Quote:
Originally posted by Tyrone Slothrop
If every state received $1.00 in federal spending for every $1.00 paid in taxes, there'd be no subsidy. The fact that some states receive much more of the largess than they pay for results in a subsidy.
And surely you get some benefit from military bases, but I don't think Senator Thune, Senator Johnson, and Representative Herseth were working so hard to save Ellsworth Air Force Base out of a commitment to the national commonweal.
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I think that you, like most politicians, underestimates the displacement effects of such spending. That is, if S.D. didn't have a military base, someone else would employ people there for something else, at least beyond the short term. (In the specific case of military installations, a defense contractor likely would hire many of them; more generally, they'd find jobs doing something else).
That said, your argument that only a 1:1 spending/taxing ratio would not create a subsidy is wrong for broader reasons. Some amount (and we can argue how much) of the $1.10 going to South Dakota has external benefits. Perhaps 5c, perhaps 10c (and it likely differs depending on the nature of the payment). But it benefits people outside of S.D. The value of that money is not fully captured by S.D.'ans (put alternatively, some of the value is reaped by the rest of the US).
Bottom line, you have to look at the types of spending and whether it can fairly be said to benefit just people in the state or benefit more broadly before you call it a subsidy.
