The Corner

Where’s Alex?

We’ve come a long way from the quaint notion, expressed by Alexander Hamilton in Federalist No. 17, that state and local governments would occupy the high ground in their relationship with the federal government. “It will always be far more easy,” Hamilton confidently asserted, “for the State governments to encroach upon the national authorities than for the national government to encroach upon the state authorities . . . “

He explained:

…Upon the same principle that a man is more attached to his family than to his neighborhood, to his neighborhood than to the community at large, the people of each State would be apt to feel a stronger bias towards the local governments than toward the government of the Union;

It’s easy to see that those days are long gone. A week doesn’t go by without planeloads of state and local officials flying to Washington and pleading on bended knee for federal subsidies for activities that once were unambiguously their responsibility. The National Governors’ Association, the National Conference of State Legislatures, the National Conference of Mayors, and all the other Washington outposts for our state, county, and local governments have been the great enablers in this sorry story.

The Los Angeles Times uncovered one exceedingly pathetic example of this last week in a piece titled “Cities plan to swap stimulus funds.”

Apparently, a black market for federal “stimulus” funds, complete with bartering and market rates, has arisen among some of California’s municipalities. Some local government officials, frustrated by Washington’s dictates with respect to how the federal largesse can be spent, have devised innovative ways to redirect those funds.

Here is one example cited by the Los Angeles Times

The tiny town of Bradbury, for example, has entered into a memorandum of understanding with Torrance to trade its $500,000 in stimulus money for $315,000 in cash for its operating budget. Officials in La Habra Heights and Irwindale said they are hoping to enter into similar arrangements with Westlake Village.

Is this the face of modern federalism? Have we reached the point where the creative energy that lies at the heart of federalism is devoted to finding better ways to game the flow of federal funds into a jurisdiction?  Sadly, it seems this has become a well-developed art form:

Officials in some of the smaller cities said they had been doing these kinds of exchanges for years, particularly with federal allocations that frequently come with conditions they cannot meet.

When the MTA published a list last week of cities that had not submitted sufficient qualifying projects, La Habra Heights started hearing from cities with projects of their own to fund, Clark said.

“They call you or e-mail you and they offer you a trade,” she said. She described the discussions as a bartering process, but said the going rate was 62 cents to 65 cents on the dollar.

Irwindale City Manager Robert Griego said his office was contacted by six local cities. His town decided to work with Westlake Village because it offered the best deal.

“It also allows Westlake Village to complete an important project,” he added, “and that’s what the stimulus money is for.”

What’s next — credit default swaps for stimulus funds?

Obviously, the far better solution to this mess is not to send all those dollars to Washington in the first place. Allow those governments to which citizens are presumed to feel Hamilton’s “stronger bias” to handle these essentially local concerns on their own. Imagine if all that creative energy were expended, not in outsmarting Washington’s bureaucrats and lawmakers, but instead in devising real solutions for their constituents.


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