Federal Spending is More Than the Combined Spending of the States

By Josiah Dalke
October 8, 2021

One only has to turn on the television to see that the federal government has, in effect, completely engulfed state and local government. When a problem arises, many individuals no longer consider how state government will remedy the situation

The burden of governance has shifted to the federal government in many aspects. Part of the reason for this is that the federal government has grown beyond comprehension in the last 150 years.

One area in which this is evident is the growth of spending between federal, state, and local governments. According to the Tax Policy Center, the amount of spending by the federal government has greatly surpassed any other category of spending. The report showed that federal receipts in 2018 totaled over $3.5 trillion, which greatly surpasses the states’ $1.8 trillion and local government’s $1.4 trillion. This is a huge transition from federal spending never rising above several billion dollars in the early 1900s.

Why does this occur? Part of the reason for this change between state and federal budgets is that the federal government wields monetary power that the state does not have. When the federal government sees a problem, it is not restricted by budgetary restrictions. All it needs to do is just print more money or borrow from some other entity. This was clearly done in the COVID-19 pandemic.

States do not have this luxury. Because the United States cannot have 50 different currencies, printing power is reserved for the federal government. This means that state budgets are limited to the amount they can obtain through revenue. This creates several effects. For one, because state budgets are limited in funding, more time and effort is made in debating where to appropriate funds. The second effect is that the amount that is appropriated is already minimal and thus will not have the same capacity to create long-lasting change.

It's no wonder the federal government has increased in size and overshadowed state action. Federal funding is virtually unlimited, and thus less time and effort is needed to pass the budget. In fact, detailed budgets are no longer necessary on a federal level due to the inception of bureaucracy and shifting the burden of responsibility on executive agencies. The federal government has, in essence, taken the role of state governments as they now dictate where the majority of government money, in general, will be spent and appropriated. This is a problem.

As difficult as it might be, decreasing reliance on federal action is incredibly important if state governments want to maintain their autonomy. A big part of that can be done by boosting the economy. If the economy grows and flourishes, more money can be gleaned through state revenue. This may provide an outlet for states to take hold of their own problems and diminish the federal government's role in their own affairs. Ironically, it is typically the states that struggle economically that rely more on federal aid. State solutions are always preferred. It would be best to find more solutions to get federal action out of state affairs and back into its own domain.


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