One policy debate in the last legislative session was whether Minnesota will opt in early to an expansion of Medicaid, largely underwritten by the U.S. Government. Animating the debate is the mistaken belief that there’s such a thing as “free” money from Washington, DC.
Russell Sobel, a professor of economics at West Virginia University, has quantified the burden of “free” money. Sobel says that every one dollar in “free” money given to the states results in states having to raise 40 cents in taxes. Federal spending, in other words, contributes to the ratchet effect at the state level.
Mercatus also has a 37-minute video of Sobel talking about his paper. You can watch it here.