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Federal spending in northeast Indiana jumped 17 percent during the past fiscal year, a new federal report shows, nearly double the national spending increase of 9.3 percent.
For fiscal year 2008, which ended Sept. 30, federal spending in the region's 11 counties increased $733 million, to $5.1 billion.
Nationally, federal spending in the last fiscal year entirely overseen by President George W. Bush's administration increased to $2.79 trillion - about $9,184 for every person living in the United States. The figures come from the Consolidated Federal Funds Report, compiled by the U.S. Census Bureau, issued today.
Where did the money go?
In northeast Indiana, the largest federal expenses were retirement and the purchase of goods and services: 37 percent of the $5.1 billion spent went to retirement and disability payments, and almost 28 percent went to procurement contracts, most of it for national defense.
Nationally, 18 percent of federal spending was on procurement contracts.
Procurement spending in northeast Indiana also saw the biggest dollar increase in federal spending, according to the report: It rose $589 million to $1.4 billion, an increase of almost 71 percent.
The largest percentage increase, meanwhile, was in direct loans - specifically, federal direct student loans for college.
Federal student loans increased more than 3,800 percent in Allen County, thanks to the federal government's purchase of student loans from local banks.
Judith Cramer, director of financial aid at Indiana University-Purdue University Fort Wayne, said that as the financial markets froze last year, there was a fear that banks would stop making student loans, so the federal government agreed to buy the loans from banks as soon as they were made.
"They didn't make direct loans here in Allen County, but they sure did end up owning a lot of them," Cramer said.
IPFW disbursed close to $45 million in student loans, she said, and at least half ended up being bought by the federal government.
Larry DeBoer Jr., a Purdue University professor who specializes in government policy and tax issues, said the increase in spending appears to have been largely automatic and would have happened no matter who was in the White House.
"It's the federal government responding to changes in the economy," DeBoer said. "It's what you usually expect during a recession and what most economists would say you want during a recession."
For example, as jobs disappeared, spending on unemployment insurance, food stamps and other programs tied to income automatically increased as more people qualified.
At the same time, he said, federal spending to buy goods and services is a direct stimulus to the local economy.
"Every dollar spent in those procurements there is a dollar in the local economy," DeBoer said. "It doesn't really matter what it is that's purchased, as long as you're buying something. Though hopefully it's something that will be useful at some point."
Local economic development experts estimate government procurement contracts account for more than 10,000 jobs in the region.
