The Palmetto Insider

The blog of the South Carolina Policy Council

South Carolina’s Free Ride

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Drudge is reporting today that private sector payments, as a share of personal income, have reached an all-time low. By comparison, government payouts are at an all-time high.

This graph from the Mercatus Center illustrates the trend in vivid terms:

The steadily rising red line represents government transfer payments.

The steadily declining blue line represents private sector pay.

Here, in South Carolina, the trend is the same – and has been for a very long time.

As our new report on federal per capita spending notes:

In the FY10-2011 proposed Senate budget, federal funding reached an all-time high of $8.258 billion, compared to an overall state budget of $21.151 billion. But if federal funding in the state budget is up owing to one-time stimulus dollars, South Carolina’s status as a “recipient” state is not new. According to the D.C.-based Tax Foundation, “South Carolina has been a ‘recipient state’ since at least 1981, ranging between $1.19 and $1.36 in federal spending received per dollar of taxes paid.

In economic terms, South Carolina is a “free rider.”

… except there’s no such thing as a free ride. Either high government spending is going to cease – in practical terms, no federal bailout for South Carolina’s next budget. Or, we’ll pay for such spending by printing more dollars – which could translate into inflation, and higher prices, for years to come. (Essentially, our children will pay tomorrow for the free ride we are taking today.)

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Written by Jameson Taylor

May 25, 2010 at 4:01 pm

Posted in Uncategorized

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