A friend of mine helped restructure a major American manufacturing company a few years back. Among the first things he learned was that the company was knowingly selling some of its products at a loss. The more it sold, the more it went into the red; the fewer it sold the better off it was — and it was advertising the things.
It didn’t take a genius to recognize the problem.
In New York we have an analogous situation in our relationship with the federal government. For every dollar we send to Washington, we get about 75 cents in return. Yet New Yorkers as a whole send a delegation of representatives to Washington every two years, the majority of which philosophically advocates for a larger federal government.
Marc Cenedella, the founder of the online job-matching service TheLadders, talked about this disparity while briefly considering a race for U.S. Senate in 2012. He saw the situation with the same clarity my restructuring friend viewed the practice of manufacturing at a loss. If New York is losing 25 cents on every dollar it sends south, why does it keep electing members who want to broaden the scope of federal power, and, intrinsically, its cost?
The late-Sen. Daniel Patrick Moynihan famously issued a report on this issue a generation ago, when New Yorkers were only losing 15 cents on the dollar. The Moynihan Report raised eyebrows at the time, but it had no lasting impact on many New York voters. We still cheer when a “grant” comes in from Washington, instead of asking how much this latest largesse cost us.
It’s worse in another way, too, since Moynihan’s days. The federal government has now perfected the art of leveraging tax dollars against the very states providing them. In a type of bureaucratic judo, it’s learned to get its claws into the mechanics of state and local governments using money provided by their own residents.
Much of the money coming from Washington these days comes in the form of block grants with strings attached. States and municipalities eagerly accept this “free” money to fund local programs, but once they do, Washington owns them: It can mandate all sorts of local actions that infringe upon homerule freedoms and drive up local and state taxes. Common Core is an example of this. The feds provided the start up “Race-to-the-Top” funding, but in a couple of years, New York will be on its own in paying for an expensive new bureaucracy, and school districts will have to comply with federal education dictums.
Oyster Bay has run into this dynamic, too, after accepting money from The U.S. Department of Housing and Urban Renewal(HUD). HUD is suing Oyster Bay for allegedly discriminating against African Americans in two affordable housing programs — one aimed at first-time buyers, the other at senior citizens. Prosecutors allege the programs violate federal housing law because the town gave preferences to residents, or their children who live in Oyster Bay, which has few black residents.
If Oyster Bay doesn’t comply with HUD, the federal government can deny it money for other programs — .75 of its own money theoretically — as it is doing in Westchester County and other parts of the country. It’s a lose-lose situation for New York taxpayers.
Logically, New Yorkers should want the smallest federal government possible. Even advocates for big government should want more money spent at the state level and less at the federal level. We understand that wealthier states like New York have to pay more than they get back under the federal system, but isn’t it a touch insane to year-after-year work against your own economic interest?
It’s a question worth asking at upcoming congressional debates.
William F. B. O’Reilly is a Republican consultant who is working on the Rob Astorino campaign for governor.