Federally Subsidized State Profligacy

November 18, 2022 by Dan Mitchell @ International Liberty

I was going to write about Argentina again today, following up on yesterday’s column.

But the National Association of State Budget Officers has released a new report about spending in the 50 states.

This is an opportunity to see how all the pandemic spending by Washington has encouraged bad fiscal policy at the sub-national level.

To be succinct, the answer is “a lot.”

Figure 1 shows that all the grants and handouts enabled reckless policy. For all 50 states, the burden of spending climbed 24.7 percent between 2020 and 2022.

But not all states are created equal.

So I went to Table 1 of the report to see how much spending increased in various states.

Here are some of the highlights. Special applause for Georgia (home of my beloved Bulldawgs!), which actually reduced the spending burden over the past two years. And honorary mention to North Carolina, which is further enhancing its reputation for sensible fiscal policy.

Colorado also was one of the best states, doubtlessly thanks to TABOR. And New Hampshire also deserves further plaudits for relative frugality.

The big states of Texas and Florida increased spending by less than the 24.7 percent average. As did New York, surprisingly.

I’m sure nobody is surprised to see such bad results from New Jersey and California. And Illinois deserves some sort of Booby Prize for its recklessness.

P.S. I’ll close by shifting to a different topic. As you can see from Figure 5, Medicaid (the government’s health entitlement for poor people) is consuming ever-larger shares of state budgets (and the federal budget).

Medicaid reform (block granting the program) is a very good idea to fix budget problems at the state level and to fix budget problems in Washington. And reduce fraud as well.