When the economy was growing, state and local governments spent money as if the good times would never end. But in the face of stagnant revenues, state and local governments are now spending record amounts of taxpayer money lobbying the federal government for a larger piece of Uncle Sam’s deficit-fueled budget.
States and localities are on track to spend a combined $83.1 million in taxpayer money this year on Washington lobbyists, the second straight recession year to top the previously unbroached $80 million barrier, according to the nonpartisan Center for Responsive Politics. By comparison, officials spent less than half that much - $38.5 million - lobbying Washington in 2001. Lobbying expenditures by states and localities rose by 118 percent from 2001 to 2008, compared with a 101 percent increase among all sectors of the economy that lobbied Washington over the same period, according to the data.
The theory behind aid to the states is that the federal government can operate programs in the national interest to efficiently solve local problems. The belief is that policymakers can dispassionately allocate large sums of money across hundreds of activities based on a rational plan designed in Washington.
The federal aid system does not work that way in practice. Most federal politicians are not inclined to pursue broad, national goals, but are consumed by the competitive scramble to secure subsidies for their states. At the same time, federal aid stimulates overspending by state governments and creates a web of complex federal regulations that destroys state innovation. At all levels of the aid system, the focus is on regulatory compliance and the amounts spent, not on delivering quality services.