Making Sense of the Federal Budget

Covering the budget, whether at the U.S. Capitol or in statehouses, creates high anxiety for journalists. The raw numbers mean little to readers, so journalists must put millions and billions of dollars into perspective.

Let’s start with the federal-state relationship. The federal government sends $3.1 trillion to the states each year, or about 90 percent of the entire federal budget. So any changes that Congress makes in federal spending, whether up or down, have repercussions for the states. Nationwide, federal spending equals 19 percent of the states’ economic activity. State by state, the reliance ranges from 32.9 percent in Mississippi to 11.6 percent in Wyoming, according to Anne Stauffer, director of fiscal federalism at the Pew Charitable Trusts.

This data, a critical reporting tool for journalists, was created by Pew after the Census Bureau discontinued it a few years back. Pew also analyzes data across states, allowing journalists to compare how their state is recovering from the recession. “Reporters on the front line in statehouses can find a perspective you can’t easily get inside your statehouse, and that is, ‘How is my state doing, over time and compared to other states,’ ” said Barbara Rosewicz, a director of research for state fiscal health and economic growth at Pew.

Rosewicz explained Pew data that tracks tax revenue, which across all 50 states accounts for half of state government revenue. Again, on a state-by-state basis, the picture is much different. Reporters can use Pew’s interactive tool to compare states.

She said 21 states’ tax revenue, adjusted for inflation, has recovered to peak levels; 29 states are still running behind, spelling difficult choices by governors and state legislators. Pew also has created a “volatility index” based on each state’s reliance on various taxes, a useful tool for policymakers as well as journalists.

Pew Resources: Fiscal 50: State Trends and Analysis Tool

Additional places to go for information, courtesy of Economics Editor Sudeep Reddy of the Wall Street Journal:

* Federal Reserve Bank of St. Louis: https://research.stlouisfed.org
* Congressional Budget Office: www.cbo.gov
* Congressional Research Service: www.crs.gov
* Bipartisan Policy Center: www.bipartisanpolicy.org
* Center for Budget and Policy Priorities: www.cbpp.org
* Committee for a Responsible Federal Budget: http://crfb.org
* Economic Policy Institute: http://www.epi.org
* American Action Forum: http://americanactionforum.org

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