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State of The States


Michael Greve, who runs the American Enterprise Institute’s Federalism Project, has a very smart analysis of the state budget crunch. The governors tend to blame unfunded federal mandates for their woes. Greve writes that the real problem is not mandates but the incentives to state overspending that the federal government has created. Some of the implications: 1) The administration’s answer to the states’ demands for more federal money should not just be “no.” It should also be a restructuring of federal-state relations along lines that promote accountability and choice. 2) In the current system, apparently federalist initiatives can undermine true federalism. Greve argues that the Clinton-Bush policy of giving states “flexibility” on Medicaid is doing just that. 3) States like New Hampshire, which may very well opt out of the No-Child-Left-Behind funding, ought to be relieved of the obligation to pay taxes to support the program. There’s a lot to chew over here, and I am less convinced of the feasibility of Greve’s solutions than of the soundness of his analysis. It’s a long piece, but Greve writes well, and conservative policy wonks really should read the whole thing. If you’re concerned about the growth of government spending, you should be concerned about the states, because that’s where it’s mostly been happening.


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