Which States Support Which Ones? Predicting Federal Flow Through From the Feds to the States

Abstract

While politicians in Washington, who have already authorized trillions of funds for businesses in the past 3 years, have been arguing over allocating funds for state and local governments, there have been a number of suggestions that stimulus packages potentially benefit certain states at the expense to others. The arguments primarily appear to come down to politics – “red,” Republican-led states versus “blue,” Democratically-led states. The insinuation is that that the “blue” states are more poorly run than the red states and that the better run “red” states should not be “bailing out” poorly run “blue” states. A linear regression model was developed that perfectly predicted both federal fund recipients and “red” or “blue” designations. Correlation and principal component analysis was run to determine the factors that were the best predictors. The truth appears to be as Governor Cuomo states, “blue” states are better run, better funded and are more productive than “red” states when measuring gross domestic product, income and net tax revenue per person. Educational funding was a major reason “blue” states were ahead of their “red” neighbors.