Kentucky’s Piece of “the Federal Pie”

The Courier-Journal ran an editorial today further building on the case for federal support to Kentucky laid out in Sunday’s paper. Both pieces are worth a look. What are your thoughts on support to Kentucky – and especially, Kentucky’s Appalachian counties – in this time of state shortfall?

Editorial | The federal pie

Vows to reduce federal spending are popular on the campaign trail this year, but voters in Kentucky and Indiana better hope that no matter who wins the elections, most of the promises remain just talk.

A report Sunday by Courier-Journal writers James R. Carroll and Lesley Stedman Weidenbener made clear just what the stakes are.

Kentucky, one of the nation’s poorest states, ranked 12th among the 50 states in federal spending per resident during the 2009 fiscal year, according to Census Bureau data. That was a total of more than $50 billion, an average of $11,592.63 for every man, woman and child in the commonwealth. Indiana’s ranking isn’t as high — 32nd per capita — but it still amounts to a total of $61 billion in money from Washington.

A couple of points should be clear to anyone who looks beyond the hollow sloganeering.

One is that a big chunk of the money — 52 percent of the total in Kentucky, for example — comes from Social Security, Medicare and Medicaid. If congressional candidates want to reduce those figures, they will have to cut popular programs on which ordinary citizens depend. That would be political suicide, of course, so don’t worry: There won’t be any shredding of these entitlement programs. But it also means that much of the budget-cutting, deficit-slashing rhetoric is hollow.

Moreover, many of the other federal dollars that are spent in the states go to areas that are likely to prove resistant to political tampering. Kentucky ranks near the top of the list, for example, in active military pay and expenditures for veterans programs. Indiana gets a big chunk of change in defense procurement contracts and federal mortgage insurance on homes.

There are areas where Congress has sufficient control to reduce or eliminate spending, but don’t bet on its happening. Rand Paul, the Republican candidate for a Senate seat from Kentucky, might turn out to be enough of an ideologue — and sufficiently obtuse about Kentucky — to embrace cuts in ventures such as agriculture subsidies, anti-drug efforts, supplemental nutritional assistance and Appalachian Regional Commission programs.

Overall, however, the line of politicians willing to support spending cuts that harm their own states will be short. Indeed, the opposite will be true. In Indiana, Gov. Mitch Daniels, a noted deficit hawk, established an office in 2005, his first year on the job, to compete for federal grants and procurement.

There remains campaign criticism of federal stimulus packages and the auto industry bailout, but those are not recurring expenditures — and, in any case, nonpartisan studies show that the costs of doing nothing would have been worse. Similarly, health care costs must still be contained, but without reform the existing system was unsustainable.

The answers to federal budget dilemmas lie in increasing revenues by raising tax rates for the wealthy, closing tax loopholes, winding down the wars and costs in Iraq and Afghanistan as quickly as can be done responsibly, reaching careful bipartisan agreement on which programs can be administered more efficiently and less expensively and, most important, getting the economy and employment moving faster in the right direction.

Anything else is just a sound bite.

Kristin Tracz

About Kristin Tracz

Kristin Tracz served MACED’s Research and Policy team from 2009-2012 working on clean energy policy, energy efficiency programs and the Appalachian Transition Initiative. She joined MACED after finishing her Master of Environmental Management degree at the Yale School of Forestry & Environmental Studies. She now lives and works in Washington, DC.