The conditions that Congress imposes on its assistance to the states are policies that it would have no power to impose on the states directly. That would be federal “commandeering” of state agencies, which is unconstitutional under New York v. United States (1992) and Printz v. United States (1997).
The Supreme Court is only just beginning to appreciate that conditional federal assistance allows Congress to commandeer the states as effectively as if it had commanded them directly. Last summer, the Court ruled that the continued flow of preexisting federal Medicaid funds can’t be conditioned on the states’ expanding their Medicaid programs under Obamacare. But even under that ruling, states that refuse to expand their Medicaid programs will still be subsidizing the Medicaid expansion of other states. That’s not a carrot. It’s a stick — and it’s commandeering.
Almost as harmful as the intermingling of federal and state finances is the intermingling of federal and state regulatory activities. The problem here arises when the federal government gives states “permission” to implement federal rules as long as they meet a myriad of conditions. If a state fails to meet any of the conditions, the federal government preempts the field and implements the rules itself.
The state insurance exchanges under Obamacare are a perfect example. To gain federal approval, state exchanges have to meet so many conditions that state flexibility in the matter is a fiction. States that set up their own exchanges are merely allowing themselves to be deputized as instruments of the federal government. But if states let the federal government come in and establish the exchanges itself, it could do so in a way that punishes local interests. For the states, it’s a lose-lose proposition.
This “conditional preemption” strategy, which is essential to the Clean Air Act and other EPA programs, also allows Congress to extend its control beyond the Constitution’s intended limits. Congress deputizes state agencies while escaping accountability, by leaving state officials liable for the success or failure of what are really federal programs.
The Supreme Court has a name for this blurring of the finances and regulatory activities of state and local governments: “cooperative federalism.” That’s the label the Court uses when it rubber-stamps the manifold backdoor schemes through which Congress seizes control of state governments while escaping accountability for the results.
The Supreme Court’s acceptance of “cooperative federalism” is based on the fallacy that states retain the freedom to accept or reject what are supposed to be voluntary “cooperative” federal programs. But there is always a penalty. States that refuse to participate in a federal spending program lose the money their residents have already contributed to fund the program, and all of it goes to other states. States that refuse to implement federal regulations must watch the federal government take over yet another area of state policy.
Washington should be forced to pay for, and be accountable for, the implementation of its own policies.
Sometimes the cooperation of federal and state authorities is clearly beneficial — for example, in the response to a major fire or hurricane. In such situations, the federal government can provide resources on a scale far beyond what an individual state would be able to muster, but it does so as an equal partner with the state that is directly affected. It does not use the crisis to insinuate itself into the inner workings of state governments.
States are not threatened when federal and state officials coordinate as equals, but it is a different matter when states must give up their autonomy because the federal government presents them with an offer they can’t refuse.
Congressional conservatives should make this a mantra: Congress needs to mind its own business, and let the states mind theirs.
— Mario Loyola is director of the Center for Tenth Amendment Studies at the Texas Public Policy Foundation. His article “The Federal-State Crack-Up” appears in the current issue of The American Interest.