Piling on Problems: How Federal Policies Affect State Fiscal Conditions

This paper pulls from a variety of data sources to estimate the positive and negative impacts of federal policies on state and local finances. For 2004, it finds that a positive federal policy impact of $467 billion is offset by at least $153 billion in negative impacts, representing a one-third reduction in positive impacts. While positive impacts grow only slowly over the next three years, the negative impacts increase rapidly. By 2007, the negative impacts reduce the positive impacts by at least 45 percent. The net value of federal grants and subsidies declines by 18 percent from 2004 to 2007.