The economics of state allocations
Stimulus Funds Not Targeted To States That Need Jobs
(The bulk of state funds were "spread" around but double to democratic districts. Remember obama said he wanted to "spread the wealth around" but he was really saying he wanted to pay off his cronies and democrate party people. Because of this I see no reason why obama cannot be impeached for this crime while in office. It is a crime to send funds in twice the amount to democratic districts. This is another Quo Warranto case. I hope Leo Donofrio and Steve Pidgeon will also bring this obama administration crime to the attention of the DC Court.)
Of the $787 billion in ARRA, state governments will receive as much as $300 billion. The bulk of these state funds will be spread over four key programs:
* A $54 billion Fiscal Stabilization Fund meant primarily to stave off cuts in state education spending
* A $90 billion Fiscal Relief Fund meant to shore up financing for state Medicaid programs
* A $40 billion program to allow states to extend and increase unemployment insurance (UI) benefits
* At least $70 billion to fund transportation projects
Each program also includes a small portion to be allocated at the discretion of the executive branch.
(This is interesting. Its says each part of the stimulus program includes a "small" portion which can be allocated, or used as a SLUSH FUND, AT THE DISCRETION OF OBAMA. I would like to know how much is at the 'discretion' of obama and where the funds went.) Story Reports
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Report: Democratic districts received nearly twice the amount of stimulus funds as GOP districts
By: Mark Hemingway
Commentary Staff Writer
December 16, 2009
A new analysis of the $157 billion distributed by the American Reinvestment and Recovery act, popularly known as the stimulus bill, shows that the funds were distributed without regard for what states were most in need of jobs.
“You would think that if the stimulus money was actually spent to create jobs, there would be more stimulus money spent in high unemployment states,” said Veronique de Rugy, a scholar at the Mercatus Center who produced the analysis. "But we don't find any correlation."
The Mercatus Center at George Mason University in Virginia is one of the nation's most respected economic and regulatory think tanks and has a Nobel prize-winning economist on staff. The econometric analysis was done using data provided by Recovery.gov -- the government website devoted to tracking the stimulus data -- as well as a host of other government databases.
Additionally, Mercatus found that stimulus funds were not disbursed geographically with any special regard for low-income Americans. “We find no correlation between economic indicators and stimulus funding. Preliminary results find no statistically significant effect of unemployment, median income or mean income on stimulus funds allocation,” said the report.
(Wow this means the stimulus funds didn't do what they were suppose to do nor were the funds distributed in a way to stimulate the economy. It is more evidence obama is a FRAUD) Story Reports
The Mercatus Center analysis also found that Democratic congressional districts received on average almost double the funding of Republican congressional districts. Republican congressional districts received on average $232 million in stimulus funds while Democratic districts received $439 million on average.
“We found that there is a correlation [relating to the partisanship of congressional districts],” de Rugy said. Her regression analysis found that stimulus funds are expected to decrease by 24.19 percent if a district is represented by a Republican.
“During the appropriations process, you're not surprised to see the Democrats are getting more money, but in this case a lot of the money we're looking at is going through HUD [Department of Housing and Urban Development], or Department of Education, Department of Transportation etc. and they're following a formula,” she said. “But the correlation exists, and not only does it exist -- when you look at how much money we're talking about, it's a pretty big deal.”
The analysis found that neither congressional leadership positions of local members nor presidential preference in 2008 were factors in stimulus allocation by congressional district.
Finally, the Mercatus analysis shows that a majority of the funds allocated went to public rather than private entities -- nearly $88 billion to $69 billion. While some of the money given to public entities may eventually filter down to the private sector, it's much less transparent how money given to public entities is spurring economic growth and job creation.
(Yes, the Department of Housing and Urban Development, Department of Education, Department of Transportation etc are following the "obama formula" of kickback or payoff slush fund money. All this should be investigated by congress but of course it will not be investigated as long as the democrates are in control. An investigation into why democratic districts were given twice the stimulus money via the obama administration formula should be a top priority in congress. This is FRAUD committed by a FRAUD.
(I want to know how the obama formula works. I want to see it. How complicated is it? The letter from the San Francisco Federal Reserve Bank explains a little. ???
The letter equates economic need with a states expected stimulus share. How could it be possible for twice the funds to go to democratic districs? This would mean democratic districs have twice the economic need than republican districs have. This is a FRAUD exposed. The "need" seems to have been to equate democratic districs with twice the economic need for funds because they are democratic districs. This is the obama stimulus formula. If your a democrate you get twice the amount if not you get 50%.) Story Reports
The following information is from an "Economic Letter" the Federal Reserve Bank Of San Francisco Published on Apri 17, 2009.
FRBSF Economic Letter
The American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law on February 17, and already its impact is being felt in state capitals around the nation. Governors and state legislators are incorporating expected stimulus funds into 2009-2010 budgets and a number of state public works projects predicated on ARRA funding already have begun. As states start spending these ARRA funds, the debate about their likely economic impact has taken on new life.
One question is whether federal stimulus funds are heading to those states best positioned to put the money to good use right away. That is, have the funds been allocated in a way that maximizes their potential impact on national economic growth? This Economic Letter addresses this question by comparing the degree of economic need in different states with each state's expected share of ARRA funds. Such an analysis is important in evaluating the likelihood that stimulus money will be spent effectively. While it is too early to tell whether the overall stimulus package will have its intended effects, this review suggests that, by and large, the distribution of federal stimulus funds is indeed tilted toward those states most likely to spend the funds quickly and effectively.
The economics of state allocations
Of the $787 billion in ARRA, state governments will receive as much as $300 billion. The bulk of these state funds will be spread over four key programs:
* A $54 billion Fiscal Stabilization Fund meant primarily to stave off cuts in state education spending
* A $90 billion Fiscal Relief Fund meant to shore up financing for state Medicaid programs
* A $40 billion program to allow states to extend and increase unemployment insurance (UI) benefits
* At least $70 billion to fund transportation projects
The money going to states is meant to reduce their need to raise taxes or cut government spending to meet their constitutional balanced-budget requirements. According to ARRA proponents, such fiscal austerity could intensify the contraction of the national economy (see, e.g., Romer 2009).
The total impact of ARRA money going to states will depend on how quickly and productively states use the funds. How a given state spends its ARRA allocation will depend importantly on two factors: the restrictions tied to the use of the funds and the state's budget position. For unrestricted funds, states facing more severe budget deficits will probably spend the money quickly. States in stronger fiscal health, however, potentially could receive more unrestricted money than they need to fund planned obligations and might save the excess by adding to their rainy day funds or transferring it to residents in the form of tax cuts. A good indicator then of how likely a state is to spend unrestricted federal funds immediately is its projected near-term budget deficit. I look at the relationship between state ARRA allocations and projected state budget gaps below.
For restricted funds, such as money earmarked for specific transportation projects, a different question is in order: Will these new public investments crowd out potential private investment, as some have argued (e.g., Becker and Murphy 2009), by drawing away productive resources such as capital and labor? The closer a state's economy is to operating at capacity, the greater the potential for such crowding out. Below I also analyze whether ARRA's transportation spending is expected to go disproportionately to states with the greatest idle productive capacity, which would reduce the potential for crowding out.
How are stimulus funds allocated to states?
The way in which ARRA funds will be distributed to states differs for each component of the stimulus package. For the $40 billion UI component, the federal government will almost fully reimburse each state's cost of expanding and extending unemployment benefits. Hence, these funds will be allocated roughly in proportion to state unemployment rates. The other three ARRA state programs cited above are allocated according to formulas specified in the legislation, though each program also includes a small portion to be allocated at the discretion of the executive branch. The Fiscal Stabilization Fund, which is meant to prevent cuts in state education spending, uses the simplest of the three formulas. Aside from a small portion set aside for incentive grants, program funds will be allocated to each state according to a weighted average of its total population and its school-age population.
The Fiscal Relief Fund piggybacks on the existing formula for federal government assistance to state Medicaid programs and has three parts. The first is a simple scaling up of the existing federal share of a state's Medicaid costs. Second, a so-called "hold-harmless" component is meant to offset cuts in federal support called for by the existing formula in states where per capita income grew rapidly in the last few years prior to the start of the recession. The third part provides for an additional increase in a state's federal Medicaid share in proportion to the rise in the state's unemployment rate during the recession. Taken together, the Fiscal Relief Fund's three components direct the most support to states that have experienced the most rapid reversals in economic fortunes, where strong pre-recession economic growth was followed by rapidly rising unemployment and expanding Medicaid rolls.
The Fiscal Stabilization and Fiscal Relief Funds are partially restricted. They are meant to enable states to maintain spending on Medicaid and education above minimum thresholds laid out in the legislation. However, once a state has met those minimum requirements, stimulus funds from these two programs allow the state to shift resources to other parts of its budget. For practical purposes, these funds are largely unrestricted.
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Lets not forget obama has the ability to payoff his thugs with the stimulus money because of the follwing provision:
"each program also includes a small portion to be allocated at the discretion of the executive branch."
This is money obama could send to the communist party or acorn. How did he use this money and how much? I would like to know wouldn't you? Story Reports
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