Fed Use Cash to Bend States to Their Will

Member Group : Jerry Shenk

Depending upon their definition of "balanced," up to 43 states, Pennsylvania included, have legal requirements to balance their budgets.

But in recent years, very few, including the commonwealth, have been able to do so without the infusion of massive amounts of newly-borrowed or just-printed federal cash.

For fiscal 2014, Governor Tom Corbett proposed a total budget of $66.7 billion, which included $28.4 billion in statel funds and $21.7 billion in federal funds.

Pennsylvania isn’t alone. On average, states rely on federal assistance for 30 percent of their budgets.

Regrettably, in his budget address, the governor didn’t discuss the
constitutional implications of federal money in Pennsylvania’s budget.

Even though the states have their own taxing authorities, since the Reagan administration, the federal government has transferred much, in some years most, of its annual deficit values to the states.

Pennsylvania state politicians love federal cash, because, as seen in Corbett’s budget proposal, it allows them to claim about three-quarters more spending than state revenues — without the political risk of increasing state taxes.

But, that’s where things get tricky.

The 10th Amendment to the United States Constitution reads: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
Undaunted, the federal government buys – and regulates — its way into state affairs – attaching strings which dictate state policies and sometimes direct what the states can do with their own revenues.

Federal transportation funding and Medicaid are examples of joint state/federal programs that benefit many Pennsylvanians – but the feds mandate speed limits and specify benefits.

The first dollar states accept from the federal government to provide the services with which states are legitimately charged erodes the 10th Amendment.

Accepting huge amounts of federal dollars to fund nonfederal activities not only erodes the amendment, it undermines the will of state legislators and policy-makers to defend the state sovereignty the 10th Amendment guarantees.
In this way, the national government expands, unchecked, beyond its constitutional limits at the expense of the states and, by extension, the people.
The effect is what physicists and business people refer to in their disciplines as incremental degradation. Applied to governments, incremental degradation means one diminishment of freedom at a time enabled by one small assumption of power until freedom is effectively lost.

The most susceptible states, like Pennsylvania, are those whose dysfunctional legislatures are least able – or willing – to live within their means.

While accumulating debt which burdens generations of Americans, federal deficit spending drives massive, nearly-transparent increases in federal control and the de facto integration of federal and state governments, a process that diminishes state and local control and accountability.

Voters in state and local elections often aren’t really voting for or against state and local policies, they’re just electing people to implement decisions made by Washington politicians and anonymous bureaucrats.

Central governments love central control. One-size-fits-all mandates on things like health and welfare policy, school curricula, lunches, housing, speed limits, legal drinking age and waste water treatment standards, among legions of others are issues best left to the states, but on which the federal government has illegally intruded.

Uniformity is a central planner’s dream because, by discouraging or eliminating investor incentives and mobility between states, uniformity simplifies federal control of markets and people. But diversity loses, along with local choice, innovation and the Constitution’s limits on federal power.
It’s not a Democrat vs. Republican issue. Both parties have been complicit in subverting the 10th Amendment.

Finally, though, in response to the Obama administration’s relentless expansion of federal power, there’s an important separation-of-powers issue emerging.

In 2011, Oklahoma filed a federal lawsuit, since joined by other states and parties, challenging the grotesquely-named Patient Protection and Affordable Care Act – Obamacare — on constitutional grounds.

Oklahoma’s case argues that Obamacare makes no provision for enforcement of noncompliance penalties in states like Oklahoma and Pennsylvania which didn’t implement health insurance exchanges.

The case questions whether the IRS has statutory authority to award federal subsidies in states that didn’t create state exchanges, since the law only authorizes subsidies for states that did. The Oklahoma lawsuit may be opponents’ best hope of nullifying Obamacare.

Lower court decisions split on this and similar cases, so the US Supreme Court will hear it – giving Chief Justice John Roberts another bite of the Obamacare apple.

It’s a start.