Government Spending, Regulation/Economic Development

Harry Reid: His real impact on Nevada

Geoffrey Lawrence

Harry Reid says that "No one can do more" for Nevadans than he does, as U.S. Senate majority leader.  But do the senator's claims pass muster?

Reid's claims rely on the misguided premise that the purpose of a United States senator is to plunder federal taxpayers from other states in order to benefit the senator's home state.  In fact, the true mission of a senator should be to protect citizens from exactly that type of mob-oriented, devil-take-the-hindmost rule by standing up for principle and taxpayers everywhere.

Nevertheless, even by Reid's own ill-conceived doctrine, the numbers indicate that he's abjectly failed to "bring home the bacon."

When Reid got to Washington, D.C., in 1983, per capita federal spending in Nevada was 16th highest among the states. Since that time, per capita federal spending in Nevada has fallen to 50th among the states, according to the Tax Foundation. Only 65 cents of every dollar paid by Nevadans in federal taxes now returns to the Silver State in the form of federal spending. In other words, no U.S. senator has done less, bringing federal dollars to his or her home state, than has Senator Reid.

At the same time, the senator has pursued schemes that uniquely penalize Nevada. An example is the federal health-insurance takeover legislation. The so-called Patient Protection and Affordable Care Act, pushed through the Senate by Reid, attempts to reduce the number of uninsured Americans by — among other ploys — greatly expanding state-run Medicaid programs. The intent behind this was to offload much of the legislation's massive expense onto state governments, thus manipulating downward the Congressional Budget Office's scoring of the bill's direct costs to the federal government. 

Significantly, the bill will impose a proportionally larger unfunded mandate on the Silver State than it will on any other state. Reid's unfunded mandate will almost certainly mean future spending reductions for education, public safety and infrastructure, as more state funds must go into Medicaid spending.

"But surely," Reid supporters will argue, "a state with high-ranking congressional leaders will have higher growth prospects." Not so, according to recent research at Harvard University.

That research shows that even if high-ranking congressional leaders are able to use their seniority to leverage higher amounts of federal spending in their home states, the increased spending does not lead to new job creation. In fact, higher federal spending is correlated with lower private-sector sales, employment and research-and-development spending. According to the authors of the new study:

Some of the dollars directly supplant private-sector activity — they literally undertake projects the private sector was planning to do on its own… Other dollars appear to indirectly crowd out private firms by hiring away employees and the like… A third and potentially quite strong effect is the uncertainty that is created by government involvement.

The authors show that these results hold true, whether states are large or small, over the entire 40-year period examined. The results are most pronounced in states that have geographically concentrated firms — such as Nevada's gaming and mining industries. 

The most impressive aspect of these findings is that the authors do not account for the cost of increased federal spending within the targeted states. They assume the money comes for free — ignoring the fact that federal spending must be financed through higher taxes or increased borrowing — meaning that the spending itself is the cause of private-sector malaise.

Hence, the Silver State is actually fortunate that Senator Reid has failed to deliver on his mantra as the one who can "bring home the bacon." Perhaps he should take note of this and retool his message.

Nevadans need a congressional delegation that will defend taxpayers and prevent their resources from being confiscated by the federal government in the first place. The last thing our statewide community needs is a tax-and-spend delegation that is myopically hell-bent on fighting for a piece of the federal booty. 

That doesn't create jobs or wealth. Creative men and women do — if they are left free to pursue their dreams.

Geoffrey Lawrence is a fiscal policy analyst at the Nevada Policy Research Institute. For more visit http://npri.org/.

Geoffrey Lawrence

Geoffrey Lawrence

Director of Research

Geoffrey Lawrence is director of research at Nevada Policy.

Lawrence has broad experience as a financial executive in the public and private sectors and as a think tank analyst. Lawrence has been Chief Financial Officer of several growth-stage and publicly traded manufacturing companies and managed all financial reporting, internal control, and external compliance efforts with regulatory agencies including the U.S. Securities and Exchange Commission.  Lawrence has also served as the senior appointee to the Nevada State Controller’s Office, where he oversaw the state’s external financial reporting, covering nearly $10 billion in annual transactions. During each year of Lawrence’s tenure, the state received the Certificate of Achievement for Excellence in Financial Reporting Award from the Government Finance Officers’ Association.

From 2008 to 2014, Lawrence was director of research and legislative affairs at Nevada Policy and helped the institute develop its platform of ideas to advance and defend a free society.  Lawrence has also written for the Cato Institute and the Heritage Foundation, with particular expertise in state budgets and labor economics.  He was delighted at the opportunity to return to Nevada Policy in 2022 while concurrently serving as research director at the Reason Foundation.

Lawrence holds an M.A. in international economics from American University in Washington, D.C., an M.S. and a B.S. in accounting from Western Governors University, and a B.A. in international relations from the University of North Carolina at Pembroke.  He lives in Las Vegas with his beautiful wife, Jenna, and their two kids, Carson Hayek and Sage Aynne.