It's time to end the more than 1,100 grants-in-aid programs
that spend one-sixth of the federal budget. By James L. Buckley Dec. 25, 2014
4:01 p.m. ET
Before the newly elected members of Congress become
contaminated by the prevailing congressional culture, they should consider a
reform that would achieve a broader range of benefits than any other they might
embrace: dismantling the more than 1,100 grants-in-aid programs that spend
one-sixth of the federal budget on matters that are the exclusive business of
state and local governments.
Congressional freshmen should be warned, however, that if
they accept this suggestion they will be fiercely opposed by their senior
colleagues who have found the creation and exploitation of lucrative
grants-in-aid programs the surest way to scratch their constituents' backs
(think "entitlements") and ensure their re-election. But that should
add zest to the enterprise
Those programs, which provide funding for Medicaid as well
as everything from road and bridge construction to rural housing, job training
and fighting childhood obesity-now touch virtually every activity in which
state and local governments are engaged. Their direct cost has grown, according
to the federal budget, to an estimated $640.8 billion in 2015 from $24.1 billion
in 1970.
Their indirect costs, however, go far beyond those numbers
both in terms of dollars wasted and the profound distortions they have brought
about in how we govern ourselves. Because the grants come with detailed federal
directives, they deprive state and local officials of the flexibility to
meet their own responsibilities in the most effective ways,
and undermine their citizens' ability to ensure that their taxes will be used
to meet their priorities rather than those of distant federal regulators. The
irony is that the money the states and local governments receive from
Washington
is derived either from federal taxes paid by residents of
the states or from the sale of bonds that their children will have to redeem.
Congress finds the authority to enact those programs in the
Supreme Court's interpretation of the Constitution's general-welfare clause in
Steward Machine Co. v. Davis (1937). More recently, in the court's 2012 NFIB v.
Sebelius decision upholding the Affordable Care Act's individual mandate,
Chief Justice John Roberts wrote that Congress may use
federal funds to "induce the States to adopt policies that the Federal Government
itself could not impose," so long as participation by the states is
voluntary. To put it another way, Congress is licensed to dabble in areas in
which it is forbidden to act, which it does by bribing the states to adopt
Congress's approaches to problems that are the states' exclusive responsibility.
<http://topics.wsj.com/person/R/John-Roberts/7417>
It is impossible, in this article, to detail all the costs
imposed by those programs, but here are some of the most egregious ones: They
add layers of federal and state administrative expenses to the cost of the
subsidized projects; distort state priorities by offering lucrative grants for
purposes of often trivial importance; and undermine accountability because
state officials bound by federal regulations can't be held responsible for the costs
and failures of the projects they administer.
Finally, and of prime importance, those programs have
subverted the Constitution's federalism, its division of federal and state responsibilities,
that was intended to prevent a concentration of power in a central government
that could threaten individual liberties.
The states are free to decline to participate in the
programs, but that has proved very hard to do. Money from Washington is still
regarded as "free," and state officials are delighted to accept
grants, strings and all, rather than raise the extra money that would be
required to pay the full cost of the projects they freely undertake with
federal subsidies. What makes declining grants particularly difficult is the
fact that if a state does not participate in a program, its share of the
money-derived in whole or part from its own taxpayers-will go elsewhere.
There is only one way to resolve the problems that have
resulted from Congress's addiction to grants-in-aid programs, and that is to
terminate all of them. They must all go because none is free of the added costs
described
above. If any exception is made, members of Congress will be
encouraged to launch a new wave of grants on the assurance that theirs will be
exempt from the problems and costs that have plagued the existing ones, and it
would take another generation to prove them wrong.
Yet because federal transfers now constitute about 30% of
the states' revenues, Congress cannot cut off the funds overnight. Therefore,
it should terminate the programs by converting all the grants the states and localities
are currently relying on into single, no-strings-attached block grants, one for
each state,that would be phased out over six years. That would allow Congress
and the states the time to adjust their respective tax codes to accommodate the
successive reductions in the federal transfers.
If the newcomers to Congress embrace the reform, the timing
could not be more propitious. Recent stories concerning the incompetence, and
worse, at the IRS, the Veterans Health Administration, the Centers for Disease
Control and Prevention, and other federal agencies have undermined the myth
that Washington necessarily knows best. Once Americans have learned the true
cost of those programs, they will know they have everything to gain from their termination
both as citizens and taxpayers.
Mr. Buckley is a retired federal appellate judge and a
former U.S. senator. He is the author of "Saving Congress From
Itself" (Encounter Books, 2014).
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