Blue Model Blues
Big Blue is Killing Upstate New York

Upstate New York is dying—and big blue is its killer. That’s the takeaway from an excellent piece by William Tucker in Desert News National on the economic woes of the upstate area. Tucker’s case in point is Binghamton, an upstate town that is doing almost as badly, and even in some ways worse, than Detroit. Binghamton has low average incomes, high unemployment, low home ownership rates, and high “evacuation” numbers. Other upstate areas are suffering similarly. The reason?

[U]pstate New York is tethered to New York City, whose residents overwhelmingly support higher taxes, stricter regulation and bigger spending than the national averages. Those policies are blamed for upstate’s economic woes by many in the region.

“Basically what you’ve got in New York is a state tax code and regulatory regimen written for New York City,” says Joseph Henchman, vice president for state projects at the Tax Foundation in Washington. “Legislators say, `Look, New York is a center of world commerce. Businesses have to be here. It doesn’t matter how high we tax them.’ I hear that a lot. But when you apply that same logic to upstate, the impact is devastating.”

Tucker walks through the destruction wrought by two policies in particular. New York spends twice the national average on its Medicaid system, even though cheaper systems, like California’s, work better. Moreover, New York, unlike other states, requires cities and counties to help fund the Medicaid system. So the cost of maintaing a poorly functioning Medicaid system gets partially shunted onto upstaters who can’t afford it.

In the high-income playground New York City has become, residents can bear terrible government, excessive taxes, and burdensome regulations. The money wealthy New Yorkers make has helped keep afloat a blue model system that would have collapsed otherwise. But upstate, poorer Americans are reeling from the impact of over-regulation, and the region is drying up. NYC’s blue progressives think of themselves as champions of the little guy and the poor. Upstate New York gives the lie to that self-assessment.

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