Feds buying off states with money that increases debt

by Sen. Doug Whitsett

Our nation’s founders were more apprehensive about creating an all-powerful central government than they were fearful of intervention by foreign states. For that reason, they created a federalist Constitution designed to check and balance the powers of governments. The United States Constitution enumerated only limited powers to the federal government. It then divided those listed powers among its three branches. But more importantly, it reserved all powers, not specifically granted to the central government, to the states and to the people.

They envisioned each state as an independent entity that would fiercely defend those Constitutional powers against incursions by the federal government. However, they failed to anticipate that the exclusive powers granted to the federal government to coin money might result in its ability to bribe the states into giving up those states’ rights.

Following World War II, the Brenton Woods Agreements fixed most international monetary exchange rates relative to the U.S. dollar. At that time, the value of the dollar was secured by convertibility to gold.

President Richard Nixon terminated the gold standard by ending the international convertibility of the U.S. dollar to gold in 1971. Since that time, most other currency exchange rates continue to be valued relative to the U.S. dollar. For those reasons, the federal government has been able to print an unlimited quantity of currency.

This abundance of cash has allowed our federal government to create and maintain more than 1,100 grant-in-aid programs. Most of the funding for these programs is secured by borrowing money through selling U.S. bonds. Borrowing money to provide grant-in-aid to the states is a major cause of our incredible $18 trillion sovereign debt.

In 1970, the entirety of federal programs designed to “aid” the states cost taxpayers about $24 billion. By 2015, the programs will exceed $640 billion, adding as much as a trillion dollars to our untenable national debt each two years. These massive spending programs are effectively controlling how states develop and expend their budgets.

These grant-in-aid programs collectively spend about one-sixth of the entire federal budget on matters that are, and should be, the sole and undivided business of state and local governments. This unprecedented tsunami of federal cash has profoundly distorted how we govern ourselves.

Federal grant-in-aid programs provide funding for about one-fourth of Oregon’s all-funds budgets. They deliver federal cash for education, transportation, medical care, public safety, environmental regulation, land acquisition, low-cost housing and a multitude of other welfare programs. Their tentacles reach deeply into virtually every state program.

Each federal grant comes with detailed rules on how the money must be spent. Most require matching state funds as a condition of receiving the grant.  Many are multi-year awards that encourage the creation of programs and bureaucracies that require maintenance of effort on the part of the state. Of course, the entire program must eventually be maintained by the state when the grant money ends.

In upholding the Affordable Care Act’s individual mandate, Chief Justice John Roberts wrote that Congress is authorized to expend federal funds to encourage the states to voluntarily adopt policies that the federal government is not constitutionally authorized to impose. Distant federal regulators manipulate the state legislatures by offering cash awards to “incentivize” programs and regulations that the regulators consider desirable. Legislators appear unable to refuse this “free money,” regardless of its impact on either the peoples’ priorities or the constitutional rights of the state.

Ironically, nothing is ever free. All of that federal money originates either from the taxpayers or from money created through the selling of bonds. The principle and interest on that borrowed money will be due and payable by our children.

The states are certainly not required to accept what amounts to federal bribes. However, refusing to take the money ensures that other states that are willing to participate in the programs will receive the benefits provided by taxpayers living in non-participating states.

As much as one-third of the activity of the budget-writing Joint Ways and Means Committee is focused on approving federal grant-in-aid applications. During the interim between legislative sessions, the Emergency Board spends even more of its time approving federal grants.

In my opinion, the preponderance of these grants would never be funded if the money originated from state revenue. Unfortunately, the committees have rarely, if ever, actually refused to accept a federal grant, regardless of how wasteful its provisions might be or how intrusive it may be upon constitutionally protected states’ rights.

State legislators are allowing their access to grant-in-aid “free federal money” to subvert the division of state and federal obligations that were designed to protect our individual liberties. State authority is being replaced by federal administrative rules and regulations created by executive agencies.

In this manner, states are rapidly losing their autonomy. They are becoming subdivisions, or virtual puppets, of the all-powerful central government. Administrative rules and regulations created by federal bureaucrats are nearly identical to the edicts of the King of England that the founders so despised.

Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls