Does federal spending hurt or help? Ultimately, federal revenue is a zero-sum game. The common belief that federal funding is additive fails to appreciate where “federal dollars” come from.
In a meeting I held at the White House for mayors from across the country, I asked who would like to receive more federal funding for infrastructure. Every mayor expressed interest. I then explained that their cities could only receive more federal funding if other communities were willing to receive less and asked which mayors would be willing to receive less so another community could have more. Unsurprisingly, no Mayors were willing.
Spending from both the federal and local level comes from the same source - the taxpayer. However, when project funding is cycled through the federal system, a host of federal restrictions also apply.
See my paper on the nationalization of infrastructure policy for an in-depth comparison of local vs. federal project funding and delivery.
Who Decides: The Impact of Nationalizing Infrastructure Policy