Allocating the US Federal Budget to the States: the Impact of the President

Abstract

This paper provides new evidence on the determinants of the US federal budget allocation to the states. Departing from the existing literature that gives prominence to Congress, we carry on an empirical investigation on the impact of Presidents during the period 1982-2000. Our findings suggest that the distribution of federal outlays to the States is affected by presidential politics. First, presidential elections matter. States that heavily supported the incumbent President in past presidential elections tend to receive more funds, while marginal and swing states are not rewarded. Second, party affiliation also plays an important role since states whose governor has the same political affiliation of the President receive more federal funds, while states opposing the president's party in Congressional elections are penalized. These results show that presidents are engaged in tactical distribution of federal funds and also provide good evidence in support of partisan theories of budget allocation.

Testing Models of Distributive Politics using Exit Polls to Measure Voters’ Preferences and Partisanship

“…Similarly, Larcinese, et al (2006) find no evidence that states with close presidential races receive more federal monies. 6 .…”

“…Similarly, in a more recent study on federal budget allocation by contemporary presidents, Larcinese, et al (2006) find that states with more frequent presidential vote swings do not receive more funds. All of these studies use lagged presidential vote returns to measure the fraction of swing voters.…”

“…Levitt and Poterba (1999) also find indirect evidence that the majority party favors its core areas: areas represented by more senior Democrats tend to get more. between spending and past share vote for the incumbent president's party (Fleck, 2003;Larcinese, et al, 2006;Garrett and Sobel, 2003). 10 Finally, other theorists emphasize the importance of factors such as proposal power (Baron and Ferejohn, 1989), legislative seniority (McKelvey and Riezman, 1992), over-and under-representation (Ansolabehere et al, 2003;Knight, 2004), committee structure, presidential leadership, and universalism (Weingast et al, 1981;McCarty, 2000).…”

Does Electoral Competition Curb Party Favoritism?

“…Several papers to date have documented the fact that party favoritism in the allocation of intergovernmental transfers is quantitatively important. Using U.S. data, Grossman (1994), Larcinese et al, (2006) and Berry et al (2010) find some evidence that states and districts aligned with the federal government do receive more funds 6 . Arulampalam et al (2009) quantify this difference as representing 16% in the case of federal-to-regional transfers in India.…”

Estrategias distributivas presidenciales en contextos cambiantes de centralización fiscal y nacionalización partidaria: Transferencias discrecionales en Argentina durante presidenciales peronistas

“…Por dicho motivo se han realizado múltiples estudios en que se las utiliza sea como variable dependiente o independiente para casos de países tan diversos como Canadá, Estados Unidos, Argentina, Brasil y Alemania (ver entre otros Bonvecchi y Lodola, 2011;Cox y McCubbbins, 2001;Gordin, 2006;Larcinese et al, 2005;Mehiriz y Marceau, 2013;Rodden, 2006). La selección del caso argentino entre los países federales se basa no solo cuando ofrece la posibilidad de comparar presidentes de un mismo partido bajo distintos contextos, sino también en que es un caso relevante para el estudio de las estrategias distributivas de los presidentes en general y, en especial, del rol que cumplen en estas las transferencias intergubernamentales discrecionales.…”