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.

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3 Replies to “Is Rapidly-Increasing Federal Spending in NM a Good Thing?”

  1. What jumped out at me from this article is not New Mexico’s place in the pecking order, but Alaska’s. Alaska, home of the self-reliant and conservative Sarah Palin is number ONE. Got to love it.

    Federal spending is GOOD for New Mexico. Our state is home to three Air Force bases and White Sands. Plus we have regional federal offices here in ABQ. And then there is Los Alamos and Sandia Labs. Yeah, a good thing because that money is being used to defend our country and in the case of the labs “R&D”.

    1. Mark,

      I too had wondered if the national laboratories and military bases were part of this calculation. If so, then the so called evil of the government teat that New Mexico is allegedly on is simply misleading at best.

      The ‘evil’ is the social and entitlement programs that keep people dependent and poor.

      Nevertheless, if you judge NM favorably with that stick, you can’t turn around and use it against Alaska in the same breath simply because you don’t care for Sarah Palin. Alaska is indeed home to several military installations and has a pretty small populous in order to balance out the inflow vs. tax dollars into DC. Besides, detractors of Palin will at every opportunity point out that she left the governor’s office before the end of her term. So either she’s not in office long enough to have a reall effect, or she’s responsible for all the evils in their government.

      You can’t have it both ways.

  2. Caterina,

    NM is firmly in the democrat camp while Alaska is a republican state. It does not have a state income tax nor a state sales tax. It relies on oil and the federal government. I’m sure the calculation takes into account all federal tax inflows.

    I do not care for Palin, in fact, if she is what the republicans want then I will run the other way. She is a pitiful example and is the reason I didn’t vote for McCain. Like Obama, she has no solid experience to offer America. She is all show. And no, I didn’t vote for Obama either – I went with a third party candidate.

    We could talk all sorts of evil government programs. I always note that no one says anything about the subsidies farmers get to the tune of billions each year nor the generous tax credits granted big businesses. In America, we have the best govt money can buy. And it doesn’t matter if its republicans or democrats in charge – both pander to money interests.

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