A Cautionary Fail

In a little noticed item of not-so-breaking news this week, we learned that the financing of state governments has for the first time ever become a largely federal endeavor. That is to say, federal transfers now account for the largest share of state government finance. More than sales taxes, more than property taxes, and more than state income taxes. Uncle Sam is increasingly the fuel in our states' gas tanks.

It is probably conservative to say "the government that governs best governs least," but it is absolutely part of our federal heritage to say "the government that governs closest governs best." These principles seem to be evaporating before our eyes. The latter is perhaps even more important than the former. It simply means that the closer the government is to its voters, the more accountable and responsible we can expect it to be. Small town mayors are more accountable to the citizens of the small town than is the president of the United States. The state legislature is easier to control than Congress (see my posting here).

Federalism has always been an integral--but threatened--part of our governing system. Our founders recognized the diversity of the states and appreciated the valuable contributions this rich tapestry would make to the national good. However, there have always been those who saw one-size-fits-all solutions as optimal. For these well meaning elitists, imposing national standards was a lofty goal. When the federal government forced the states to enact a 55 mph speed limit on penalty of lost highway funds, my native Montana essentially told them to pound sand with a $5, no points "failure to conserve energy" fine. The state got its money and no one drove 55.

The point has broader implications, if the states become a mere organ of the federal government, then our power to control our government suffers immensely. Why elect a state legislature at all, if their only role is to dole out the federal dole? Who needs a governor if the president is calling the shots from 1600 Penn. Ave.? There are important reasons to have local services funded by local dollars and allocated by local officials. These are accountability, accountability, and accountability.

So why then, does the federal government have the money to fill gaps in state and local governments? Why does the federal share of funding continue to grow? Hmmmm. Could it be that no local government would get away with the reckless borrowing, high taxing, ballooning government strategy the feds are following? Well of course not: their voters would never stand for it. Only the 535 impersonal, distant, and arrogant power-aggregators in Washington can pull off that trifecta.