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The United Fiefdoms of America

A Commentary By Howard Rich

Tuesday, May 12, 2009

Lost in last week’s barrage of Barack Obama “spending reform” coverage was a USA Today story that should send chills down the spine of any state official – or taxpaying citizen, for that matter. For the first time ever, federal aid – not property, sales or income tax – is the top revenue source for state budgets, the paper reported.

And not surprisingly, you could probably knit your way from Hyannis Port to Honolulu with all the “strings attached” by federal bureaucrats. Like the automotive industry, banking business or mortgage market, an unprecedented level of state governmental policy is now controlled out of Washington.

And just as government’s costly intrusion into the free market is eroding our capitalist economy, its escalating incursion into the realm of state sovereignty is encroaching upon our individual liberties. As Indiana State Sen. Jim Buck told USA Today , “This money isn't manna from heaven. It comes with a price.” Indeed it does – and that price is our freedom.

Of course, to hear big government apologists tell it, this news is exclusively the result of the current economic crisis and the need for government to “lend a hand.” "This has more to say about the severity of the recession than anything else," a spokesman for the left-leaning Center on Budget and Policy Priorities said. "Congress stepped in on a temporary basis to help states."

Nothing could be further from the truth.

While Washington’s bailout craze has indeed spawned a sizable increase in federal aid to states, what we have witnessed over the last eighty years is the systematic stripping away of local control – a steady, methodical (and increasingly expensive) obliteration of the sovereignty of state governments. This marks a complete reversal of the framework of government our founding fathers envisioned, and amounts to a deliberate shredding of the Constitutional compact that states entered into as a prerequisite for joining the Union.

Back in 1929, for example, federal aid comprised just 2% of state consumption expenditures. It rose to 12% under the administrations of Herbert Hoover and Franklin Roosevelt, but remained at approximately that level until the 1960’s.

Then, according to a 2008 report by the Heritage Foundation, state dependency exploded with the introduction of Medicaid. Comprising just 6% of state budgets in the early Seventies, Medicaid currently accounts for almost a third of all state expenditures – and that number is climbing.

As Congress has expanded eligibility and added services and benefits – all without state approval – Medicaid has grown at a completely unsustainable clip. In fact, over the last 35 years, Medicaid has grown by $1.64 for every dollar in state spending growth. Similar increases can be seen in federal education, environmental, social security and welfare programs – with states having to pay ever-escalating tabs across the board. And with deficit spending adding trillions to a growing national debt, Uncle Sam kept right on pouring cash into these “federal-state” programs. It made sense to U.S. lawmakers.

More federal spending brought more federal control, and in those rare instances when states dared to resist Washington’s will, the feds threatened to cut state bureaucrats out of the gravy train. Of course that’s just half of the scam. When tax money wasn’t available to cover the enforcement of new federal edicts, D.C. politicians passed the tab on down to states in the form of unfunded mandates. As of last March, the “mandate gap” stood at over $130 billion. Sadly, all that this joint “federal-state” governance has done is to further remove power from the people while “locking in” exorbitant growth rates for government at all levels – a process facilitated by the hundreds of millions of dollars spent by states on taxpayer-funded lobbyists. Basically, Americans are forced to pay more as they receive less from government – all while having their voice taken from them.

Over the decades to come, our children and grandchildren will be paying off our previous debt as well as the trillions of dollars that government is spending on its various “recovery” efforts. Let’s hope that as they labor to do so, they will insist not only on dramatic reductions in the size and scope of government, but also the reemergence of a balance of power that gives them a voice in the policies that affect their lives. Absent that, we will continue to see a nation of fiefdoms drifting further toward servitude.

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