What determines homeland security spending? An econometric analysis of the Homeland Security Grant Program.(Report)

Introduction

The Department of Homeland Security (DHS) annually disburses grants to each U.S. state. The distribution of these grants has been attacked widely. DHS grants are being distributed as "pork," say critics, alleging that politicians fighting for their respective state's share of DHS funds has resulted in a disproportionate amount of funding going to states with relatively small populations and relatively little risk of terrorist attack (e.g., de Rugy, 2006; O'Beirne, 2003). Given the serious nature of terrorism and the obvious consequences of misallocating grant funding, the legitimacy of this assertion is significant. However, claims of politics driving DHS spending have relied largely on anecdotal and descriptive evidence.

We attempt to provide a more rigorous examination of the issue. Using statistical revealed preference analysis, we address a series of simple but important questions: (i) Is the distribution of DHS grants determined by risk of terrorist attack? (ii) Does the party affiliation of a state's elected officials drive DHS grant funding? (iii) Does the Congressional influence of a state's elected officials determine funding? and (iv) Has recent legislation introduced to change the grant disbursement procedure had the desired effect of increasing the importance of risk in determining the funding distribution? By comparing the varying grant disbursements, the relative risk of terrorist attack, and the political backdrop in each state, our objective is to identify what factors determine DHS grant outcomes.

The Problem: Are Politics Trumping Terrorism Risk?

Made clear by the attacks of September 11, 2001, the landscape surrounding terrorism prevention and policy has undergone a sea change in recent years. As one response, the U.S. Congress passed the Patriot Act of 2001. The Patriot Act reorganized government dramatically by bringing a myriad of federal agencies and programs (e.g., the Federal Emergency Management Agency, the Office of Domestic Preparedness, and the Nuclear Incident Response Team) under the domain of the DHS while also creating several new agencies (DHS, 2006a). Though the list of responsibilities left to the DHS is lengthy, department objectives have been summarized as follows: Preventing terrorist attacks, reducing America's vulnerability to terrorism, and minimizing the damage should an attack occur (DHS, 2004a).

A primary instrument the DHS uses to address these objectives is the Homeland Security Grant Program (HSGP; DHS, 2007). Through a number of individual grant programs, the HSGP distributes money annually to U.S. states and territories. These grants are significant in scale; over 1.6 billion dollars were disbursed in 2006 (DHS, 2007). Individual grant programs under the HSGP have particular eligibility requirements and objectives; however, they share the core mission of the DHS: "to enhance the ability of State, local and tribal governments to prepare, prevent, and respond to terrorist attacks and other disasters" (DHS, 2007).

One fallout of the changed landscape is that national security has emerged as a prominent issue in the national consciousness (Roberts, 2006). A hailstorm of criticism has surrounded the distribution of Homeland Security grants (e.g., de Rugy, 2005, 2006; Earle, 2004; McLaughlin, 2002; Roberts, 2005; Wisloski & Connor, 2006). Sparsely populated states have received more per capita grant dollars than their more crowded counterparts, and this has been the precipice for much of the controversy surrounding the department (Roberts, 2005).