Federal Aid to States

In a discussion on this web site in mid-November 2012, there were questions about (1) which parts of the country have the highest poverty levels, thereby indicating some remediation by some outside entity and (2) which states get the most Federal Aid.  I addressed the first issue with an entry on this web site (http://fairlyconservative.com/2012/12/05/a-look-into-poverty-in-the-united-states).  In this entry, I will address the second issue using data that exist in the 2012 Statistical Abstract available on www.census.gov/compendia/statab/.

Also, the data include the proper types of information (i.e., mostly “entitlements”).  Some earlier comments wanted to include defense spending, although Cindy clarified that that was not what she had in mind.  Another argument to not include defense spending is that one of the few responsibilities that governments have always had (i.e., tradition) and will always have is a moral obligation to protect its citizens.  Therefore, those data will not be included in this analysis, and the data will include “entitlements” only.  I use the 2009 data provided in the Statistical Abstract (given as Table 432; the 2009 data are used since Table 433 gives the Federal Aid to State and Local Governments by State only up to 2009).  The data included are shown in Table I.

For 2009, the numbers above total around $537-552 billion (the government has two numbers in two adjacent tables and the numbers above add up to approximately that amount – go figure, maybe the government has no clue what they really spend!).  Another point about the data is that these “entitlement” expenditures have risen from $135 billion in 1990 to an estimated $625 billion in 2011, representing an annual growth rate of roughly 7.7%.  This amount over the past 20 years is about twice the inflation rate for that period.  No wonder the government has seen its spending go through the roof and are running huge deficits!  Most of that growth, incidentally, occurred in 2009-2010 (over 10% increase).

As in the previous posting (“A look at poverty in the US”), I split the US into three regions (Table II), which turns out to be closely correlated to the latest presidential election results.

The Average Federal Aid per person for each region is $1776 for Region #3, $1779 for Region #2, and $1664 for Region #1.  The difference between each region is relatively insignificant, and compares favorably with the mean aid per person ($1788) for the entire US.

The data show that for Federal Aid to State and Local Governments by State for 2009, all states except four are roughly getting an even break.  The states getting a disproportionate amount of funding include the District of Columbia ($16,052), Alaska ($5103), Wyoming ($3928), and New Mexico ($3222).  Other than DC, for Region #3, federal aid funding ranges from $1121-2693.  Other than Alaska and Wyoming, for Region #2, funding ranges from $1390-2685.  Finally, other than New Mexico, for Region #1, funding ranges from $1164-1882.  If anyone has any ideas on why these states are out of the ordinary, please let us know.  Also, since each region is roughly breaking even in Federal Aid, why not cut out the middle man (i.e., federal government), reduce our federal taxes, and let each of the states handle these “entitlements”?