The Allocation of the US Federal Budget to the States: Evidence on the Power of the Purse

This paper provides new evidence on the determinants of the allocation of the US federal budget to the states. We find that the president has a strong influence on the budget allocation, while support for theories that give prominence to the Congress is rather weak. Membership of prestige committees is not used to divert federal spending nor does membership of the Armed Services committee affects defense spending. The presidential race matters. States that are historically volatile or extremely safe in presidential elections tend to receive more funds, while marginal states are not rewarded. Finally, we find good evidence in support of partisan theories. states whose governor has the same political affiliation of the president receive more federal funds, while states opposing the president’s party in Congressional elections are penalized.