No, Federal Spending Is Not 1/5th Of North Dakota’s Economic Base

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Written By:
Rob Port

Aug 17, 2010
8:38am

I had to chuckle when I read this whopper in a recent editorial in the Grand Forks Herald:

Agriculture, 36 percent. Oil industry work, 24 percent. Tourism, 18 percent.

So far, routine stuff: The pie chart graphs North Dakota’s economic base in 2008, not considering federal payments.

Now, take a look at the next pie chart in the North Dakota Farm Bureau’s new brochure — the chart that does consider federal payments.

Agriculture still is No. 1. Its share is 28 percent, meaning it comprises 28 percent of North Dakota’s economic base.

But in the new chart, No. 2 has changed. It’s now federal payments, not the oil industry.

Federal payments — Social Security, Medicare, federal salaries, federally funded construction and so on — make up fully 21 percent of North Dakota’s economic base, the pie chart reveals. That’s second only to farming as a driver of the state’s economy.

No wonder Grand Forks’ political and economic leaders gathered Monday to thank North Dakota Sen. Byron Dorgan for the work he’s done.

This is pure, unadulterated economic illiteracy. Ask yourself: Where do the funds for Social Security, Medicare, federal salaries and stimulus projects come from? Our taxes. The federal government cannot spend a dime on any of that without first taking that money from we taxpayers.

To note all of that federal spending is to look at only one part of the equation. To spend, the government must first take.

If we want to talk about federal spending’s impact on our economy, we should also talk about the impact of federal taxes on the economy.