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.

The House is scheduled to pass another $26 billion bailout for state and local governments on Tuesday. The legislation provides another $10 billion for education and $16 billion to extend the increased share of Medicaid being paid for by the federal government since passage of the stimulus.

A common theme with federal programs that fund state and local activities is that the distribution formulas are highly complex and politically-driven. The result is that policymakers at the federal and state level are constantly jockeying for more money, while the general public remains largely ignorant as to where the money comes from and how it’s spent.

The city of Bell, CA recently made national headlines when it came to light that city officials have been receiving massive six-figure salaries. Bell taxpayers were so irate that police in riot gear were required to maintain control at a recent city council meeting. 

The Low-Income Home Energy Assistance program provides $5 billion annually to the states, which distribute the funds to businesses, nonprofits, and homeowners. Unfortunately, the states do a poor job making sure the money isn’t lost to fraud and abuse.

The 1990s were a decade of rapid private sector expansion and federal government restraint. The 2000s are a decade of government expansion at all levels and private sector retrenchment.

On May 27th the USDA awarded $168 million in stimulus money to 145 local infrastructure projects across the country. A third of the money is going to the Mohegan Indian tribe in Connecticut for a new community center. The $54 million loan has attracted national scrutiny because the tribe operates one of the biggest casinos in the country, which grossed $1.3 billion in 2009.

President Obama is proposing to give the states another $50 billion. However, that would amount to another bailout for state and local government employees and their unions. The president claims that more deficit spending is necessary to sustain the nascent economic recovery. But the only thing the money would sustain is the excessive wages and benefits government employees enjoy at the expense of the private sector.

Yesterday, the Washington Post reviewed the life of Phyllis McClure, who was an advocate for federal education spending in low-income neighborhoods.