The Public Interest

The regional war for Federal aid

Ann R. Markusen & Jerry Fastrup

Fall 1978

IS IT really true that current patterns of Federal aid steal from the Northeast and subsidize the Sunbelt? The facts will certainly play an important role in current efforts to change the regional impact of Federal policy. The rhetorical charges of theft have been abundant. Two years ago, The Washington Post announced “A New Federal Favoritism for the Sunbelt States.” The Village Voice not long after headlined, “Regional Robbery: How Washington Saps the Northeast.” More recently, Senator Moynihan contended in The New York Times, “The crucial point is that.., the redistributional mode of government, with its bias against New York, is now firmly established in Washington. It is sustained by the rewards it provides to others.” And a National Journal staffer predicted in the Times, “Theres going to be a terrific political issue when the Northeast wakes up to the fact that its being milked to death for tax money going outside the region.” These charges followed a dramatic June 1976 National Journal article entitled, “Where the Funds Flow: A National Journal Survey Shows that There Is a Massive Flow of Wealth from the Northeast and Midwest to the Faster-Growing West and South.” The Journal updated its analysis a year later with 1976 data, reaching the same general conclusions. To our knowledge, since the National Journal series, no alternative calculation of net flows of regional aid has been constructed. But the political and empirical questions are far more complex than such journalistic accounts recognize.

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