"The federal government doesn't pay for teachers, firefighters or policemen. So, obviously that's completely absurd. "-- Mitt Romney
CBO Report:
Federal Financial Support to State and
Local Governments
The federal government provides financial support to state and local governments in a variety of ways. The largest amount comes to state and local governments in the form of grants, but the federal government also delivers support through the federal tax code by provisions that
make it less expensive for state and local governments to raise revenues through their own tax collections and to borrow money by issuing bonds. That federal financial
support covers the gamut of state and local government activities—including ones involving education, assistance to individuals and families with limited resources, transportation
systems, and other infrastructure projects.
Magnitude of Federal Financial Support
Federal outlays for grants to state and local governments totaled $607 billion in 2011, or roughly one-quarter of all state and local government expenditures (which in 2011 amounted to $2.5 trillion).3 Health care programs accounted for nearly half of those grants, including
$275 billion for Medicaid. Most of the remaining grants went to fund programs in income security; education, training, employment, and social services; and transportation.
Such grants are funded through both annual appropriations and the authorizing legislation of some
mandatory programs.4 Another type of federal financial support is in the form of
tax subsidies that make it less costly for state and local governments to raise revenues through taxes or to borrow.
In 2011, according to estimates by the staff of the Joint Committee on Taxation, the federal tax subsidy deriving from the deduction for state and local taxes was $67 billion,
and the tax subsidy for bonds issued by state and local governments totaled about $30 billion. The tax subsidy for state and local taxes is one of the largest “tax
expenditures” in the individual income tax, exceeded only by the exclusion of pension contributions and earnings, the exclusion of employers’ contributions for health care, local governments to borrow more cheaply than they could otherwise.
http://www.cbo.gov/sites/default/files/cbofiles/attachments/04-25-TaxCodeTestimony.pdf
Romney is saying: "You're absolutely right, Sean, I never said we don't need more teachers or firefighters. In fact, in that context, 'we don't need' means 'the President cannot fire or hire' teachers or firefighters . . . . They are not federal workers, period! . . . That's just a fact. . . . It's just another case of the liberal media taking my words out of context."
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