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.)


Written by Jameson Taylor

May 25, 2010 at 4:01 pm

Posted in Uncategorized

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