It is easy to poke fun at such federal expenditures because it is hard to think of purposes more quintessentially local in nature or further removed from the pressing concerns that ought to command Congress’s attention. The vast majority of federal grants, however, deal with needs that are generally accepted as important, such as the construction and maintenance of roads, assistance for the poor, and education. But others, such as the one that would widen sidewalks to fight juvenile obesity, illustrate Congress’s incurable temptation to propose a federal solution to any problem or need, however parochial.
That temptation is as old as the Republic. Thomas Jefferson, who vigorously opposed expansions of federal power proposed by Alexander Hamilton, nevertheless approved federal aid for the construction of what came to be known as the Cumberland Road. Its purpose was to serve newly settled areas beyond the Appalachians. James Monroe, however, later vetoed a bill for its preservation and repair based on his understanding that Congress’s spending authority was restricted “to purposes of common defense and of general, not local, national, not State, benefit” (message to Congress, May 4, 1822). While other early Congresses occasionally enacted legislation providing for the construction of roads and canals, until the outbreak of the Civil War, such proposals were routinely vetoed as unconstitutional.
The first grant-in-aid program of the modern kind was the Morrill Act of 1862. It authorized grants of federal lands to the states on the condition that they or the funds derived from their sale be used by the states for the establishment of agricultural colleges. President Buchanan vetoed an earlier version as unconstitutional, but the 1862 Act included a provision for military training in the colleges’ curricula that may have eased its acceptance as the Civil War was then in its second year.
Almost a century later, the federal government became involved in education in a significant way with the enactment of the National Defense Education Act of 1958. That was Washington’s response to the Soviet Union’s launching of Sputnik, the first satellite to achieve orbit, and the resulting fear that the United States was falling behind the Soviets in the field of science. Accordingly, because of what was viewed as a threat to national security, Congress authorized the distribution of grants to schools at all levels to accelerate our training of mathematicians and scientists. From that point on, the defense rationale was abandoned and Washington’s involvement in education grew at such a rate that twenty-one years later, in 1979, Congress found it necessary to create a Department of Education and a cabinet secretary to oversee it.
That same concern for national security launched the federal government’s wholesale involvement in the construction of highways. The need to facilitate the movement of troops and supplies in a national emergency was the justification given for President Dwight Eisenhower’s National Interstate and Defense Highway Act of 1956, which paid ninety percent of the cost of building a 41,000-mile interstate highway system. That ambitious project was financed by federal taxes on gasoline paid into the Highway Trust Fund. Because of its military rationale, this legislation clearly fell within the scope of the Constitution’s Defense Clause. Over the years, however, that fund has increasingly been used for a broad range of purely local uses, such as the replacement of a one-lane bridge linking two small Connecticut communities.
It was not until Lyndon Johnson’s Great Society that the creation of grants-in-aid programs became epidemic. In 1960, there were 132 of them; but by 1970, their number had quadrupled to 530. Over those ten years, transfers to the states rose from 7.6 percent of federal outlays to 12.3 percent (see Chris Edwards, Policy Analysis, no. 593). By then, the proliferation of federal urban grants led Peter Drucker to note, in his essay “The Sickness of Government,” that
during the past three decades, federal payments to the big cities have increased almost a hundred-fold for all kinds of programs, whereas results from this incredible dollar-flood are singularly unimpressive. What is impressive is the administrative incompetence. We now have ten times as many government agencies concerned with city problems as we had in 1939. We have increased by a factor of a thousand or so the number of reports and papers that have to be filled out before anything can be done in the city. Social workers in New York City spend some 70 or 80 per cent of their time filling out papers for Washington, for the state government in Albany, and for New York City. No more than 20 or 30 per cent of their time, that is, almost an hour and a half a day, is available for their clients, the poor. As James Reston reported in The New York Times (November 23, 1966), there were then 170 different federal aid programs on the books, financed by over 400 separate appropriations and administered by 21 federal departments and agencies aided by 150 Washington bureaus and over 400 regional offices. One Congressional session alone passed 20 health programs, 17 new educational programs, 15 new economic development programs, 12 new programs for the cities, 17 new resources development programs, and 4 new manpower training programs, each with its own administrative machinery.
But that was just the beginning. Congress had become so addicted to this form of federal largesse that by 2010 the number of grants programs available to states and/or localities exceeded 1,100 and, at a cost of $608.4 billion, they constituted 17 percent of the federal budget for that year, its third largest category of expenditures after entitlements and defense. They now provide states with about a quarter of their revenues. The adjacent table underscores the relentless increase in federal grants, which are projected to expand to $643.3 billion in 2014.
TRENDS IN FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS
Distributions by function. Outlays in billions of dollars.
SOURCE: Budget of the U.S. Government, Fiscal Year 2015, Historical Tables.
NOTE: Rounded numbers not reflected in totals.
It is clear that over the past two generations we have experienced a radical change in how we govern ourselves.
ARGUMENTS IN SUPPORT OF FEDERAL GRANTS
There are essentially