State Bureaucracy.

Throughout his two terms as president, Eisenhower worked to curb the size of government. But an entirely separate layer of government bureaucracy had grown at the state and local levels. In 1950 only three states—New York, Pennsylvania, and California—had general revenues and borrowing over $1 billion; state governments' total revenue and borrowing exceeded $13 billion, with tax revenues topping $11.8 billion. By 1959 seven states exceeded $1 billion in revenues and borrowing, and California hit a whopping $3 billion in revenues. Even states traditionally considered "poor," such as Mississippi, took in more than $320 million. By 1960 general revenues and borrowing by the states exceeded $27 billion, of which taxes accounted for only $18 billion.

Local and State Spending.

States dramatically increased their spending on highways over the decade, going from $567 million in 1950 to more than $7.3...