Presidents' Politicized Funding Priorities

Presidents' Politicized Funding Priorities
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The Congressional Budget Office recently projected that discretionary outlays by the federal government will exceed $12.5 trillion over the next decade. With such large sums at stake, should we grant greater control over the bureaucracy to presidents?

For many scholars and political observers, the answer is clearly "yes." Legislators have a powerful incentive to win their next election, and the most influential members can use the power of the purse to secure their political futures. Over the long term, this can lead to a seemingly unfair distribution of federal funding across the nation. Presidents, so the thinking goes, will limit Congress's inefficient spending due to their nationwide constituency.

Our new research, however, demonstrates that presidents actually target politically important constituencies with federal funds just as much as Congress does. In 2009 and 2010, congressional districts within strongly Democratic states received approximately 50 percent more federal project-grant funding than comparable districts within strongly Republican states.

Although Congress authorizes the overall amount of project-grant funding, federal agencies exercise discretion as to the particular distribution. Presidents then exert influence over the federal agencies through their political appointees. This funding advantage represents $26 million more per district, or $37.50 more per capita, per year on average.

While these sums seemingly pale in comparison with the trillions noted above, imagine the difference $100 million could make for your district over the next four years. Would those changes influence your vote in an election? The evidence suggests that most, if not all, presidential administrations believe it might.

Our own research covers only two calendar years due to data limitations, but it is consistent with the results of several other studies that used longer time horizons as well as different combinations of presidential and congressional control. The presidential incentives driving our main results appear persistent regardless of which administration or party is in office.

This research, while significant in its own right, highlights important principles for a broader array of decisions from mandating vaccinations to education reform. In response to an undesirable outcome, such as a seemingly unfair distribution of federal funding, our initial inclination is often to make stark personnel changes in the decisionmaking body. Such action generally presumes the undesirable outcome was due to individual incompetency or greed. In contrast, our research demonstrates that institutional incentives can largely determine outcomes regardless of which individual or individuals are in charge. We should therefore seek to understand existing institutional incentives better before we make dramatic changes.

Over the coming decade, presidents and Congresses will influence the distribution of at least $12.5 trillion in federal funds. Our results show that presidents target politically important constituencies to influence voter behavior in presidential and congressional elections. Hence, granting greater control over the bureaucracy to presidents will not necessarily result in a more efficient distribution of federal funds. Perhaps scholars and pundits should reconsider whether granting presidents greater control over the bureaucracy is truly preferable.

Thomas Stratmann is a scholar with the Mercatus Center at George Mason University, where he is also a professor of economics. Joshua Wojnilower is currently a third-year Ph.D. student in the economics department at George Mason University. Both are coauthors of a new working paper published by the Mercatus Center on "Presidential Particularism: Distributing Funds Between Alternative Objectives and Strategies."

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