Congress’s infatuation with grants programs has its source in a series of Supreme Court cases dealing with the Constitution’s Spending Clause, which authorizes the federal government to collect taxes with which “to pay the Debts and provide for the common Defense and general Welfare of the United States.” The Court has construed the general welfare language as allowing Congress to “induce” states to accept federal directives regarding matters that fall within the states’ exclusive constitutional authority and that Congress itself has no power to regulate. The inducing takes the form of offers of federal subsidies for a vast range of state activities. If a state accepts the offer, it is bound by the regulations that come with the money. The states are free to decline the subsidies, but experience has demonstrated that “free” money is extraordinarily hard to refuse, however onerous the attached conditions.
As I will demonstrate at some length in my chapter on costs, those conditions can be onerous indeed, but they are by no means the only burdens that attend the acceptance of federal funds. To cite just a few, grants-in-aid programs add a costly layer of administrative expense at the federal level as well as increasing administrative costs to the states. The use of federal money triggers a host of mandates (such as the obligation to pay union wage scales on construction work financed with federal dollars) that can add substantially to what a state would spend on a particular project if it were only using its own money. Uniform federal rules deny states the ability to respond to local conditions as they would if free to handle the work their own way, and to the degree that state officials serve as implementers of federal policies, their citizens are effectively disenfranchised. They no longer have a voice in the design and management of projects that can have the greatest impact on their lives. And the proliferation of grants programs imposes major costs on Congress itself.
Senators and representatives are public servants, but they are also human beings who are subject to the ambitions and temptations that are part of our nature. They have discovered that the Court’s construction of the Spending Clause provides them with the easiest way to ingratiate themselves to constituents and ensure their own reelection. They can now focus on their constituents’ most immediate concerns which, in the nature of things, will involve such parochial matters as the condition of local roads, the education of their children, and the safety of their communities—matters that are the immediate responsibility of their state or local officials. And so they respond to those concerns by introducing legislation that will authorize transfers of federal money to the local highway commission or school or fire department—subject, of course, to regulations that Congress itself has no direct power to impose. Creating grants is not only politically rewarding; it is safe. Few will object to a proposal for such motherhood issues as care for the homeless or better nutrition for kids. But any politician intrepid enough to propose a one-dollar reduction in Medicare payments in order to avert the program’s bankruptcy will have AARP’s 40,000,000 members calling for his scalp.
To cite an example of Spending Clause incentives at work, within weeks of his election, my newest senator (and former congressman) began taking one-hour weekend bus trips in his state so that he might strike up conversations with ordinary citizens in what he referred to as an “informal environment.” According to the newspaper story reporting on one of those trips, his fellow riders expressed concerns over low wages (he advised his listeners that he favored raising the federal minimum wage to $10, one dollar more than the scheduled Connecticut minimum), the difficulties of finding jobs, the high cost of education, and the need for more affordable housing—the same concerns they would have expressed had they been in a conversation with their governor or mayor. One woman informed him that she depended for a third of her income on a bus that operated until midnight thanks to a federal grant that would soon expire. The senator assured her that he favored its continuance. As he told the reporter, “I heard loud and clear how significant extended bus hours are,” and on his return to Washington I have no doubt that he did his best to ensure that the federal grant would be renewed. Apparently none of the riders raised questions about the Middle East, or immigration law, or Medicare reform, or other issues that only a federal senator could deal with.
From my senator’s perspective, this was an enormously productive trip. That one-hour bus ride earned him a favorable newspaper story and will consolidate a reputation for ministering to his constituents’ concerns. As one of them remarked, “He could be at home relaxing. Instead he’s on a bus trip with us.” Of course, he might also have spent the time studying what he and his colleagues might do to address a host of problems that lie beyond the power of governors and mayors and that only Congress can address. I am not criticizing my senator. He is merely playing the current congressional game, and doing so with energy and imagination. My problem is with the game itself.
If I had been on that bus, I would have expressed a very different set of concerns, not because I was any wiser than my fellow citizens but because over the past forty-four years my work has immersed me in questions of national policy that only members of Congress can address. Had my senator asked me, I would have told him that my greatest worry was over the future the little girl seated across the aisle from us will face if Congress fails to screw up the courage to address our deficits and the runaway costs of our entitlement programs. In time she and her playmates will be faced with economy-crushing levels of taxation and/or savings-destroying rates of inflation if Congress fails to act. That is the sort of problem my senator and his colleagues in Washington should be concentrating on, not matters like bus schedules that governors and mayors are far better able to address.
This is not to disparage a U.S. senator’s interest in municipal bus schedules, but the brutal fact is that we face a host of critical problems that only Congress can address. For years, both sides of the congressional aisles have known that the trajectory of entitlement spending will soon reach a point where we will be unable to honor promises made to the elderly, a trajectory that left unchanged will soon reach unsustainable levels. They know that within fifteen years the Medicare trust fund will be exhausted and that within another three the Social Security fund will be as well. Yet nothing has been done to adjust programs designed fifty and eighty years ago, respectively, to meet twenty-first-century demographic realities. There is a broad agreement that our corporate tax rates need to be reduced if our businesses are to remain competitive in a global economy and that this can be done without a loss of revenue by weeding out the favors to special business and other interests that litter our tax codes. Although individual members of Congress have developed practical approaches to both entitlement and tax reforms, nothing happens. Administrative agencies run out of control, but congressional oversight committees seem unable to rein them in.
Congress’s current dysfunction is rooted in its assumption, over the years, of more responsibilities than it can handle. As a result, its members now live a treadmill existence that no longer allows them time to study, learn, and think things through. Instead, they substitute political reflex for thought. To compound the problem, their eyes are now so fixed on their particular political bases that they hesitate to make the compromises that the legislative process requires, and to ensure reelection, they avoid coming to grips with divisive issues whenever they can. When members of Congress do manage to enact a complex piece of legislation, they no longer have the time or patience to attend to all the minutiae that responsible legislation requires. Instead, they pass the messy details along to federal agencies, which spin out the regulations that will give the law shape. So no one, including those who drafted those laws, really knows how their handiwork will affect the real world until the regulations have been issued and put into effect.
In sum, the American Republic is in a very bad way today. It is spending itself into bankruptcy