Texas Doesn’t Need Federal Money: Deconstructing the Myth of Federal Funding

Posted By David On

One of the most common arguments against a National Divorce is that the states could not survive without federal funding. But why would one oppose red state secession if red states are essentially charity cases? Why would opponents of red state secession be so eager to continue funding people whom they openly despise? This is contrary to common sense and sounds like gaslighting in an abusive relationship: “You can’t live without me!”

The truth is that scarcely any money is “federal money” to begin with. The only way money should be considered federal money is if it comes exclusively from federal activity. Otherwise, it almost always comes from the citizens of the states. Federal funding is nothing but a fancy redistribution scheme with an inefficient, unnecessary, and controlling middle-man who insists he’s doing you a big favor by giving some of your money back to you.

Almost the entire federal budget comes from various taxes extracted from the states. In 2022, 54% of federal revenue came from individual income taxes, 9% corporate income taxes, 30% from social security, 2% from excise taxes, and only 5% from “other.”[1] [1] Even this 5% mostly included estate and gift taxes, customs duties, and earnings from the Federal Reserve system. There is no reason why the states as independent nations could not do most of the things within this slim 5%.

Even if the successor states to the US wished to forego a national bank and the resultant revenues due to criticisms of the current Federal Reserve, this would only be a minor loss. The federal reserve transferred $86.9 billion to the treasury in 2020, which may sound like a lot, but when compared to the federal revenues in 2022 of $4.9 trillion, was only 1.7% of federal revenues.[2] [2]

In a National Divorce, the dual system of state taxation and federal taxation would be consolidated into a single comprehensive system of national taxation.

Texas is the most common target of the argument that they could not exist without the federal government, in large part because they have an active secession movement, so let’s explore the numbers for a Republic of Texas.

About a third of Texas’s budget comes from so-called federal funding, which is about the same for most other states.[3] [3] But as of 2022, the citizens of Texas paid $3.52 to the federal government for every dollar they received in federal support.[4] [4]

In 2021, the average taxpayer in Texas paid $13,659 in federal income taxes, which is just slightly above the national average.[5] [5] For comparison, New Mexico is the only state which receives more money from the federal pot than they put in, and ironically is a blue state. Even impoverished West Virginia pays $1.04 for every dollar they get back. A large retiree population might be driving New Mexico’s fiscal imbalance, given that most federal spending is on social programs. Another reason is the Great Replacement. New Mexico was 49.3% Hispanic as of the 2020 census, and whites on average have a net lifetime impact of plus $221,000 while Hispanics on average have a net lifetime impact of minus $588,000.[6] [6]

The Great Replacement is all but an official policy of the federal regime. Thus, if a National Divorce allows successor states to reverse the Great Replacement and stabilize their demographics, they would reap substantial financial rewards in the long term. Until then, they must pay for their own dispossession along with the budgetary consequences of that dispossession.

That a third of Texas’s budget comes from “federal” funding is overshadowed by how Texas only gets 1 dollar back from the federal government for almost every 3.5 dollars that it puts in. Texas doesn’t need the federal government; the federal government needs Texas.

There may be some things which the federal government does which Texas benefits from, but there is no reason why Texas could not perform these functions, just as there is no reason why states could not supplant federal revenue collection and generation. Let’s examine federal expenditures and break down where the money goes.

As of 2023, 21% of the federal budget went to social security.[7] [7] There is no reason why a National Divorce should deprive retirees of the benefits which they worked for, as this would be tantamount to theft. Even now, pensioners can collect their social security if they retire abroad. The administration of social security can gradually be passed to the new nations. People frequently roll over their IRAs into new IRA accounts without drama. Rolling everyone’s federal social security into state plans all at once would be a simple matter. Those near retirement age could be handled first.

Furthermore, new nations may want to gradually phase out social security because most people spend and invest their money better than the federal government. A UBI for the elderly could be provided for those few people who completely mess up their retirement planning, which could in part be funded by the additional GDP generated by people having more money to spend.

24% of the federal budget goes to health insurance programs. This includes the ironically named Affordable Care Act, better known as Obamacare. New nations would find it easier to repeal or reform Obamacare due to less gridlock. Nationalist successor states could also focus on reducing healthcare costs by addressing root causes of bad health such as toxic food fillers like high fructose corn syrup and seed oils, which are currently allowed under federal regulations despite being scarcely tolerated in Europe. Again, there is no reason why the successor states could not take over these functions and expenditures just as well if not better than the current federal regime. Lithuania does not have a health insurance crisis despite its small size.

8% goes to “economic security benefits” better known as welfare. States can provide welfare programs of their own. A National Divorce would also allow them to crack down on welfare fraud and perhaps even turn the gravy train off entirely for parasites who consistently abuse the system. Christopher Caldwell in The Age of Entitlement described lavish welfare programs as the price of keeping the peace in the post-Civil Rights era. New nations would be free to choose whether they will continue to indulge a resentful and violent underclass with perpetual tribute labeled as welfare. The fact that blacks on average have a net negative financial impact of $751,000 over their life must be accounted for when discussing the finances of Southern states due to their large black populations. Whether blacks receive their own country, have to abide by white standards, or move to Blue states which are more amenable to indulging them, it is unlikely that Red states after a National Divorce would continue to indulge blacks as a perpetual charity case.

13% of the federal budget goes to defense, which is equivalent to 3.5% of US GDP. For comparison, the spending goal for NATO countries is 2% of their GDP, although most members fall short.[8] [8] Texas and other successor states could save money by dropping “bomb the third world, import the third world” policies. The Texas Nationalist Movement has already signaled that they would welcome a NATO-style defense pact.[9] [9] While a National Divorce would affect NATO’s defense spending, it is only fair that other NATO countries contribute to their defense instead of relying on American taxpayers.

That the Texas GOP is a hotbed for Zionism would be an obstacle to non-interventionism, however. For example, Governor Abbott recent attacked the First Amendment under the guise of combatting anti-Semitism on college campuses, and in March, 2021, denounced Gab because of its free speech policy.[10] [10][11] [11] An independent Texas may very well continue an interventionist foreign policy on behalf of Israel. However, support for Israel is greatest among older voters, so it is only a matter of time until Zionist fueled-interventionism withers away from lack of public support. US defense spending is also high in part due to the corruption and inefficiency of the military-industrial complex combined with deindustrialization, and these problems could be better addressed after a National Divorce.

8% of the federal budget goes to veterans benefits and federal retirees. As with social security, these programs can be handled by the successor states individually, or more likely by working together.

A thornier issue is how 10% of the federal budget goes to paying interest on the National Debt. One solution would be to distribute the debt in proportion to population or GDP, just as spouses divide assets and debts in a regular divorce. But this is not entirely fair, as the federal government frequently spent money in ways the states did not approve of. For example, the Texas Nationalist Movement has been adamantly opposed to taking on a penny of the national debt.[12] [12] Frankly, lenders should not have lent to the US due to its inherently dysfunctional nature. However, even if Texas or other new nations were to take on a portion of the national debt, they would finally be positioned to pay it off by trading irresponsible policies for sound ones.

The rest of the federal budget goes to miscellaneous matters.

Additionally, removing the federal government as a middleman would liberate states to make their own policies as federal funding commonly comes with strings attached. The Supreme Court in South Dakota vs. Dole ruled that the strings attached to federal funding cannot be so great as to be “coercive.”[13] [13] But why should any “federal” funding be used as leverage at all, given that federal money is just state money to begin with?

What about Red states which are less prosperous than Texas? Not a single Red state received more money from the federal budget than they contributed, so even poor states like West Virginia would still see at least a small budgetary increase after a National Divorce. Furthermore, Red states don’t have to look to Blue states or the federal regime for help. For example, Texas could lend disadvantaged Red states a hand. This would be similar to how about 1% of the federal budget already goes to foreign aid, except this would be to countries closer to home.

For example, what impact would an independent Texas have on West Virginia if it sent 1% of its budget to disadvantaged Red states and one tenth of that 1% went to West Virginia? Texas’s budget is biennial instead of annual, and is a total of $321.3 billion over 2024 and 2025.[15] [14] Because a third of Texas’s current budget comes from the federal government and Texas gives the federal government about $3.5 dollars for every dollar it gets back, and 1/3 times 3.5 is a factor 1.17, Texas’s budget as an independent nation would increase by about $374.85 billion to a total of $696.15 billion. West Virginia’s budget in 2024 was $4.87 billion and is slated to be $5.22 billion in 2025, for a total of about $10.1 billion, and this would be slightly higher if it neither gave nor received money from the federal government.[16] [15] 0.1% of Texas’s 2024-2025 budget going to West Virginia would be about $0.7 billion, thereby increasing West Virginia’s 2024-5 $10.1 billion budget by about 7%. Furthermore, that Nebraska, South Dakota, and Florida each contribute over $5 for every dollar they receive back from the federal government should disabuse the notion that Red states would all clamor to Texas for help.

This undeniably debunks the Left’s condescending claim that Red states are charity cases which could not survive without Blue America’s largesse as an abusive sugar daddy.

[1] [16] https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government [17]

[2] [18] https://www.federalreserve.gov/newsevents/pressreleases/other20210322a.htm [19]

[3] [20] https://everytexan.org/our-work/policy-areas/budget-taxes/federal-budget-taxes/ [21]

[4] [22] https://smartasset.com/data-studies/states-most-dependent-federal-government-2023 [23]

[5] [24] https://www.nationalpriorities.org/interactive-data/taxday/average/2021/tx/receipt/ [25]

[6] [26] https://en.wikipedia.org/wiki/New_Mexico [27]

[7] [28] https://www.cbpp.org/research/policy-basics-where-do-our-federal-tax-dollars-go [29]

[8] [30] https://www.visualcapitalist.com/which-countries-meet-natos-spending-target/ [31]

[9] [32] https://texit.tnm.me/defense-national-security/what-will-happen-to-all-of-the-u-s-military-bases-after-texit/ [33]

[10] [34] https://www.informationliberation.com/?id=64355 [35]

[11] [36] https://www.texastribune.org/2021/03/11/texas-republicans-social-media/ [37]

[12] [38] https://news.tnm.me/texit/not-one-red-cent-apportionment-of-national-debt-upon-texas-secession/ [39]

[13] [40] https://supreme.justia.com/cases/federal/us/483/203/ [41]

[15] [42] https://comptroller.texas.gov/about/media-center/media-kit/budget/2023/ [43]

[16] [44] https://www.nasbo.org/mainsite/resources/proposed-enacted-budgets/westvirginia-budget [45]