There Is No Free Federal Money – IOTW Report

There Is No Free Federal Money

A paper published in November examines what happens when states and local governments take federal grant money. They end up on average raising taxes or fees by 82 cents per federal dollar received.

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It’s because federal money usually comes with a cost sharing provision, referred to as a “stimulus effect,” or the it is meant to grow local government spending not off set it, called the “fly paper effect.”

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The original paper Here


8 Comments on There Is No Free Federal Money

  1. Biggest scam ever perpetrated on a gullible public! First they tax the people and take copious amounts of money from them. Then they offer to return some of it back to them with strings, rules and regulations attached and the requirement that they pay even more money for their own money!! The old bait and switch!

  2. Look at the study and scroll down to the first graph, where it shows the effects of Federal monies on local spending. Then, read the explanations that follow. At the extreme end, we see where an influx of “free money” and all the little strings attached – mainly compliance mechanisms – has the end result of states spending even more money to comply. That extra $1.65 is essentially spent to get the $2.00 from Old Unkie Sam. What we’re left with is 35-cents of FREE money, that we just spent a buck, sixty-five to get!

    This should be required reading of every single voter in the country. Append this to your side-bar for posterity!!!!

  3. Medicaid expansion under ObamaCare was all about the growth of government at the promise of federal tax payer money.

    The states that went for it thought they were outsmarting all the other states and getting their money too, they didn’t realize they’d end up putting more money in themselves over the long run.

    A honey trap from the get go.

  4. All government redistribution amounts to trying to raise the level of the shallow end of the pool by scooping water out of the deep end, spilling 1/2 of it on the ground, then dumping what’s left into the sallow end.

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