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Impact of the 2010 Census

FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
December 28, 2010

IN THIS ISSUE:

1.  The Results of the 2010 Population Count

2.  The 2010 Census: Winners and Losers

3.  Low Tax States Big Winners in Census

Introduction

The results of the 2010 Census were released last week, and there are many implications – demographical, political and otherwise.  Since most of you are still in holiday mode, I thought we could use this time to take a close look at the latest Census results and ponder what they might mean for our future.

As you’ve probably already heard, the political implications of the 2010 Census are expected to favor the Republicans, as they are likely to pick up most (but not all) of the new congressional districts as I will discuss below.   In addition, the reapportionment in the Electoral College as a result of the Census will almost certainly make it harder for President Obama to win re-election in 2012.

There are some Census results that have been largely overlooked by the mainstream media.  One in particular is the fact that states with high taxes saw their population growth rates decline, while most states with low taxes saw growth rates soar.  But before getting into those discussions, let’s cover the highlights of the 2010 Population Count, commonly referred to as the “Census.”  

Census Results of the 2010 Population Count

Last week, the United States Census Bureau released its official count of the nation’s resident population. It said the population, as of April 1st, was three hundred eight million, seven hundred forty-five thousand, five hundred thirty-eight (308,745,538).

The population increased 9.7% in the last 10 years.  This was the nation’s lowest growth rate since the 1930s. Experts say this was a result of falling birth rates among some groups and fewer immigrants because of the recession.  According to the National Center for Health Statistics, US births fell 2.6% in 2009 to the lowest level on record.

 Census Bureau Director Robert Groves announces results for the 2010 U.S. Census at the National Press Club. 

Two states had the largest population increases. Texas gained more than four million people -- more than any other state. Nevada was the fastest growing state. Its population increased 35% percent from the last Census in 2000.

Across the country, the largest increases were in southern and western states. The population continues to move from the Northeast and Midwest to the South and West. This has been happening for the past 40 years.

The United States Constitution calls for a Census of the nation’s population every 10 years. This must be done to equally divide the 435 voting districts in the House of Representatives among the states. Each House member represents, on average, about 700,000 people. The states with the biggest populations have more congressional seats than less populated states. The most populated state, California, has 53 House seats, whereas the least populous state, Wyoming, has only one seat.

A total of 18 states will gain or lose seats in the House because of the Census results. Texas will gain four seats, more than any other state. Florida will gain two seats. Six states in the South and West – AZ, GA, NV, SC, UT, WA – will each gain one seat. Ohio and New York will lose two House seats each. Eight states, mostly in the Northeast and Midwest, will lose one seat each.

Most political analysts concede that the Census report was likely good news for the Republican Party and bad news for the Democrats and President Obama. Most of the states that will gain seats usually support Republicans. Many of the states losing seats usually vote for Democrats.  But I’m getting ahead of myself – more on the political implications as we go along.

“Redistricting” is the process by which individual states that gain or lose House seats reconfigure their voting districts to include more or less people. In most cases, the state legislatures and governors are responsible for setting the borders of congressional districts. Even if states don’t gain or lose seats in the House as a result of the census, all states are required to redistrict periodically to reflect their changing population concentrations.

The 2010 Census: Winners and Losers

As alluded to above, most political analysts agree that the Census results favor the Republicans and disfavor the Democrats in upcoming elections and possibly for years to come.  The basic reason is that most of the states that will gain House seats as a result of the 2010 Census are so-called “Red” states that tend to vote Republican.  Most of the states that lost seats are so-called “Blue” states that tend to vote for Democrats.

What follows are excerpts from a good article I found in THE WEEK that discusses the topic of Census winners and losers:

QUOTE:
Thanks to population shifts from the Northeast and Midwest to the South and the West, several states will be redistricted to account for the changing headcounts, a process with far reaching implications for political life cycles over the next decade. Here, a list of the winners and losers from the 2010 Census:

WINNERS

Republicans
‘All the gaining states but Nevada and Washington are pretty solidly Red, and all the losing states but Louisiana and Missouri are solidly Blue,’ says James Joyner at Outside The Beltway. That spells ‘good news for Republicans.’  But the fact that population gains in the South and West were ‘driven overwhelmingly by minorities, particularly Hispanics,’ could give the Democrats ‘potential advantages’ in some districts, counters The New York Times.

Texas
‘Texas will gain four new members of Congress,’ reports Jeannie Kever in the Houston Chronicle, the biggest gain of any state, to add to its 32. The Lone Star state's population grew by 20.6 percent in the last decade — thanks, in part, to a ‘surging Hispanic population.’

Florida
The Sunshine State will gain two new seats in Congress, reports Reid Wilson in the National Journal, boosting the Sun Belt’s influence in Washington.  Alas, the state’s 18 percent population growth wasn’t quite as high as expected, reports WUSF.com. Some had predicted Florida would ‘overtake New York as the nation’s third most populous state.’

Washington D.C.
The population of the District of Columbia, now at 600,000 residents, grew for the first time in 60 years, reports Carol Morello in The Washington Post. The key factors: ‘A real estate boom’ and the expansion of the federal government that followed the Sept. 11, 2001 terrorist attacks. The headcount is still well below the city’s peak population of 802,000 in 1950, though.

LOSERS

Democrats
‘This is about as bad as it could get for Democrats,’ says Dave Weigel at [liberal] Slate. The party’s caucus will now see ‘internal warfare in the rust belt and Northeast,’ where shrinking populations in Michigan, Ohio, and Pennsylvania will force representatives ‘into a Thunderdome battle for the diminished number of seats.’

President Obama
While Democrats in general are damaged by the census, says Ezra Klein in The Washington Post, it ‘hurts Obama’ most of all. ‘In total, this census takes [at least] six electoral votes from Barack Obama’s 2008 haul. ‘ Obviously, such a shift would have been ‘meaningless in the context of 2008, when Obama won by 192 electoral votes,’ says Shane D'Aprile at The Hill.  But it could be a ‘decisive margin’ if 2012 is a close contest.

New York
The Empire State will lose two of its 27 seats in the House, leaving it ‘with the smallest Congressional delegation it has had in 200 years,’ reports Raymond Hernandez in The New York Times, meaning that in 2020, the state will likely be overtaken by Florida as the third most populous in the union.

The U.S.
Population grew by only 9.7 percent in the last decade, giving the U.S. a headcount of 308,745,538. That’s the slowest growth since the 1930s, according to Census Bureau Director Robert Groves.  And if our growth slows to a halt,  says Jacob Heilbrunn at the National Interest, ‘the Social Security system and a host of other government programs are going to go under.’  END QUOTE

As noted above, there will be 12 new House districts created in the states that gained seats as a result of the Census.  As the article points out, most of those states tend to vote for Republicans, so the GOP is very likely looking at a boost just ahead.  However, there are some political analysts who argue that long-term demographics in the US do not favor the Republicans, and I might not disagree.

You see, the initial Census data released last week only reflect the total number of residents living in the US.  The initial data do not reflect the demographic makeup of these shifting populations, such as their race, ethnicity, age, education level, and income.  The Census Bureau says it will roll out that data in February and March, and that information will give us more insights as to whether the United States will become more Republican or more Democratic over the long-term.

One other note: I have not elected to write about the effects the 2010 Census will have on the Electoral College, but most analysts suggest there will be a pick-up of apprx. 12 votes for the GOP just ahead.  I have included an article on this development in the links below.

Low Tax States Big Winners in Census

What interested me the most in all of the Census data that came out last week was the fact that almost all of the states with the highest population growth rates had low or no income taxes.  Seven of the nine states that do not levy an income tax grew faster than the national average.

The other two, South Dakota and New Hampshire, had the fastest growth in their regions, the Midwest and New England, respectively.  Altogether, 35% of the nation’s total population growth occurred in these nine low or no income tax states, which accounted for just 19% of total population at the beginning of the decade.

Here’s a graphic illustration of how the House districts will change as a result of the Census. Keep in mind that this process is a zero-sum game, in that there are only 435 voting districts in the House of Representatives. For each district gained, one must be lost.

Tale of the tax tapeLet’s take my home state of Texas as an example, where we have no state income tax, and it ranks second lowest in the nation in terms of overall taxation.  Texas’ population grew 21% in the last decade, from nearly 21 million to more than 25 million.  That was a more rapid growth rate than in any states except for four much smaller ones (Nevada, Arizona, Utah and Idaho).

Texas’ diversified economy, business-friendly regulations and low taxes have attracted not only immigrants but substantial inflows from the other 49 states.  As a result, the 2010 reapportionment will give Texas four additional House seats, the most of any state, followed by Florida which will get two additional seats.

In contrast, California gets no new House seats for the first time since it was admitted to the Union in 1850, and was one of the nation’s fastest growing states over the next century.  Another example is New York which saw its population decline and will actually lose two House seats as a result of the 2010 Census.  Some 1.7 million people left New York State in the last decade, the largest exodus any state experienced.  Upstate New York is dying, killed by high taxes.

The states that lost seats ranked an average of 24th in taxes and had an average tax burden of $2,267 per capita (weighted more toward the states that lost more than one seat).

The states that gained seats ranked an average of 39th in taxes and had an average tax burden (weighted) of $1,788 -- 27 percent lower than the losing states.

The bottom line is, the high tax, heavily unionized states have once again lost representation in the House as Northeast and Midwest businesses have taken their plants and jobs and headed south and west. People vote with their feet and flee to low-tax states. This suggests that it’s not so much the climate, as many argue, but instead it may be the income taxes.

Happy New Year Everyone!!

I sincerely hope that everyone reading this had a memorable Christmas or whatever holiday you may have been celebrating.  We certainly did at my house.  And I wish everyone a very Happy New Year! The Halberts will be hosting a gathering of family and friends on New Year’s Eve to ring in 2011, as usual.

I have a good friend who puts on the hands-down best fireworks show I’ve ever seen, short of the professional shows you see in big cities.  He launches his arsenal from our boat dock on Lake Travis outside Austin where we live, so we are a big favorite among the nearby neighbors.

I hope 2011 is a great year for all of my clients and readers!  I thank you all very much!!

Wishing you profits in the New Year,

 

Gary D. Halbert

  

SPECIAL ARTICLES

Census Ratifies Sunbelt’s Supremacy
http://www.politicsdaily.com/2010/12/21/the-census-ratifies-the-sunbelts-supremacy-and-buoys-the-gop/

How the Census will affect the Electoral College
http://realclearpolitics.blogs.time.com/2010/12/21/reapportionment-and-the-electoral-college/

A liberal (but nonetheless interesting) view on possible long-term voter demographics
http://www.slate.com/id/2278861/


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Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, ProFutures, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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