There is, of course, no government in the US. We have a President and 535 members of Congress, nominally members of two parties (with a sprinkling of independents), but in fact 535 geographic fiefdoms each representing local interests and vested corporate interests.. Jeff SachsHow on earth do economists still get this problem so screwed up?
This is a big state vs median state problem. What we just witnessed were two budget deals, one acceptable to median states and acceptable to big states. A huge multiplier less than one problem staring Sachs in the face and he fails to see it.
Big states have economies of scale that are completely disrupted by federal intervention. The socialist public sector unions in California have been complaining about federal intervention for a decade, from NCLB, High Speed Rail, and now Obamacare. In a balanced flow of government goods in California, all federal funding needs to go through the state capital in block grants, otherwise multipliers drop into the mud out here.
Median states have a very adaptable short chain of government operations. They simply convene the legislature and adapt to changes in federal spending. Big state vs small state, quit trying to hide the problem.