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Federal pause: States should reclaim responsibilities
- Details
- Tuesday, 04 February 2025
- Written by John Hood
Reacting a few days ago to President Donald Trump’s brief attempt to suspend payment on a broad swath of federal grants, U.S. Sen. Chuck Schumer warned that “virtually any organization, school, state, police office, county, town or community depends on federal grant money to run its day-to-day operations, and they’re all now in danger.”
North Carolina’s new attorney general, Jeff Jackson joined others in challenging the Trump policy, issued by a U.S. Office of Management & Budget memo on January 27 and withdrawn (sort of) two days later. Jackson called the administration’s “sudden freeze in federal funding” so “sweeping that it could cause widespread and immediate harm across our state — delaying disaster recovery in our western counties, undercutting law enforcement, and affecting children and veterans.”
While it is OMB’s responsibility to ensure that federal grants are authorized by law and properly expended, I won’t defend the administration’s shambolic performance. The memo should have been more clearly worded and its import clearly understood by Trump’s own officials.
Nevertheless, the episode could have a salutary effect — because Schumer and Jackson are largely correct. Federal funds do play a huge role in the day-to-day operations of many state, local, and private agencies. That’s a big problem.
For starters, Washington is careening wildly toward fiscal crisis. We can’t just keep running massive deficits. The ratio of federal debt to gross domestic product is already higher than it’s ever been outside of wartime or the Great Depression. For North Carolina policymakers to expect an uninterrupted flow of (borrowed) federal funds is foolish. At some point, preferably sooner rather than later, Congress and the White House will have to act.
Even if you think they should hike taxes, the proceeds won’t come anywhere close to closing deficits denominated in trillions of dollars. Nor will Washington politicians slash Social Security and Medicare benefits for most seniors — wealthy retirees, don’t be so sure — or defense spending. Indeed, international events will likely compel America to spend vastly more on our military, not less.
That means virtually all other categories of federal expenditure, from housing and infrastructure to education and social services, must shrink. This isn’t ideology. It’s math. Federal funds comprise about a third of North Carolina’s state budget and smaller but significant shares of local budgets. These practices are fiscally unsustainable.
Although the arithmetic case for federal retrenchment is strong, I find another argument more compelling. Washington should never have been funding transportation, housing, education, and social services in the first place. These are state and local responsibilities, not federal ones. The United States Constitution only authorizes Congress to levy taxes and spend money on a specific list of truly national functions.
Past politicians pretended otherwise. They cited passages from Article 1, Section 8 conferring on Congress the power to levy taxes to “provide for the general welfare” and to “make all laws which shall be necessary and proper for carrying into execution” the powers otherwise specified. But these clauses were intended as limitations, not expansions — as secure fetters, not elastic bands. The “specification of particulars” in Section 8, wrote Alexander Hamilton, “evidently excludes all pretension to a general legislative authority, because an affirmative grant of special powers would be absurd as well as useless if a general authority was intended.”
One of the document’s framers, James Madison, explained that the general-welfare language was lifted from the previous Articles of Confederation and intended to limit the new government’s role to purely national functions. “If Congress can do whatever in their discretion can be done by money, and will promote the general welfare,” he wrote, “the government is no longer a limited one possessing enumerated powers, but an indefinite one subject to particular exceptions.”
Under no circumstances should the ordinary operation of state and local government be contingent on federal funding (or borrowing, in this case). North Carolinians should take back these responsibilities, as should our peers elsewhere.
No, it can’t be done overnight. But it must be done.
Editor’s Note: John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy with American history (FolkloreCycle.com).
