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Federal Spending Federal Spending in the Northeast-Midwest The Northeast-Midwest Institute and the Northeast-Midwest Congressional and Senate Coalitions have tracked and analyzed federal spending and taxation patterns since their founding in the mid-1970s. Most states in the Northeast and Midwest contribute more in taxes to the federal government than they receive back in federal spending, which means the Northeast-Midwest region subsidizes federal spending in the rest of the country. The factors driving the Northeast-Midwest's low return on federal tax dollar vary within the region. In the Northeast as a whole, higher than average per-capita taxation yields a low return on dollar despite relatively high levels of federal spending. In the Midwest, the low return on federal tax dollar stems from relatively low levels of federal spending. Factors that Influence Federal Spending The consistency of federal spending, taxation, and return on dollar trends over time points to the stubborn nature of what determines the federal balance of payments for a state or region. An elected official has limited control over the flow of federal funds into and out of a state, and little opportunity to spur dramatic changes from one year to the next. Factors that influence federal spending and taxation patterns include the following:
While quick and dramatic changes to the regional flow of federal funds are unlikely, the Northeast-Midwest Institute looks for opportunities to improve federal spending and taxation patterns for the region over time. The Northeast-Midwest Institute regularly publishes reports about state and regional imbalances in federal spending. In addition, the Institute works with the Northeast-Midwest Congressional and Senate Coalitions to inform and educate policymakers about the impact that federal legislation and programs have on spending patterns. Attention is paid to federal funding formulas and to federal spending on important regional issues.
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