Malo periculosam, libertatem quam quietam servitutem.



February 2009

The Stimulus Marks The Death Of Federalism

Written by , Posted in Liberty & Limited Government

If federalism wasn’t dead already, the “stimulus” killed it. That is, the relationship between the federal government and the states has become so distorted compared to the original conception held by our founders that it would make little practical difference if we just went ahead and abolished the concept of states altogether.

The Constitution designed a system in which the states share sovereignty with a federal government. According to Madison, the powers of the federal government were to be “few and defined,” while those remaining with the states would be “numerous and indefinite.” This is no longer so.

The federal government now has the final say in most areas which used to be the sole responsibility of the states. Criminal law, an area left exclusively to the respective states, is becoming ever more federalized. Obeying the laws of California and growing pot for medical use is no protection from federal agents. Whatever one might think of this behavior, it’s the voters of California who should get the final say.

A fifty-five mph speed limit, promptly ignored by most motorists, was dictated to the states by passage of the 1974 Emergency Highway Energy Conservation Act.  Although the national speed limit was later repealed in 1995, numerous federal standards remain, such as the minimum ages for drinking and smoking. The federal government has largely accomplished this power grab by opening the spigot of federal dollars, then threatening to cut off any state that doesn’t kowtow to Washington’s demands.

So when a number of governors of both parties balked at taking federal money for unemployment insurance, knowing that they would be stuck with the bill of an expanded government welfare mandate when the federal funds expired, it should come as no surprise that the beltway response was to attempt to denigrate and browbeat the rogue states into compliance. Democratic Senator Charles Schumer responded to their rejection of federal funds by admonishing governors for playing “political games,” then boldly declared, “whether the governors want to or not, they can be forced to take the whole thing.” This astonishing declaration strikes at the heart of our federalist system. Even the race card has been played to shame governors into accepting the dictates of Washington, such as when democratic House member James Clyburn shamelessly alleged that any rejection of stimulus money, and the strings that came with it, amounts to “a slap in the face of African-Americans.” Not all states have the foresight to resist such federal encroachments. State financial shortfalls and a narrow view of state interest leads some, such as California Governor Arnold Schwarzenegger, to turn to Washington hat in hand.

Aside from the eventual subjugation of state authority, funneling federal dollars into the states also leads to significant waste. No longer dependent on their constituents for financial support, the states become rent-seekers looking to game the federal system. This is why 250,000 Washington State residents recently received a $1 check in the mail.  As a reward for this wasteful spending, the federal government will pump into the state millions in new welfare funds. This seemingly irrational and grossly wasteful spending is encouraged by the present system, where states have financial incentives to meet federal bureaucratic rules that allow them to qualify for more funding.  The impact on the taxpayer is simply not important to the state in this calculus.

Alexander Hamilton described the balance between national and state governments as one of “utmost importance” that should be “dwelt on with peculiar attention.” Yet hardly a thought was given by Congress to this fundamental principle when it hastily passed almost $1 trillion in new federal spending, $144 billion of which has been designated for state consumption. And so we must now repeat in vain Thomas Jefferson’s wish “never to see all offices transferred to Washington.”