Where the Money Flows
By: Dr. M. Ray Perryman
Federal funds directly support individuals and businesses across Texas. In 2022, nearly $277.6 billion was spent in the state by various agencies. That’s down from $349.7 billion in 2021 and $321.0 billion in 2020, when assorted COVID-19 stimulus packages were in place. The last year of pre-pandemic data indicates $206.8 billion, with 2018 only slightly lower. Things are slowly getting back to more typical patterns. (Note that these totals are for fiscal years, from October 1 through September 30.)
Looking at 2019, which is representative of a more “normal” process, the most spending by far was from the Social Security Administration, with over $72.0 billion. Next was the Department of Defense ($43.8 billion), followed by the Departments of Health and Human Services ($38.8 billion), Veterans Affairs ($18.9 billion), Agriculture ($9.7 billion), Education ($6.9 billion), and Transportation ($5.2 billion). The Department of Homeland Security contributed nearly $3.0 billion, followed by Housing and Urban Development ($2.6 billion), National Aeronautics and Space Administration ($1.3 billion), and the Railroad Retirement Board ($902.7 million).
These inflows generate dynamic responses across the economy. Funds paid to individuals such as retirees in turn generate consumer spending and effects throughout the supply chain. Other money goes directly into the health care system through Medicare and Medicaid. Schools receive billions in federal funding, and critical infrastructure is developed and maintained.
Other payments go to private companies through contracts with government agencies. In 2019, there were almost 240,000 contracts in place. These agreements range from massive defense contracts (such as Lockheed Martin in Fort Worth, which is building next generation aircraft for the military) to relatively small construction and maintenance projects.
Tarrant County was the highest recipient county, with over $24.6 billion (due to the major concentration of defense contractors). The most populous counties in the state (Harris, Dallas, Bexar, and Travis) are naturally near the top of the rankings, as a result of both Social Security being such a major factor (which is tied to population) and the presence of entities with notable contracts. On a per-capita basis, some smaller counties rank near the top, including Potter County (where Bell Boeing V-22 Osprey tiltrotor aircraft are assembled).
While individuals and companies from Texas send billions to Washington each year, what comes back is even larger. Not only are millions of the most vulnerable Texans supported, but some of the state’s largest and most innovative companies also prosper. While we certainly need to bring deficits to more manageable levels and may be careening toward a needless debt ceiling debacle, it must be recognized that there are legitimate public purposes which must be supported. Every Texas community benefits from these crucial resources, and we get back more than we send. Stay safe!