Proponents of reducing federal spending to responsible levels often focus on entitlements and military spending, the two largest categories of spending. That’s where the hardest work will be done. But very rarely is it mentioned federal grants and aid to the states and local governments constitute the third-largest spending category.
In 2011, the federal government spent half a trillion dollars on state and local aid, earmarking money for everything from first-responder programs (such as firefighters) to K-12 education.
Aside from the fact state aid helps to run up the debt significantly, as federal spending on state and local programs increases, local control decreases and public accountability becomes more difficult. What school board or teacher wants the federal government to have a significant say in what they must teach or how they should measure results?
Veronique de Rugy, writing in Reason Magazine, likens federal aid to a drug to which every state is addicted:
Grants are not merely a substantial part of the federal budget. They have become like a drug for the states. The federal share of total state spending rose from 25.7 percent in 2001 to 34.1 percent in 2011. State and local governments drink up roughly 80 percent of total federal grant spending, with the remainder going mostly to nonprofit organizations providing services at the state and local levels. In a February 2011 Tax and Budget Bulletin, Chris Edwards of the Cato Institute found that in 2010 the federal government was micromanaging primary education with 109 grant programs costing taxpayers a total of $86.5 billion. Yet under the Constitution, K−12 education is a state and local activity. It was federal funding that allowed states to increase overall spending dramatically during the last two decades, including during the recent economic downturn.
As the Senate today likely votes to approve over $50 billion in federal aid to the northeast in the aftermath of Hurricane Sandy, we will be watching individual members’ votes carefully to see whether they are serious about addressing the national debt crisis in the only way possible: by reducing federal spending.