ANALYSIS: States Hit Hardest by Recession Get Least Stimulus Money

The stimulus bill "includes help for those hardest hit by our economic crisis," President Obama promised when he signed the bill into law on Feb. 17. "As a whole, this plan will help poor and working Americans."

But FOXNews.com has analyzed data tracking how the stimulus money is being given out across the 50 states and the District of Columbia, and it has found a perverse pattern: the states hardest hit by the recession received the least money. States with higher bankruptcy, foreclosure and unemployment rates got less money. And higher income states received more.

The transfers to the states having the least problems are large. Even after accounting for other factors, each $1,000 in a state's per capita income means that the state got $21 more per capita in stimulus funds. With a spread of almost $38,000 in per-person income between the top and bottom states, this has a sizable impact. High-income states get considerably more stimulus money.

States with higher bankruptcy rates got a lot less, not more, money — roughly $86 less per person for each percentage point increase in the state's bankruptcy rate. States with higher foreclosure rates were treated very similarly, losing $82 per person for each one percentage point more of the people suffering foreclosures.

The spending data come from two reliable sources: the Wall Street Journal and the Federal government's Recovery.gov. On June 30, the Wall Street Journal published data on stimulus spending by state for seven categories of social spending (education, HUD, health, crime fighting, job training, arts, and food and farming) and eight categories of infrastructure spending (transportation, water, energy, military, veterans, government, outdoors, and emergency shelters). The Journal's data allow a comparison by each category of government spending. Their total accounts for $195 billion out of the $787 billion that will be spent on the stimulus. Out of this money, the amounts vary a lot across the nation, with the very lowest, a mere $504 per capita in Florida, to the highest, at $3,712 per capita in D.C.

If one relies on the Recovery.gov accounts instead, which, as of July 8, reported $218 billion of spending but without the detailed breakdown provided by the Journal, the bottom line is the same: the money is not going to the states hardest hit by the recession or to the poorest states.

The four accompanying charts show how stimulus dollars per capita from the Journal vary with the unemployment, bankruptcy and foreclosure rates as well as per capita income for the 50 states. A trend line is also included to make comparisons easier. The data for economic conditions were taken from when the stimulus bill was being passed. In each figure, the trend clearly shows that the states in the worst economic shape got the least federal government money.

Two comments should be raised about the figures. Alaska has by far the highest stimulus spending per capita of any state, more than twice the second highest state, Arizona ($808). But its higher amount may at least partially reflect the state's much higher cost of living. In any case, given that it is such an outlier, the charts were redone excluding Alaska. Doing that, the results for bankruptcies, foreclosures, and unemployment indicate that the states with the worst problems got even less money than shown in the charts provided here. While states with higher incomes also still got more money, the relationship was no longer statistically significant. Finally, the charts were redone with the most recent data available for these measures of economic hardship, and the results were very similar.

Obviously all these measures of economic conditions as well as some other factors could simultaneously play a role in how much money different states received from the federal government. To account for political considerations in how the money was distributed, Obama's share of the two-person vote in a state was also included. Concerns about the stimulus being used to reward supporters has already been noted in the press.

Politico reported on June 5 that the “Stimulus tour” — visits by Mr. Obama and other administration officials “across the country to tout the massive spending program or hand out stimulus cash to grateful local officials” — overwhelmingly took place in states that voted for Obama: “52 of the 66 events were in states that backed Obama.” The other 14 events were in states that Obama lost only narrowly. A new study released by USA Today also finds that counties that voted for Obama received about twice as much stimulus money per capita as those that voted for McCain.

In our results, Obama's share of the vote accounted for only a small percentage of the variation in how the stimulus money is being allocated. A one percentage point increase in Obama's vote share means an additional $13.52 in per capita spending, but even then the relationship rests on the large amount of money given to D.C.

Breaking down the data by type of spending shows that money for infrastructure was much more likely than social spending to go to high-income states with low bankruptcy and foreclosure rates. Federal spending on construction and repairs to federal buildings as well as repairs to highways and public transit projects drives much of this perverse relationship between economic distress and infrastructure stimulus spending.

The chairmen of the Senate and House Appropriation Committees, Senator Dan Inouye, D-Hawaii, and Congressman David Obey, D-Wis., have already opened the door for a second stimulus plan this year. Obey and Inouye have both indicated that a second bill might be needed if the economy didn't improve fast enough, and Obey is on record saying that more money should have been included in the bill. Neither politician's office was willing to provide any on the record comments.

"The stimulus bill is designed to help those who have been hurt by the economic downturn.... Do you see disparity out there in where the money is going? Certainly," a Democratic congressional staffer knowledgeable about the process told FOXNews.com. "The people to talk to are in the administration.... The administration is deciding where [the money] flows."

An Obama administration official told FOXNews.com that "it is not as simple as looking where the money goes. You could have someone who lives in Maryland and works in Virginia and they are benefited from money given to the Virginia firm even though they live in Maryland." She also noted that it didn't really matter who got the money because "giving out money is good for everyone. If you give the money to an old person, they will spend it and that will create more jobs."

She also said that Congress was responsible for deciding where the money would go. "We didn't write the bill. We let Congress write the bill," she said.

Lee Ohanian, an economics professor at UCLA who has extensively studied New Deal policies and depressions, told FOXNews.com that the spending patterns our study found "certainly don't fit what you would think that they would be from the standpoint of government spending as a social safety net.... The pattern does seem quite odd. It is certainly not the way the program was advertised."

*John Lott is the author of Freedomnomics.