Despite growing debt and unsustainable deficits, the federal government sends over $1 trillion per year to state and local governments. The dozens of federal aid programs are both unnecessary and unaffordable.
Unfortunately, many legislators struggle to support reductions to subsidies that might affect their state or district, even if they agree with the policy change in principle.
The phrase “bring home the bacon” refers to legislators taking credit for federally funded projects, often in the context of earmarks in the appropriations process. In a broader sense, members can perceive a false responsibility to maintain all streams of federal funding that flow to their area.
As Congress considers the dire need for budgetary savings in this year’s reconciliation and appropriations legislation, members should recognize that the “bring home the bacon” mindset underlying state and local subsidies is based on a series of myths.
Bacon Myth #1: “Pork is politically important”
A handful of politicians have been mythologized for their ability to secure projects and funding. However, the political salience of federal aid to state and local governments is much lower than it was in the 20th century.
- The increasing nationalization of politics means that many Americans are unaware of increases or decreases in federal aid to their area. The 2024 election provides a telling example, as record subsidies to state and local governments failed to protect Democratic incumbents in key battlegrounds.
- To the extent that the public is aware of federal funding trends for their area, issues such as the state of the economy, immigration, and core social values still take higher priority.
- While members often receive requests for funding increases that would supposedly benefit their area, pleas from lobbyists and interest groups with their hands out do not represent heartfelt concerns of the wider constituency.
Bacon Myth #2: “Pork has significant economic value”
Some legislators view federal subsidies to state and local governments as an important boon to the local economy. This is misguided.
- Federal funding comes with red tape that adds costs, delays, and can even provide resources for leftist causes and groups. This has been a long-term problem and ramped up during the Biden administration.
- Federal programs require legions of bureaucrats for administration. This pulls workers out of the private sector and increases spending, causing a drag on growth. The American Legislative Exchange Council’s annual analysis of states consistently shows that states with leaner governments have better results.
- Various kinds of federal subsidies have a poor track record of fostering sustained economic growth in an area.
Bacon Myth #3: “Pork delivers free money to constituents”
The federal tax system is highly progressive, with the top 20% of taxpayers covering over 80% of income taxes. Some members representing rural districts and states with relatively lower average incomes can be tempted to think that a more “generous” federal government benefits their constituents. This is not the case.
- The economic gap between regions is narrowing. While the northeast and Great Lakes once held the largest share of the country’s economic activity, the “Sun Belt” has rapidly caught up thanks to generally pro-growth policies and north-to-south population shifts. All regions now pay a big price for big government. (There is also a reversed form of this argument. Some members claim that their states deserve more federal handouts due to paying an above-average share of taxes. However, the “moocher state” talking point is deeply flawed, and at a time of incredible deficits no states are truly pulling their own weight.)
- The “log rolling” culture in Congress has led to a status quo of cross-subsidies. The net economic result between regions is mostly a wash, with the exception of massive inflows of tax dollars to Washington for managing the programs.
- The federal government could soon reach the fiscal cliff, which would create turmoil nationwide. Justifying subsidies based on some people benefitting today makes it more likely that all Americans will pay a heavy price very soon.
Congress must be willing to make tough choices in 2025 if there is any hope of ensuring that the American dream is still alive in 2035. That must include unwinding subsidies to state and local governments.
