state collapse if it weren’t propped up by federal subsidies. Our roads would crumble, our schools close down, our elders go without groceries and pills, Box Elder evaporate, and Kristi’s brothers go bankrupt. Without that $1.8 billion excess, life for white South Dakota would look a lot more like the life on the reservations that we comfortably subsidized moochers try to ignore.

11 Comments

  1. Richard Schriever 2021-04-22

    His right-wing interlocutor is stereotypically spewing racist crapola. It’s the easier path to complicated financial analysis.

  2. bearcreekbat 2021-04-22

    Hidi-hidi-ho Jerry!

  3. Porter Lansing 2021-04-22

    Trying to excuse mooching by blaming it on Indians extrapolates to admitting that said mooching is embarrassing and wrong.

    Every month we citizens of New York, New Jersey, Massachusetts, California, Connecticut, Minnesota, Colorado, and Utah reach into out paychecks and send money to South Dakota to help pay it’s bills.

    We don’t ask you to raise taxes and pay your share but we do ask that you treat Indians with respect and recognize that Indians are the only true and valid culture gift SD has to offer to USA.

  4. Joe 2021-04-22

    ”In 2019, the white median age was 43.7 (not 58), compared to 29.8 for Latinos or Hispanics, 34.6 for Black residents, 37.5 for Asian Americans, and 20.9 for persons identifying as two or more races. The new census estimates show that, in contrast to other groups, white Americans sustained a natural decrease (an excess of deaths over births) of 1,073,206 over the 2010 to 2019 period. The loss was partially attenuated by the net gain of 1,056,594 white immigrants.”

    The US white population will continue to decline, largely because of a sharp drop in births. It will be awhile, though before the average age is 58.

    https://www.brookings.edu/research/new-census-data-shows-the-nation-is-diversifying-even-faster-than-predicted/#:~:text=In%202019%2C%20the%20white%20median,as%20two%20or%20more%20races.

  5. Mark Anderson 2021-04-22

    You know that the small population, large territory states are going to have a hard go of it. Montana and Idaho have attracted some wealthy California liberals. South Dakota was originally oversold to Scandinavians. Ole Rolvaag had it down. Better than Harvey Dunn, The Prairie is my Garden, is a great painting but again… Giants in the Earth is the real deal. We named our daughter from the most stable woman in that book. She thanked me sarcastically after reading it.
    She was born in Yankton and lives in Brooklyn. The money issue just shows that we are the United States, not the giver and taker states, although I have used that taker state argument too many times because conservatives seem to not even know where they live. They seem to want to flee to the wilderness even though they seem to need machine guns to hunt. Maybe they could work out deals with the reservations for that prime land.

  6. Donald Pay 2021-04-22

    Mark Anderson has a good view on this. I like him bringing in Rolvaag’s novel, which is a realistic portrayal of immigrant life on the plains. Geography, weather, soils, flora and fauna also limited Indigenous life on the Great Plains, but they adapted to the conditions. When European immigrants brought European ways over and tried to survive it was much more complicated. Lots of federal subsidies have been needed to make South Dakota semi-habitable, beginning, of course, with near genocide of the First Nations, and continuing on to half the state government’s budget, to say nothing of infrastructure.

  7. Cory Allen Heidelberger Post author | 2021-04-22

    And there’s the thing, Porter: I won’t say my friend’s racist interlocutor or Kristi Noem and her well-subsidized brothers are wrong to accept federal assistance if they will just admit that federal assistance for those who need it is an acceptable, useful aspect of a healthy civil society. They can’t deny the fact that they are getting federal assistance and that our state’s quality of life in general is sustained by federal assistance; they can’t deny the fact that South Dakota could not provide the roads and schools we need or sustain the level of economic activity we enjoy now without federal handouts and paychecks. Yet they lack the courage to admit that their politics are wrong and that we need socialism to stay alive. Worse, they then resort to racist scapegoating to gaslight themselves into thinking that they themselves are not part of the problem.

  8. John 2021-04-22

    There oughta be a law that reads ‘a state receives federal contributions in direct one for one proportion to its tax contribution’.
    The red states would rage, then they would have to become more progressive with their taxing and other policies.
    Blue states could give up their clamor for state and local tax (SALT) deductions since those states would recoup the lost revenue to pay for providing local services.

  9. jerry 2021-04-22

    Utility companies in South Dakota are gonna be coming after us for the storm in Texas, again. Watch your utility bills go through the roof again as they did when the first cold snap hit west river. Wanna see how a state can loose $800 million bucks in Texas?
    “Minnesota’s biggest gas companies are putting forward plans to recoup their expenses by adding a surcharge to customers’ bills, which the state utility commission would first have to approve. Normally, such adjustments to account for winter prices go into effect in September, but Minnesota’s biggest gas utility, Houston-based CenterPoint Energy, says the financial pinch is so great it wants to start billing customers next month — and charging them nearly 9 percent interest until the extraordinary costs are paid off.” Washington Post 4.22.21

    Count on another rate increase with the blessing of our PUC. Utility company’s are moochers that shut down renewable energy here. We could have huge farms to offset these kinds of surges, but no politico wants to reign in where their money comes from.

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