Brookings Panel on Economic Activity March 2021, 2014

The Political Economy of Discretionary Spending: Evidence from the American Recovery and Reinvestment Act
Christopher Boone, Columbia University Arindraji Dube, University of Massachusetts Amherst Ethan Kaplan, University of Maryland at College Park
Final conference draft

Abstract
We study the spatial allocation of contract, grant and loan awards in the ARRA, one of the largest discretionary funding bills in the history of the United States. Contrary to both evidence from previous fiscal stimulus and standard theories of legislative politics, we do not find evidence of substantial political targeting. Party leaders did not receive more funds than rank-and file legislators. Democrats in swing districts did not receive more than Republicans in such districts. Ideological moderates and pivotal members of Congress received slightly less than average. While Democratic districts overall received slightly more than Republican districts per resident, this differential mostly disappears when we consider award per worker in the district. At the same time, we find no relationship between extent of award and measures of the severity of the downturn in the local economy, or the pace at which funds were spent, while we do find more funds owing to areas with more economic activity and a greater incidence of poverty. Overall, most of the variation in spending across congressional districts remains unexplained. The results are consistent with the discretionary component of ARRA being allocated based on project characteristics other than countercyclical efficacy or political expediencyboth of which stand in contrast to evidence from fiscal stimulus in the New Deal. One explanation suggests that legislative norms have reduced the scope of discretionwith attendant benefits and costs.

The Political Economy of Discretionary Spending: Evidence from the American Recovery and Reinvestment Act
Christopher Boone , Arindrajit Dube , and Ethan Kaplan March 12, 2014

Abstract We study the spatial allocation of contract, grant and loan awards in the ARRA, one of the largest discretionary funding bills in the history of the United States. Contrary to both evidence from previous scal stimulus and standard theories of legislative politics, we do not nd evidence of substantial political targeting. Party leaders did not receive more funds than rank-and-le legislators. Democrats in swing districts did not receive more than Republicans in such districts. Ideological moderates and pivotal members of Congress received slightly less than average. While Demoratic districts overall received slightly more than Republican districts per resident, this dierential mostly disappears when we consider award per worker in the district. At the
We thank Bryan Hardy, Kyle Meng, Ruchita Tiwary, Sebasti en Turban and Laurence Wilse-Samson for excellent research assistance and the Institute for New Economic Thinking for generous nancial support. Any mistakes are our own. Columbia University University of Massachusetts Amherst University of Maryland at College Park

same time, we nd no relationship between extent of award and measures of the severity of the downturn in the local economy, or the pace at which funds were spent, while we do nd more funds owing to areas with more economic activity and a greater incidence of poverty. Overall, most of the variation in spending across congressional districts remains unexplained. The results are consistent with the discretionary component of ARRA being allocated based on project charactersitics other than countercyclical ecacy or political expediencyboth of which stand in contrast to evidence from scal stimulus in the New Deal. One explanation suggests that legislative norms have reduced the scope of discretionwith attendant benets and costs.

Introduction

The American Recovery and Reinvestment Act (ARRA), otherwise known as the Obama stimulus, was one of the largest discretionary spending bills in US history. At the time of passage, it allocated a total of $787 billion, consisting of: $212 billion in tax cuts; $267 billion in entitlement programs, which was largely channeled through state governments; and $308 billion in discretionary projects awarded through contracts, grants and loans. In this paper, we study the allocation of the funds in the ARRA, with an eye towards several objectives. First, given the size and signicance of this bill, understanding how and where the money was spent is important in and of itself. Second, we use this bill to test theories from political economy in order to learn about the legislative process and the distribution of government spending in general. While the tax and entitlement components of the spending were largely formulaic, the allocation of the discretionary component aords a window into assessing a variety of economic and political considerations that may have played some role. Finally, the ARRA provides an opportunity to examine the political economy of a particular type of government 2

spendingnamely, scal policy for the purpose of macroeconomic stabilization. In doing so, we consider the implications for improving the design of such policies. Passed during the the Great Recession, the stated aim of the ARRA bill was to stimulate the economy, in large part by saving and creating jobs. Recent evidence suggests that state and local multipliers are larger in areas with greater excess capacity (Dube, Kaplan and Zipperer, 2014; Nakamura and Steinsson 2013; Shoag 2010). Thus we might expect areas with larger increases in unemployment to receive more money: in other words, Sacramento, California would be a larger recipient than, say, Flint, Michigan or Fargo, North Dakota. Secondly, we might expect lower income areas to receive more funds. Johnson et al. (2001) document that individuals with low levels of income and low levels of liquidity respond more strongly to stimulus. Finally, we might expect primacy placed upon projects which are more labor intensive or projects which are more rapidly implementable (shovel ready). Contrary to such expectations, however, there was no signicant or consistent relationship between the amount spent and a number of dierent measures of local unemployment, including the unemployment rate in January 2009, the change in the unemployment rate between 2007 and 2009. We also nd no evidence that more funds went to districts that were able to spend the money more quickly (i.e., those with more shovel ready projects). While our proxies (especially of shovel readiness) are admittedly imperfect, targeting of areas with high unemployment, excess capacity, or shovel readiness did not appear to play a major role in the allocation of the discretionary funds across Congressional Districts. We do nd that districts with greater employment-per-resident and districts with greater incidence of poverty received more but these characteristics are not directly linked to countercyclical objectives. To be sure, some of the formula-based components of the ARRA bill, such as Medicaid funding or unemployment insurance benets, explicitly targeted areas with higher unemployment. However, such targeting

did not occur for the most discretionary component of the bill. To political economists, the lack of evidence in favor of optimal economic targeting is not surprising, given that the actual allocation of funds occurs through the legislative process. Political economy models make other predictions about the cross-sectional variation in discretionary spending, based on the interests of individual politicians; instead of simply maximizing social welfare, politicians may seek to maximize party success, individual success, or some combination of the three. In this sense, the ARRA aords a window into testing theories of positive political economy, a key goal of which is to understand in whose interests politicians act. One view is that politicians act in the interests of the party. However, there is a longstanding literature in political science suggesting that the United States, having a majoritarian political system, has weak political parties (Baron, 1991; Shor, 2006a; McCarty, Poole and Rosenthal, 2001). Our evidence supports the weak party hypothesis. In our baseline sample that excludes state capitals, Democratic districts in the House recieved, on average, only $95 more per capita in discretionary funding than their Republican counterparts, despite the fact that Democrats had large majorities in both chambers of Congress and held the presidency at the time of passage of the ARRA bill. Controlling for district characteristics that were relevant for some of the funding formulas, this dierential falls to $34 per capita and is not statistically signicant. In addition, we do no nd any dierential by party when we consider award per worker (as opposed to per resident) in the districtswith or without controls. We do nd that strongly Democratic districts (with between 80 and 90 percent Democratic Party vote share) received more funds. However, this dierential is at least in part driven by a small number of very dense urban districts with high levels of employmentand the dierential is smaller when we consider the stimulus award per worker in the district. Importantly, neither of the two parties appear to have targeted extra

funds towards marginal districts, i.e., those with close outcomes in the previous election. We nd no signicant impact of being a marginal Democrat versus a marginal Republican. This is an important result for two reasons. First, legislators working in the interests of the party might choose to target funds towards marginal districts because these are the districts that are most vulnerable to switching parties in the next election. Second, close Democratic districts and close Republican districts are likely to be similar along many other dimensions as well, and so this comparison oers the cleanest empirical test of whether districts were targeted based on their explicit party aliation. Our results here echo those of Albouy (2009) who, using a regression discontinuity design, nds that states with a majority of congressional districts aligned with the party of the president receive a relatively small and statistically insignicant 2.6% more in intergovernmental transfers from the Federal Government. Shor (2006a; 2006b) nds similar results for the allocation of funds in state legislatures. Using less well-identied panel methods, Berry, Burden and Howell (2010) do nd that counties with a representative aligned with the party of the president receive more funds. In contrast to the literature, we focus on a single piece of legislation. However, the legislation we analyze is sizeable with $308 billion in discretionary funds. Albouy (2009) nds his null results during a time of divided government when the president had to bargain with Congress in order to get legislation passed. Interestingly, we nd the same null eect during a period of strong unied government. The voting on the ARRA bill was highly polarized with only seven Democrats voting against the bill and zero Republicans voting for it.1 Party deers who either voted with the opposition or abstained from voting received a somewhat smaller average amount of contract/grant/loan money conditional upon covariates compared to those who voted with their party. However, the magnitudes are not very large, and the results are not statistically signicant in
The seven Democrats includes Parker Grith, a Democrat from Alabamas fth Congressional district, who switched parties 10 months after the vote.
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most specications. Overall, there is not much that the discretionary ARRA spending was aimed at maximizing the success of either political party. A second view posits that politicians are self-interested and maximize their own return without strong regard to either general welfare or party interests. In this case, districts with powerful politicians should receive more discretionary funds. Both Knight (2005) and Cox, Kousser and McCubbins (2010) provide suggestive empirical evidence that those with agenda setting power are able to gain substantial rents. In contrast, Berry, Burden and Howell (2010) use a 23-year panel of county-level disbursements of federal government expenditures and nd that committee leaders and members of important comittees do not receive greater amounts of federal dollars per capita than other districts. Since we consider a single large discretionary spending bill, our statistical power is more limited; however, the funds we consider are all discretionary, which is an attractive feature of our analysis. We nd that the Democratic leadership did not receive more funds than other legislators. The Republican leadership did receive somewhat more, depending on specications, but these results are often not statistically signicant and driven by two outliers.. Overall, these ndings are not strongly consistent with an explanation of funding allocation based on the behavior of self-interested politicians. Similarly, theory suggests that political moderates who can credibly threaten to vote for either side should need to be bribed to vote. The most commonly used model in political economy, the probabilistic voting model (Lindbeck and Weibull, 1987), captures this intuition. It nds that policy and rents are apportioned to individuals in rough proportion to their probability of being swing voters. Rent accrual to ideological moderates has been veried in the Swedish context (Dahlberg and Johansson, 2002). However, in contrast to Dahlberg and Johansson (2002), we nd that ideological moderates were actually less likely to receive ARRA funds. Moreover, swing districts also receive a lower proportion of ARRA funds than more partisan districts. In

the Senate, where the bill necessarily relied on the support of 3 Republicans and one conservative Democrat to overcome a Republican llibuster, we nd no evidence that pivotal states siding with the majority received more funds. A related theory posits that the president targets swing states in the electoral college. Similar to Menchaca (2012), we nd no evidence for strategic targeting of likely swing states by the president. Moreover, in contrast to Larcinese et al. (2006) but in concordance with Inman (2010), we nd little evidence of greater funding for states marginally aligned with the party of the president. Overall, when we consider the variation in spending across congressional districts, we do not nd much evidence of targeting based on both countercyclical or political economic considerations. It is possible that Democrats felt constrained in their ability to explicitly target districts based on partisan aliation, yet they still engaged in a more subtle form of targeting, whereby funds were targeted based on characteristics such as employment and poverty because those characteristics tend to be associated with Democratic districts. Another possibility is that the policy preferences of Democratic legislators support the types of projects that tend to be located in Democratic constituencies. While we can rule out more explicit measures of partisan targeting, we are not able to identify or distinguish between these more subtle and limited forms. We do nd that districts with greater employment-per-resident (i.e., more urban and economically more active areas) and districts with greater incidence of poverty received more funding. This could reect a form of economic targeting, or reect a greater weight on Democratic party priorities. However, in general the evidence suggests that both economic and political targeting was limited. We note that we are only able to account for less than 30% of the variation in our baseline model with 14 variables and 334 observations. Most of the variation in ARRA receipts across districts is unexplained. At the same time, much of our evidence is consistent with the burgeoning empir-

ical political economy literature in both economics and in political science, which document similar failings of the theories. The relative lack of political and counter-cyclical targeting in the most discretionary components of the ARRA contrasts with evidence from the New Deal legislation. Fishback, Kantor and Wallis (2003) argue that grants under the New Deal were targeted both to high unempoyment areas and to swing district supporters of President Roosevent in the prior presidential campaign. In the section where we interpret our results, we consider some possible explanations for this dierence. These include the relatively speedy enactment of the legislation; the non-cyclical (i.e., reinvestment) goals of the bill focusing on public goods provision; and a greater reliance on rules over discretion in the current legislative envrionment. We also discuss some policy implications of our ndings on targeting. The remainder of the paper is structured as follows. In section 2, we summarize how decisions were made to allocate ARRA funds. In section 3, we describe the data that we use. Section 4 presents our results, and in section 5 we interpret our ndings and discuss policy implications. Section 6 concludes.

How Congress Budgeted the ARRA

Budget items are normally sent through nance committees in both the House and the Senate. In the case of the ARRA, most of the details of the contract, grants and loans (hereafter CGL) portion of the bill were sent to the 12 appropriations subcommittees in both the House and the Senate. Since the Obama administration and leaders in the Republican Party both had argued strongly against expenditures which were explicitly targeted to particular districts (earmarks), no earmarks were incorporated into the bill. Before the bill was passed, each of the 12 appropriations subcommittees separately in both the House and the Senate came up with proposed budgets. These budgets were then reconciled across the House and the Senate and ul-

timately written into the bill. Since no Republican House members actually voted for the bill, Republicans in the House of Representatives played little role in formulating the budget. In the Senate, all of the Democrats who were present voted in favor of the bill; they were joined by two independents, Joe Lieberman from Connecticut and Bernie Sanders from Vermont2 . In addition, one Democratic Senator, Ben Nelson of Nebraska publicly announced his ambivalence towards voting in favor of the bill in the weeks leading up to the vote. The Democrats and independents were joined by three Republican Senators Susan Collins and Olympia Snowe from Maine, and Arlen Specter from Pennsylvania3 . So, in the Senate, Republicans played a larger role than in the House, but the bill was still predominantly formulated by staers on the Democratic side. The bill was crafted with strong time constraints. Thus most of the appropriations committees doled out money based upon pre-existing formulas for allocating funds. However, due to the new administrations interest in selecting at least some projects based solely on project quality, many committees allocated a minority of their funds through competitive grants. Thus, almost all of the CGL money was spent using either funding formulas or competitive grants. The competitive grant money was allocated to the departments in the Executive Branch and was then allocated to recipients based upon merit using criteria described in the bill. The criteria used by the various departments diered by type of grant and were written by both legislators and staers. The formula money was given to the governors. However, gubernatorial discretion was limited in terms of how it could be spent, where it could be spent and how quickly it should be spent. For example, highway money had to be used to build and repair highways and 50% of it had to be spent within
Ted Kennedy did not vote due to illness and Al Franken was not allowed to sit for the Senate seat until the summer of 2009 due to litigation following a very close election. 3 Arlen Specter was a Republican until May 2009 when he switched to the Democratic Party.
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6 months, all of it within a year. The money that remained unspent was to be redistributed to other states by the Federal Department of Transportation. Other portions of the bill mandated that a certain percent of the funds be spent in rural or urban areas. Despite the pervasive use of funding formulas and competitive grants, there was still room for political inuence over the distribution of expenditures. The Obama administration pushed certain projects of interest to the administration (money for alternative energy, high speed rail, local public transportation). Similarly, whereas pushing for district-specic projects was not allowed, members of Congress could have inuenced the amount of money spent through dierent programs. For example, members of Congress from rural areas might have tried to push the subcommittees to increase allotments to funding formulas based upon highway miles while representatives from urban districts might have pushed for increased funds through funding formulas for public transportation systems. Overall, despite the pervasive use of funding formulas and competitive bidding, there was indeed substantial scope for politicians to aect the geographical distribution of funds.

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3.1

Data Description
American Recovery and Reinvestment Act of 2009

Our data on ARRA spending comes from the website www.recovery.gov, which was created to provide taxpayers with information on how the ARRA funds are spent, as mandated by the Act itself. Spending under the ARRA can be divided into three major categories: tax benets; entitlements; and contracts, grants and loans. For the last category, Recovery.gov provides information on each individual recipient, including the recipients address along with the primary zip code and congressional district where the activity was to be carried out. For the tax benets and entitlements categories, only state-level statistics are available. Most of the analysis in this paper is therefore focused exclusively on the CGL funds. As of January 2014, the 10

total estimated expenditure under the ARRA was $840 billion (an increase from the original estimate of $787 billion). Of this, CGL funds accounted for around $267 billion. We aggregate the amount of disbursement to the House district level and, for some specications, to the state level. We exclude from our baseline analysis all congressional districts containing any part of a state capital. We do this because a large portion of the money going to state capital districts was disbursed to the state governments and subsequently redistributed across the state. For example, educational grants are predominantly sent to state capitals and then distributed by governors and state legislatures throughout the state. This type of spending is recorded in the ARRA data as going to the congressional district where the headquarters of the state governmental agency is located, and does not accurately reect the distribution of spending across congressional districts. After dropping congressional districts containing any part of a state capital, we are left with 334 out of 435 congressional districts, implying that the average capital city is contained within two congressional districts. We discuss this issue in more detail below. Overall, $106 billion of the $267 billion in CGL funds remains after excluding state capitals from the sample.

3.2

Voting and Congress Data

We use vote returns from Congressional Quarterly for the November 2008 general election for the U.S. House of Representatives. The two-party Democratic vote share in each congressional district is computed as the number of votes for the Democratic candidate divided by the total votes for the Democratic and Republican candidates. The median Democratic vote share in our sample is 57.7%, reecting the Democratic majority in the House at the time. On February 13, 2009 the date of the vote on the ARRA conference report there were 255 Democrats, 178 Republicans, and 2 vacant seats in the House of Representatives. Data on the tenure for each member of the House comes from the Oce of the Clerk of the House of Representatives. We use data from the website 11

Govtrack.us to nd committee assignments for the 111th Congress and each representatives vote on the ARRA. DW-Nominate scores for individual legislators were downloaded from voteview.com. For district-level presidential vote returns, we use data from the Swing State Project.

3.3

Other Data

We also use data for a number of demographic and economic characteristics at the state and district levels. Data on state-level Medicaid and county-level unemployment insurance expenditure is from the Bureau of Economic Analysis. District-level information on population, poverty, and land area comes from the U.S. Census Bureau. We use data on county-level unemployment rates from the Local Area Unemployment Statistics program at BLS. County-level information on home loans is from Home Mortgage Disclosure Act (HMDA) data made available by the Federal Financial Institutions Examination Council. District-level characteristics for unemployment rate, home loans, highway miles, and unemployment insurance are derived from the county-level information using geographic correspondences provided by the Missouri Census Data Center. For data on total employment, we use the 2008 LEHD Origin-Destination Employment Statistics (LODES) data available from the U.S. Census Bureau, and aggregate the census block-level data to the district level.4

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4.1

Results
What Was the Money Spent On?

In this section, we give an overview of what types of projects were funded with the ARRA money. In gures A1 and A2a and A2b, we display a map of the United States where darker areas received more funding per capita. Figure A1 shows amounts per capita aggregated to the state level. Figures
LODES data is not available for Massachusetts, so we instead use the ZIP Code Business Patterns from the U.S. Census Bureau, and derive district-level employment using geographic correspondences from the Missouri Census Data Center.
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A2a and A2b show amounts at the congressional district level, with Figure A2b omitting districts continaing portions of state capitals. Figure A2b displays the distribution of funding we use in our main district-level analysis. There are no obvious patterns from the maps. The mean amount of stimulus funds received per resident in a district in the form of contracts, grants and loans was $469 per capita, or $900 per capita including state capitals. This reects the exclusion of all CGL funds to state governments, particularly education funds which constituted a very large proportion of total funds. We show descriptive statistics in Table 1. There is sizeable variation in expenditure across districts. The standard deviation of per capita expenditure is $542 per person and $1786 per person including state capitals. State-level amounts per resident are slightly higher than district-level amounts ($156 excluding money going to state capitals and $48 including money going to state capitals). This reects small states getting slightly larger amounts. Additionally, since the House of Representatives was highly Democratic at the time, the mean Democratic vote share was 58%. The vote share was identical for districts containing at least some portion of a state capital. Focusing only on districts not located in state capitals, we begin by showing a kernel density estimate of the per capita expenditure.5 The distribution, shown in Figure 1a, is heavily skewed to the right. The lowest amount of money obtained by any district was Anthony Weiners (Democratic) district in New York City, which received around $7 per person of CGL funding. The most received by any congressional district was around $3750 per person for Doc Hastings (Republican) district containing Spokane, Washington. Hastings district received over 500 times more money per person than Weiners district. In Figure 1b, we show a histogram and kernel density estimates of the Democratic vote share. The mean vote share was approximately 57% for
We use an Epanechnikov kernel with an optimal bandwidth minimizing mean squared integrable error relative to a tted Gaussian distribution.
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the Democrats, reecting that the House was highly Democratic at the time. There are two modes of the distribution of two-party vote share, one Republican mode around 40% and another Democratic mode around 70%. There are also a few districts with uncontested Republican winners and almost 3 times as many Democratic ones. The amount of variation across congressional districts was substantial. If most districts received a similar amount of funds, then variation across districts in levels of funding would constitute a small fraction of total funding. However, when we compute the de-meaned variation relative to total variaI

(yi y )2
I i=1

tion,

i=1 2 yi

, de-meaned variation accounts for 79.9% of total variation and

the mean payment to a district accounts for a mere 20.1% of total variation. This shows that ARRA expenditures were not distributed equally. A substantial majority of the variation in funds allocated across noncapital districts is due to a small number of districts that received a large amount of funds. Out of 334 districts that dont contain state capitals, we identify 17 outliers, using a cuto of $1300 per resident. Of these districts, 12 are Democratic districts and 5 are Republican districts. Out of the 10 districts receiving more than $2000 per resident, 5 are Republican and 5 are Democratic. If we take a simple model with only a dummy for a Democratic district, adding in dummies for these 17 districts increases the R2 from 0.007 to 0.808. When we look at the distribution of funds on a per worker basis, we nd 5 Republican districts which get more than $3500 per worker and 2 Democratic districts which received more than that amount. In the per worker regressions, a simple model with a constant term and a Democratic dummy yields an R2 of zero to three signicant digits. However, adding 7 dummies for the outlier districts increases the R2 to 76.4%. Interestingly, adding in dummies for outlier districts does not qualitatively change the signs and magnitudes of the other coecients in more fully specied models. We show these results in Appendix Figure A3. The large amounts allocated to

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the outlier districts are due to sizable individual grants rather than a large number of grants. The two top Republican recipients, Doc Hastings (WA) and Buck McKeon (CA) received 22% and 42% of their funds respectively in their top award. In both cases, these were large competitive DOE grants or loans (water reclamation at the Hanford nuclear site and a solar energy loan, respectively). The two top Democratic recipients, Elijah Cummings (MD) and Barbara Lee (CA), received 29% and 11% of their funds from their top grant respectively. In the case of Elijah Cummings district, the funds were Maryland Department of Education funds which would usually go to the state capital (Annapolis) but in this case went to Baltimore6 . In the case of Barbara Lees district, the large grant was to the California Department of Transportation for the construction of a local highway tunnel. More generally, the top 10 recipients all received over $2000 per recipient and in all cases, a majority of the money was contained in the top 5% of grants. The top 4 recipients all received over $3000 per resident and more than 80% of their funds were in the top 5% of grants. In general, as seen in Appendix Figure A3, there is a strong positive correlation between the amount a district received and the percent of funds received in the top 5% of grants. This suggests that outlier districts were outliers largely because they had a particular large project that they were awarded, often through a competitive grant. The money in the ARRA bill was distributed through 207 dierent federal funding agencies. However, the top four of these account for 55% of the total CGL funds distributed. These four agencies are (in order): the Ofce of Elementary and Secondary Education ($64.6 billion), the Department of Energy ($39.7 billion), the Federal Highway Administration ($27.7 billion), and the Oce of Special Education and Rehabilitation Services ($13.6 billion). The other top-10 granting agencies were the National Institute of
6 This is the only case we found where state funds went to a district that did not contain the state capital.

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Health, the Department of Housing and Urban Development, the Federal Transit Administration, the Federal Railroad Administration, the Environmental Protection Agency and the Rural Utility Service. These 10 agencies distributed 74% of the $267 Billion in our data. The amounts for these top ten funding agencies are listed in Appendix Table A1. The top 5 granting agencies in the data excluding the state capitals were the Department of Energy, the Federal Highway Administration, the National Institute of Health, the Federal Transit Administration, and the Department of Housing and Human Services (Appendix Table A2).

4.2

States and Funding Formulas

The variation in ARRA expenditures across states is well explained by simple formulas: largely Medicaid and highway miles. This has already been pointed out by Inman (2010). Using state-level data on ARRA expenditures from Federal Funds Information for States (FFIS), he shows that 55% of state-level expenditures are explained by simple funding formulas incorporating highway miles, prior Medicaid expenditures and state budget gaps. Sixty-seven percent of the variation in highway funding can be explained by 7 variables including highway mileage per capita. However, Inman nds that his simple cross-state funding formulas do not work well in explaining either stability aid or other aid, where they explain only 6% and 10% of the cross-state variation, respectively. We replicate Inmans results with our data at the state level and report it in Table 2. In particular, we regress: ARRAs = + unemp09 s + decit s + medicaid2005 s + statepop s + (1)

interestatemiles2005 s + senFiscalChair s + closeObamawinner s where unemp09 is the February 2009 state unemployment rate as reported by the Bureau of Labor Statistics, decit s is the 2009 state budget gap, statepop s is the state population in July 2009 as reported by the American 16

Community Survey, interstatemiles2005 s is the number of miles on interstate highways per 10,000 residents in 2005 using data from the 2008 Statistical Abstract, senFiscalChair is a dummy that takes a value of 1 if a senator from the state is the chair or ranking member of one of six budget-related Senate committees,7 and closeObamawinner s is a dummy variable which takes on a value of 1 if the state two-party vote share for the Democratic Party in the 2008 presidential general election was between 50 and 52%. Our results are largely consistent with Inman (2010). Column 1 of Table 2 uses the same data source for the dependent variable (ARRA expenditures from FFIS) as Inmans regressions.The data sources for the explanatory variables are not identical to Inmans, and so we are unable to exactly replicate his results.8 Columns 3-6 use our data source for ARRA spending the contracts, grants and loans from Recovery.gov at the state and district level. Column 7 also uses data from Recovery.gov, but in this case we use the more comprehensive agency-reported data that is available at the state level; this data set includes information for the entitlement portion of the bill, as well as the contracts, grants and loans, for a total of $470 billion. Using the FFIS data and Inman specications, our regressions explain over 81% of the variation in state-level ARRA allocations.9 Estimating the same specication but now using the CGL funds data from Recovery.gov aggregated to the state
7 The six committees are: Appropriations, Banking and Urban Aairs, Budget, Commerce and Transportation, Environment and Public Works, and Finance. 8

In particular, our results for the state budget gap do not correspond to Inmans. He nds a positive correlation between the amount received and the state budget gap. We also nd this in some specications, depending on how the state budget gap is dened. However, the specication displayed in Table 2 uses the budget gap as a percent of the general fund budget, instead of the budget per capita. We do this in order to reduce the inuence of an outlier, and we nd no relationship between our measure of the budget gap and amount received. In Appendix Table A3, we show that Inmans model explains only 7% of the crossstate variation in education spending, but 67% of the cross-state variation in highway spending.
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level, we are still able to explain about 72% of the variation in spending. This is shown in column 3. However, when we remove the funding going to state capitals, and aggregate the remaining money to the state level, the explanatory power of the regression drops dramatically. The R2 falls to a value less than 0.14. The money going to state capitals is primarily formula-based funding for education and infrastructure. Exclusion of the funds going to state capitals removes 60% of the total dollar amount awarded. Moreover, as shown in columns 5 and 6, when we run the Inman regressions at the congressional district level, we explain less than 4% of the total variation. Since the vast majority of money sent to state capitals is actually then redistributed across all districts within a state, we conclude that simple funding formulas do not explain the allocation of discretionary funds from the ARRA bill across congressional districts. Finally, column 7 displays the state-level results using the agency-reported data, which includes data for state capitals, as well as entitlement spending. Here the explanatory power is much lower than in column 3, suggesting that the entitlement portion of the spending is not as well-explained by the funding formulas. The state-level regressions show three interesting facts about the distribution of ARRA funds. First, simple funding formulas do not explain any of the state- or district-level variation in the CGL portion of ARRA funding. Second, if anything swing states that voted narrowly in favor of Obama received lower amounts of discretionary stimulus funding than other states. States that narrowly voted in favor of Obama in 2008 but within a 2% vote margin received $81 less per capita in discretionary funds; omitting the money going to state capitals, the magnitude of the dierential increases to $202 less per capita, and becomes statistically signicant at the 1% level. Moreover, looking at Appendix Figure A1, we see that swing states in general including those voting narrowly for McCain as well as those voting narrowly for Obama did not receive signicantly more funds than other states. The third interesting nding is that a small number of variables t cross-state

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expenditure patterns quite well for total expenditures. However, the same models t quite poorly when explaining the money that is spent outside of state capitals, where the awards largely exclude the formula-based allocations for education and infrastructure. Since this is true even at the state level where spatial measurement error is unlikely to to be large, it suggests that measurement error is probably not the main reason for the low explanatory power of political models in explaining the cross-district patterns of ARRA expenditure.

4.3

Economic Targeting

Given the stated countercyclical objective of the legislation, we now consider whether nancial need or high excess capacity was predictive of how much CGL funding a state received. In Table 3, we show coecients for the change in the unemployment rate between January 2009 and January 2007, We do this using the agency data as well as with the CGL data and we show specications with and without controls using the agency data. In the specications with controls, we control for state employment and the poverty rate. The specication is rather sparse because of the limited degrees of freedom with only 50 observations. This obviously also limits our ability to interpret our results. The coecient on change in the unemployment rate is relatively small and the sign of the coecient ips when we add controls. This is surprising since some of the state-level money was explicitly set aside for high unemployment states. For example, 35% of the $87 billion allocated for Medicaid was set aside for high unemployment states. We also look to see whether the amounts given across states varied systematically with employment levels in the states. Certain states such as New York have a high level of employment per resident and thus might be expected to receive larger amounts of funds to stimulate employment. However, we nd that amount received per resident and state-level employment is negatively correlated in all specications though the coecients are far from statistically signicant. Finally, because 19

unemployment has higher incidences in poorer areas, we look at how statelevel poverty rates correlate with overall funds in a state and again nd a negative relationship. States with higher poverty levels on average received less funding. An increase in the poverty rate by 1 percent is correlated with a decline in funding of $46 per resident in our baseline specication with controls. The poverty coecients are signicant at a 10% level when we use the agency data. The coecient on poverty is roughly 1/3 the size and not statistically signicant in the contracts, grants and loans data. Turning to the district level, in Appendix Figure A5, we non-parametrically regress the amount received per resident on our two measures of excess capacity. In both cases, we see that districts with higher unemployment received slightly less funding per district resident. These results reinforce similar ndings by Gimpel et al. (2013) and Inman (2010). In the district-level regressions in Table 4, we report coecients on 7 dierent covariates for 5 dierent speccations, reecting results from 35 dierent regressions. First of all, in the rst three panels (rows), we show conditional correlations of amount of CGL funds per district resident with our covariates. In the bottom two panels, we report conditional correlations of amount of CGL funds per worker in the district. We look at per worker specications because we do nd that, in contrast to the cross-state variation, more money did go to highly urbanized areas. This is not surprising given that much of the formula money given to the states stipulated that a certain percentage of the funds be spent in urban areas. Most people who work in Wyomings congressional district also live in it. However, a much lower percentage of people who work in the congressional districts in Manhattan live there. Moreover, neighboring Brooklyn and Queens are much more places of consumption than production. This, in part, explains the low amounts of funds received by Anthony Weiners district. Interestingly, the amount of funds received per resident is much more strongly correlated with employment in a district than with the percent of the district that is urban. In panels A and D we show per resident

20

and per worker results for covariates without other controls. In panel B, we control for log 2008 employment, the poverty rate, highway miles and percent urban as well as 9 vote share bin dummies for the vote share of the House Represenative in the district. Our results adding in all these covariates are generally similar to the unconditional results. In panel C, we also control for land area. In some specications, this leads to dierent results. All of these covariates are covariates which were explicitly or eectively incorporated into funding formulas. Finally, in panel E, we report the per worker variant of panel C; panel E diers only in that we omit log employment since we already incorporate employment in our dependent variable. We nd no statistically signicant correlation in any of the specications between amount per capita and either of our measures of unemployment or the amount of UI spent in the district per capita. We also nd no statistically signicant correlation with percent urban in any of the specications. We also nd very strong positive correlations between employment in a district and amounts per resident. The estimates are very tightly estimated. Districts with 100,000 more workers on average get $200 more per resident. In all three per-resident specications, the t-statistics are above 5 and the point estimates vary by less than 0.06 across specications. Moreover, employment is not only highly correlated with funding, it is quantitatively important. Adding just employment increases the R2 by over 13 percentage points. Also, adding in other controls does not change the marginal R2 of adding in employment. The estimates are surprisingly invariant to controlling for percent urban. Unsurprisingly, employment is not correlated with amount received per worker in the district. The second most important of our covariates is poverty. Poor districts received more money. Adding in poverty increases the R2 by approximately 0.03. Again, this is not surprising given that some of the formula money set aside portions specically for historically poor areas.10 The results on
10

For example, some of the money disbursed by the Department of Labor used denitions

21

poverty are less robust than those on employment. Adding in our other controls lowers the coecient estimates slightly but also almost doubles the standard errors. Unconditionally, places with a one percentage point higher poverty rate received $16 more in funds per resident and $42 more per worker. Note that since around 1/3 of the residents in a district work,11 the per worker coecients are usually approximately 3 times as high. Unconditionally, both coecients are signicant at the 1% level. With the full set of controls, the t-statistics in the per resident specication are just below signicance at the 10% level with a t-statistic of 1.57 and the per worker coecient is signicant at between the 10% and 5% level with a t-statistic of 1.87. It is possible that the bill didnt target unemployment because it targeted shovel ready projects and places with more shovel ready projects were places with lower unemployment (or lower increases in unemployment). The Obama administration said that shovel-ready projects would be made high priority and this was reected in the bill. Much of the formula grant money had stipulations that money would have to be returned if not spent quickly enough. While it is dicult to measure shovel readiness using an ex-ante measure, we do have recipient reported information on the pace at which the funds were disbursed and spent. To assess shovel readiness, we construct measures of what fraction of the funds in a district were in projects that were completed within one year. Using this measure, we show in Online Figure A7 that places which were allocated more money were on average somewhat slower in completing projects. This is possibly because districts which received more money received money for large infrastructure projects and these on average took longer. However, Online Figure A7 shows that uniformly places that received more money never completed their projects more quickly. Across all specications, the coecient on percent completed within one year is negative and signicant at the 10% level or less. The specof poor areas dened in a bill in 1965. 11 Note that this ratio is dierent from the employment to population ratio as standardly dened in that it includes the elderly and children.

22

ications with controls are more signicant and the per worker coecients are signicant at a 1% level. Interestingly, the negative results on completion within one year contrast with null results on percent of funds spent within 2 years despite the fact that there is slightly more variation in the percent completed within two years variable. Moreover, in reported regressions, we note that controlling for percent of funds spent within one year does not impact the coecients on unemployment. Though shovel readiness may have played a role in the selection of projects, we nd no evidence that it inuenced the how money was allocated across congressional districts.

4.4

Group Targeting: Partisanship

We next investigate whether members of Congress acted in the interests of their party. At the time of passage of the ARRA, Democrats had a strong majority in both the House and the Senate and they also held the presidency. Therefore, they were able to pass the legislation without any support from Republicans in the House, and they passed the bill in the Senate, overcoming a potential Republican llibuster, with the help of only three Republicans. Did, then, the Democrats get a large majority of the funds, as might be expected from simple and standard political economy models? As De Rugy (2010) has shown, districts represented by Democrats received substantially larger sums of ARRA money than those represented by Republicans. In our database of contracts, grants and loans, districts represented by Democrats received 55% more than those represented by Republicans. The mean Republican district received $684 in funds whereas the mean Democratic district received $1,057. However, as pointed out by Nate Silver (2010), the state capitals received funds that, while nominally allocated to the capital, were in turn allocated across the state.12 Education funds are usually allocated in this manner. The top 17 recipient districts are all part of state capitals, and 26 of the top 30 are state capital districts as
Albouy (2009) also points out the state capitals problem as part of his justication for running state-level regressions.
12

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well. The probability of either of these events occuring by chance is below 1 in 1013 . However, the pattern of funds is slightly more nuanced than Silvers account. He argues that state capitals tend to be heavily Democratic and therefore these transfers to state agencies are more likely to be counted as going to Democratic districts. In fact, on average, state capital disticts have almost the same Democratic vote share as districts not located in state capitals. In Table 1, we show that the Democratic vote share for the House seat is 58% whether we include the 101 out of 435 districts which contain portions of a state capital or not. 13 While urban areas tend to vote more Democratic, there are many districts containing portions of state capitals and either surrounding suburban land or even surrounding rural land (e.g., Wyoming is itself one district). Republican districts containing state capitals are slightly larger and less dense. More importantly, state capital districts in larger states do tend to be more Democratic than average, while capital districts in smaller states tend to be more Republican. The state capitals in the largest states received disproportionately larger sums because most of the education and Medicaid spending for the entire state is often given to the capital, and states with large populations received more total education and Medicaid funds. The districts of the top ten recipients are, in order, the capitals of California, New York, Illinois, Florida, Texas, Ohio, Michigan, Georgia, Pennsylvania, and Massachussetts. Only two of the top 17 districts, and four of the top 26 districts were Republican. Since we do not know how the funds nominally allocated to state capitals were actually dispersed within the states, we exclude all districts that include state capitals from our analysis. This eliminates 13 states which do not have a congressional district without some part of a state capital from our sample. In our revised sample, the partisan gap is substantially lower, with Democratic districts receiving 23% more than Republican districts. The average
Our set of capital districts diers slightly from Silvers. We identiy 101 congressional districts containing some portion of a state capital city or its surrounding county. Silver denes 78 districts as containing all or part of a states capital city.
13

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Republican district receives $416 per capita as compared to $510 per capita in the average Democratic district. While this $95 dierential is statistically signicant (see column 2 of Table 5), it becomes $19 and statistically insignicant once percent living in poverty is introduced as a control. We then add our controls. None of the controls change the coecient on the Democrat dummy by much with the exception of the poverty variable. Column 5 shows that conditional on the four other funding formula controls, including employment, the coecient rises slightly to $109 and remains signicant at a 5% level. However, introducing poverty reduces the coecient back to $33 and makes it insignicant. In the per worker regressions, reported in columns 7 and 8, the Democrats dummy is insignicant and small with or without controls. In fact, conditional upon controls, the coecient on the Democrat dummy is -$85. Ultimately, it is not clear whether Democrats funneled money to their districts through funding formulas that targeted high poverty areas and high employment areas or whether these areas got more because they were trying to create jobs in poor areas and centers of employment. Nonetheless, it seems unlikely that poor areas beneted from explicit targeting of Democratic areas. In fact, the poverty is slighlty more strongly correlated with funds per resident in Republican areas than Democratic ones. We now look more closely at how Representatives did as a function of the two-party Democratic vote share. Figure 2a plots the CGL funds per resident against the Democratic vote share. Five Republican outliers who received substantially larger amounts stand out and roughly triple the number of Democrats also stand out. Figure 2c shows that the Democratic outliers are all in districts which are 100% or very close to 100% urban. Thus, it is not surprising that in Figure 2b, we see only two Democratic outliers though we still see the same ve Republican outliers. In Figure 2d, we plot worker-per-resident ratio nonparametrically on vote share. Interestingly, we nd a similar hump for districts with 80-90 percent Democratic vote share. This suggests that much of the hump in funding for Democrats in the 80-90

25

percent range is attributable to those districts being centers of employment. In all of the scatterplots in Figure 2, we can see that Democrats receiving between 80 and 90 percent of the vote share seem to have received a higher amount of funds per capita. To assess this further, we non-parametrically regress per-capita amount of CGL funds on the Democratic Party vote share and report the results in Figure 3a.14 We also use a (semi-parametric) partial linear model to regress the per-capita CGL funds on the Democratic Party vote share, controlling parametrically for the ve funding formula controls: percent living in poverty, percent living in an urban area, land area, road miles, and employment.We estimate:15 Ai = f (vi ) + X +
t

where Ai the the per capita amount of ARRA funding received in district i, X is the set of demographic and economic controls and f (vi ) is a nonparametric function of the two-party Democratic vote share.16 The results are shown in Figure 3b. Figures 3a conrms the evidence from the simple scatterplot that strongly Democratic districts with around 80 percent of the vote share receive well above the mean amount of CGL funds. Figure 3b shows that this relationship continues to hold after we account for covariates. Figure 3a also suggests that highly Republican districts get a modest amount more than the average
We use the STATA command lpoly, using a rule of thumb plug-in bandwidth that minimizes the conditional weighted mean integrated square error. Standard errors are obtained by bootstrapping with 100 replications. 15 Due to concerns that very urban districts got substantially more money and are also highly Democratic, we ran specications controlling for a dummy variable which takes on a value of one for districts with 100% of their area in urban land. We also tried controlling for a dummy which takes on a value of one if a district has 90% or more of its land in urban areas. Our results are highly robust to these alternative specications. 16 We use the Yatchew method to dierence out the parametric component X , and use local polynomial regression (STATA command lpoly) to estimate the f (vi ) component nonparametrically; the bandwidth selection is based on the rule of thumb plugin method. Standard errors are obtained by bootstrapping with 100 replications.
14

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recipient. However, this dierence is not statistically signicant and does not survive the inclusion of covariates in Figure 3b. Figure 4 shows the same results with amount per worker as the left hand side variable. In Figure 4a, we see that, whereas Democrats in the 80-90 percent vote share range do not get as much more as in the per resident gure, they still do get more than Democrats in less safe districts. However, close Republican highly Republican districts also now get substantial amounts. The bootstrapped condence intervals are much wider for the very Republican districts because they are driven by one outlier who received a substantial amount. Putting in our ve controls also increases the amount received per capita for marginal Republican districts though not for marginal Democratic ones. Interestingly, when we compare close Democrats to close Republicans, we nd that these districts receive about the same amount (if anything the marginal Democratic districts obtained less CGL funds). In Table 5, the point estimates for Republican leaning districts with 40-50% (Democratic) vote share are positive, but generally not statistically signcant. Democratic and Republican districts with around 50% Democratic vote share are likely to be similar in terms of other characteristics, so comparing these districts oers another way to test whether the partisan representation of the district aects the spending allocation. These results lend support to the argument that the higher average level of spending in Democratic districts is driven more by district characteristics than by party aliation per se. However, the substantially larger amount of CGL funds going to districts where Democrats received between 80 and 90 percent of vote share suggests that there may be a partisan gap in funds, or some other factor that may be dierent in these districts.

4.5

Individual Targeting: Party Elites

Did legislators use their individual positions of power to their own benet? We break down per capita ARRA funds by whether members had leadership positions in Congress, whether they were legislative swing voters and how 27

long they had been members in Congress. Our ndings are predominantly negative. Congressional leaders have inuence both because they have agenda setting powers as well as because they are socially well-connected and potentially persuasive allies. From column 4 of Table 5, we can see that the Democratic Speaker of the House, Nancy Pelosi, received about $250 more per capita than the average House member, though this dierence is not statistically signicant when we include our full set of controls. John Boehner, the Minority Leader, by contrast, received approximately $114 less per capita. Out of our sample of 334 representatives who do not represent any portion of state capitals, there are 20 Democratic committee chairs and 19 Republican ranking members. The Democratic committee chairs received on average $133 less than similar members. However, the Republican ranking members received almost $375 more on average, and this is signicant at a 10% level of condence. However, the results for the Republican leadership, as can be seen in Figure 2c, are driven by two strong outliers amongst the Republican ranking members. As noted earlier, the top 2 recipients out of these 334 representatives were both Republican ranking members. They were Doc Hastings of Spokane, Washington, ranking member of the House Committee on Natural Resources, and Buck McKeon of Santa Clarita, California, ranking member of the House Armed Services Committee. The probability that 2 or more out 19 Republican Ranking Members would be in the top 1% of recipients by random chance would happen with a probability of 1.5%. However, besides these two top recipients, Republican ranking members and party leaders did not receive more than average members of Congress. Ten out the nineteen Republican ranking members in our sample receive above the median amount of funding. The Minority Leader, John Boehner, was in the bottom 11% of recipients. The top Democratic committee chairs did not receive more CGL funds than average. Out of 20 Democratic committee chairs in our sample, only 2

28

were in the top 10% of recipients. The top ARRA fund recipient in the Democratic Party Leadership went to the Speaker of the House, Nancy Pelosi, who represented San Franciso, California. She received the 11th largest amount of funds of the 334 representatives in our sample. The second largest recipient in the Democratic leadership was Patrick Murphy of Pennsylvanias District 8, which serves Levittown and surrounding areas. He received the 28th highest amount. Similar to Republican leaders, the median Democratic leader did not receive a signicantly dierent amount from the median Representative. Eleven out of the 20 Democratic committee chairs got more than the median amount received in our sample. The fact that Democratic leaders received signicantly less on average than the average congressperson is due to the fact that 6 out of the 20 leaders received below the 25th percentile of funds and three, two representatives from New York and one from California, were in the bottom 4%. All three of these representatives received less than $100 per capita for their districts. In Table 7, we regress amount per resident and per worker on dummies for the Democratic leadership and for the Republican leadership separately. We do this with and without our baseline controls. We show that Democratic Congressional leaders on average get the same or less than other members of Congress. The coecient on the Democratic leadership is not statistically signicant in any of the specications. The coecient is zero in the per resident specication without controls and negative in all others. In Appendix Table A6, we report the dummies separating out the Speaker of the House (Pelosi) on the Democratic side and the Minority Leader (Boehner) on the Republican side. Pelosi is an outlier and the speaker dummy is statistically signicant in at the one percent level in all specications except the per worker specication with controls. In the per resident specication with controls, she gets almost $600 more per resident than other similar members. Conditional on the speaker dummy, the rest of the Democratic leadership gets signicantly (at the 5% level) less controling for funding for-

29

mula amounts in both per worker and per resident specications. They get $126 less in the per resident specication. On the other hand, returning to Table 7, we see that in all specications, the Republican leadership gets more than average. With controls, the amounts are statistically signicant at the 10% level. However, the minority leader on the Republican side is also an outlier. Unconditionally, his district gets $338 less per resident and $150 less conditional upon controls. Despite being at the 11th percentile in the distribution of funds, the Boehner results are signicant themselves at the 1% level without controls, suggesting that these estimates are plagued by small sample sizes and skewed data. Accounting for Boehner, the rest of the Republican leadership gets $409 more on average conditional upon controls and this is signicant at the 10% level. However, again, these results are driven by two outliers, Buck Mckeon and Doc Hastings, who on average, get $3325 more funds per resident. Taking out these two outliers, we do not nd evidence that the rest of the Republican leadership received more than other Congressional members. Because of the small numbers of party leaders, we also calculate small sample tests to assess whether these individuals received a disproportionate amount of CGL funds. Intuitively, by comparing those in power during the ARRA bill to those in power in the following and prior Congresses, we estimate the impact of being in power precisely when the ARRA bill passed. We matched the districts of current congressional leaders in the 111th Congress to the districts of their predecessors who held the same positions in the 110th Congress. There were 6 Republican leaders who we could match due to a number of exits of Republicans in the leadership of the 110th Congress. In 5 out of 6 cases, the district with a leader in power during the ARRA vote received more money. This would happen by random chance 4% (one-sided test) of the time. We also look at leadership changes between the 111th and 112th Congress. For Republicans, this raises our sample size to 10. We nd that in 7 out of 10 cases, the district with a leader in power during the ARRA

30

vote received more, which would happen by random chance with a probability of 8.9%. We run the same comparison for Democratic leaders as well. In the case of Democrats, there is no evidence that committee chairs received more money17 ; in only 5 out of 11 cases did the leader in power during the ARRA vote get more. These results are reported in Appendix Table A5. Legislative tenure can be thought of as a proxy for social connections or institutional knowledge of the functioning of Congress. For this reason, it is possible that higher tenure legislators are able to procure a greater amount of funds. Rows 5 and 7 of Table 7 show that tenure is positively correlated with amount received per resident and per worker. Both are signicant at the 10% level. However, Figure 5b shows that many of the higher tenure (shaded more heavily) observations are in the 80-90 percent range. Conditional upon baseline controls, coecients drop by a half to two third. An additional Congressional session is associated with $2.5 more in funds per resident and is not statistically signicant at conventional levels.We show, in Appendix Figure A7, non-parametric and semi-parametric regressions of amount received per capita on tenure. We also break them down by party. For Republicans, we can see that very high tenure individuals actually receive less and for Democrats, results, increases in funding with tenure are solely due to a few outliers with more than 50 years in the House18 . Overall, we see very little evidence that powerful individuals targeted ARRA funds to their own districts.
Our negative results on the importance of committee chairs is in contrast to recent work by Cohen et al. (2011) who use committee chairs in a district as an instrument for the impact of public spending. Berry et al. (2010) nd the opposite. Our own work suggests that these estimates may suer from small sample sizes and non-normal errors. 18 Feyrer and Sacerdote (2011) use average tenure of a Congressional delegation in a state as an instrument for amount of ARRA money. Our results suggest that tenure is not an eective instrument at the district level and that high tenure districts are dierent from low tenure districts in ways other than just the tenure of the Congressional members.
17

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4.6

Individual Targeting: Party Discipline and Pivotal Members of Congress

Another measure of whether legislators act in the interests of their party is whether they punish party members who deviate from the party line. For the ARRA bill, there were a few legislators who voted against the majority of their party: Republicans who abstained from voting in the House or even voted for it in the Senate, and Democrats who abstained or voted against the ARRA bill. No House Republicans voted for the bill; however, two did not vote. Additionally, seven Democrats voted against the bill, one voted present and one did not vote. Party defectors did get less on average than those voting with their parties both in the Democratic and the Republican party. Coecients are not signicant at conventional levels and amount to -$86 pooled across parties or -$87 for Democrat deers. These results are shown in columns 5 and 6 of Table 8. Putting in baseline controls increases the magnitudes of the estimates. With the full set of baseline controls, deers do get less and results are statistically signicant in per worker or per resident specications at the 5% level or less. For Democrats, the amounts are -$144. However, looking at Figure 5D, we see that with the exception of one outlier, Democratic deers get exactly the expected amount conditional upon vote share. Dan Lipinski, a Democrat who represents the 3rd congressional district in the suburbs of Chicago, was a strong outlier, and his district recieved only $75 per resident. Lipinski voted present on the bill, and his district received the 17th lowest amount per capita in Congress. In a median regression, which reduces the inuence of outliers, the coecient on voting against party is -$49 per capita and is not statistically signicant at conventional levels (results not shown). Legislators can also use their individual power to gain political rents is by claiming to be undecided. Legislators in the middle of the ideological distribution can more credibly claim to be undecided and thus need persuading in terms of rents for their district. To assess this possibility, we look at 32

how Congress member ideology correlates with per capita receipts of ARRA funding. We use the rst dimension of McCarty, Poole and Rosenthals DW-nominate, which is the most commonly used measure of congressional ideology. In the modern era, more than 85% of legislative voting behavior can be explained by the rst dimension alone. We are interested in how ideology correlates with funding for two reasons. First, we want to make sure that returns to vote share are not simply proxying returns to ideology. Second, theories of congressional politics suggest that moderate politicians may be able to capture larger amounts of rents because they are swing voters on bills and thus able to demand compensation in order to vote in favor of a bill. In Appendix Figure A8, we semi-parametrically regress ARRA receipts per capita at the district level on DW-nominate, controlling for baseline funding formula controls in both panels A and B but including linear vote share controls in panel B. Liberal members do get more funds. This is also seen in the rst column of Table 8. However, vote share controls reduce and take away statistical signicance of DW-nominate. However, the ARRA bill passed by a large margin in the House of Representatives and so noone was pivotal. By contrast, in the Senate, the administration had to negotiate to get three Republicans (Susan Collins of Maine, Olympia Snowe of Maine, and Arlen Spector of Pennsylvania) to break a potential llibuster. Moreover, one conservative Democrat, Ben Nelson of Nebraska, publicly aired his ambivalence towards voting in favor of the bill. In column 4 of Table 8, we put in a dummy for Pennsylvania and Nebraska. Unfortunately, we cannot include the two Maine districts in our analysis because both contain part of the state capital. Conditional upon controls, we do nd that pivotal districts got $120 more and the results are signicant at the 5% level. However, in all other specications, the results are not signicant and in the per worker specication, they are negative. More important, in our state level analysis in Table 3, the estimates range from -$265 to -$365 across CGL and agency data sets and all specications

33

are signicant at the 5% level. We take this as evidence that pivotal states did not get more money. If anything, they got less. Adding in Maine does not qualitiatively change these results except in the agency reported data without controls. This is show in column 7 of Table 3. Finally, we also look at whether Governors of Democratic states received more funds. The party of the Governor is used as an instrument for scal expenditure in Conley and Dupor (2013). Similar to Conley and Dupor, we nd that using CGL data at the district level, a positive correlation between a Congressional District lying in a state with a Democratic Governor and the amount that the district receives per capita. However, in our four specications, only one is statistically signicant and at only the 10% level. Moreover, however, in Table 3, we see that, in the agency data, the sign of the coecient on Democratic Governor depends upon whether controls are included. Using the CGL data, the sign is negative and statistically signicant at the 10% level. We interpret our ndings as showing that neither Democratic nor Republican Governors got systematically more ARRA funds per capita.

Interpretations and implications for future policy

To summarize our ndings, we nd little to no evidence of positive targeting of funds towards powerful individuals. We also nd limited targeting in favor of the party that held the majority in both chambers of Congress and held the Presidency. Additionally, we nd no targeting of funds towards districts that had large increases in unemployment. Nonetheless, we do nd that there was substantial variation across electoral districts in the allocation of funds. At a certain level, our nding that party leaders, swing districts, and ideological moderates did not recieve more funding, and that deers did not suer a clear penalty, may not be surprising to close political observers. 34

This is especially so given that the Obama administration had mandated that contracts, grants and loans be allocated based on either formulas or competitive grants. Funding formulas are intentionally coarse instruments for the purposes of limiting politically motivated geographical targeting. At the same time, since formula money is allocated by state governors, it is somewhat possible to target particular districts in small statesfor example, single district states. Similarly, while the competitive bidding process limits the ability to target specic areas, the choice of projects still allows a degree of discretion and thus inuence. Moreover, while targeting individual districts would have been dicult, the bill could have easily used funding formulas and even competitive grants to tilt money strongly towards more Democratic states. The spatial outcome for the ARRA bill stands in stark contrast to ndings about the other large scal stimulus in U.S. history: the New Deal. Fishback, Kantor and Wallis (2003) document that although loans were not politically targeted or targeted to high unemployment areas in the New Deal Programs, grants were targeted both to high unempoyment areas and to swing-district supporters of Roosevelt in the prior presidential campaign. In this section, we discuss some possible explanations for the limited geographic targeting in the ARRA bill, and why this may have been dierent during the New Deal era. One possible explanation for our results is that the spatial allocation reected the desires of the administration and Congress. As its name suggests, the bill had two componentsrecovery and reinvestment. While some parts of the bill (Unemployment Insurance, Supplemental Nutrition Assistance Program, Medicaid) were focused on recovery (or at least relief), the CGL component was more focused on reinvestment. Certainly automatic stabilizers, for example, are well targeted to those with a high propensity to consume out of income and those in (or at risk of of falling into) poverty. Maybe, then, the spatial allocation of CGL funds reected the variation in local needs for public goods rather than jobs.

35

However, even though other parts of the bill were better targeted, we nd it unlikely that the allocation of CGL funds was what the administration would have preferred in the absence of political constraints. In January of 2009, the unemployment rate in California was 9.7% and rising rapidly; the unemployment rate in Michigan was 11.4%; however, the unemployment rate in North Dakota was 3.9%. Many schools and highways needed to be rebuilt, and it would not have been particularly dicult to use the severity of the business cycle in an area as a factor in allocating funds. We think a more plausible argument is that there are certain tradeos that arise when greater targeting in scal policies is allowed, and the administrations relatively nontargeted approach reected constraints and not preferences. There are a number of costs that may arise from ner grained geographic targeting. First, there may be increased delays in project selection due to bargaining between legislators, something which runs counter to a rapid enactment in face of a major economic crisis. For example, when Congress tried to set aside Medicaid money for high unemployment areas, the Senate opted for a lower percentage to be allocated towards high unemployment areas and this caused delay in bargaining in the conference committee. Second, such discretion may lead to precisely the type of political opportunism as both predicted by theories of legislative politics and at least partly conrmed by the New Deal experience. Such opportunism, however, may have deligitimized a piece of legislation that was quite controversial and was under substantial scrutiny. For these reasons political constraintsreal or perceivedmay have prevented the administration from engaging in a more targeted approach, instead favoring the use of funding formulas and competitive bidding. In a majoritarian system where politicians gain re-election in part through providing funds to their districts, funding formulas limit the degree to which politicians can steer funds to their own districts. Starting with the FederalAid Highway Act of 1916, Congress increasingly used formulas to allocate fed-

36

eral funds. This was done in large part to reduce graft by allocating across states according to established empirically-veriable criteria that reected need. Moreover, using formulas to allocate funds streamlined bargaining by allowing Congress to decide on the level of funding and then delegate the dispersion of funds. It allows for Congress to retain control over what types of projects are funded while bypassing bargaining over the spatial distribution of the funding in which politicians may be particularly interested. Over time, the use of formulas to allocate funds has become more prevalent. Given that the Obama administration advocated a quick passage and expressed an interest in limiting pork, a reliance on funding formulas and competitive grants may have been the means of acheiving those goals. In addition to allowing for timely passage of the legislation, the channeling of money through existing programs also provided a method to ensure that funds were spent quickly, which was a priority for this particular piece of legislation. However, while a relatively non-targeted approach has merits in terms of reducing the possibility of graft, and possibly expediting the pace of legislation, it comes with costs as well. In particular, it prevents an ability to target based on economic as well as political considerations. It is noteworthy that while the scal stimulus in the New Deal may have provided greater award to swing districts, it also channeled more money to higher unemployment areas. The good news is that political constraints appear to have made scal policy more politically neutral; the bad news is those constraints may have also reduced the countercyclical ecacy. This has a number of implicaitons for future stimulus bills. First, this means that the components of the policy which are better targetede.g., automatic stabilizersare quite important and it may be useful to put greater weight on these. At the same time, besides automatic stabilizers, there are economically sensible reasons to increase public goods provision as part of a countercyclical policy, as discussed in Delong and Summers (2013). The relevant hurdle rate for such projects eectively falls, and an optimal scal

37

policy should likely include an expansion in the funding of such projects. However, it should be possible to include local area unemployment rates, or other transparent measures of excess capacity, as a factor in the funding allocation for contracts, grants and loans. Such an approach would combine the virtues of a more rules-based policy regime with some of the gains from a more targeted variant of stimulus policy. If we had found that the political process generated sucient demand for added funding in harder hit areas, the need for such an explicit rule would not arise. However, that is not what we found, suggesting that the inclusion of local excess capacity measures in funding formulas is likely to have a substantial payo. Moreover, we note that the government relied on already existing funding formulas to disperse the funds, which means that the time for updating the formulasin order to better accomodate the objectives of countercyclical scal policyis now, before the next crisis hits.

Conclusion

In this paper, we have looked at the spatial distribution of ARRA funds to assess how it was targeted economically and politically, and use it as a window towards evaluating theories of political economy. Our main nding is that much of the variation across congressional districts in discretionary spending remains unexplained. Though simple formula-based theories do quite well at the state level, this is almost entirely due to the allocation of Medicaid, education and highway money based upon simple funding formulas. Once state capitals are excluded, it is dicult to nd systematic and signicant explanatory variables capable of explaining the variation in spending. Parties did not appear to act in their own collective interest by targeting marginal districts. For the most part, politicians did not exploit their individual positions of power within the Congress to grab funds. At the same time, discretionary funds were not well targeted to high unemployment districts, and dierences in shovel readiness as measured by the pace of

38

spending do not appear to explain the cross-district variation in expenditures. We do nd, however, that more funding went to districts with more employment per resident, which likely reects greater economic activity. Additionally, districts with higher incidence of poverty also received somewhat greater funding. Overall, even in our most saturated regressions models, the percentage of the unexplained variation remains above 70%. This suggests that factors other than cyclical targeting and political power explains the choice of projects. For example, we cannot rule out that some of the variation that we fail to explain is accounted for by highly stimulative projects in lower unemployment areas, projects with greater long-term benets (such as school construction or weatherization) or projects with particular interest to the administration (renewable energy or high speed rail projects, for example). A comparison of the targeting of discretionary funds under ARRA with New Deal legislation is also illustrative. Grants under the New Deal appear to have gone both to higher unemployment areas, as well as swing district supporters of President Roosevelt. The reduced political and cyclical targeting in the ARRA may reect a more rules-based environment today compared to the 1930s. At the same time, future stimulus policies can increase countercyclical targeting by explicitly using measures of unemployment and excess capacity as part of the allocation of contracts, grants, and loans. We see our ndings as a call for continued empirical research on the distribution of funds. What explains the targeting of funds? Is the surprising lack of explanatory power of measures of party or individual legislator inuence due to the presence of repeated interactions in Congress? Is it dierent from in the past (Levitt and Snyder, 1995), perhaps due to greater public scrutiny in the presence of modern media? These are questions that empirical political economists will hopefully address.

39

References
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[9] DeLong, J. Bradford and Lawrence H. Summers (2012), Fiscal Policy in a Depressed Economy, Brookings Papers on Economic Activity (2012), pp. 233-297. [10] Dube, Arindrajit, Ethan Kaplan and Ben Zipperer (2014), Heterogeneous Eects of Fiscal Expenditure: Local Evidence from the ARRA Bill, Working Paper. [11] Feyrer, Jim and Bruce Sacerdote (2011), Did The Stimulus Stimulate? Real Time Estimates of the Eects of the American Recovery and Reinvestment Act, NBER Working Paper 16759. [12] Fishback, Price, Shawn Kantor and John Wallis (2003), Can the New Deals three Rs be Rehabilitated? A Program-by-Program, County-byCounty Analysis, Explorations in Economic History 40, pp. 278-307. [13] Gimpel, James, Frances Lee, and Rebecca Thorpe (2013), Geographic Distribution of the Federal Stimulus of 2009, Political Science Quarterly 127:4, pp. 567-595. [14] Grunwald, Michael (2012), The New New Deal: The Hidden Story of Change in the Obama Era, Simon and Schuster. [15] Inman, Robert (2010), States in Fiscal Distress, NBER Working Paper 16086. [16] Johnson, David S., Jonathan A. Parker, and Nicholas S. Souleles (2006), Household Expenditure and the Income Tax Rebates of 2001. American Economic Review 96(5): pp. 1589-1610. [17] Knight, Brian (2005), Estimating the Value of Proposal Power, American Economic Review 95: pp. 16391652.

41

[18] Larcinese, Valention, Leonzio Rizzo, and Celia Testa (2006), Allocating the U.S. Federal Budget to the States: The Impact of the President, Journal of Politics 68 (2): pp.447-456. [19] Levitt, Steven D. and Snyder, James M. (1995), Political Parties and the Distribution of Federal Outlays, American Journal of Political Science 39, pp. 958-980. [20] Lindbeck, Assar and Jurgen Weibull (1987),Balanced Budget Redistribution and the Outcome of Political Competition, Public Choice 52: 27397. [21] McCarty, Nolan, Keith T. Poole, and Howard Rosenthal, (2001) The Hunt for Party Discipline in Congress, American Political Science Review 95: 67387. [22] Menchaca, Marcos (2012), Swing Voter Theory in American Presidential Elections, working paper. [23] Nakamura, Emi and Jon Steinsson (forthcoming), Fiscal Stimulus in a Monetary Union: Evidence from U.S. Regions, American Economic Review. [24] Serrato-Suarez, Juan Carlos and Philippe Wingender (2011), Estimating Local Fiscal Multipliers, working paper. [25] Silver, Nate (2010), http://www.vethirtyeight.com/2010/04/studyclaiming-link-between-stimulus.html [26] Shor, Boris, (2006a) Presidential Power and Distributive Politics: Federal Expenditures in the 50 States, 19832001, Working Paper. [27] Shor, Boris (2006b), The Weak Leviathan? Testing Partisan Theories of Political Inuence on Defense Procurement in Congressional Districts: 98th - 102nd Congress, Working Paper. 42

Figure 1. Histograms of stimulus amount and Democratic vote share

Notes: Sample includes the 334 districts not containing state capitals. Stimulus data includes only contract, grants, and loans reported on Recovery.gov. Democratic vote share is the two-party vote share: the percentage of Democratic votes out of total votes for the Democratic and Republican candidate in the 2008 congressional election.

Figure 2: Compare stimulus amount per resident to amount per worker.

Notes: For the scatter plots, each dot represents one of the 334 districts not containing state capitals. Amount per resident refers to people living in the congressional district; Amount per worker refers to people employed within the congressional district, though they may reside elsewhere. Panel (d) displays the results of a non-parametric regression of the worker-to-resident ratio on the Democratic vote share.

Figure 3: Non-parametric and semi-parametric regressions of amount per resident on Democratic vote share.

Notes: Panel (a) is a non-parametric regression (using kernel-weighted local polynomial smoothing) of stimulus amount per resident on Democratic vote share. Panel (b) reports the results of semi-parametric regression that includes (parametric) controls for employment, poverty rate, percent urban, land area, and road miles. Sample includes 334 congressional districts not located in state capitals.

Figure 4: Non-parametric and semi-parametric regressions of amount per worker on Democratic vote share.

Notes: Corresponds to Figure 3, except that the dependent variable in this gure is amount per worker, and employment is not included in the set of controls in Panel (b).

Figure 5: Congressional district-level stimulus amount per resident.

Notes: Each dot represents one of the 334 districts not containing state capitals. Percent urban is the percentage of the district population living in urban areas. Tenure refers to the number of terms served by the congressional representative. Leadership refers to party leaders and committee chairs (for Democrats) or ranking members (for Republicans).

Table 1: Descriptive Statistics With Capitals Mean Std. Dev. Without Capitals Mean Std. Dev.

Variable State level Stimulus amount (millions) Stimulus amount per capita State budget gap (%) State unemployment rate Medicaid per capita Interstate miles per capita State population (millions) Senate scal Chair or Ranking Member Obama vote share 50-52% District level Stimulus amount (millions) Stimulus amount per capita Stimulus amount per worker Percent below poverty line Percent urban Land Area (square miles) Total highway miles Employment (1000s of workers) % spent in 1 year Tenure (number of 2-year terms) Democratic vote share DW-Nominate score Total stimulus amount

5334 1056 8.7 7.6 976 .00029 6.1 .24 .06

5705 450 6.6 1.8 326 .00035 6.8 .43 .24

2112 517

3133 262

613 900 1941 13 79 .81 852 297 33 6.2 58 -.034

1213 1786 3623 5.6 20 3.1 975 100 11 4.6 23 .44

316 469 1101 14 80 .54 762 289 31 6.5 58 -.033

370 543 1308 5.8 20 1 864 103 10 4.6 24 .44

$267 billion

$106 billion

Table 2: State- and district-level regressions: stimulus amount per resident vs. state-level characteristics. (1) FFIS Total Constant State budget gap (%) State unemployment rate Medicaid per capita Interstate miles State population Senate scal Chair or RM Obama 50-52% Observations R2 State or district level Excludes state capitals 363.2 (50.31) -1.105 (1.178) -0.615 (5.107) 0.330 (0.0388) 19.08 (2.388) 0.881 (1.363) 11.25 (19.54) -13.31 (16.82) 50 0.817 state (2) FFIS Other 107.2 (18.69) -1.518 (0.557) 2.602 (2.547) 0.0738 (0.0100) 8.239 (1.200) -0.683 (0.365) 9.912 (8.140) -13.21 (7.574) 50 0.775 state (3) CGL 336.9 (254.0) 27.95 (8.506) -15.94 (22.94) 0.369 (0.136) 93.21 (29.20) -6.743 (4.721) 45.39 (94.29) -81.11 (73.75) 50 0.718 state (4) CGL 648.7 (580.1) 8.774 (7.385) -28.65 (38.63) 0.0344 (0.102) 21.24 (114.6) -2.901 (6.927) -47.10 (66.89) -202.0 (59.60) 37 0.136 state Y (5) CGL 420.9 (518.7) 18.74 (15.50) 4.029 (56.58) 0.166 (0.295) 95.37 (33.47) -2.920 (10.33) 34.06 (184.0) -140.0 (275.9) 435 0.010 district (6) CGL 561.1 (345.8) 13.48 (4.745) -15.13 (19.24) -0.00501 (0.0911) -9.019 (89.25) -4.082 (5.237) 40.99 (71.58) -211.8 (61.41) 334 0.033 district Y (7) Agency 1103.4 (456.6) 9.857 (7.005) -21.74 (51.47) 0.569 (0.102) 27.35 (18.32) -4.628 (5.386) -41.22 (126.7) -63.84 (83.25) 50 0.269 state

Notes: Columns (1)-(4) and (7) are state-level regressions, and columns (5) and (6) are district-level regressions. The dependent variable is a measure of stimulus receipts per resident and varies across columns. Column (1) uses estimated state-level total receipts from Federal Funds Information for States. Column (2) uses the same data source but excludes stability, medicaid, and highway aid. Columns (3)-(6) use contracts, grants and loans from Recovery.gov. Column (7) uses state-level agency-reported data from Recovery.gov. The units for the explanatory variables are as follows: state budget gaps are estimates for FY 2009, expressed as percentage of general fund budget; state unemployment rates are for February 2009; medicaid expenditures for 2005 are in dollars per capita; interstate miles are in miles per 10,000 persons; and state populations are in millions. Robust standard errors in parentheses. * p < 0.10, ** p < 0.05, *** p < 0.01.

Table 3: State-level stimulus amount per resident. Independent Variable: Change in unemployment State Employment Percent Poverty Democratic Governor Average Cong Tenure NE, PA ME NE, PA

Panel (a): Amount per resident Agency-reported No controls -42.60 ( 40.38) 0.015 -0.0254 ( 0.0163) 0.027 -48.28* ( 25.20) 0.110 43.78 ( 120.7) 0.003 15.91** ( 7.712) 0.043 -56.43 ( 211.8) 0.001 -287.5** ( 134.4) 0.018

R2

Panel (b): Amount per resident Agency-reported With controls 29.41 ( 38.03) 0.351 -0.0117 ( 0.0131) 0.346 -46.03* ( 24.61) 0.346 -3.873 ( 93.85) 0.346 10.10* ( 5.414) 0.363 -305.0** ( 120.1) 0.373 -365.4*** ( 115.9) 0.374

R2

Panel (c): Amount per resident Contracts, Grants, Loans With controls 39.77 ( 26.35) 0.605 50 -0.0141 ( 0.0157) 0.596 50 -18.38 ( 13.73) 0.596 50 -160.5* ( 92.30) 0.627 50 13.87 ( 8.992) 0.625 50 -281.0*** ( 76.78) 0.617 50 -266.2*** ( 53.03) 0.609 50

R2 Observations

Notes: The dependent variable is amount per state resident, using the agency-reported data from Recovery.gov for panels (a) and (b), and the contracts, grants, and loans data for Panel (c). Controls include medicaid expenditures per capita, interstate highway miles, total employment in the state, and the poverty rate. Robust standard errors in parentheses. * p < 0.10, ** p < 0.05, *** p < 0.01.

Table 4: District-level regressions: stimulus amount vs. economic characteristics Independent Var: Unemp Rate Change in Unemp UI per capita % spent in 1 year Employment (thousands) Poverty Rate % Urban

Panel (a): Amount per resident No controls -8.840 ( 11.62) 0.001 -32.68 ( 25.83) 0.007 -47.76 ( 310.2) 0.000 -4.966* ( 2.762) 0.009 1.962*** ( 0.366) 0.139 16.14*** ( 5.911) 0.030 1.562 ( 1.015) 0.003

R2

Panel (b): Amount per resident All controls except land area R2 8.523 ( 14.47) 0.257 -2.242 ( 31.37) 0.256 418.2 ( 475.1) 0.259 -6.573** ( 2.618) 0.271 1.970*** ( 0.321) 0.256 14.05* ( 8.172) 0.256 0.533 ( 2.004) 0.256

Panel (c): Amount per resident All controls 6.824 ( 15.24) 0.277 -6.252 ( 33.04) 0.277 443.5 ( 481.8) 0.280 -5.619** ( 2.550) 0.287 2.019*** ( 0.315) 0.277 12.87 ( 8.219) 0.277 -1.579 ( 1.434) 0.277

R2

Panel (d): Amount per worker No controls 31.09 ( 31.62) 0.002 -32.07 ( 66.99) 0.001 4.744 ( 698.3) 0.000 -20.05*** ( 6.598) 0.026 -0.207 ( 0.477) 0.000 42.03*** ( 11.52) 0.035 -2.963 ( 2.594) 0.002

R2

Panel (e): Amount per worker All controls 22.41 ( 35.70) 0.102 334 -6.855 ( 74.86) 0.101 334 928.7 ( 1022.3) 0.104 334 -17.76*** ( 6.21) 0.120 334 0.052 ( 0.341) 0.101 334 30.76* ( 16.45) 0.101 334 -2.544 ( 3.847) 0.101 334

R2 Observations

Notes: The dependent variable is district-level stimulus receipts as contracts, grants and loans for 334 districts not in state capitals; panels (a)-(c) use stimulus amount per resident, and panels (d)-(e) use amount per worker in the district. All controls include the vote share group dummies shown in Table 6, as well as employmemt, poverty rate, percent urban, land area, and road miles (though employment is not included in the per worker specications). UI per capita indicates year 2008 total district-level unemployment insurance receipts in thousands of dollars per capita. The district unemployment rate is the value for January 2009. The change in unemployment is the dierence between the unemployment rates in January 2009 and January 2007. Robust standard errors in parentheses, adjusted for clustering at the state level. * p < 0.10, ** p < 0.05, *** p < 0.01.

Table 5: District-level regressions: stimulus amount vs. political party and district characteristics (1) Democrat Employment (thousands) Percent Poverty Land Area Total Highway miles Percent Urban Constant Observations R2 Includes state capitals 683.6 (78.84) 433 0.011 Y 415.5 (48.56) 332 0.007 -148.8 (103.3) 332 0.145 -472.1 (148.1) 332 0.195 373.4 (122.6) (2) 94.96 (45.44) (3) 92.88 (51.08) 1.953 (0.366) (4) 19.00 (61.58) 2.172 (0.395) 22.19 (7.437) 108.0 (54.13) -0.0171 (0.0498) 0.183 (1.391) -260.2 (129.6) 332 0.176 (5) 109.3 (50.07) 2.097 (0.322) (6) 33.88 (64.45) 2.247 (0.359) 20.49 (7.859) 103.6 (54.72) -0.0399 (0.0596) 0.198 (1.441) -521.1 (185.9) 332 0.217 1085.1 (162.7) 332 0.000 39.85 (14.80) 327.6 (193.5) -0.152 (0.193) 1.576 (3.494) 423.0 (347.5) 332 0.071 (7) per wkr 34.00 (158.4) (8) per wkr -85.12 (181.4)

Notes: The dependent variable in columns (1)-(6) is district-level stimulus receipts as contracts, grants and loans, per resident; in column (7)-(8), the dependent variable is stimulus receipts per worker employed in the district. Column (1) includes data for all congressional districts; columns (2)-(8) include data for only those districts not located in state capitals. Two House seats were vacant at the time of the ARRA vote, and they are coded as missing party aliation, so the number of observations is 2 less than in other tables. Robust standard errors in parentheses, adjusted for clustering at the state level. * p < 0.10, ** p < 0.05, *** p < 0.01.

10

Table 6: District-level regressions: stimulus amount vs. vote share blocks (1) per res Unopposed Republican (13) Dem vote share 1-30 (16) Dem vote share 30-40 (63) Dem vote share 50-60 (42) Dem vote share 60-70 (44) Dem vote share 70-80 (51) Dem vote share 80-90 (20) Dem vote share 90-99 (5) Unopposed Democrat (34) Employment (thousands) Observations R2 Additional controls 334 0.121 161.5 (130.9) 70.13 (133.8) -6.304 (100.3) -32.82 (66.14) 12.87 (67.85) 105.4 (40.03) 792.9 (144.0) -21.47 (188.0) 47.45 (103.5) (2) per res 242.1 (115.7) 147.9 (124.8) 60.67 (105.8) 13.01 (89.64) 86.87 (75.33) 146.4 (47.52) 685.3 (147.3) 261.3 (135.5) 125.2 (115.0) 1.741 (0.334) 334 0.220 (3) per res 123.8 (106.5) -95.42 (174.0) 26.38 (91.28) -56.16 (87.81) 15.65 (71.92) 100.1 (64.82) 603.7 (189.1) 106.6 (206.7) 51.49 (139.3) 2.019 (0.315) 334 0.277 X 334 0.031 334 0.101 X (4) per worker 437.9 (278.7) 77.35 (343.1) -31.88 (321.4) -138.5 (285.7) -39.66 (263.1) 34.42 (219.4) 837.3 (390.6) 405.7 (395.0) -16.47 (353.5) (5) per worker 150.7 (290.3) -579.6 (537.4) -117.2 (287.7) -330.1 (298.4) -228.8 (254.6) -101.7 (235.6) 658.6 (460.0) -100.5 (551.4) -215.5 (374.0)

Notes: The dependent variable in columns (1)-(3) is stimulus receipts per district resident; the dependent variable in columns (4)-(5) is stimulus receipts per worker (i.e., per person employed in the district). The vote share blocks are dummy variables that equal 1 if the Democratic vote share for that representative falls in the specied range. The number of representatives in each group is indicated in parentheses. The omitted category is 40-50% Democratic vote share, and there are 46 representatives in this group. Additional controls include poverty rate, percent urban, land area, and road miles. Robust standard errors in parentheses, adjusted for clustering at the state level. * p < 0.10, ** p < 0.05, *** p < 0.01.

11

Table 7: District-level regressions: stimulus amount vs. party elites (1) per res Democratic leader Republican leader Number of terms Observations R2 Vote share controls Additional controls 334 0.011 334 0.301 X X 334 0.035 334 0.141 X X 0.142 (76.50) 244.0 (203.4) (2) per res -86.95 (68.03) 383.3 (206.2) (3) per worker -19.91 (156.3) 1055.9 (742.5) (4) per worker -249.7 (157.5) 1175.4 (684.2) 7.021 (3.506) 332 0.004 2.430 (3.079) 332 0.276 X X 14.06 (7.780) 332 0.002 7.567 (7.331) 332 0.101 X X (5) per res (6) per res (7) per worker (8) per worker

Notes: Additional controls include employmemt, poverty rate, percent urban, land area, and road miles. Democratic leaders include committee chairs as well as the Speaker of the House (Pelosi); Republican leaders include ranking minority members of committees as well as the Minority Leader (Boehner); the Majority Leader and both Whips represented districts in state capitals, and so are not included in the sample. Per res indicates that the dependent variable is amount per resident. Robust standard errors in parentheses, adjusted for clustering at the state level. * p < 0.10, ** p < 0.05, *** p < 0.01.

12

Table 8: District-level regressions: stimulus amount vs. other political characteristics Independent Variable: DW-Nominate abs(DW-N) Democratic Governor PA, NE Vote Against Party or Abstain Democrats voting against

Panel (a): Amount per resident No controls -145.4*** ( 51.83) 0.014 308.3* ( 158.9) 0.008 52.96 ( 75.73) 0.002 -6.932 ( 38.24) 0.000 -86.49 ( 57.93) 0.001 -87.65 ( 68.22) 0.000

R2

Panel (b): Amount per resident All controls except land area R2 -109.6 ( 154.1) 0.256 7.897 ( 161.8) 0.255 77.94 ( 76.13) 0.261 40.70 ( 44.25) 0.257 -82.79 ( 49.96) 0.255 -66.96 ( 60.11) 0.257

Panel (c): Amount per resident All controls -120.2 ( 158.4) 0.276 15.32 ( 166.4) 0.275 88.46 ( 71.85) 0.282 70.76 ( 52.22) 0.277 -132.1*** ( 46.71) 0.277 -143.9** ( 57.75) 0.278

R2

Panel (d): Amount per worker No controls -76.10 ( 167.5) 0.001 386.1 ( 358.8) 0.002 24.53 ( 190.7) 0.000 -89.36 ( 99.54) 0.000 -230.5 ( 145.9) 0.001 -150.5 ( 167.6) 0.000

R2

Panel (e): Amount per worker All controls -29.50 ( 366.7) 0.101 332 134.4 ( 412.2) 0.101 332 140.3 ( 161.6) 0.104 334 33.91 ( 143.5) 0.101 334 -323.7** ( 126.3) 0.102 332 -334.8** ( 159.2) 0.102 334

R2 Observations

Notes: The dependent variable is district-level stimulus receipts as contracts, grants and loans for 334 districts not in state capitals; panels (a)-(c) use stimulus amount per resident, and panels (d)-(e) use amount per worker in the district. All controls include the vote share group dummies shown in Table 6, as well as employmemt, poverty rate, percent urban, land area, and road miles (though employment is not included in the per worker specications). Vote against party or abstain includes 5 Democrats who voted against the bill, 1 Democrat who voted present, and 2 Republicans who did not vote. Democrats voting against include 5 Democrats who voted against the bill and 1 who voted present. Robust standard errors in parentheses, adjusted for clustering at the state level. * p < 0.10, ** p < 0.05, *** p < 0.01.

13

A1

Appendix

A1

Figure A1. State-level map: stimulus per resident.

Notes: Stimulus funds paid out as of February 2014, by state. Source is Federal agency-reported data from Recovery.gov. Total amount for 50 states is $460 billion, and includes spending on entitlements as well as contracts, grants, and loans.

A2

Figure A2a. District-level amount per resident, with capitals.

Figure A2b. District-level amount per resident, no capitals.

A3

Figure A3. Proportion of total district amount accounted for by largest 5% of awards in that district.

A4

Figure A4. Outliers.

A5

Figure A5. District-level: Amount per resident vs. unemployment rate and excess capacity.

A6

Figure A6. District-level: Shovel readiness.

A7

Figure A7. District-level: Amount per resident vs. Congressional tenure.

Notes: Semi-parametric controls include total employment, poverty rate, percent urban, land area, and road miles.

A8

Figure A8: Semi-parametric regression of amount per resident on DW-NOMINATE score. Controlling for Democratic vote share.

Notes: Semi-parametric regression of stimulus amount per resident on DW-NOMINATE score for 334 congressional districts. The set of semiparametric controls includes total employment, poverty rate, percent urban, land area, and road miles. Panel (b) adds the Democratic vote share as an additional parametric control. The horizontal axis is reversed so that left-wing representatives appear on the right (to correspond more closely to the previous gures).

A9

Table A1. Top funding agencies. Includes money going to state capitals.

Rank w/ caps 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Funding Agency

Rank no caps 9 1 2 44 5 3 4 21 28 6 14 7 31 8 11 10 46 13 12 16 15 20 23 19 26

Total Amount (million $) w/ caps 64,678 38,352 27,892 13,585 10,869 10,462 9,277 7,515 7,354 6,741 5,015 4,638 4,248 4,242 4,218 4,086 2,898 2,690 2,468 2,357 2,037 1,943 1,541 1,538 1,529 no caps 1,922 20,952 19,196 309 5,831 7,384 6,692 866 699 4,811 1,568 3,456 529 2,696 1,850 1,909 290 1,599 1,603 1,125 1,202 904 806 934 753 % in caps 97% 45% 31% 98% 46% 29% 28% 88% 90% 29% 69% 25% 88% 36% 56% 53% 90% 41% 35% 52% 41% 53% 48% 39% 51%

Office of Elementary and Secondary Education Department of Energy Federal Highway Administration Office of Special Education and Rehabilitative Services Department of Housing and Urban Development National Institutes of Health Federal Transit Administration Federal Railroad Administration Environmental Protection Agency Rural Utilities Service Administration for Children and Families U.S. Army Corps of Engineers - civil program financing only Department of Labor Public Buildings Service National Telecommunication and Information Administration Department of Justice Department of Education National Science Foundation Health Resources and Services Administration Department of Health and Human Services Federal Financing Bank Department of the Army Department of the Air Force Rural Housing Service Department of Defense (except military departments)

Number of awards w/ caps 756 4316 13879 735 6411 16891 974 86 903 2148 2992 4583 707 1487 294 4728 1929 4980 3680 899 3 1973 1708 1753 283

Median amount ($) w/ caps 809,162 649,350 569,170 316,278 317,515 257,773 2,000,000 8,315,000 612,000 1,295,500 261,244 132,302 946,034 167,267 5,660,544 157,102 58,017 330,935 333,469 367,801 692,000,000 359,613 314,774 95,000 680,144

Max award size ($) w/ caps 4,880,000,000 1,360,000,000 261,000,000 1,230,000,000 326,000,000 157,000,000 423,000,000 2,550,000,000 433,000,000 83,100,000 220,000,000 62,300,000 489,000,000 148,000,000 155,000,000 136,000,000 1,120,000,000 148,000,000 89,700,000 62,500,000 1,200,000,000 32,700,000 51,700,000 54,000,000 531,000,000

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Table A2. Top funding agencies. Excludes money going to state capitals.

Rank no caps 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Funding Agency

Rank w/ caps 2 3 6 7 5 10 12 14 1 16 15 19 18 11 21 20 26 30 24 22 8 27 23 28 32

Total Amount (million $) no caps 20,952 19,196 7,384 6,692 5,831 4,811 3,456 2,696 1,922 1,909 1,850 1,603 1,599 1,568 1,202 1,125 1,000 999 934 904 866 829 806 801 762 w/ caps 38,352 27,892 10,462 9,277 10,869 6,741 4,638 4,242 64,678 4,086 4,218 2,468 2,690 5,015 2,037 2,357 1,501 1,104 1,538 1,943 7,515 1,287 1,541 1,261 961 % in caps 45% 31% 29% 28% 46% 29% 25% 36% 97% 53% 56% 35% 41% 69% 41% 52% 33% 10% 39% 53% 88% 36% 48% 36% 21%

Department of Energy Federal Highway Administration National Institutes of Health Federal Transit Administration Department of Housing and Urban Development Rural Utilities Service U.S. Army Corps of Engineers - civil program financing only Public Buildings Service Office of Elementary and Secondary Education Department of Justice National Telecommunication and Information Administration Health Resources and Services Administration National Science Foundation Administration for Children and Families Federal Financing Bank Department of Health and Human Services Department of Veterans Affairs National Aeronautics and Space Administration Rural Housing Service Department of the Army Federal Railroad Administration Federal Aviation Administration Department of the Air Force Department of the Navy Office of Science

Number of awards no caps 2668 9057 12061 681 4753 1441 3156 967 183 3050 125 2471 3191 1895 1 359 1275 375 1305 907 26 267 960 255 287

Median amount ($) no caps 675,381 595,605 253,194 1,770,192 297,457 1,402,000 156,606 190,648 287,500 143,288 6,162,554 341,595 328,505 269,838 1,200,000,000 457,844 280,417 500,000 89,081 382,000 5,002,500 1,811,658 285,235 1,513,770 600,000

Max award size ($) no caps 1,190,000,000 261,000,000 157,000,000 423,000,000 144,000,000 83,100,000 62,300,000 127,000,000 720,000,000 50,200,000 155,000,000 12,000,000 18,500,000 27,700,000 1,200,000,000 62,500,000 29,600,000 166,000,000 44,700,000 32,700,000 400,000,000 30,300,000 23,700,000 64,800,000 65,000,000

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Table A3. State-level regressions: additional specications (1) Total Constant State unemployment rate State budget gap Medicaid per capita Interstate miles State population Senate scal Chair or RM Obama 50-52% Observations R2 50 0.050 50 0.039 50 0.176 -0.677 (1.174) -18.08 (13.54) -6.643 (13.39) 50 0.066 18.44 (2.060) 1.047 (1.031) -3.354 (12.53) -21.67 (17.36) 50 0.669 1433.4 (223.1) -53.51 (24.43) (2) Total 913.4 (103.0) (3) Total 1565.5 (278.7) -102.2 (46.35) 2709.6 (1760.0) (4) education 291.6 (34.89) -3.621 (6.107) 189.5 (282.0) (5) highway 98.81 (25.53) 0.842 (3.118) 22.51 (87.99) (6) Total 295.7 (251.8) -13.43 (23.67) 2597.3 (845.4) 0.390 (0.135) 89.42 (28.83) -6.921 (4.603) 56.39 (93.28) -80.82 (68.87) 50 0.710

1304.2 (1397.2)

Notes: Dependent variable is stimulus amount per resident (from Recovery.gov) aggregated to the state level. Columns (4) and (5) only contain those contracts, grants, or loans that we were able to classify as education or highway spending, respectively. Specications in this table correspond to similar specications in Table 3 of Inman (2010). See notes to Table 2 for explanation of variables. Robust standard errors in parentheses. * p < 0.10, ** p < 0.05, *** p < 0.01.

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Table A4. District-level stimulus amount: other controls (1) per res Percent Poverty Percent Urban Land Area Total Highway miles Constant Observations R2 249.1 (74.59) 334 0.030 344.3 (77.96) 334 0.003 440.6 (31.69) 334 0.010 16.14 (5.911) 1.562 (1.015) 52.88 (25.24) 0.00556 (0.0257) 464.9 (41.63) 334 0.000 528.4 (143.6) 334 0.035 1338.1 (211.2) 334 0.002 962.4 (69.30) 334 0.040 (2) per res (3) per res (4) per res (5) per wkr 42.03 (11.52) -2.963 (2.594) 257.3 (99.41) 0.154 (0.0677) 983.6 (103.4) 334 0.010 (6) per wkr (7) per wkr (8) per wkr

Notes: The table shows coecients on the additional controls that were included in several of the regressions discussed in the paper. The dependent variable is district-level stimulus amount per resident (per res) or stimulus amount per worker (per wkr) received as contracts, grants and loans. Robust standard errors in parentheses, adjusted for clustering at the state level. * p < 0.10, ** p < 0.05, *** p < 0.01.

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Table A5. Small sample committee tests Compare district of 111th committee leaders to districts represented by committee leaders in... 110th Congress 112th Congress 110th or 112th Democrats No. of cases No. of times 111th leader receives more Percentage p-value: 1-sided test 2-sided test Republicans No. of cases No. of times 111th leader receives more Percentage p-value: 1-sided test 2-sided test 6 5 0.83 0.04 0.08 4 2 0.50 0.76 1.00 10 7 0.70 0.09 0.18 3 1 0.33 0.50 1.00 8 4 0.50 0.69 1.00 11 5 0.45 0.50 1.00

Notes: This table shows the results of small sample tests (Fisher exact tests) for whether committee leaders receive more stimulus funds. Leaders here includes both chairpersons and ranking members. We compare the districts whose representatives are leaders during the 111th Congress (which passed the ARRA) to districts whose representatives are leaders of the same committee during the previous or following Congress. This test only works for those committees with a change in leadership.

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Table A6: District-level regressions: stimulus amount vs. party elites (1) per res Committee chair (D) Ranking member (R) Pelosi Boehner Democratic leader Republican leader McKeon, Hastings Observations R2 Vote share controls Additional controls 324 0.038 324 0.308 X X 324 0.044 324 0.147 X X -83.38 (70.50) 271.0 (212.8) 1485.9 (31.28) -338.4 (31.28) (2) per res -126.2 (57.57) 409.1 (212.6) 581.8 (169.3) -149.8 (63.52) (3) per worker -96.81 (173.4) 1149.8 (774.7) 1311.6 (68.70) -757.8 (68.70) (4) per worker -309.7 (149.7) 1255.3 (698.1) 649.5 (398.0) -422.9 (216.2) 0.142 (76.62) -106.0 (56.18) 3325.0 (70.06) 334 0.212 -84.22 (65.41) 29.58 (43.46) 3291.4 (78.48) 334 0.491 X X -19.91 (156.5) -139.1 (99.73) 11352.2 (2104.0) 334 0.440 -240.9 (149.3) -16.14 (113.4) 11057.7 (2140.0) 334 0.511 X X (5) per res (6) per res (7) per worker (8) per worker

Notes: Additional controls include employmemt, poverty rate, percent urban, land area, and road miles. Democratic leaders include committee chairs as well as the Speaker of the House (Pelosi); Republican leaders include ranking minority members of committees as well as the Minority Leader (Boehner); the Majority Leader and both Whips represented districts in state capitals, and so are not included in the sample. Per res indicates that the dependent variable is amount per resident. Robust standard errors in parentheses, adjusted for clustering at the state level. * p < 0.10, ** p < 0.05, *** p < 0.01.

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