Law & the Courts

Thirty Years of Federal Coercion, on the Drinking Age and More

(Reuters photo: Fred Prouser)
On this day in 1987, the Supreme Court said it was okay for Congress to give states offers they can’t refuse.

Thirty years ago today, the United States Supreme Court issued its decision in South Dakota v. Dole. The case involved South Dakota’s attempt to maintain a drinking age of 19 — at least for beer containing up to 3.2 percent alcohol — despite the federal government’s demand that it be increased to 21.

The inequity inherent in the federal policy is obvious, even to an eight-year-old. Like any good Wisconsinite, my son has already started contemplating when he can enjoy his first beer. In response to a recent inquiry, I answered, when he’s 21. His reply? “But can’t I vote and join the army at 18? That doesn’t make any sense . . . ” No, no it doesn’t.

But that made no difference to the federal government in 1984, when Congress passed legislation ordering the secretary of transportation to withhold 5 percent of federal highway funds from states that maintained a drinking age below 21. In a sign of things to come, despite President Reagan’s initial reservations over interfering with state policymaking, he reversed course. ”Some may feel that my decision is at odds with my philosophical viewpoint that state problems should involve state solutions, and it isn’t up to a big and overwhelming Government in Washington to tell the states what to do,” he admitted. “And you’re partly right.” However, he added, “in a case like this, where the problem is so clear-cut and the benefits are so clear-cut, then I have no misgivings about a judicious use of federal inducements to encourage the states to get moving, raise the drinking age, and save precious lives.”

Conservatives would soon be equally disappointed in the Article III branch. South Dakota responded by challenging the law. It allowed 19-year-olds to purchase alcohol and argued that the withholding of federal transportation money was unconstitutionally coercive. In a 7–2 decision authored by Chief Justice William Rehnquist (and joined by Justices Antonin Scalia and Byron White), the Court disagreed.

The Court had long recognized the danger surrounding the federal government’s use of conditional grants. As far back as 1936, the Court warned in U.S. v. Butler that “constitutional guarantees, so carefully safeguarded against direct assault, are open to destruction by the indirect, but no less effective, process of requiring a surrender, which, though in form voluntary, in fact lacks none of the elements of compulsion.” The majority in Dole rendered this a distinction without a difference. While the Court recognized that the penalties attaching to federal conditional grants could not be so onerous as to pass “the point at which pressure turns into compulsion,” it ultimately held that states’ freedom of choice was preserved by its ability to refuse the funding itself.

In a powerful dissent, Justice Sandra Day O’Connor highlighted the unworkable nature of the Court’s holding. Focusing on the spending power of the federal government and quoting Butler, she explained, “if the spending power is to be limited only by Congress’ notion of the general welfare, the reality, given the vast financial resources of the Federal Government, is that the Spending Clause gives ‘power to the Congress to tear down the barriers, to invade the states’ jurisdiction, and to become a parliament of the whole people, subject to no restrictions save such as are self imposed.’” Going even further back in Supreme Court jurisprudence, she cited McCulloch v. Maryland when she declared “the immense size and power of the Government of the United States ought not obscure its fundamental character. It remains a Government of enumerated powers.”

Why is South Dakota v. Dole worthy of observance? Every year, the federal government provides hundreds of billions of dollars in assistance to state governments. Over many decades, the amount of federal assistance to states has hovered around 3 percent of GDP, nearly equal to the federal deficit. About one-third of the typical state’s revenue is from federal funds. That level of funding gives the federal government a powerful lever over the budgets and policies of state governments, a lever that is rapidly turning into an instrument of control. In violation of the federal structure of our Constitution, which was designed to reflect the “vertical” separation of powers, the fiscal operations of federal and state governments are increasingly integrated — and the feds are increasingly in control.

What strings come attached to those federal dollars?

State officials are all too familiar with this creeping federal takeover. Every day, these “assistance” programs confront them with a painful dilemma — either remain faithful to the preferences of the voters who elected them and risk the money that the federal government has already taxed away from them, or secure the money and trade away the voters’ preferences. Academics and bureaucratic technocrats often call this “cooperative” federalism. From the point of view of state officials, a more apt description is “coercive” federalism. The federal government makes the states an “offer they can’t refuse.”

Ironically, a slight sliver of hope was revealed in a more recent decision that incensed conservatives, NFIB v. Sebelius. While Chief Justice Roberts upheld most of President Obama’s signature legislation, the Court finally distinguished between varying levels of coercion. Under the provisions of the Affordable Care Act’s Medicaid expansion, states stood to lose “not merely a relatively small percentage of its existing Medicaid funding, but all of it,” on average more than 20 percent of each state’s total budget. This, wrote Justice Roberts, is “much more than relatively mild encouragement — it is a gun to the head.”

The ghost of South Dakota v. Dole continues to cast a long shadow on state houses. As state legislators grapple with budget negotiations in places such as Madison and Sacramento, they need to ask themselves how much of “their” budget actually comes from the federal government; again, the typical answer will be about one-third. The critical follow-up question is one that is seldom asked — what strings come attached to those federal dollars? May the 30th anniversary of Dole serve as an important reminder of the lengths to which the federal government will go to coerce states in our federal system. Legislators need to keep in mind, the federal government cannot place a “gun to the head” of the states.

Until a brighter line is established, we will be forced to continue to contemplate the incomprehensible, like why our 18-years-olds can vote and fight wars for their country but not enjoy a Milwaukee’s Best. At the very least, individual states that wish to allow their 18-year-olds to imbibe should be free from federal coercion requiring the erection of such an absurd barrier.


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— Jake Curtis is an associate counsel at the Wisconsin Institute for Law & Liberty’s Center for Competitive Federalism. The above piece has been adapted from a WILL report,“Shining a Light on Coercion in Federal ‘Assistance’ to States.”

Jake Curtis is a Milwaukee lawyer and formerly served as a Department Chief Legal Counsel in the Walker Administration as well as an Associate Counsel at the Wisconsin Institute for Law & Liberty.


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