Federal Spending and the Revolution of '94

Abstract

With the election of 1994, the Republican party gained control of both houses of the U.S. Congress for the first time since 1954. In this paper, we analyze whether this change in party control had significant effects on the determinants of federal spending at the state level. To perform this analysis, we utilize panel data on federal spending, at the state level, over the years 1983-2004. We allow for a break in the sample to analyze whether the political determinants of state level spending differed after the election of 1994. There is little evidence that a presence in the house or senate majority yields positive spending effects prior to the election of 1994, but a positive spending effect does emerge after the Republican takeover. Surprisingly, there is evidence that spending became more redistributive (measured at the state level) in the later period.

Keywords: Political Determinants of Federal Expenditure, Party Politics, Senate Representation

JEL Classification: H0