Would a soft secession dividend outweigh the risks?
Soft secession, a novel legal theory suggesting that blue states withhold funds from and reduce reliance on the federal government, is a growing idea among Democrats across the United States. As the Trump administration consolidates its hostility toward blue states, whether it be through ICE raids or police takeovers, Democrats are quietly planning a redo of federalism.
Unlike a formal secession, which is unconstitutional and involves a clear political breakaway from the United States altogether, a soft secession is constitutional and non-violent, and aims to leverage the "giver" status of blue states. These donor states, such as California and New York, provide billions more in revenue for the federal government than they receive, while red states tend to be receiver states, taking in more money from the federal government than they give back.
In other terms, proponents of the idea contend that blue states subsidize red states. Theoretically, blue states would use their withheld funding to influence the actions of the Trump administration, such as to protect Medicaid/Medicare funding or prevent federal bans on contraceptives or abortion access.
What used to be the exclusive domain of the GOP – the primacy of the state level - is now gaining popularity among Democrats seeking to counter the abrasive relationship between blue state/local leaders and Donald Trump.
With the retention of state revenue from the federal level, and even the potential retention of the Trump administration from the state level, blue states would theoretically save money, a sort of soft secession dividend. And while this dividend would mean more funding for in-state programs, from social safety nets and healthcare, to public education and investments in clean energy, the risks are worth considering.
The United States has a deeply interconnected economy, meaning that financial chaos for the federal government and red states could further negatively impact blue economies. What harms one pocket of the aggregate could impact others, and inflationary pressures and shortages are possible. Through destabilizing the national economy, donor states could enact self-harm.
Even with the dividend going toward state goals, the surplus could be eclipsed by reduced or eliminated federal funding for infrastructure or research. This would undermine the power of the soft secession dividend, weakening certain aspects of the advantages of a soft secession.
There is also the perspective of modern monetary theory that could shed light on the capacity of blue states to effectively leverage tax revenue. If the federal government has the monetary sovereignty and monopoly over the U.S. dollar as a public monopoly, it is not meaningfully restricted to revenue in terms of expenditures, but rather restricted to pluvial inflation.
What a theorist of MMT may contend is that soft secession theory is a misunderstanding of government finance. The harm that a soft secession would impose would not be on the federal government via the deprivation of critical funds, but rather on the national macroeconomy as a whole.
While the theory could empower states with a dividend to invest in welfare, clean energy, climate resiliency, housing, research, or public education, the potential risks cannot be disregarded. There are advantages and disadvantages to the idea, and whether or not the soft secession dividend outweighs the risks is yet to be known.
Thus, it is vital that we remain critical of the theory and keep our options on the table. Among the numerous ideas for resisting Trumpism, soft secession is merely one.
