November 29, 2004

Secession is a Hollywood Fantasy

by Patrick Basham and Niels Veldhuis

Patrick Basham is senior fellow in the Center for Representative Government at the Cato Institute. Niels Veldhuis is senior research economist at the Fraser Institute.

"The West Wing" can be great television. But we should not confuse a good story with reality. The show's producer, Lawrence O'Donnell, recently raised the subject of secession on "The McLaughlin Group." According to O'Donnell, "Ninety percent of the red states are welfare client states of the federal government. They collect more from the federal government than they send in."

O'Donnell argued that the "big problem the country now has, which is going to produce a serious discussion of secession over the next 20 years, is that the segment of the country that pays for the federal government is now being governed by the people who don't pay for the federal government."

Is O'Donnell in the vanguard of a new secession movement? He certainly isn't alone in his views. Moaned Chris Jackson, the Los Angeles-based music director for the E! network, "I don't feel like a member of society any more ... Can California, the rest of the west coast, and New York secede?" Internet tee-shirt venders are selling shirts that read, "I seceded."

But O'Donnell's claim that the red states are bleeding blue states such as New York and California is a bad reading of the fiscal evidence. He includes both transfers to governments and transfers to individuals in his calculations. In this type of analysis, demographics play the major role in determining which states are net recipients.

States with more senior citizens, and hence more residents receiving Social Security, Medicare, and other federal entitlements, are bound to receive more than they give. Keep in mind that such entitlement spending makes up a large part of the federal budget.

A retirement state such as Florida receives a disproportionate amount in individual transfers. But many retirees receiving individual transfers are transitory residents who spent most of their working lives in New York and other blue states. Therefore, transfers to individuals should not be included in an analysis of which states are net contributors and net recipients.

In theory, secessionary pressures might be present if there was a large imbalance in transfers from the federal government to state governments, rather than simply a transfer imbalance between governments and individuals. If O'Donnell and his worldly peers cast their eyes upon our northern neighbor, Canada, a country that knows something about modern-day secession, they will find precious little evidence of seccessionary pressure from jurisdictions that are large net contributors to the federal government.

Canada's federal government has two specific programs that transfer resources from wealthier provinces to poorer ones. The federal government finances industrial development programs in Canada's poorer regions by transferring monies out of its more prosperous regions. Canada also maintains a constitutionally enshrined equalization program that transfers resources from the country's prosperous provinces to its poorer provinces.

Historically, three provinces, British Columbia, Alberta and Ontario, have been net contributors with the other seven provinces being net recipients. Some recipient provinces receive over 20 percent of their revenues from such payments. Yet, never has this decades-long, one-way fiscal flow stimulated a politically viable secessionist movement.

The province of Quebec provides the most striking evidence against O'Donnell's forecast. Adapting O'Donnell's cultural and fiscal yardsticks, Quebec may be categorized as a red province. It is also the largest net recipient of government subsidies. So, Quebec's always been pretty satisfied with the political status quo, eh? Quite the opposite, in fact.

Quebec's secessionist movement is so strong that the province has held two referenda on succession. The most recent ballot, held nine years ago, saw 49.5 percent vote to leave Canada. Over the past quarter-century, Quebec has mostly had secessionist provincial governments; in national politics, secessionists have dominated Quebec's federal parliamentary delegation for four consecutive elections.

Empirically unfounded and comparatively disproven, blue state secession is an idea that only Hollywood could believe in. If a blue state candidate ever loses a presidential election on the "The West Wing," it isn't hard to guess where the plotline will be headed.

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