Federal Transfer Payments to States

Federal transfer payments to state and local governments totaled some $444 billion in 2013; these included payments of $282 billion for Medicaid, $3.4 billion for LIHEAP, $80 billion for SNAP, and some $78 billion for other transfers to the states.

The payments often are synergistic, not at all fixed, too.  For instance, LIHEAP payments are used by the states to magnify SNAP payments, since SNAP contains an energy allowance, a “standard utility allowance.”

Governor Dannel Malloy [D] last week announced that Connecticut would “expend $1.4 million in available federal energy assistance funding” to raise minimum LIHEAP payments for 50,000 beneficiaries, or about a quarter of its food-stamp rolls.  The increase…will “preserve approximately $66.6 million” a year in food-stamp benefits.  So Connecticut will leverage $1 in additional federal LIHEAP funds to reap $48 more from Washington for food stamps.

Mr Malloy’s neighbor Andrew Cuomo jumped for the free lunch the next day by declaring that New York would “dedicate approximately $6 million in additional federal” heating assistance to maintain $457 million in food-stamp payments.

Of course, this is done with taxpayer money, so the money transferred to, say Connecticut, comes in part from nearly bankrupt California, in part from bankrupt Illinois, in part from nearly bankrupt New York, etc.

It would help if the synergies were done away with.  It would help even more, and more permanently if the transfers were done away with, and the States required to see to their own responsibilities without freeloading off other States’ citizens.

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