House Speaker

[Ken]

So no more air travel in Ohio?

Air travel is possible without the federal government. There are airports, control towers, and even airlines that are headquartered here.

No more social security?

Currently, the federal government confiscates 15% of everyone's paychecks for Social Security/Medicare. The state of Ohio could just collect that money instead and then distribute it to beneficiaries. (Of course, Medicare might be insolvent, as many federal programs are, but there's no reason the states couldn't just start printing money exactly like the federal government does.)

No more Medicare or Medicaid? (which would mean no more hospitals in rural Ohio)

Hospitals in rural Ohio existed before Medicare and Medicaid did and could continue to exist today.

No more student loans to attend college?

Sounds good to me. Student loans are a boondoggle that leaves students deeply in debt and in need of bailouts.

No more Federal reserve managing the money supply?

Sounds good to me.

No FDIC to ensure your bank deposits?

Banks pay the FDIC to insure deposits. There is no reason a state agency could not be set up the same way.

1. All air traffic controllers in this country are federal employees as is the entire system of air traffic control. Could Ohio build its own system of air traffic control that seamlessly interfaces with all other states and also hire and train its own air traffic controllers? Sure. But it wouldn't save any money, it would cost more. And would take a decade to get up and running.

2. Ohio doesn't have remotely enough money to take over social security, medicare, and medicaid on its own. Taxes would have to go up drastically. And because Ohio has a median age that is higher than the national average and wages that are lower than the national average it would mean that it would be drastically most costly for Ohio to take over those federal programs that it is for Ohioans to simply pay the federal taxes that support them. Put another way, the rest of the nation subsidizes Ohio when it comes to those three programs. A quick back-of-the-envelope calculation tells me that Social Security alone pays about $50 billion a year to Ohio residents. How much would you have to raise taxes in Ohio to replace that?

3. Yes, most if not all rural hospitals in Ohio would go bankrupt without Medicare and Medicaid. A 2019 analysis found that those two programs accounted for 56% of revenues for rural hospitals nationwide. The percentages are higher in rural areas because there are a higher percentage of elderly and poor patients in rural hospitals compared to urban and suburban hospitals. No hospital in Ohio has the margins to survive losing 56% of its revenue. https://www.aha.org/system/files/2019-0 ... t-2019.pdf

So sure, Ohio could operate like an independent nation and take on all the roles that the federal government currently does. But it would actually cost the state massively MORE to do so than the taxpayers of Ohio currently pay to support those existing Federal programs.

Sure you can just turn off the Federal government as you suggest but you either end up with Haiti or Somalia. Or you end up replacing all those Federal functions at the state level with greater cost and inefficiency. Either choice is hugely dumb and irresponsible.

[Josh]

1. All air traffic controllers in this country are federal employees as is the entire system of air traffic control. Could Ohio build its own system of air traffic control that seamlessly interfaces with all other states and also hire and train its own air traffic controllers? Sure. But it wouldn't save any money, it would cost more. And would take a decade to get up and running.

No it wouldn’t. Hire the existing controllers and keep using the existing facilities.

2. Ohio doesn't have remotely enough money to take over social security, medicare, and medicaid on its own. Taxes would have to go up drastically.

Yeah it does, Ken. If Ohio suddenly had no federal tax burden there would be a lot more money to go around.

And because Ohio has a median age that is higher than the national average and wages that are lower than the national average it would mean that it would be drastically most costly for Ohio to take over those federal programs that it is for Ohioans to simply pay the federal taxes that support them. Put another way, the rest of the nation subsidizes Ohio when it comes to those three programs. A quick back-of-the-envelope calculation tells me that Social Security alone pays about $50 billion a year to Ohio residents. How much would you have to raise taxes in Ohio to replace that?

Wouldn’t have to raise it at all. Just keep the current payroll tax.

I’m aware of your “blue states subsidise red states” talking points, but they are based on false premises. Ohio and many other states would do fine on their own without the federal behemoth.

3. Yes, most if not all rural hospitals in Ohio would go bankrupt without Medicare and Medicaid. A 2019 analysis found that those two programs accounted for 56% of revenues for rural hospitals nationwide. The percentages are higher in rural areas because there are a higher percentage of elderly and poor patients in rural hospitals compared to urban and suburban hospitals. No hospital in Ohio has the margins to survive losing 56% of its revenue. https://www.aha.org/system/files/2019-0 ... t-2019.pdf

No they wouldn’t. If people wanted to have hospitals we would simply take action to keep them built, open, and staffed.

Places like Haiti have hospitals, you know. And Haiti is in worse financial shape than Ohio.

So sure, Ohio could operate like an independent nation and take on all the roles that the federal government currently does. But it would actually cost the state massively MORE to do so than the taxpayers of Ohio currently pay to support those existing Federal programs.

Sure you can just turn off the Federal government as you suggest but you either end up with Haiti or Somalia. Or you end up replacing all those Federal functions at the state level with greater cost and inefficiency. Either choice is hugely dumb and irresponsible.

An independent country like Ohio would look a lot more like the Netherlands or Luxembourg than it would Haiti or Somalia.

[Ken]

An independent country like Ohio would look a lot more like the Netherlands or Luxembourg than it would Haiti or Somalia.

Well sure, Ohio could look like the Netherlands if Ohio raised its tax rates to match that of the Netherlands: 25% corporate income tax, 49.5% top income tax rate, 25% VAT (sales tax) and 25% capital gains tax.

Not to mention gas taxes which bring the price of gas in Netherlands to 2.18 EUR or $2.31 per liter this week. Which equates to $8.73 per gallon.

But then if Ohio politicians like failed speaker-designee Jim Jordan actually wanted to be like the Dutch they wouldn't be threatening to shut the government down over tax rates that are far lower and social programs that are far less generous here in the US.

[to bring this thread full circle back to the original topic]

[Josh]

Ken,

Do you really think massive deficit spending and government debt is a good idea?

[Robert]

Well sure, Ohio could look like the Netherlands if Ohio raised its tax rates to match that of the Netherlands: 25% corporate income tax, 49.5% top income tax rate, 25% VAT (sales tax) and 25% capital gains tax.

Many forget that the USA went about 100 years without income taxes or massive federal spending. The "wars" just started to become an excuse for massive federal budgets and spending.

[Ken]

Ken,

Do you really think massive deficit spending and government debt is a good idea?

The Federal deficits you refer to are almost entirely the consequence of the Bush and Trump tax cuts. The budget was balanced and running a surplus before that.

[Ken]

Well sure, Ohio could look like the Netherlands if Ohio raised its tax rates to match that of the Netherlands: 25% corporate income tax, 49.5% top income tax rate, 25% VAT (sales tax) and 25% capital gains tax.

Many forget that the USA went about 100 years without income taxes or massive federal spending. The "wars" just started to become an excuse for massive federal budgets and spending.

In 1880 after the first 100 years of the American existence:

• The poverty rate was an estimated 56%
• 20% of the population was illiterate
• Life expectancy at birth was about 40 years
• The infant mortality rate was about 25%
• Large numbers of families struggled to put foot on the table and a large percentage of children went hungry on a regular basis

Today the defense budget represents about 10% of total federal spending. It was obviously higher during the world wars. But that isn't where most of your tax dollars go.



Here is a more detailed breakdown

[Robert]

In 1880 after the first 100 years of the American existence:

Much of that is before the industrial revolution, or before it really kicked in. Many rural people may have lived in poverty money wise, but had land and food aplenty for their family.

I do think there is a place for federal spending, but at much more modest levels then we have now. I think of the federal government was able to cut up to 50% of their spending, shifting from defense to more social needs, we would do a lot better. Shutting down the CIA and stopping the interference in foreign governments would be a great start.

[Ken]

In 1880 after the first 100 years of the American existence:

Much of that is before the industrial revolution, or before it really kicked in. Many rural people may have lived in poverty money wise, but had land and food aplenty for their family.

I do think there is a place for federal spending, but at much more modest levels then we have now. I think of the federal government was able to cut up to 50% of their spending, shifting from defense to more social needs, we would do a lot better. Shutting down the CIA and stopping the interference in foreign governments would be a great start.

The industrial revolution was fueled by government spending. The railroads, the Erie Canal and highways. The Panama Canal, rural electrification, massive public power projects, massive public irrigation projects, etc, etc.

I don't disagree that there is wasteful spending. But the fact of the matter is that the bulk of federal spending is social welfare transfer payments: social security, Medicare, Medicaid, education spending, infrastructure spending, etc. It isn't the CIA and certainly isn't foreign aid.

And most of that money is simply just the government recirculating dollars within the economy. Most social security checks don't get stashed under mattresses or in bank accounts. Those dollars immediately gets re-spent on food, clothing, shelter, transportation, etc, so it is hugely stimulative. Likewise Medicare and Medicaid spending. Not one dime of those hundreds of billions of dollars stays with the recipient. In fact the recipients never see a dime of those dollars. It goes straight to hospitals, clinics, doctors, nurses, pharmacists, and also keeps circulating in the economy. Take that away and the rural health care system would rapidly collapse and the urban/suburban health care system would soon follow. Even education spending immediately recirculates in the economy. Student loan and student grant recipients don't pocket the money. It gets spent and recycled into the education economy

I could list a lot of wasteful federal programs but I suspect my list would be different from yours:

Federal flood insurance program costs nearly $6 billion/year baseline and go way up with each hurricane
Federal farm subsidies cost about $30 billion per year
Direct federal fossil fuel subsidies cost about $20 billion per year
Indirect federal fossil fuel subsidies in the form of tax breaks cost another $11 billion/year
The Federal Highway Administration spends $52 billion/year on freeway projects, many of which are unnecessary and just exacerbate sprawl

And yes, there are enormously wasteful amounts of Pentagon spending, most of which is pork barrel stuff for politicians to bring home to their districts and corporate sponsors in the form of military contracts

But all that stuff is small potatoes compared to the big social safety net programs I listed above.

Defense and intelligence agency spending is just 10% of the federal budget so you don't get to 50% cuts by eliminating those. Even if you cut 100% of the military, intelligence and foreign aid budget you only cut about 10% of the total federal budget.

[Robert]

But all that stuff is small potatoes compared to the big social safety net programs I listed above.

These are loaded with tons of pork too. There is room for massive cuts in all areas.