Do Federal Funds Better Support Cities Or Suburbs?

For many years, debates have raged over the effect of federal spending on metropolitan growth and development. The federal highway program and home lending policies have been cited as encouraging sprawling development while discouraging investment in center cities. Others assert that the federal government is engaged in a "stealth" urban policy disproportionately supporting central cities. This paper examines the flow of federal dollars to the Chicago metropolis and finds that while the city and its older suburbs receive more per capita in terms of income supports, federal programs that encourage wealth building have been heavily concentrated in the newer suburbs. The preponderance of federal spending on poverty alleviation has done little to encourage, or perhaps has even discouraged, private investment in other activities.

Thanks to Kurt Sommer