TThe biggest point of sticking points of collision swirling the confidence of the Republicans to adopt the ambitious expenditure bill of President Donald Trump focuses on deductions for state taxes and locals, the so-called salt ceiling and the funding of Medicaid. Republican members of the Chamber should continue the deliberations in the weekend after the representatives. Andrew Clyde (R-GA), Chip Roy (R-TX) and Nicole Malliotakis (R-NY), among others, shared their respective concerns concerning the bill throughout the week.
The Hawks of the Republican Budget want to keep the salt ceiling as is and bring more “significant change” to the expenses of Medicaid. At the same time, their moderate counterparts want a greater tax distribution for states with higher state and local tax systems and more generous insurance for the coverage of Medicaid. Meanwhile, the Democrats were left on the sidelines, hoping that the GOP implodes before the mid-term elections of 2026.
Many Republicans like to repeat the often used line that the federal government must increase more dollars in taxes or expenses of oblique bars to cover budgetary deficits motivated by the dependence of Democrats with regard to rights. They are not wrong to say that the loading of budgetary debt is untenable.
Republicans still have to recognize that they may have become more dependent on the rights and federal dollars than blue states. And Democrats must take advantage of the opportunity granted because the Trump bill threatens to keep a salt ceiling and tighten the requirements of the coverage of Medicaid which harm voters on both sides. After all, the blue states subsidize the budgetary gaps in the red states, and a salt ceiling will guarantee that this remains the case.
The total net differential between federal tax revenues of states and the contributions of the federal dollar in states from 2018 to 2022 amounted to a transfer of transfer of more than 1 billion of dollars to the blue states in red states. In 2017, the Republicans used the salt ceiling to place even more tax burden of federal revenue on blue states. The joint tax committee estimated that the salt ceiling has increased federal revenues by $ 78 billion for the 2019 taxation year, most of which have dropped in the Blue States.
Over a similar period of five years, this annual number of $ 78 billion amounts to almost $ 400 billion, or almost 40% of the total transfer payment. Four blue states are responsible for 50%of the estimated increase in federal tax revenue of the salt ceiling: California (25.1%), New York (16.8%), New Jersey (6.4%) and Illinois (4.2%). Forty of the 50 best districts most affected by the salt ceiling are in New York, California, New Jersey and Illinois.
But during the year 2023, the per capita federal share of expenses on Medicaid in the red states which chose to extend the public health insurance program – the majority has at this stage – almost equal ($ 1,960) that of the blue states ($ 2,100). Even on a total basis of a dollar in all states, and not only those adopting the expansion of Medicaid, the Blue States have received a lower proportion of funding from the Centers for Medicare & Medicaid that the federal government has perceived from them in federal tax revenues.
Many studies consider that the additional dollars spent on Medicaid by blue states are a judicious investment. Health results have been improved with less cases of obesity, high blood pressure, diabetes and cardiovascular conditions, among other diseases, as well as higher life expectancy. National economies were more likely to thrive with increased work, better educational results, lower debt charges and higher credit scores. The two advantages lead to an improvement in state budgetary conditions.
The Trump administration and Maga Republicans may at least receive credit for consistency. Their reported desire is to put an end to the role of FEMA in the aid for disaster recovery, on the move of organizational and financing responsibilities of the agency to the States. Again, the consequences will be serious for red states, because natural disasters, apart from California forest fires, are less common in the blue states. Florida (25%), Louisiana (20%) and Texas (5%) alone received half of the nearly 40 billion emergency dollars in the event of FEMA disaster, and almost three -quarters have gone to the red states since 2018. Dating from 1980, weather disasters and climatic disasters were particularly expensive for red states, with the costs of the Florida and Texas.
It should be noted that red states have benefited from blue states for at least the 1980s in some respects. The basic realignment and closure commission (BRAC) was created in 1988 to assess the effectiveness of military facilities in the United States. The commission was quickly activated to close the bases largely in the regions with a heavy representation of the blue state. Since 1988, the dominant regions in the red state (ie Southeast, Southwest) have seen their share of the installations increase by 6 percentage points compared to the dominant regions in the blue state (i.e. northeast, mid-Atlantic) carrying out a decrease of 7 percentage points.
While President Mike Johnson (R-La) leads the Republican Party to what will probably be a long weekend of negotiations, the GoP must respect that his thin majority in the Chamber and in the Senate could be threatened by doing the bad step on the salt ceiling and the Medicaid cups. Republican voters of blue and red states have become detained not only on rights and federal funding, but also on the blue state tax that allow the United States to provide these advantages. For these Democrats looking for a clear opportunity, here it is.
