Unfunded Mandates, Grants, and the Power of the Federal Government to Strong Arm the States

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The Constitution severely confines federal power. Should I say that again?

The Constitution severely confines federal power.

This means that most all power is held by the states. However, the federal government wants the power that the states have. So, what does the federal government do?

In today’s blog post, I’m unpacking a few of the ways the federal government tries to circumvent the Constitution and insert themselves into the realm of state power. This topic seems to grow in importance by the day and we’ve ignored it for too long. It’s about time we know the different ways the federal government unconstitutionally imposes itself on state power.

To best explain how this works, I’m going to use a quote from one of my textbooks (a textbook I recommend and will reference frequently in today’s post):

“…Over time, we have moved to a system where both the national and state governments contribute to most policy areas [highly unconstitutional and dangerous]. One key way this occurs is via various federal grant programs, where the federal government provides money–and accompanying rules–for programs implemented at the state level.” (Wilson 2021).

Grants-in-Aid: Categorical and Block Grants

person in white laboratory gown wearing blue goggles

Grants-in-aid started out as land grants given to states for schools by the national government. Madison believed this was highly unconstitutional. However, as time progressed, these federal cash payments to states to fund state implemented federal programs merely grew. As my textbook describes it: “Washington would pay the bills; the states would run the programs“. It was an ingenious way to get around the Constitution.

If the federal government couldn’t (Constitutionally) overtly fund or write laws about education, but wanted to fund and write laws about education, they would simply use a grant-in-aid to do so. The federal government could not be found guilty of directly violating the Constitution because they would simply give money to the states to implement their federal programs. In other words, the federal government could step back, hands in the air, and say that they didn’t force states to take the money that had to be used to implement a certain federal program. It was the states. It’s the state using the money and implementing the program. And indeed, the state doesn’t have to take the money.

However, the states and federal government found many mutual benefits in this new enterprise. The primary one being political benefits. “Federal money seemed to a state official to be ‘free’ money. Governors did not have to propose, collect, or take responsibility for federal taxes. Instead, a governor could denounce the federal government for being profligate in its use of ht peoples money. Meanwhile, he or she could claim credit for new public works or other projects funding by Washington and, until recent decades, expect little or no federal supervision in the bargain” (Wilson 2020).

What an insult to the U.S. citizenry. The federal government and state governments presume that we are either too clueless, careless or dumb to recognize that the federal programs the state officials are critiquing are the same federal programs providing the money for the projects these same state officials are taking credit for and using as brownie points for their campaigns. It’s rather embarrassing.

These grants-in-aid are broken up into two categories: block grants and categorical grants. Block grants are grants that are given to states to use as they wish, giving the states more control over the money. However, categorical grants are the primary form of grant used and are grants that come with strings attached (they all have strings attached, but categorical grants are more overt).

mother and son painting

These strings are called conditions of aid, or actions the state must take in order to be eligible for the federal money. However, in recent years the federal government has taken this a step further with something called mandates. Mandates are when the federal government tells the state what do, period. As my recommended textbook puts it: “Most mandates have little or nothing to do with federal aid–they apply to all state governments whether or not they accept grants”.

But I’ll get to mandates. For now, let’s rewind a bit and take a look at grants-in-aid. According to the Office of Management and Budget, the federal government spent more than $695 billion on grants to states in 2018.

Here are some of the categories of grants given out.

Health care (including Medicaid) $421.1 billion
Income security $110.6 billion
Transportation $64.8 billion
Education, training, employment and social services$60.6 billion
Community and regional development $19.1 billion

There’s so much to unpack here and I don’t want to spend forever and a day to explain this to you, so please understand that many of the grants are, what we call, formula grants. This means that the federal government is legally required, by law, to provide the state a certain amount of funding based on the number of, say, people who are poor, or children who lack access to good education or any number of things. So, the state gets more money the poorer the inhabitants of the state are. The problems here should be obvious. Instead of states handling their own finances, and their own citizenry as they see fit, they now have an incentive to keep their citizens poor so that the state can get more federal money.

Further, the federal government wields it power over states by withholding funds if the state does not comply with the attached standards. For instance, if funding is supposed to be used for some new federal education program that the state doesn’t agree with, if the state refuses to implement the program as the federal government dictates, the federal government withholds funds. The state then flounders as it attempts to survive without federal funding. But, it usually cannot survive since it’s so dependent on federal money, not to mention, the citizenry whines and screams at the state legislators for refusing money for education (never understanding that accepting such money only tightens the federal noose around the state’s neck).

asphalt road between brown trees

According to Wilson, “In theory, accepting the conditions is voluntary—if you don’t want the strings, don’t take the money. But when the typical state depends for a quarter or more of its budget on federal grants, many of which it has received for years and on which many of its citizens depend for their livelihoods, it is not clear exactly how ‘voluntary’ such acceptance is” (68).

The states have put themselves in a very dangerous and vulnerable position. At this point, most of the states would be harming themselves should they choose to pull away from the federal government and attempt any form of healthy independence. Further, state citizens are highly uninvolved at the state level. Taxation and funding at the state level is low, meaning that, should federal funds be removed, many of the programs and projects the states are now implementing (welfare, medicaid, education, unemployment, social services, etc) would dry up and disappear.

Friends, to say that we’re in a mess is an understatement.

So, what’s happened? Over time, federal control over states has increased dramatically while state dependence on the federal government has also increased. If the federal government can boss states around by strong arming them with money, what’s to stop the federal government from bossing the states around simply because it wants to?

See how this works? This is arbitrary power. If the federal government can act outside of the Constitution some, they can act outside of the Constitution always. There’s nothing stopping them from doing whatever they want. If they can boss states around some (which, remember, is not Constitutional), then they may as well just control the states completely.

Thus, it should be no surprise that the federal government started mandates.

Mandates

I already mentioned mandates briefly in the description above, but I’ll go over them in a bit more detail here. Mandates are essentially federal rules telling states or even private citizens what to do or not do.

Here’s a description from TheBalance.com:

lawyer working on his computer

“When Congress increases the U.S. minimum wage, it creates an unfunded mandate on businesses. They must comply with the law by paying higher salaries out of their pockets. The 1996 minimum wage increase cost $4 million per state on average. Business lobbying against this unfunded mandate has kept the minimum wage unchanged since 2009.

Another unfunded mandate is reducing federal funds to administer Food Stamps or other welfare programs.2 In 1998, Congress reduced federal funds for states to administer the food stamp program. That cost the states between $200 million and $300 million a year.3

Here are three other examples of unfunded mandates:

Eliminating federal matching funds for states to administer child support enforcement4

Requiring public transit agencies to upgrade security measures, training programs, and background checks

Requiring commuter railroads to install train control technology

Congress created an unfunded mandate with the Internet Tax Nondiscrimination Act of 2004.3 It prohibited states from collecting sales taxes on internet purchases. That cost states between $80 million and $100 million in annual revenue.”

However, not all unfunded mandates, or simply mandates, deal with issues like minimum wage and the like. Most mandates revolve around civil rights and environmental protection. For instance, states and businesses cannot discriminate based off of race, sex, age, ethnicity, or physical and mental disabilities. This is a mandate. There is no financial compensation for following this law. It’s simply required of states and individuals regardless of the financial cost it may incur. Or, many businesses and states must comply with federal regulations about clean air, pure drinking water and the like.

Congress is not the only government body guilty of forcing states to do or not do certain actions. The federal courts are equally if not more guilty of this type of behavior. In fact, according to the textbook I’ve been referencing here, “many of the more controversial mandates result not from congressional action but from court decisions” (68).

For instance, “a citizen can now use the federal courts to obtain from a state welfare office a payment to which he or she may be entitle under federal law.”

symbols of justice and law on table of judge

The courts, primarily the Supreme Court, continues to strip states of their power and hand the federal government more power by invalidating state or local laws and issuing mandates about state and individual behavior, usually in the name of civil rights or liberty.

Congress did pass a law called the Unfunded Mandates Reform Act, in which Congress is required to provide funding for mandates whose incurred cost passes a certain threshold. However, Congress has violated their own law on numerous occasions since, further emphasizing the dire consequences of arbitrary power.

Conclusion

Who is to blame for this overwhelming web of power that is suffocating the very soul of the Constitution? Everything about this convoluted and unhealthy relationship between the states and the federal government is against the makeup of the Constitution.

If you need a refresher of federal power, please click here to read this article. Keep in mind, the federal government was created to bring about order and unity to a disorderly union. That was it. All relevant governing was left to the states because the founders trusted the states to take care of individual state problems in a way the national government could not.

We’ve all but abandoned that premise.

Again, I ask. Who is to blame for this? The state governments? The federal government? The courts? It would be easy to assign blame to all of these different institutions. They are, after all, the ones doing the actions discussed here. But, who can blame government for wanting more power? Do we not all know that those in power are going to try and get more power? Is that not a given? Don’t we know that state governments want to keep their jobs and will do anything to appease their citizenries, even if it means choking on federal funding?

So, to use a bad analogy, we really can’t blame a dog for barking. I mean, he’s a dog, he’s going to bark. If anyone is to blame for a dog barking incessantly, it’s the owners for failing to train the dog correctly.

Let’s think about it then. Who’s been demanding for funding for unconstitutional programs, asking the federal government to fix this problem and that problem, punishing state government for refusing federal money, asking for more civil liberties and the laws that come with them and an endless stream of other things… ?

Who’s truly to blame for this predicament we’re in today?

I really shouldn’t need to give the answer.

The Liberty Belle

9 thoughts on “Unfunded Mandates, Grants, and the Power of the Federal Government to Strong Arm the States”

  1. Bob Manderville

    Your writing is always informative but this is a remarkable account of how we digressed from where the founding fathers imagined they wanted us to be. When lumped with the administrative state and entitlement reform you get an idea of the struggle ahead of us. Great piece !

  2. This entire article comes down to the famous Rothchilds quote: “Give me control of a nations money and I care not who makes its laws.” As anyone who reads The Liberty Belle knows, when our founders were alive and walking the earth there was no Federal Reserve. The Fed change everything. Our founders NEVER would have allowed a central bank.

  3. You got it Lee. Just like troubleshooting a noisy car. Follow the knocking and you’ll find the problem. In this game of the world, if you want to find the problem, just follow the money!

  4. The latest Covid Bill bill passed last week explicitly bars states from cutting taxes. States “shall not use the funds,” the bill says, “to either directly or indirectly [our emphasis] offset a reduction in the net tax revenue” that results “from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase.” I can’t stomach the thought that the democrats are now openly promoting labor Unions but are also protecting Blue States from losing businesses and population to Red States where they can enjoy lower taxes and more freedoms.

    Christin. How do you feel about this new twist in our rights and how do we now defend ourselves?

    1. C. McMasters Ph.D.

      Wow, thanks for clueing me in about this. I’ll have to look into it more but it sounds like more of the same, federal overreach into the state arenas. So, the federal government cannot direct states how to handle their own taxation. That’s not within their Constitutional realm of power. I think one of the most effective things we can do is encourage and embolden our state legislators to fight for the power they already have over their own states. They do not have to follow a federal mandate that is outside of the Constitution and they need to know that we’ll support them in that endeavor. They’re afraid to disobey the federal government because they’re afraid we’ll punish them for it. If they know they have our support, they will be emboldened to act accordingly. — My two-cents pre-research. 🙂

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