U.S. State Deficits: Any Relationship to Political Leanings?

by: TJ Marta

Are U.S. state deficits related to political leanings?

  • Blue, or Democrat-leaning states tend to run far higher per capita deficits.
  • Generally, I try to avoid mixing politics with economics, but that's kinda hard when the government has its hands firmly around the neck of the economy.
  • Of course, I could evade the issue by simply arguing that in voting, one must make one's own value judgment on the type of society one wants to live in - a "European social safety net economy" or a "cowboy capitalism" one, to lay out the extremes.
  • But that's really just a cop out given the market's and our foreign creditor's concern about the US deficits. The US has been loading on the debt since FDR's New Deal, and the time has come to "pay the piper."
  • At some point, the bald fact of the matter is we all have to live within our budgets, and below is an interesting analysis on the matter.

Details:

Back in Aug CNNMoney.com ran an article with data of per capita state debt for each state.

The graph looked surprisingly similar to the political red versus blue state maps. That perception prompted me to determine whether there was, indeed a relation. I took data from Wikipedia regarding how "red" or "blue" each state is in ten different "buckets" based on the margin of victory in the past five presidential elections (first graph below). There are other measures of "red" and "blue", but I chose the presidential election data because it had more buckets, which I believe lead to greater granularity. Finally, I regressed the per capital state debt against the "color" of the state (second graph below).

Average margins of victory in past five presidential elections

Average margins of victory in past five presidential elections

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Red v Blue GraphClick to enlarge

State debt per capita and "redness"/"blueness" of state

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The average color of a state is 5.5, suggesting a relatively even split in the states, and the average per capita state debt is $1313.

The average "blue" or Democrat-leaning state (score of 5 or lower) averages a per capita debt of $1896.

The average "red" or Republican-leaning state (score of 6 or higher) averages a per capita debt of $729.

The 10 lowest per capita debt states were all red, or Republican, with an average color of 7.4 and an average debt of $250.

The 10 highest per capita debt states are all blue, or Democrat, with an average color of 2.1 and an average debt of $3214.

Disclosure: No positions