2 + 2 = ?

For those of us concerned about the encroaching reach of government into our daily lives and finances, consider Ilya Somin on Volokh today, and then George Will in the WaPo last weekend. (I wrote about Will's piece, then parked it, but found it adds in directly to Somin's piece today: Do we really want to encourage such dependence on federal funds? At what price? Freedom?)

Somin:

The Dangerous Growth of State Dependence on Federal Funds Ilya Somin • January 23, 2012 11:57 pm

Tad DeHaven of the Cato Institute has a good post highlighting the data on state governments’ growing dependence on federal funds. Since 2001, federal grants have risen from 25.7% of state government spending to 34.1% today. Most of that growth has occurred since the present recession began in 2008.

One of the main distinctive benefits of American federalism is that, historically, state governments have had to raise most of their funds from their own taxpayers, rather than relying on grants from the feds. This gives states incentives to compete for taxpayers and improve the quality of their policies and public services, thereby increasing the effectiveness of voting with your feet. I cover these points in more detail here.

In most other federal systems, the central government provides the lion’s share of subnational governments’ funding. If present trends continue, the United States may join this trend. State governments will increasing look to Washington for most of their funds, and incentives for competition and innovation will be undermined. It’s possible that fiscal policy will return to “normal” as the economy improves. But state governments are likely to lobby for current grant levels to continue even after the recession ends. Current federal subsidy levels could easily become the new normal.

From the comments:

rimfire says:
Take the king’s gold, dance to the king’s tune

Grants and such are the way the federal government takes over state/local institutions such as schools.

George Will in today's WaPo:

The Supreme Court can pack large portents in small details. When in late March it considers the constitutionality of Obamacare, there will be 51 / 2 hours of oral argument — the most in almost half a century.
...
An hour of argument will be devoted to whether Obamacare’s enormous expansion of Medicaid is so coercive of states that it is incompatible with federalism — the Constitution’s architecture of dual sovereignty. The court’s previous rulings about compulsion point toward disallowing this expansion.

Spending on Medicaid, a theoretically cooperative federal-state program, is approximately 40 percent of all federal funds given to states and 7 percent of all federal spending. Enacted in 1965 as a program for the poor, it has exploded. The increase in its costs by the end of this decade is expected to be $434 billion. Its cost is projected to rise 7.9 percent a year — faster even than Medicare’s (6.9 percent).
...
In theory, state participation in Medicaid is voluntary; practically, no state can leave Medicaid because its residents’ federal taxes would continue to help fund the program in all other states. Moreover, opting out of Obamacare’s expanded Medicaid would leave millions of poor people without affordable care. So Obamacare leaves states this agonizing choice: Allow expanded Medicaid to devastate your budgets, or abandon the poor.

The Constitution created a federal government of limited and enumerated powers and promptly strengthened this with the 10th Amendment

lBut even with the federal government paying most of the costs, in many states their portion of Medicaid costs is the largest item in their budgets, even exceeding education. And Obamacare, which forbids states to restrict the eligibility criteria it adopted before this new burden, would deny all Medicaid funds to noncompliant states.
...
The Constitution created a federal government of limited and enumerated powers and promptly strengthened this with the 10th Amendment. The Supreme Court has held that the states therefore retain “a residuary and inviolable sovereignty” incompatible with federal “commandeering” of states’ legislatures and executives. Under Obamacare’s Medicaid expansion, states are dragooned for the furtherance of federal objectives.

In 1987, the court upheld a federal law denying a portion of federal highway funds to states that refused to implement a drinking age of 21. The court held that the threatened loss of funds — only 5 percent — was a “relatively small” inducement and hence “not so coercive as to pass the point at which pressure turns into compulsion.” The court thereby said the federal government cannot behave like Don Corleone, making offers states cannot refuse. At some point, government crosses the threshold of unconstitutional compulsion.

George doesn't go on here, but ask yourself: how many states have the 18+ drinking age now? When they can be military, vote, work and are considered adults. (except in the eyes of the healthcare insurance policies.)

That's right, none. In reality, even those states with drinking cultures, Germanic like Wisconsin, eventually caved and danced to the federal rules for federal dollars. Before the MADD presentations and driving stats kicked in. It reality it was about that federal money at the time, not about saving lives, that every state raised their drinking ages to 21. Hello then, Don Corleone?

Will goes on:

The crucial consideration is the degree of threatened impoverishment. Because of Obamacare, the nation needs clarity from the court. If it now thinks Congress has unfettered power to place conditions on states receiving money from it, the court should explicitly disavow its coercion doctrine. But if the coercion doctrine is to survive, Obamacare should not.

The Obamacare issues of Medicaid coercion and the individual mandate are twins. They confront the court with the same challenge, that of enunciating judicially enforceable limiting principles.

If there is no outer limit on Congress’s power to regulate behavior in the name of regulating interstate commerce, then the Framers’ design of a limited federal government is nullified. And if there is no outer limit on the capacity of this government to coerce the states, then federalism, which is integral to the Framers’ design, becomes evanescent.

So, the time the court has allotted for oral argument about Obamacare is proportional to the stakes. This case is the most important in the more than half a century since the Brown v. Board of Education cases because, like those, it concerns the nature of the American regime.

He's not really being racial, really.
For the issue of the future of federalism, this one compares to Brown.