Republicans Want to Hold California's Tax Dollars Hostage

Republicans Are Bad With (Your) Money

“The greatest trick the devil ever pulled was convincing the world he didn’t exist.”

-- Keyser Söze (paraphrasing Baudelaire)

Evidently Republicans want to place conditions on disaster aid to California, to help victims of the Pacific Palisades fire. They haven’t been specific about what those conditions are yet, but one can make inferences from what they have said. According to the Washington Post:

Rep. Zach Nunn (R-Iowa) said California and other Democratic-controlled states would need to atone for “bad behavior” if they wanted federal assistance.

“We will certainly help those thousands of homes and families who’ve been devastated, but we also expect you to change bad behavior,” Nunn said Monday on Fox Business. “We should look at the same for these blue states who have run away with a broken tax policy. We want to be able to help our colleagues in New York, California and New Jersey, but those governors need to change their tune now.”

If the Republicans were talking about California State government subsidies for fire insurance on homes built in hazard zones, that might be worth discussing. It’d be a little bit weird, because Republicans are the ones who are constantly squawking about how the federal government should butt out of the business of the states. But if the federal government is paying for disaster relief, I can see a strong argument for having a conversation about providing relief in areas we knew were compromised by climate change. Of course, while we’re at it, we should also talk about rebuilding in flood plains, and tornado alley, and building codes in hurricane zones, and the parts of Florida and Louisiana that are going to be completely submerged by 2050. But sure, state subsidies for insurance in fire zones in California can and should be part of that wider conversation.

The thing is, Nunn specified a “broken tax policy,” and he hit out at New York, California, and New Jersey. Which is very weird, because Nunn’s from Iowa. His only connection to the tax policy of New York, California, and New Jersey is through federal spending. And in 2022, as in most years before, New York, California, and New Jersey all paid significantly more in federal taxes than they got back in the form of federal spending. New York: $7.01 billion, California $83.1 billion, and New Jersey $29 billion. Iowa, in case you’re wondering, got $9.9 billion more in federal spending than it paid in federal taxes in 2022. So yes, by all means, let’s talk about the broken tax policy. But the only part of that conversation that’s in-bounds for a Congressman from Iowa probably isn’t going to go the way Nunn wants it to.

Here’s a weird thing about Republicans that most people – especially Republicans – don’t seem to know: Republicans love government spending. Love it. One way you can tell is just to look at the balance of payments by state. In 2022, eleven states paid more in federal taxes than they received. All but one of those states went for Harris in the 2024 election. If Republicans really cared about fairness and a balanced budget, their first order of business in the new Congress should be a law requiring that federal tax dollars can only be spent in the states that generate them. If spending in the states that are paying their share stayed exactly where it is, and all the states that are receiving more federal money than they pay out had to cut programs to match their tax contributions, the federal government would have saved $1.079 trillion in 2022. That cut would hit 39 states, 30 of which went for the Republican candidate in 2024.

What Republican politicians don’t like isn’t spending – it’s taxes. They like to spend, without taxing, and ratchet up the national debt. Reagan, both Bushes, and Trump all increased the national debt at least as aggressively as any Democratic president. Reagan in particular spent an astounding amount of money, even as he was slashing tax revenues left and right. This pattern benefits Republicans on two levels.

First, they can distribute money in friendly districts, buying votes under the ideological cover of “making America great again.” Of course they don’t admit that they’re spending on credit. They tell Republican voters that the national debt is increasing because of Democrats, and social spending in urban centers and blue states. Republican voters know better, but they go along with it because they like the money, they love “owning the libs,” and the narrative that all the problems in the country are someone else’s fault meshes with their worldview, (even if they know it’s bunk).

The second way high spending and low taxes benefits Republicans is that tax cuts give wealthy donors more cash on-hand. As the debt goes up, that debt gets sold to private investors. The Republican donors can then take the money they saved on taxes, and use it to buy public debt. So we give Melon Husk a tax cut and take $100 out of the federal budget. But we still need a bridge, so we go ahead and build one, but now we’re $100 short. Melon Husk loans us the money, and charges us interest. The federal government is now paying Melon Husk interest on top of his tax cut. And the problem compounds itself: next year’s budget will be short both the $100 tax cut we gave to Husk, but also however much we’re paying him in interest. Except the size of the numbers that are actually involved is indecently large. Trillions and trillions of dollars over years, much of it paid out to the same people who benefit from the tax breaks that created the debt in the first place.

This is all part of a process that has been ongoing since the 1970s, and it’s something that should be more widely discussed. For our immediate purposes, we just need to remind ourselves that the myth that Republicans are fiscally responsible, and are in any position, ever, to lecture Democrats about tax policy, is based entirely on decades of appalling (and often racist) dishonesty and a credulous pool of voters with a generational victim complex. The only thing that should be tied to California’s disaster relief money is Zach Nunn, with a note pinned to his shirt admitting that whatever relief funds California gets are a small fraction of the money they’ve paid to support the rest of the country over the years. And if the incoming Republican president succeeds in making California’s relief money into a political football we should all be extremely clear about the hypocrisy and stupidity of that move.

And maybe go the polls and vote Democrat next time.