federalism

One of the more amusing parts of my job is thinking of all the different ways I can explain to people what I do. “I work for a public policy think tank” usually causes eyes to glaze over and elicits a response of “what does that mean?” My grandfather finds it particularly difficult to understand my work. He spent most of his life working in a steel mill, starting at the hearth and working his way up to the metallurgy lab after serving in WWII, and in his eyes if you don’t produce a tangible good your work is suspect or doesn’t make sense. He’s Italian so he talks with his hands when he’s fired up, and when he’s trying to figure out my work, his hands are really moving.

The easiest way to explain what a public policy think tank does is that it studies and watches government. The fact that our government is so large and so complex that it takes legions of analysts from coast to coast to help citizens understand it tells us more about the sorry condition of our Republic than anything else.

The 2011 debt limit fight in Washington DC highlights a disturbing trend I have watched unfold over the years, and I’ll call it the slow death of federalism. By federalism I mean the notion that the federal government has no powers not explicitly granted it by the people through their states, with all other powers reserved to the states or the people.

We often hear about the “separation of powers” but generally we only hear about the horizontal separation between the three branches of the federal government. Little is said nowadays about the vertical separation of powers between the federal and state governments. That’s because the separation is disappearing.

I’m not talking about odious examples of federal overreach like an individual health insurance mandate, pat-downs and body x-rays just to board a plane, the concocted “right to privacy” from Roe v. Wade, and the myriad regulations imposed from Washington DC on nearly every aspect of our lives. These are what we see on the surface. Below that, on a level of public policy to which few pundits or journalists pay attention, a subtler form of creeping statism is destroying the proper balance of state sovereignty clearly delineated in the Constitution. Because the balance has given way to utter dependence, it threatens to unravel the socioeconomic order as we know it today.

Some recent experiences crystallized the depth of this problem for me.

113-DOTA friend of mine does policy work for a state agency in the West. He sent me a picture of a poster hanging in his office area (in his defense, I’ll point out that he didn’t put it there).

The purpose of his division is to secure for his state as many goodies from the federal trough as possible, while minimizing oversight and influence from the federal government. I can’t help but notice this is important enough to be mentioned twice on the poster, once in larger letters.

More and more, state policy making is less about managing the affairs of a relatively self-contained polis, and more about siphoning as much money as possible from the federal government. State government is becoming a mere pass-through for federal funds and an apparatus of federal policy.

In any state, you’d be hard pressed to find a major agency that doesn’t have at least 1 staffer whose sole job is to “maximize federal funding.” Often there’s an entire department for that purpose. Even cities and counties hire people to do nothing but chase federal money.

In my own state of Washington, earlier this year lawmakers fought over how to plug a $4.5 billion budget deficit. This came in the wake of them already having dealt with $9 billion in deficits recently. Washington, like many states, spent profligately during the pre-recession boom years. Lawmakers—in this case Democrats—used one-time surplus revenues to create or expand ongoing programs. It was akin to me winning $500 in the lottery and then buying a car that carries a $500-per-month payment. What do I do after the first month?

Part of the budget battle almost always involves Medicaid, an inflexible program whereby the federal government matches state spending on health care subsidies for people below a certain income threshold, dollar for dollar. So, for example if the state ratchets up Medicaid spending by $100 million, they “leverage” another $100 million from the feds. It works in the other direction, too. Consequently, during budget fights you hear a lot of talk about doing everything possible to “leverage” federal dollars. With Medicaid the problem is particularly pernicious, because if ever lawmakers have to cut Medicaid funding the statists take to the streets in protest due to the fact that a $50 million Medicaid cut is actually a $100 million Medicaid cut.

But the addiction to federal money is not confined to health care spending. It’s true across the spectrum of state government programs.

For state lawmakers, federal grants and federal matching programs are convenient tool for distributing more goodies to favored interest groups without the burdensome task of raising taxes on constituents. Federal money has allowed state lawmakers to reward supporters and grow government without much effort.

I’m blessed to work with a policy analyst who knows my state’s budget better than the lawmakers who vote on it. There might be a couple people in the state capitol who understand it better than he does. Maybe.  Occasionally we share a cubicle, and I always learn much from his side comments. During the biennial budget process, we share our continued amazement when state lawmakers talk about “leveraging” federal money as if 1) it’s free, and 2) it’s endless.  It is neither. It comes with innumerable regulations about how the money can be used, to whom it can be dolled out, and more. Thus, a state’s sovereignty over its internal affairs is compromised dramatically.

We’re learning today in a big way that the money isn’t endless, either. A headline in my state capitol city’s newspaper made that clear. “State has 6-8 weeks of cash left, state treasurer warns DC delegation” - “Washington Treasurer Jim McIntire says he has six to eight weeks of cash available to keep paying state-government bills if Congress fails to lift the debt ceiling in time and interrupts federal payments of about $500 million a month.”

Washington state’s general fund spending is just over $30 billion for two years. But total budgeted spending is almost $75 billion when you add in all of the “free” federal money that flows through state spending (and that doesn’t include federal money that goes directly to counties and cities). It’s no wonder, then, that even as state tax revenues flattened or dipped after the recession began, total budgeted spending continued to grow steadily. State lawmakers used “free” federal money to backfill their budgets. Compound that over many years and across most states, and you get a better understanding of why our nation has a $14 trillion national debt. The feds can print and borrow to support general operations, while no state can print money (Deo gratias), and my own can’t borrow for such purposes.

It’s telling that even as the national economy slugs along, business in Washington DC is booming. Vast federal buildings rise regularly as the bureaucratic administrative complex grows ever more intrusive into state affairs. The tentacles of leviathan reach from there all the way into aspects of our day-to-day lives in ways we don’t even realize. Hence the cry of state treasurers across the country that if payments to the states are interrupted, the sky is soon to fall.

Some have asked how it could be otherwise, and to what extent do I want to see federal influence minimized? I tend to think the optimal size and scope of the federal government ought to be such that its disappearance would be all but unnoticeable by the states, at least in the short term.

Once I asked my Italian grandfather—the one whose hand moves a lot when he inquires about my job—why he wasn’t trying to get the weeds out of the honeysuckle bushes that line his driveway. “Pull open one of the bushes, look inside, and tell me where the weeds end and the honeysuckle begins,” he said. The viny weeds had crept through every part of the honeysuckle and grown intertwined with it. The tangled mess had become unmanageable. In similar fashion, were you to read through a state budget line by line, you would have a difficult time determining where federal influence ends and the state’s begins.

The quiet centralization of government authority and the erosion of federalism have helped bring us to here and now, the brink of default—a nation addicted to debt and states addicted to federal spending.

Books discussed or mentioned in this article can be found at The Imaginative Conservative Bookstore.

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5 replies to this post
  1. Great piece John! I love how this illistrates the dependence on our Federal masters at the State level. Can I repost on my site? With full credit and links of course. Nice work.

  2. Excellent, John, and in a way Americans all want more out of the system than they put in. Decadence and corruption can be sneaky – how many formerly upright families take more from Medicare or Social Security than ever they paid in? John's friend Pogo was right.

  3. John,
    I love your grandfather! The only people I have ever known who understand budgets are women–economics, after all, was the domain of the household, and were it still so. My wife, two sisters-in-law, my sister, and my mother-in-law all know exactly what budgets are. Don't spend more than you take in. Simple. A good friend once told me that if I had to make up budget numbers as part of my job, never ask for $.29 for pencils, because everybody knows what $.29 is, and you will always get turned down. Ask instead for $10million for "research and development," because nobody knows what a million dollars is, and they will always approve it. Now a TRILLION dollars is literally beyond the imagination of any human being. If you started a business in the year Jesus was crucified, and lost a million dollars a day since then, you would still have a few hundred years to go before you lose a trillion. And what does the "federal government" owe? I doubt that your friend has a real clue about the Washington state budget; how can we understand billions? Put my wife in as Secretary of the Treasury, and I guarantee the progressives would never win again.

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