U.S. grants to states now 11 times larger than in 1960

WASHINGTON, March 15 Fri Mar 15, 2013 5:25pm EDT

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WASHINGTON, March 15 (Reuters) - The U.S. government is now sending state and local governments more than 11 times the amount of money it granted them in 1960, according to President Barack Obama's annual report on the economy to Congress that was released on Friday.

The total grants to state and local governments in 2012 was $504.4 billion, compared with $45.3 billion 52 years before, when adjusted for inflation, according to the report prepared by the president's Council of Economic Advisers.

Some of the burst in funding came from the 2009 federal economic stimulus plan, which included the largest transfer of federal money to states in U.S. history.

The report showed that just as recently as 2000, the grants were only a little more than $300 billion, adjusted for inflation. States and local governments saw the last of the stimulus money in 2012, and the report showed a slight dip in federal grants from 2011.

With the completion of the stimulus, along with the across-the-board spending cuts known as sequestration that began this month, the report said states will likely spend $20.5 billion less in federal dollars in 2013.

Since 1960, the composition of the grants the U.S. government sends to states and locals has also changed. That year, nearly half, 47.3 percent, were for physical capital. In 2012, only 15.7 percent of federal grants were for physical capital.

Payments for individuals, through programs such as unemployment benefits, food stamps and Medicaid health insurance, now account for 60.2 percent of the grants.

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