When Uncle Sam Doles Out Money, it Impacts Statehouses

By Chris Adams

The U.S. is a nation of states – and the national story is a state story.

So when it comes to the spending of federal tax dollars, reporters need to understand how cash authorized by  Congress has a major impact in every town, county, city and state nationwide.

In a session with National Press Foundation Paul Miller fellows, two experts from the Pew Charitable Trusts laid out how money flows out from Washington – and how its impact is wildly different.

Barb Rosewicz and Rebecca Thiess detailed for fellows the many ways that federal money hits local pocketbooks. It’s spending on military bases and educational programs; Medicare and Medicaid payments; Social Security and veterans disability claims and pensions.

In some states, those payments combined are a major source of economic activity. New Mexico is the highest (not counting the unusual case of Washington, D.C.); the equivalent of 33 percent of all economic activity in the state comes from federal payments.

That’s more than twice the lowest-ranking state on that measure: North Dakota, where the equivalent of only 13 percent of economic activity is tied to federal payments.

The point of the exercise is to see how dependent many parts of the country are on federal payments.

Pew tracks all those dollars, and further breaks them down into military spending, grants to states, pension programs, health care and all the other ways Congress spends its – your – money.

Rosewicz and Thiess also talked about the changes in revenue to states, and how it collapsed during the Great Recession of 2007-2009. State revenue has  come back since then, but it took nearly four years to do so. During those years, federal spending filled in many of the gaps.

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