But at the state and local levels, it’s another story. Reliance on money flowing down from the federal government, rather than up from citizens, distorts how our state and local governments function. In his 2008 article for the Heritage Foundation, “Federal Funds and State Fiscal Independence,” Sven R. Larson wrote:
Joint state-federal spending programs also increase both individual dependence on the government and states’ dependence on the federal government and federal taxpayers. State fiscal policy is increasingly tied to the execution of federal spending programs and policy priorities. With this growing dependence comes a shrinking independence in state fiscal policy, making states increasingly less able to make fiscal choices that fit their residents’ needs and preferences.
In other words, money is power, and the more revenues come from the federal government, the more state and local governments will be answering to it—its priorities, its policies, its rules—before they answer to their own constituents. We find ourselves paying more and more in sales, property, and state income taxes but having less and less say in how the money is spent because of the dominant influence of federal power. This is how federal aid insidiously corrupts and destroys the proper functioning of the Tenth Amendment. Federal money is like the “free sample” of heroin that drug dealers give away. Once state officials start taking it, it leads to a spiral of dependency that requires enormous willpower to break.
One of the reasons some governors didn’t want “free” stimulus money is that it was for programs they wouldn’t have been able to fund once the federal money ran out. They knew that while the federal government giveth, it can also taketh away, and that makes it virtually impossible for states to plan in the long term. States didn’t want to have people get hooked on new federally funded programs and then have to cancel them.
I know all too well how this game works from my own experience with the federal government during my tenure as governor of Arkansas. Whether we’re talking about Medicaid, education funding, highway money tied to adherence to federal speed laws, or unemployment benefits, states are increasingly enslaved to the federal masters, and that means being held hostage to policies that may not be in the best interest of the state. To be fair, this is not a practice that happens only under Democrats—it’s not that much different under Republican presidents.
Also, the federal government can be like a well-meaning relative who sends you extravagant gifts that reflect their taste, not yours. Never mind that this relative lives way beyond his means and has borrowed the money he spent on you from you! (That’s another chapter.) Although America is a melting pot, we’re far from a homogeneous society; life in Maine is very different from life in Mississippi or Montana. Despite Rodgers and Hammerstein’s urging that “the farmer and the cowman should be friends,” farming communities are different from ranching communities, which, in turn, are different from factory towns or suburban office parks.
As long as we’re referencing Rodgers and Hammerstein (bet you didn’t think I knew Broadway musicals), I’ll go on to say we need to run from the idea of a centralized “Bali Ha’i,” the symbolic utopia of everyone’s hopes and dreams. That kind of place isn’t real; it’s a ridiculous campaign slogan. And I hope I’m not just “A Cock-Eyed Optimist” when I say our differences—social, economic, cultural, and geographic—can and should be respected and our diversity celebrated. Local residents know what they need, and it doesn’t help them to have the federal government blow their grandchildren’s tax money on a new airport terminal named after their senator when what they could really use is a middle-school gym and some bike paths.
You know, I have a great name for that school: James Madison Junior High.The States as Laboratories: When Experiments Fail
Supreme Court justice Louis Brandeis, in a well-known dissenting opinion from 1932, wrote, “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”
Brandeis had a good point, but nowadays the federal government seems to ignore logic in pursuit of its own agenda. In a real laboratory experiment, researchers start with a hypothesis and devise ways to test it; if the outcome doesn’t support the outcome they’d expected, they must revise their hypothesis and subject it to more testing. This procedure is called “the scientific method.” But our government is not run by dispassionate scientists.
Take ObamaCare. Ever since the debate over this program began, it’s been compared to RomneyCare, the failed statewide health-care program implemented by none other than my fellow GOP member Mitt Romney when he was governor of Massachusetts. Any critical assessment of this program will show that it failed (more on this in later chapters), and yet the Obama administration decided to emulate it in its pursuit of a national health-care program. They had the facts but chose to pay attention only to the results that suited their effort to expand the federal government’s control. This is not science, and it’s certainly not a proper way to govern. It is pseudoscience and propaganda and an insult to our intelligence.
Justice Brandeis was right. Using states as laboratories is a wonderful idea, but if an outcome doesn’t support the federal government’s compulsion to expand an idea nationwide, then we shouldn’t do it. We were supposed to learn from RomneyCare, not Xerox it into federal law. It is a classic example of the complete insanity of government.The Financial Crisis and the Failure of Federalism
One of the culprits in the financial crisis that hasn’t gotten enough attention is the federal Office of the Comptroller of the Currency (OCC). Not only did the OCC fail to do its job to stop banking abuses that were allowing anyone with a pulse to get a mortgage (I’m not sure that even a pulse was required), but it also kept states from regulating the mortgage madness. The rules it promulgated were so outrageous and tied the states’ hands so thoroughly that the attorneys general and banking superintendents of all fifty states opposed them. Think about it—how often do all of our states agree on anything?
The rules were overturned by the Supreme Court inCuomo v. Clearing House Association
in June 2009, but by then we were deep in the mortgage crisis and the Great Recession. The attorney general of Idaho, Lawrence Wasden, had written in April of that year about how this failure of federalism contributed to the financial crisis:
More than five years ago, state attorneys general warned the OCC of the problems of subprime loans. In fact, in 2003, state attorneys general traveled to Washington, D.C., to speak to the head of the OCC to warn him that lenders were pushing mortgages that were growing in risk. The attorneys general also asked the OCC for support to deal with exorbitant interest rates and fine print fees. The OCC dismissed these warnings and was steadfastly opposed to working with the attorneys general.
To expand on the observations of Attorney General Wasden, the OCC went even further to exacerbate the situation with rules that blocked state oversight of some of the financial entities that contributed to the economic crisis. In the process, it cast aside the principles of federalism on which our Constitution is based.
At a time when the mortgage-lending industry was becoming the wild, wild West, the OCC handcuffed the sheriffs—all fifty of them! We’re still suffering the consequences. Again, note that these concerns preceded the election of Barack Obama and the Democrats’ total control of Congress that happened after 2006. The GOP, led by the wellintentioned President George W. Bush, pushed for an “ownership society,” which is laudable, but only if peoplePublic Employee Unions: Another Power Grab
what they can
. I’d like to own a Falcon jet, but I don’t. It’s not a lack of desire but a lack of dollars!
When California was trying to balance its budget in 2009 so that it could keep the lights on in Sacramento, it reduced payments to home health workers employed by the state. Responding to complaints from his supporters at the Service Employees International Union (SEIU), President Obama literally made a federal case out of it and forced Governor Schwarzenegger to back off that plan or lose billions from the “stimulus.” It has to be more than pure coincidence that the head of the SEIU, Andy Stern, visited the White House more often than anyone else
else—during the first half of 2009.
Let’s remember that the people of California didn’t elect Andy Stern to decide how their state budget should be balanced. They elected Arnold Schwarzenegger. But it seems as though both he and the residents of that state got a lesson in governing “the Chicago way.”
All states except Vermont are required by their own constitutions to balance their budgets. (Vermont, given its Yankee thriftiness, does that anyway.) When states have to meet the salary, pension, and other benefit demands of public employee unions, their budgets can’t stretch as far, so something else has to go. Unionized public employees cost about 30 percent more in wages and 70 percent more in benefits than those who are not in unions. They can prevent low-performing employees from being fired, as you may have seen in your child’s school. They can further bloat local and state budgets by demanding that more people be hired than are really necessary to do the job, so government is more expensive and less efficient.
This keeps the states hungry for more federal money, even though it means ceding more of their power to Washington and makes them less responsive to their own citizens’ preferences and priorities. In contrast, the federal government doesn’t appear to be running out of money, but it certainly is. The money it’s spending is Chinese. (Know the old expression “You’ve been shanghaied”?)
The way I see it, public employee unions have a parasitic relationship with the states but a symbiotic relationship with Washington. Here’s how it works: With the force of the federal government behind them, unions get to attach themselves to the weakening states like ticks with an unquenchable thirst for power; and in doing so, they offer Washington a chance to exercise even more federal power. Both become untouchable.
It’s all according to plan. Why, I can picture President Obama and Andy Stern now, walking off together through the fog,The BP Oil Spill: Failure to Respond to the States
style as the president says, “Andy, I think this could be the beginning of a beautiful friendship.”
If ever there was an example of the failure of the federal government to coordinate its efforts with the needs of the states, it’s the BP catastrophe that happened in the spring of 2010. Day in and day out, oil poured into the Gulf of Mexico as parish, county, and state officials complained that the federal government was not incorporating their knowledge and resources effectively to align its response with their local conditions and needs. They were also frustrated by their inability to get timely approvals for their requests and answers to their questions.
As the clock ticked and the days passed, the federal government showed a maddening slowness to act—not in deference to the states (of course not) but in deference to BP—and then, once it did step in, it was dismissive of local and state officials and experts, who had a lot to offer.
There would have been less damage, both environmentally and economically, if each level of government had been able to perform the tasks it was most suited for. The role for the feds is to assist the states at the request of the governors and to make sure that a coordination of resources is taking place involving all levels of government as well as private sector resources. When it comes to oil spills, states have their own strict laws—some stricter than the federal laws—to try to protect their shores and their people. To cite just a couple of examples, California requires more intensive testing of response equipment, while Alaska requires that every tanker have two escort ships and that oil companies be able to pick up three hundred thousand barrels of oil in three days.
Billy Nungesser, president of Plaquemines Parish in Louisiana, testified before a subcommittee of the Senate Committee on Homeland Security and Governmental Affairs in June 2010, saying that he had “spent more time fighting the officials of BP and the Coast Guard than fighting the oil,” and adding, “I still don’t know who is in charge.” With respect to Coast Guard officials who’d been charged with keeping parish officials from getting tangled in red tape, he said, “If they have the authority, they aren’t using it.”The Five Levels of Government
The federal government can’t seem to respect the structure of the original federalist system as set out by the Constitution, with three levels of jurisdiction: local, state, and federal. Yet when we talk about government, we really should be able to break it down into five levels: family, local, state, federal, and world.
As I discussed in chapter 1, families should have as much influence and as much power and control over all of our lives as possible. At the family level, the governing authorities (parents) are closest to the governed (children) and therefore have the deepest understanding of what is in their best interests.
At the other end of the spectrum, there’s the rest of the world. Although international governing bodies like the United Nations might serve a purpose and allow us to develop relationships with other countries, it is important for America to retain its sovereignty and give faraway entities as little power and control over our lives and country as possible. I think even James Madison would agree that this is a good way to remember where power should reside—especially if he knew that terrorist nations like Libya chair the UN’s Commission on Human Rights and that Iran, a brutal patriarchal regime that stones women to death for the “crime” of being raped, boasts a coveted seat on the UN Commission on the Status of Women.