Return on investment: Look at where federal money goes in the Q-C

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By Ed Tibbetts | Monday, May 5, 2008 2:05 AM CDT | () comments

In any given year, the federal government showers about $2 billion on Scott and Rock Island counties.

That’s about $6,900 per person.

Where does all that money go?

The answers might surprise you.

In the Quad-Cities, the biggest chunk is going to Social Security benefits for tens of thousands of people like Mary Ann Maxwell, a 74-year-old retired nurse from Davenport.

Maxwell paid payroll taxes into the system her entire working life and says the $1,000 a month she gets is vital to her well-being.

“It’s very important. I do have a few investments, but they don’t bring in much money,” she said. “I very much rely on it.”

In fiscal year 2006, $573 million, or 27 cents on every federal dollar flowing to the Quad-Cities, went to Social Security retirement and survivor payments.

Another $132 million, or

6.2 cents, went to disability and supplemental income payments from the agency.

Health-care payments also made up a big hunk of the money. Another $331 million, or 15.5 cents, went to Medicare, which provides health care for the elderly. Nearly 6.4 cents, or $137 million, went to Medicaid, which provides health coverage for the poor and disabled.

Put together, that’s 55 cents out of every dollar flowing to the metro Quad-Cities going to Social Security, Medicare and Medicaid, according to the figures that are part of the Consolidated Federal Funds Report for 2006.

In the Quad-Cities, $2.14 billion landed in Scott and Rock Island counties in fiscal 2006, the latest year for which

figures are available. That’s up from $1.99 billion the year before.

The report, released last week, tracked $2.45 trillion in domestic spending in more than 3,000 counties across the United States. And it’s a window into a poorly understood part of the federal government — how it spends taxpayer dollars.

The study covered only domestic spending. It didn’t include foreign aid, interest on the debt and spending on intelligence agencies.

In an election year, the federal budget is a prime topic of debate. But government finance watchdogs say most don’t know where their tax dollars go.

“I think it’s very clear from multiple sources people don’t understand how the federal government spends their money,” says Scott Bittle, executive vice president of Public Agenda, a nonpartisan research group with offices in New York City and Washington, D.C.

A 2006 national survey said 63 percent of Americans thought the government spent more on foreign aid than Social Security.

The opposite is true.

Foreign aid makes up 1 percent of the budget.

Bittle says it’s important that people understand the budget, given ongoing deficits. Also, Medicare and Social Security, which are funded separately from the rest of the budget by a payroll tax on workers, face long-term fiscal challenges.

Often, though, politicians gloss over the problems.

An example is the debate over earmarks.

A small part

The congressionally mandated special projects that have grown by leaps and bounds have become a symbol of out-of-control spending. Yet, they’re still a relatively small part of the federal budget, about half of 1 percent.

The federal funds report didn’t designate which dollars going to the Quad-Cities were earmarks, but the area where local leaders have most pursued them — transportation infrastructure — makes up a tiny part of federal spending in the area.

Airport, highway and transit funding combined were less than a penny of every dollar spent here.

Military spending is a significant outlay, even though it’s small compared to other parts of the United States.

Salaries for federal employees account for almost 13 cents of every dollar coming to the Quad-Cities. More than 9 cents of that — $198 million in all — goes to Defense Department workers at the Rock Island Arsenal.

Much of the rest goes to postal workers.

Another $141 million, or 6.6 cents on the dollar, goes to retirement and disability payments to federal retirees.

Arsenal’s contribution

Military contracting is a growing part of the federal outlay to the Quad-Cities.

Nearly $166 million in defense contracting dollars flowed to the two counties in fiscal 2006, according to the report, up from $95 million in 2002, before the Iraq War began. Contracts made up about 7.7 cents of every federal dollar coming here.

Local officials hope the growth continues.

They’re especially hopeful the Arsenal-based Army Sustainment Command will yield more local contracts — and contractors.

“We want a community of vendors here,” said Craig Roberts, executive vice president of Vista International Operations, a Davenport-based subsidiary of an Alaska company. Vista, which has a contract with the sustainment command, employs about 70 people in Davenport.

Even with the increase, the Quad-Cities is still a flyspeck in the defense contracting world.

The rest of the areas where spending was notable in the Quad-Cities included:

$61 million for federal Pell grants, or 2.8 percent of the area’s funding. That is triple what it was the year before but much of the change is due to a reporting anamoly.

Also included:

$44.4 million, or 2.1 percent of spending in the Quad-Cities, went to a variety of programs aimed at providing housing, health care, preschool and heating assistance to low-income families.

Food stamps, $41 million, or 1.9 percent;

Farm payments, $36 million, or 1.7 percent. Crop insurance payments were up about $5.4 million from the year before because of claims resulting from drought.

Payments to disabled veterans and the families of veterans killed on duty, $22.5 million, or 1 percent.

Ed Tibbetts can be contacted at (563) 383-2327 or etibbetts@qctimes.com. Comment on this article at qctimes.com.