Politicians: Of Course It’s About the Money (Only slightly off-topic)
In case you had any doubt about the link between politics and money, researchers at the St. Louis Federal Reserve Bank detailed the connection in their latest Economic Trends cover page.
In June 2004, the 9/11 Commission report recommended against the population-based distribution of these grants. The Commission favored instead an allocation based on risk and vulnerability. Critics of the state grant formula pointed to Wyoming’s total grant receipts per capita, which were the largest among all states because Wyoming has the smallest share of national population. In contrast, states such as California and New York, with a presumably greater terrorist threat, received much less per capita funding.
The U.S. House and Senate responded to the 9/11 Commission by seeking to base state grant levels more on risk assessments and less on population, while still guaranteeing a minimum share to each state. The distinct House and Senate proposals serve as a case study in political economy, in the way political bodies seek to allocate economic resources. The House bill proposed a state minimum allocation of 0.25 percent; the Senate bill proposed 0.55 percent. These numbers are interesting: In the House, each state has a minimum voting share of 1/435 or 0.23 percent of the representatives. In the Senate, the allocation of two senators for each state, regardless of population, increases the relative representation for small states in the full U.S. Congress to a minimum of 3/535 or 0.56 percent. It is remarkable how close these two percentages are to the minimum allocations that the House and Senate proposed. Political economy considerations would suggest that the median voter on this issue in the Senate would be from a state with below-average population— hence, the relatively generous 0.55 percent minimum share.
If this is the way the politicians handle something as serious as homeland security in the wake of a disastrous terrorist incident, you may well imagine how they allocate money for more mundane uses. Yet in the end, the example serves to illustrate another thing our pols do well – nothing:
In conference committee, however, the House and Senate did not agree on whether or how to amend the Patriot Act, so each state’s 0.75 percent minimum share has remained intact.
The money-grubbing didn’t stop when Newt Gingrich’s republicans took over in 1994, and we don’t expect it to stop now. It may, however, be allocated in a slightly different way.
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