Alaska's Dependency on DC

August 18, 2010

A New York Times article on Alaska’s love/hate relationship with the federal government underscores why weaning the states off their addiction to federal dollars would be difficult. A lot folks in Alaska (and across the country) say they want smaller government, but aren’t as enthusiastic when asked about giving up their own federal goodies.

Alaskans possess a spirit of rugged individualism, and generally don’t appreciate the federal government sticking its nose in matters like oil exploration. But Alaska receives considerably more money per capita from Uncle Sam than it sends to Washington. For example, the Times cites figures that show Alaska received $3,145 per capita in stimulus money compared to $1,781 for the next closest state. 

This disconnect – some would say hypocrisy – is exemplified by some of the state’s prominent politicians. Take for example Sarah Palin, the former Alaskan governor who has positioned herself as torchbearer for the tea party movement:
Sitting in valleys rimmed by mountains, glaciers and a vast alluvial delta, Matanuska-Susitna Borough, with its 83,000 residents, is a sub-Arctic suburb of Anchorage. Its largest city, Wasilla, is home to Sarah Palin. A year ago, while still governor, she took a stab at rejecting $28.6 million in federal stimulus for weatherization. As Alaska incurs a notable winter, Republican and Democratic state legislators overruled her and accepted the money.
Matanuska-Susitna Borough officials received about $111 million in federal stimulus, according to Pro Publica. There was $28 million for schools and $900,000 for a park-and-ride lot for commuters heading to Anchorage.
(Wasillans have a practiced eye for federal dollars; when Ms. Palin was mayor, she hired a lobbying firm that reeled in $25 million in federal earmarks for a city of fewer than 7,000 residents.)
I’ve pointed out before that Palin’s record hasn’t been very consistent on this issue.
As the following chart shows, federal subsidies to state and local government have exploded following the New Deal crack in the federalism dam. The chart separates total expenditures into health (mainly Medicaid) and non-health:
A Cato essay on fiscal federalism points out that state and local subsidies are the third largest item in the budget behind national defense and Social Security. Weaning the states off their addiction to federal money would be a good step toward getting the nation’s rising debt under control. It would also be a step toward returning the states to being the “laboratories of democracy” that once drew the admiration of Alexis de Tocqueville.



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