Using government statistics that are admittedly "raw and rough," the National Journal released a study last week that documents what appears to be a continuation of the flow of federal dollars from the Northeast and Midwest to the South and West.
The Northeast paid 12.6 billion more in taxes than it received from Washington in federal spending in fiscal 1976, according to the study, while the South received $12.6 billion more from the federal government than it paid in taxes. This trend, according to the study, became slightly more pronounced last year than it had been in 1975 when first analyzed.
Findings by the magazine:
The five Great Lakes states saw an increase in their "balanced-of-payments" deficit with the federal government from $18.6 billion in 1975 to $20.1 billion in fiscal 1976.
The South's surplus of federal funds contrasted to taxes paid increased slightly last year, from $11.5 billion to $12.6 billion.
The Northeast states' deficit in the "balance-of-payments" analysis also increased slightly, from $10.8 billion to $12.6 billion.
The 13 Western states received $10.4 billion more last year than they paid in taxes, a slight drop from fiscal 1975's $10.6 billion.
Another way the National Journal looked at the government-compiled data was to determine the money received by states in federal spending for every tax dollar sent to Washington, thus computing a spending-taxes ratio on the individual dollar.
From the dollar-by-dollar viewpoint. New Mexico led all states last year in money received, with an estimated $1.91 return on every tax dollar. Alaska, home of the pipeline, ranked second with an averange return of $1.89 on the dollar.
The District of Columbia received a whopping $7.59 in federal spending for every dollar paid in taxes, but that figure is misleading, according to co-author Joel Havemann, because the federal expenditure number includes all salaries paid to civilian government workers in the District, as well as the federal expenditure involved in local military installations.
Virginia's relatively large return on the tax dollar - $1.40 last fiscal year - is similarly misleading. The Pentagon and Eastern Virginia military installations account for much of the surplus.
Thus federal expenditures for defense ranked higher in Virginia than those in most other states, while federal spending for welfare programs was below the national average.
Defense contract spending by the federal government, which totaled $44.9 billion in fiscal 1976, accounted for more than half of all regional spending inequities.
Havemann explained that state-by-state inequities may be misleading because subconstracting by firms awarded primary contracts by the federal government does not show up in Community Services Administration data.
"Take a theoretical example - the B-1," he said in an intervieew. "The B-1 contract would have gone to North American Rockwell in California, so that state would have shown a huge federal expenditure. In fact, though, Rockwell was planning to subcontract to companies in 47 states, and the expenditure in those states would not have appeared in their statistics."
The National Journal study also used Community Services Administration data in computing welfare-related expenditure, which accounted for an estimated $25.4 billion last fiscal year. The problem with these statistics on a state-by-state basis is similar to the defense numbers, according to Havemann.
The CSA allocated spending for Medicare and Medicaid, among other benefit programs, by distributing the national spending total proportionally among states according to their eligibility lists, regardless of whether benefits were received.
There exists a "geographical bias" in incidence of these welfare payments, Havemann said.
"In some states, it's probably harder to get medical care, and that care is cheaper in the South - in fact, then, the South is getting less than the figures show," he said. "So the figures tend to exaggerate Medicare and probably Medicaid money expenditures to the South and to minimize money going to the North."
The National Journal study did not take into account interest payments on the national interest payments on the national debt, which amounted to $27.2 billion in fiscal 1976.
Of that, $18 billion was assigned in CSA figures to three states served by the New York Federal Reserve Bank, which dispersed the money throughout the country where it did not show up on CSA charts.
"If we had left out everything with a little problem, we wouldn't have included anything at all," said Havemann . "But the interest payments on the national debt were such awful datawe decided not to include them at all."
Although the figures for federal expenditures in the states are full of holes because, as Havemann pointed out, "the federal government just doesn't keep good records," they suggest the appearance, at least, of a massive flow of funds toward the Sunbelt.
This appearance has been enough to lead to the emergence of a Frostbelt lobby in Congress aimed at stemming the flow of money from the Northeastern and Midwestern states.
The Frostbelt lobby is bipartisan and consists of coalitions in the House and Senate as well as local and state businessmen and academies organized into about a dozen groups.
Representatives of Frostbelt states protest what thewy see as discrimination in federal aid formulas and tax laws that favor new construction over rehabilitation, which is prevalent in older, declining northern cities.
The lobby is on the offensive, and thus far has won several victories in its attempt to get federal spending back into northern states.
Frostbelt representatives in Congress were successful this spring in devising an alternative formula for federal aid that computes housing figures as well as population loss in distributing grant money, thus favoring older cities over the boom towns of the Sunbelt.
Future fights between Frosbelt and Sunbelt factions in Congress will probably focus on attempts to reverse the movement of military installations from North to South, and thus the flow of dollars Southward.
Another topic sure to be debated is the question of whether to simplify and standardize federal aid programs as the administration wants, or to recognize cost-of-living factor in recognition of higher living costs in the Northeast and Midwest.
National Journal's latest analysis of the funds flow for fiscal 1976 before the emergence of the Frostbelt lobby - shows the following "winners" and "losers":