Race to the Bottom

Local battles for public services, social safety nets, environmental protections and more are all connected to economic policy decisions at the federal level. Our goal is to educate local grassroots activists about how federal finance works so they can leverage that knowledge to push back against unfunded federal mandates and the “how ya gonna pay for it” questions that invariably trip up funding for progressive policies that serve the public good.

States, like households and businesses, are currency users. Trying to implement large public programs like M4A or a Job Guarantee or even Reparations at the state level would require a very strong tax base, which only a handful of states really have. During an economic turn down, a natural disaster or a pandemic, even those wealthier states would likely have to take funding away from other services, like infrastructure or public schools, in order to maintain those large public programs.

Having to raise taxes to fund programs like these at the state level can also contribute to the race to the bottom by causing capital flight – that’s where businesses and wealthy people move away to avoid paying higher taxes, leaving lower income folks to shoulder the load. When employers vacate an area, leaving working-class residents desperate, it also leaves the area ripe for gentrification by investment firms that come in and buy up properties they can later turn into high value rentals.

If a few states were able to implement a version of M4A or similar, and it failed, it would forever be used as an example of why these much-needed programs won’t work.