Where Defense Dollars Get Spent in the US: The Top 10 States

Plus, the Trump administration's Medicaid moves

Where Defense Dollars Get Spent in the US: The Top 10 States

The Department of Defense spent $407 billion on contracts and payroll in the U.S. in 2017, equal to $1,466 per resident. And while that money was spread around the 50 states, it wasn’t shared equally. The Pentagon spent more money in California than any other state, according to a report released by the defense agency’s Office of Economic Adjustment.

The map below from the report shows which states claimed the largest share of defense spending.

California led the way with $49 billion, followed by Virginia ($46.2 billion), Texas ($37.7 billion), Maryland ($21.1 billion) and Florida ($19.2 billion). Washington ($15.2 billion), Connecticut ($15.0 billion), Georgia ($13.2 billion), Pennsylvania ($12.1 billion) and Alabama ($10.9 billion) rounded out the top 10.

Those 10 states claimed more than half of all spending, for a total of nearly $240 billion.

With $394 million, Wyoming claimed the smallest portion of defense spending. With the exception of Washington, states in the Northwest received relatively small amounts, with Oregon, Idaho, Montana, South Dakota and Nebraska claiming less than $400 million each.

States also varied considerably with respect to the importance of defense spending for their local economies. In Virginia, defense outlays made up 8.9 percent of the state’s GDP, the highest rank on that measure. Defense spending contributed more than 5 percent to state economies in Hawaii, Connecticut, Alaska, Maryland and Alabama. By contrast, Pentagon spending accounted for just 1.7 percent of state GDP in California.

The report also named the top defense contractors in 2017. Lockheed Martin topped the list with $30.5 billion in defense contracts, followed by Boeing ($22 billion), General Dynamics ($13.5 billion), Raytheon ($11.8 billion) and Northrop Grumman ($11.5 billion).

Number of the Day: $1.2 Trillion

President Trump’s 2020 budget includes up to $1.2 trillion in “potentially phantom revenues” — money that comes from taxes the administration opposes or from tax hikes that face strong opposition from businesses, The Wall Street Journal’s Richard Rubin reports, citing data from the Committee for a Responsible Federal Budget. That total, covering 2020 through 2029, includes as much as $390 billion in taxes created under the Affordable Care Act, which the president wants to repeal.

The $1.2 trillion in questionable revenue projections is in addition to the White House budget’s projected deficits of $7.3 trillion for the 10-year period. That total is itself questionable, given that the president’s budget relies on optimistic assumptions about economic growth and some unrealistic spending cuts, meaning that the deficits could be significantly higher than projected.

Trump Administration Encouraging States to Make Controversial Changes to Medicaid

The Trump administration is encouraging red states to make controversial conservative changes to Medicaid without seeking congressional approval, The Hill’s Nathaniel Weixel reports.

The Centers for Medicare and Medicaid Services last week granted Ohio’s request to impose work requirements on beneficiaries. The approval came a day after a court hearing on challenges to work requirements in Arkansas and Kentucky. The requirements introduced in Arkansas have reportedly led to 18,000 people losing coverage — and the early data provides little evidence that the program is helping drive people into the workforce.

“To approve it the day after the court hearing was pretty in-your-face,” Joan Alker, executive director of the Georgetown University Center for Children and Families, tells Weixel. “It’s a statement of, ‘we’re going to push forward with our policy regardless of what a judge thinks.’”

The White House’s 2020 budget blueprint would impose a national work requirement on Medicaid and proposes shifting the program to a system of block grants or per capita caps under which states would be allowed more flexibility to change their Medicaid programs.

The block grants and per capita caps failed to pass Congress as part of the Republican Obamacare repeal efforts in 2017, and they are unlikely to gain traction in the current divided Congress. But the Trump administration “has also been quietly trying to sell states on the merits of imposing block grants, or a per-person spending cap, without congressional approval,” Weixel reports.

Critics say the administration’s moves represent an improper attempt to bypass Congress.

“This is a separation of powers issue,” Georgetown’s Alker tells The Hill. “Congress retains the authority to change Medicaid. The waiver was not intended to allow the executive branch to rewrite the Medicaid statute.”

The Trump administration has fervently defended its approach, and Health and Human Services Secretary Alex Azar told the Senate Finance Committee last week that discussions on changes such as block grants have been instigated by states. But a Medicaid lobbyist tells The Hill that the administration has been seeking out states open to testing new models.

Why it matters: Besides the constitutional issues at play, the administration’s efforts could have significant health care implications. “As GOP-led states move to further restrict Medicaid, the divide between red and blue states is likely to mean wider geographic disparities in health-care coverage and access,” The Wall Street Journal’s Stephanie Armour wrote last week.

The bottom line: If the Trump administration does push ahead with additional waivers along these lines, expect more uproar from Democrats — and more challenges in court.

Anxious and Suspicious, Citizens in Wealthy Countries Want Stronger Safety Nets

People living in some of the wealthiest countries in the world are worried about their economic futures and don’t trust government programs to provide much help if and when they need it, according to an in-depth survey by the Organization for Economic Co-operation and Development.

The OECD asked 22,000 people in 21 countries including the United States about their views on a range of economic issues such as job stability, retirement funds, housing, health care and the ability to meet expenses over time. It found what it called “a clear sense of dissatisfaction and injustice” when it comes to current policies and social programs related to those areas.

The biggest concerns were related to health and income, with majorities in both countries saying they were worried about paying their bills and what would happen to them if they became sick or disabled. Most respondents said they don’t think they receive a fair share of the public benefits they pay for through taxes, and worried that others were taking benefits unjustly.

Stefano Scarpetta of the OECD said the survey results were “deeply worrying,” since they come from citizens of wealthy countries that spend more than 20 percent of their economic output on average on social policies — roughly equivalent to $8,000 per person each year. Those policies have been quite effective, Scarpetta said, with people living longer and healthier lives than ever before due in large part to public spending on social welfare programs, but millions of people don’t see it that way.

Dissatisfaction with current policies hasn’t led to widespread rejection of social spending, though. Most respondents said they’d like to see more spending on social programs, not less, and nearly 40 percent said they’d pay an extra 2 percent in income taxes to help strengthen retirement plans and health care services.

Read the full survey results here.

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