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People in Blue States Better Off Than People in Red States

Written By Thursday 7 July 2022 Add Comment Edit

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Democrats' most alarming problem

Rick Newman

Democrats are likely to lose control of one or both houses of Congress in this year's midterm elections. But they may face an even bigger danger: A steady flow of Americans out of traditional blue states on the coasts and in the upper Midwest into red states mostly in the South.

New Census data analyzed by the American Enterprise Institute shows that eight of the 10 states losing the most residents from April 2020 through June 2021 have Democratic leadership, while nine of the 10 states gaining the most new residents have Republican governors. The numbers measure net domestic migration, which is the net change in the number of people moving in or out of one state, from or to another. That isolates people choosing to move, whereas population growth alone would also include births and deaths.

The five states with the most outbound domestic migration are California, New York, Illinois, Massachusetts and New Jersey. The five states gaining the most movers are Florida, Texas, Arizona, North Carolina and South Carolina. Massachusetts counts as a red state, since it has a moderate Republican governor, even though Democrats control the state legislature and Joe Biden won the state in 2020. North Carolina counts as a blue state because of its Democratic governor, even though Republicans control the state legislature and the state went for Donald Trump in 2020. So the party split among migration gainers and losers is even more stark than the governorships suggest.

AEI analyzed several economic indicators to validate trends that have been in place for some time, and may be intensifying. Taxes and living costs are higher in blue states enduring a net outflow of people, and lower in red states gaining new residents. Among the top 10 states losing residents, the combined state and local tax burden averages 9.2% of income. In the 10 states gaining the most residents, the state and local tax burden averages 7.7%, a full point and a half lower.

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The median home price in the top 10 gainer states is 19% lower than in the top 10 loser states. Electricity costs are 39% lower. Gainer states have a lower unemployment rate, on average, and are in better fiscal shape. Gainer states also score higher in rankings of business-friendliness, underscored last year by Tesla's (TSLA) decision to move its corporate headquarters from Palo Alto to Austin.

Population determines the size of each state's delegation in the House of Representatives, and red states are gaining while blue states are losing. Following the 2020 Census, three seats moved from blue states that went for Biden in 2020, on net, to red states that voted for Trump. That shift might seem small, except Democrats have only a five-seat majority in the House now. The next reapportionment won't take place until after the 2030 census, but it could bring an even bigger tilt in favor of Republicans.

There are at least three other reasons blue-to-red migration is a major warning sign for Democrats. First, it will increasingly signal to swing voters in national elections that Democratic policies connote bloat and inefficiency, while Republican policies coincide with healthier economies. Democrats already struggle with a liberal wing Republicans tar as "socialist" and infighting between those liberals and more moderate Democrats such as President Biden. If blue states increasingly look like failing economies, it will only make it harder for Democrats seeking national office to snag the swing votes necessary to win.

Second, energy has become a potent political issue amid the push, mainly from Democrats, to address global warming and transition from fossil fuels to green energy. Blue states, which already have higher energy costs, are more likely to ban new natural gas hookups and enact other rules to speed the conversion to renewables. Voters will rebel, however, if this means substantially higher out-of-pocket costs to heat their homes and fuel their cars. Again, swing voters at the national level will consider these failed policies. If California Gov. Gavin Newsom runs for president in 2024, as some analysts expect, how will he explain California's $6 gas to voters in swing states such as Michigan, Pennsylvania and Georgia?

High-tax blue states losing residents also face the downward spiral of trying to sustain lavish social spending while their tax base shrinks. If they raise taxes further, they'll just make the problem worse and send more people packing. But squeezing out bloat often threatens entrenched state and local power brokers who resist, resulting in self-defeating dysfunction. Not the competence voters typically look for.

There are antidotes. Some blue-state governors, such as Connecticut's Ned Lamont, have begun to hold the line on tax hikes while acknowledging they're losing wealthy taxpayers to less-onerous states. Population shifts could ease demand for homes in costly states such as California, which might bring some price relief. At the same time, home prices in cheaper southern states could rise along with demand. Some Republicans states could also turn off possible new arrivals with strident regulations of their own, such as Texas's novel anti-abortion law.

Still, Democrats habitually underestimate the willingness of some voters to opt out of high-tax, high-cost regimes. Voters do have choices, and population movements show what they want. Democrats only need to notice.

Rick Newman is a columnist and author of four books, including "Rebounders: How Winners Pivot from Setback to Success." Follow him on Twitter: @rickjnewman . You can also send confidential tips .

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Source: https://finance.yahoo.com/news/democrats-most-alarming-problem-165523692.html

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