Aug. 11 (Bloomberg) -- President Barack Obama’s signing of a $26 billion aid package to help states fill budget gaps will accelerate a surge in U.S. aid to municipalities.
The CHART OF THE DAY shows the growth in federal payouts to state and local governments, also known as grants-in-aid, in the past half century. They increased almost three times as fast as overall spending during the period, according to data compiled by the Commerce Department.
Funds were provided at a $525 billion annual rate in the second quarter, a 33 percent jump from two years ago. Most of the money went to pay health-care expenses under the Medicaid insurance program and to cover educational costs.
“Federal aid to state and local governments is starting to look structural,” Annaly Capital Management Inc. wrote yesterday on its corporate blog, Annaly Salvos. The real estate investment trust’s posting included a chart that showed grants- in-aid were equivalent to about 25 percent of state and local government receipts, up from less than 10 percent in 1960.
The federal government provided $131.25 of state and local aid last quarter for every dollar spent 50 years ago. For total expenditures, the second-quarter figure was only $45.75, as the chart illustrates.
The $26 billion program that Obama signed into law yesterday is designed to help state governments preserve the jobs of thousands of teachers, police officers and firefighters, according to its supporters. Of the total, $16 billion will extend a funding increase for Medicaid and the other $10 billion will pay for education salaries.
WOW!!! OUT OF CONTROL!!!
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