What’s the Impact of Federal Spending in States?

More than 90% of federal spending takes place in the states. The rest is for items  such as interest on the nation debt and classified programs (in which the location isn’t publicly known.)

That’s an important fact to keep in mind for state and local reporters as they write about federal spending: It’s called “federal,” but it’s really local.

It’s money for everything from military bases, to the federal share of Medicaid programs, to Social Security checks.

And while those dollars are vitally important to all states, in some they are more important than others. Federal spending for some states represents a third of their gross domestic product; for others, it’s less than 15%. (The national figure is 19%.)

In a session with National Press Foundation fellows focused on state and local coverage, two experts from the Pew Charitable Trusts detailed how money flows out from Washington – and how its impact is wildly different.

Barb Rosewicz and Rebecca Thiess explained for fellows the many ways that federal money finds its way to  local pocketbooks. That spending has been on an upward trend; while it briefly hit 36% after the recession of 2007-2009 and has come down from then, the general trend since the 1980s has been up.

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 money. The information is easily accessible at Pew’s websites for reporters tracking the finances of state economies.

“When you look at your state and the states around you, that can lead to some really interesting questions,” Rosewicz said. “Why is my state so different than the state right next door when our economies are similar?”

This program is funded by Arnold Ventures. NPF is solely responsible for the content.

Barb Rosewicz
Project director, research and content, state fiscal health, Pew Charitable Trusts
Rebecca Thiess
Associate manager, Pew Charitable Trusts
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