[Please welcome Goldy to Slog. He'll be posting here as well as his home blog, HorsesAss. — Eds]

In addition to the discounted power already provided the region, Seattle agreed this week to pay Pend Oreille County $19 million over the next 10 years, including $3 million toward construction of a new school in compensation for continued operation of the Boundary Dam. Okay, whatever.

Seattle City Light took a big risk back in 1964, deciding to invest $94 million of rate payer money in building a new dam and 300 miles of transmission lines at a time when electricity was dirt cheap. The fact that this investment more than paid off — Boundary Dam now provides about 46 percent of Seattle's power, ensuring us some of the lowest rates in the nation — is a tribute to the foresight and planning of our city-owned public utility.

In return, Pend Oreille County got a recreational lake that has become a key part of its local economy, new school buildings, and about $1.4 million a year in impact fees... not to mention cheap, wholesale electricity that saves its rate payers about $20 million a year. All told, that's an average of about $1,615 in direct cash benefits annually for every man, woman and child in Pend Oreille County.

That was the legally binding contract. But strapped for cash, and with the federal relicensing process offering an opportunity for political monkey-wrenching, if not outright extortion, Pend Oreille demanded that Seattle triple its annual payments.

Instead, the two sides "compromised," with Pend Oreille getting an additional $3 million toward a new school, a fraction of its original demands. But before you feel too sorry for those poor, exploited rural folk and their crumbling school buildings, you might want to look at this...

When Seattle built the dam 40 years ago, it also built a grade 7-12 school in the northern part of the county. Since then, enrollment has plummeted, the roof started leaking, and seven local bond measures have failed.

It's not Seattle's fault that Pend Oreille didn't maintain its school buildings, it's the Pend Oreille voters' fault for rejecting seven local bond measures. I mean, when was the last time Seattle voters rejected a school levy or bond measure?

Part of Pend Oreille's problem is that inexpensive recreational waterfront real estate has attracted retirees to the area, who obviously couldn't give a shit about funding schools for school age children they no longer have. But a bigger part of the problem is the whole attitude toward government and taxes that seems to dominate in much of the rest of the state. In their minds, the problem isn't that taxes are too low, but that those liberals in Seattle keep ripping everybody else off.

So of course Pend Oreille comes to big, bad Seattle demanding more money, because they're convinced we've been sucking them dry... when in fact Pend Oreille has always been one of the biggest welfare queens in the state. For example, between 1983 and 2004, the Puget Sound region received 98-cents back in spending for every dollar it paid in state and federal transportation taxes. But Pend Oreille County? They saw an impressive $2.58 return! That’s a $68 million subsidy over 20 years, or roughly $260 annually per man, woman and child.

And that's just for transportation; the numbers are similar in nearly every other category of government spending and investment.

More after the jump.

This whole Boundary Dam controversy drives home for me a couple of lessons, not the least of which being the immense public benefit of public investment. Most Seattle residents and businesses have no idea how lucky we are to purchase our power from a city-owned utility whose primary obligation is to the rate payers, not the shareholders. Call it "socialism" if you like (and technically, it is socialism), but Seattle City Light has always proven a tremendous boon to our local economy.

Pend Oreille County rate payers also benefit from such socialism, both from the impact fees and wholesale power provided by the Boundary Dam hydroelectric project, and from the power generated by the Pend Oreille PUD's own Box Canyon Dam, just up river.

But the bigger lesson is that today's enormous political divide between rural and urban Americans as to the proper size and scope of government is largely based on a fundamental misconception about who is subsidizing whom. For without state and federal investments and subsidies in rural electrification, irrigation, transportation, communication, education and nearly every other "-ation," much of rural America would have remained the same economic backwater it was prior to the admittedly massive expansion of government during President Roosevelt's New Deal, and the next half-century of Democratic and Republican administrations that followed.

Again, call it "socialism" if you want, and technically, for example, the interstate highway system, you know, is socialism — but it was this massive wave of public investment that helped build the United States into the greatest economic, military, political and cultural power in the history of the world.

And it was a lack of public investment that reduced Pend Oreille to begging Seattle for money after the roof fell in at its lone 7-12 school.