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States' Dependence on Federal Spending: Historically High
Posted By: Michael Tasselmyer - 09/24/13

Whenever the national economy takes a turn for the worse, states' tax revenues tend to fall, and policymakers at the federal and state levels often try to fill the budgetary gaps with an influx of federal tax dollars. These sorts of "stimulus" measures are pitched as ways to keep important public services operating until the economy recovers. In 2009, the President's signature stimulus bill -- the American Recovery and Reinvestment Act (ARRA) -- pumped massive amounts of public dollars into states' coffers, which went towards infrastructure construction, teacher and emergency personnel payrolls, and other projects.

This budgetary trick isn't new. What is unique when it comes to states' budgets in recent years, however, is just how much they depend on federal funding. According to new research from the Pew Charitable Trusts' Fiscal Federalism Initiative, more than 1 out of every 3 dollars states spend comes from a federal fund or grant. Even in past recessions -- indicated by the grey shading in the chart below -- that ratio tended to hover closer to 1:4.


Source: Pew Charitable Trusts

In the wake of sequestration, these findings mean that some states will undoubtedly be sitting a little closer to the edges of their seats as Congress begins another round of contentious debate on the budget and how it might avoid a government shutdown. States in the national capital region such as Maryland and Virginia will obviously be affected by any reduction in federal spending: more than 20 percent of the area's GDP consists of federal spending.

However, there are also some states that are more geographically removed from Washington but still have plenty of skin in the game -- in Kentucky and New Mexico, 35 percent of GDP comes in the form of federal spending, and there are 6 states total that depend on D.C. for more than 30 percent of their economic productivity. The Washington Post has a helpful breakdown of some of these figures here.

There are some signs of improvement: as the economy (slowly) recovers, states' tax revenues have steadily begun to increase. However, economists seem to agree that those numbers are heavily influenced by higher tax rates overall, such as recent rate increases in California.

For more on Pew's study, including plenty of helpful charts and deeper statistics, take a look at their Fiscal Federalism Initiative here.

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The Late Edition: September 18, 2013
Posted By: Curtis Kalin - 09/18/13

Today’s Taxpayer News!

Another “green” bust: An electric car charging company in Phoenix which was sponsored by the Department of Energy is considering bankruptcy after admitting the stations they installed are not making a profit and disclosing that DOE’s “EV Project” spent almost $100 million of taxpayer money to help prop up the fledgling company.  Read more here.

Tattoo stamps? A Raleigh, NC tattoo parlor has been accepting SNAP cards (a.k.a. food stamps) totaling hundreds of dollars. Read more at Red Alert Politics.

HipsterCare: Watchdog News highlights a new, and quite psychedelic, ad from Oregon’s state agency administering the Affordable Care Act (Obamacare).  The ad, part of a longer campaign to enroll Americans, costs taxpayers almost $10 million.  The TV ads themselves total $3.2 million in taxpayer funds.

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Congressional Franking Spending on Decline
Posted By: Dan Barrett - 09/17/13

With public approval of Congress at a consistent low, it's hard to give Members a complement or, rather, a comment on them doing something less badly. However, when it comes to their decreasing mail costs, some credit may be due.

In the first 6 months of 2013, House Members spent significantly less of their office allowances on franked mail (official letters that are permitted to be sent without postage), $8.8 million less than the same period in 2012. There are a few reasons for such a change, including:

The Interwebs: Politico reported that direct mail is being replaced with online communications (email and web ads). Comparing 2012 to 2013, Congress is following the mass migration of advertising dollars from print media (newspapers, magazines, and mailers) to social media (Facebook, Twitter, Google ads, etc.). The average Member who spent $2.2 million last year is now spending $3.6 million now and the reasoning is simple: online targeting is cheaper (if it costs anything at all) in reaching a larger audience.

Legislative Action and Sequestration: That same article cited an 18 percent cut in Members' Representational Allowances (annual budgets of Congress' office space, travel, salaries, and franking). Congress itself has passed legislation that has cut their own office benefits by at least 11 percent (via the Congressional Research Service (CRS)). And, yes, the automatic across-the-board cuts (sequestration) that big spenders are preaching will bring about Armageddon are forcing Congress to further cut their own allowances like the rest of the government. Millions of tax dollars have been saved and millions more will not be spent if this trend continues.

The Election Cycle:  However, there is a factor that Politico does not address: getting reelected. Another CRS report delved into the limits of franking in relation to election season. If a Representative is a candidate in a primary or general election, they are prohibited from sending out official mail 90 days in advance. The Members then avoid violating the regulation by sending out more mass mailers in the first 6 months of the election year. No rules are broken but mail volumes for Quarters 1 and 2 spike, as seen in 2012 as opposed to 2013. One other thing to note: CRS believes mail volume between non-election and election years does not significantly change and, while I can agree with their research, I'm making more of a point on the timeliness of franked mail, not the quantity.

So what should taxpayers expect in 2014? My money is on registered voters getting more franked mailers in the first half of the year and a steadily increasing amount of emails and online ads as we get closer to November, compared to 2013. As far as federal spending, franking costs should be expected to further decrease as Hill offices discover that online communications produce better results at a much lower (if any) cost. This issue is also divided by political parties in that Republicans tend to send out more franked mail than Democrats. This too will likely decrease as technology gets better at delivering Members’ messages in better ways online.

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George W Bush's Retirement Benefits
Posted By: Dan Barrett - 09/13/13

Below is the final NTUF infographic on Presidential Perks. Today's focuses on George W. Bush, who has spent $7.1 million of public money (so far) in six years. Like the other Chief Executives, there is no overall cost figure for Secret Service protection and the numbers are based on budgetary requests of the General Services Administration.

Be sure to check out the other Presidents' retirement costs and be on the lookout for more retirement analysis from NTU Foundation!

Other Infographics:

A summary of what former Presidents is available in an edition of The Taxpayer's Tab.

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Bill Clinton's Federal Retirement Benefits, an Infographic
Posted By: Dan Barrett - 09/12/13

How much do you think that former Presidents get from taxpayers each year? Bill Clinton gets an average $1.09 million and that's not including his Secret Service protection or any trips that might come up (like state funerals or any international negotiations that he might be a part of). In this week's third infographic, NTU Foundation took a look at exactly what Clinton spends his retirement perks on and how that compares to the other three former Commanders-In-Chief.

Like our other infographics and a recent edition of The Taxpayer's Tab, we used the budgetary requests from the General Services Administration, which is the agency in charge of disbursing the Presidents' benefits. However, the requests do not necessarily translate to actual spending. GSA does not release the actual figures of how much Presidents really cost taxpayers each year. This is the most complete information that is publicly available.

Do you think that former Presidents need public dollars? Should something be cut or increased? Let us know in the comments!

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Taxpayer Benefits for President George H.W. Bush
Posted By: Dan Barrett - 09/10/13

In this week's second infographic, we look at former President George H.W. Bush's annual office and pension allowances. These benefits are funded by taxpayers and there is still some question on exactly how much America's ex-Commanders-In-Chief are recieving eaxh year. The General Services Administration only releases Presidential retirement spening in the form of budget requests, which are not exact in what eventually is spent.

Taxpayers are also not able to see how much it costs to protect the four former Presidents. While it should not be expected to get detailed information on exactly how they are escorted and guarded by Secret Service personnel, an overall cost figure ought to be available so taxpayers can understand the full costs of Presidents after their tenure in office.

Besides the graphic below, check out a recent Taxpayer's Tab that examined the broad spending points and total costs of ex-Presidents.

Do you think that former Presidents need public dollars? Should something be cut or increased? Let us know in the comments!

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Jimmy Carter's Retirement Perks
Posted By: Dan Barrett - 09/09/13

In an edition of The Taxpayer's Tab, NTU Foundation examined the federal spending associated with the pensions and ofice expenses of former Presidents. In the first of five infographics, we highlight the benefits of President Jimmy Carter that are paid for with tax dollars.

The data was compiled using budget requests of the General Services Administration and analysis by the Congressional Research Service. One thing to remember is that these figures are requests and that actual budgetary outlays (or actual spending) are not available. We understand that a line-by-line costs of a former Commander-In-Chief's Secret Service is classified to protect their safety but taxpayers are in the dark when it comes to seeing what former Presidents actually cost in terms of their pensions, office benefits, and staff salaries.

Do you think that former Presidents need public dollars? Should something be cut or increased? Let us know in the comments!

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"Temporary" Programs That You're Still Funding
Posted By: Michael Tasselmyer - 09/06/13

Tab Insert

The American Recovery and Reinvestment Act (ARRA) was passed in 2009 as one of President Obama's first major efforts to dig the U.S. economy out of a deepening recession. Designed to employ more Americans, repair aging infrastructure, and provide additional assistance to the ever-increasing number of families who needed it, the bill authorized a variety of programs that were touted as temporary, timely and targeted.

Nearly five years later, as the economy continues along the slow road to recovery, many of those "temporary" programs are still receiving taxpayer funding in spite of doubts over their effectiveness. In this week's edition of the Taxpayer's Tab, NTUF took a look at a few in particular, including:

  • Build America Bonds: These bonds were issued through the end of 2010 in order to finance state and local governments' capital improvement projects, such as refurbishing roads and repairing public buildings. The discounted borrowing rate was a significant incentive for those who purchased them, but that discount continues to come at a cost to the federal government in the form of interest payment subsidies and other related expenses. The President has proposed a permanent program -- similar in design -- in his 2014 budget, called America Fast Forward. That would result in $23.4 billion in outlays over the next five years. Reps. Gerald Connolly (D-VA) and Richard Neal (D-MA) have both proposed to make the Build America Bonds program permanent, as well.
  • Supplemental Nutrition Assistance Program (SNAP): As more families saw their incomes fall and qualified for federal benefits, ARRA authorized a 13.6 percent funding increase for SNAP, formerly known as "food stamps". That increase was set to expire at the end of November 2013, but President Obama's 2014 budget has proposed extending it at a cost of $2.2 billion in FY2014 and $41 million in FY15.
  • Recovery Accountability and Transparency Board: The Board, which was originally slated to cease activities at the end of this month, was given authority to operate through 2015 to oversee funding related to Hurricane Sandy Relief. It was designed with the intention to provide oversight of ARRA funding disbursements. The President's budget requested an additional $12.5 million for the Board's operation in FY14.

These programs alone represent $2.9 billion in spending that was originally intended to be merely a "temporary" economic stimulus. As the late Milton Friedman said, "[n]othing is so permanent as a temporary government program." 

For more on these programs and the legislation affecting them, check out the latest issue of the Tab online here. You can sign up for future updates here.

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Latest Taxpayer's Tab: Presidential Retirement
Posted By: Michael Tasselmyer - 08/26/13

Tab Insert

It's no secret that modern ex-Presidents are usually very wealthy. Speaking engagements, book tours, and other private business pursuits away from Pennsylvania Avenue have earned the four living former Presidents -- Jimmy Carter, George H.W. and George W. Bush, and Bill Clinton -- substantial sums of money in recent years. So it may come as a surprise to some that these former Chief Executives are also eligible for millions of dollars in taxpayer-funded retirement benefits, including travel expenses, office and administrative funds, and a $200,000 pension. In this week's Taxpayer's Tab, NTUF examined some of the history behind these programs and how former Presidents are using the funds Congress has authorized them to use.

With the passage of the Former Presidents Act (FPA) in 1958, Congress authorized funding for certain administrative tasks associated with the President's transition into private life. The FPA was introduced in response to Harry Truman's financial difficulties in his life beyond the White House, particularly his inability to respond to the massive volume of mail he continued to receive from citizens still interested in his post-Presidential doings and opinions. The assistance given to modern ex-Presidents includes $1 million in travel expenses, health benefits (assuming 5 years' enrollment in the Federal Employees Health Benefits program), subsidized office rent, and office staff funding. Additionally, ex-Presidents are eligible for a $199,700 pension, which is tied to the salary of the head of any Executive Department.

In Fiscal Year 2012, the General Services Administration spent $3,671,000 on benefits for former Presidents. The infographic below shows the totals for each of the past 5 years, broken down by President:

In the 113th Congress, Rep. Jason Chaffetz (R-UT) has re-introduced the Presidential Allowance Modernization Act, H.R. 248. The bill would limit former Presidents' benefits to $200,000 per year, and do away with office & administrative subsidies, travel expenses, and reduce benefits by $1 for every dollar over $400,000 an ex-President earns in a year.

For more on Presidential retirement perks and the legislative history behind them, check out the latest issue of the Tab online here. You can sign up for future editions by going here.

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Senate Republicans Hold the Line on Spending
Posted By: Nan Swift - 08/02/13

Senate Republicans, led by Senate Minority Leader Mitch McConnell (R-KY), held off a bloated Fiscal Year 2014 Transportation, Housing and Urban Development (THUD) appropriations bill yesterday with a 54-43 cloture vote. The defeat of the Senate THUD appropriations bill comes only a day after the House version was unceremoniously yanked from the floor as support for the spending measure dwindled.

Taxpayers everywhere should be much relieved to see the THUD bill grind to a halt. Operating under the strange (and false) impression that the Budget Control Act (BCA) isn’t the law of the land, Senate Appropriations Committee Chairwoman Barbara Mikulski (D-MD) has been blithely appropriating far above the $967 billion discretionary spending limits imposed by the sequester, as reported in the

The Senate Appropriations Committee will write fiscal 2014 bills according to the top-line discretionary spending level in the Senate and White House budgets, ignoring the sequester cuts in current law.

By crafting bills at the $1.058 trillion level set by the Obama and Senate budgets, Senate Appropriations Committee Chairwoman Barbara Mikulski (D-Md.) is setting the stage for a showdown with the House, which intends to use the $966 billion level set by sequestration.

 National Taxpayers Union issued a strongly-worded vote alert urging Senators to oppose the bill early last week, explaining:

Weighing in at a staggering $54 billion, S. 1243 is $2.4 billion more than the President’s request, $10 billion beyond the House version of the bill, and $2.3 billion over FY13 pre-sequester spending levels. Taxpayers are the ultimate victims when the Senate persists in ignoring the realities of sequestration and the limits imposed by the Budget Control Act. By funding 302(b) allocation levels for discretionary spending at $1.058 trillion, the Senate makes it that much harder for appropriation bills to ever move through normal order.

We also went on to point out one missed opportunity for taxpayer savings after another:

  • $3.15 billion for Community Development Block Grants, $350 million more than the President requested
  • $250 million for the Choice Neighborhoods Program, $130 million over Fiscal Year 2013 levels
  • $100 million in grants for ludicrous high-speed rail projects
  • Increases to Transit Formula and Airport Improvement Grants
  • No reforms to Essential Air Service or Amtrak – both money-losing ventures that taxpayers shouldn’t be propping up

Only a day before the Senate’s THUD bill went belly-up due to its out-of-control, unrealistic spending, reported that House Appropriations Committee Chairman Hal Rogers (R-KY), “hinted that a vote on the [House THUD bill] was scrapped because leaders didn’t have the votes to support the deep cuts he was directed to write.”

Given the fact that earlier this spring House Republicans supported the $967 billion discretionary spending cap enshrined in the House budget in accordance with the BCA, and a Senate THUD bill that spent far more couldn’t garner the 60 votes needed for cloture, this seems to be more a matter of misappropriated priorities than a case of too many “deep cuts.” Instead of adhering to the separate defense and non-defense discretionary spending caps imposed by the BCA  - and sticking with across the board spending restraint – House appropriators shuffled the deck chairs in other areas to pay for significant plus-ups on the defense side to keep all the appropriations bills under the total cap.

When viewed in light of the profound fiscal challenges we face, legislators should be looking for savings everywhere and favored projects shouldn’t escape scrutiny, especially when there is plenty of room to save across the budget on both the defense and non-defense sides.

Sadly, for taxpayers, legislators might be forgetting that the Budget Control Act and sequestration are about slowing the growth of spending, not the “draconian” spending cuts we hear about from big government proponents. Legislators in both houses are starting to look for a way out from under the law that is reining in their profligate tendencies.  

House Appropriations Chairman Rogers went on:

“With this action, the House has declined to proceed on the implementation of the very budget it adopted just three months ago,” Rogers said. “Thus, I believe that the House has made its choice: sequestration — and its unrealistic and ill-conceived discretionary cuts — must be brought to an end. And, it is also clear that the higher funding levels advocated by the Senate are also simply not achievable in this Congress.”

Across the Capitol in the Senate, it looks more and more likely Majority Leader Reid will push for a sequester replacement bill as soon as September.

For supporters of less spending and less government, the dual defeat of two major spending bills draws a clear outline of the next big battle and highlights what our priority should be moving forward: hold the line on BCA caps and sequester-level funding, hold the line on spending overall.

Luckily for taxpayers, Senator McConnell has proven that he can. As taxpayers look ahead, we shouldn’t just hope the Senator can do it again, we need to work hard to help make sure all our legislators remain focused on these vital tasks.


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