Commentary: In states vs. federal government, money makes the difference


News item: A group called Invest in America Action says Utah will lose $2.5 billion in federal aid if the Biden Administration’s $2 trillion COVID relief package fails in the U.S. Senate.

I believe (as I’ve written many times) that one of the nation’s biggest problems is that the federal government has gotten too large, too expensive, and is attempting to do far more, in every aspect of society and life, than it is capable of doing effectively. 


Certainly, the national government has a big role to play in our federal system, especially at a time of nationwide crisis — such as the pandemic we’re currently battling.

But, overall, the country would do a lot better if the federal government stuck to its constitutional duties and the states stepped up to take care of things at home.

The founders put in place a number of tools and provisions to safeguard states in the federal system. So it’s worth asking: How did we evolve into this lopsided federal/state relationship where the federal government is dominant and domineering?

I don’t have space in this essay to describe how, over many decades the states have lost a number of important tools allowing them to push back against federal encroachment. But, clearly, the biggest reason states have lost clout is quite simple: Money.

States don’t have the ability to print money. Most of them don’t have the ability (thank goodness) to run up gigantic deficits every year, piling up unbelievable amounts of debt.

So, unlimited money gives the federal government an immense advantage. It can create expensive programs, provide money for nearly everything imaginable, and do it by simply borrowing more money. States can’t compete with that, so they look to the federal government for help. And with federal money comes federal guidelines and regulation, so states end up administering federal programs instead of creating their own programs that might better fit their needs.

Case in point is the current debate over the Biden administration’s gigantic $2 trillion COVID relief package. According to one interest group promoting the legislation, Utah’s share of that could be $2.5 billion for all of the programs involved. That’s a lot of money. If Congress approves the package, it would be foolish for Utah to turn down the money when other states are taking it. Someone else would just get the money and refusing our share wouldn’t reduce deficit spending.

Some parts of the package are, no doubt, justified and needed. But the entire package is a bloated and grotesque example of everything that’s wrong with the federal government. It will lead to more dependence, more consolidation at the federal level, and a lot more debt.

I’m the first to admit that this is not a problem easily solved. I’m not advocating that the state and various other entities, including individuals and businesses, decline the money.

But we ought to at least acknowledge what’s happening and look for some long-term solutions. I believe there are ways to reduce state dependence on federal money and programs. It will take a long time. It will require some courage and innovation. I’ll discuss some of these ideas in future columns.