Congressional Bargaining and the Distribution of Grants

Abstract

In the United States, state and local governments receive over $700 billion annually in federal grants, yet relatively little is known about how Congress designs these programs. I formalize a theory of congressional bargaining over grants and test the theory using an original dataset of Senate amendments. The results suggest that congressional rules and political considerations shape, and at times distort, federal grant programs. While grant programs may be intended to improve education or provide health care, I find that members of Congress treat these programs as opportunities to procure more funding for their constituents. Further, I show how coalitions are shaped by the status quo policy and the distribution of population, poverty, and other demographic characteristics across states. These results have important implications for our understanding of the policymaking process and who benefits from federal programs.