Switching in the revenue sharing

 I assume two accounts, one granted equally per state, and one equally per district.

Let us say our limit is Vermont, we are giving them a billion per year. They have one district and one state. Hedre in California, I am ripped off, true, but if revenue sharing is kept small and dedicated to states then I give the small state a bump and my net losses, over the optimum 5/1 ratio are about 20 billion in the federal budget. That is peanuts, a rounding error, but it gets the small state and their bzonker senator off my back.

In a sudden stop what happens?  That ratio will flips and districts get the moola, but costs go way up, maybe ten fold.  Vermont still gets is billion as it has a district,  my share is still fair as districts are more or less equal. But something like 40 billion goes to my state capital. We have states rights, the district checks are going to state capitals.

There is a broad neutral in the distribution around states with five districts. They most fit the system on average and will vote to flip the ratio in volatile times. From these middle states, it is still a mostly fair grant even it states or districts get more.   Small states always to marginally better. Large states will always limit the amount during normal times, and it is to their benefit to flip it over to the state side, which lowers their costs.  Revenue sharing is an energy consuming equalizer, works fine but the volatility induces its own cost. Most of that cost born by the large states.

The price large states pay is a fairly monopoly fee. The Swamp programs are dominated by large states, small states suffer an unfair institutional burden of scale. All we are doing with revenue sharing is making the earmarks liquid, make it easy for Congress to move the needle in unexpected times. Everything here is neutral, just take the cash and do earmarks plans outside of the Swamp. Otherwise that monopoly tax gets collected in units of earmarks, and we get stuck in government sudden stops.

Folks, this is simple stuff, the market structure is simple, well defined and very liquid. It is constitutional rebalancing. The long term and short term equilibrium  match. This is the direct creation of liquidity, an event where science is applied to markets and budgets to predict distribution of outcomes. Posting that distribution to the agents who can adjust their bets asynchonously and fairly. Sandbox.