Is Rapidly-Increasing Federal Spending in NM a Good Thing?

Recently, Barry Massey of the AP wrote about the massive, 15% growth in federal spending last year alone. This 15% growth is just the tip of the iceberg. New Mexico receives more federal money per capita than all states but Alaska, Virginia, Hawaii and Maryland. As we’ve cited in the past, New Mexico is the most reliant state on the feds relative to what we pay in taxes.

Gerry Bradley of New Mexico Voices for Children thinks this is just grand and complained that “It’s very strange to see people railing against government when the federal government props up the whole economy here.” While the federal government may be propping New Mexico up right now, the pace of spending growth is both unsustainable and of dubious actual benefit to New Mexico. After all, we remain one of the poorest states in the nation.

Contrary to Bradley’s thoughts on the matter, there is now empirical evidence that increased federal spending in a particular state displaces rather than augments economic growth. The full-length research paper is available here and a shorter blog posting on the study can be found here.