Allocating the US Federal Budget to the States: The Impact of the President

Abstract

This paper provides new evidence on the determinants of the U.S. federal budget allocation to the states. Departing from the existing literature that gives prominence to Congress, we carry on an empirical investigation on the impact of presidents during the period 1982–2000. Our findings suggest that federal budget allocation is affected by presidential politics. States that heavily supported the incumbent president in past presidential elections tend to receive more funds, while marginal and swing states are not rewarded. Party affiliation also matters since states whose governor belong to the same party of the president receive more federal funds, while states opposing the president's party in Congressional elections are penalized. These results show that presidents are engaged in tactical distribution of federal funds and also provide good evidence in support of partisan theories of budget allocation.