California’s behavior today is reminiscent of the course charted by South Carolina in the nullification crisis of 1832.
The Washington Post reports that federal-state plans for a high-speed train connecting San Francisco with Los Angles and points in-between may never come off the ground. In the face of public resistance, the state may have to decline some $3.5 billion in federal “stimulus” funds dedicated to an initial segment of the line, connecting the thriving metropolises of Bakersfield and Merced. We may be witnessing an outbreak of fiscal and institutional sanity.
Federal funding programs replicate, on a daily basis and an increasingly alarming scale, a debility that Alexander Hamilton identified as a constitutional problem. State officials, he wrote in Federalist 1, will seek to maximize to “the power, emolument, and consequence of the offices they hold under the state establishments.” Officials’ time horizon extends over their expected tenure (at most, their lifetimes); thus, they would never support a Constitution that is calculated to produce long-term collective gains. They would have to be beaten, as mercifully they were.
Federal grants programs systematically exploit state officials’ constricted time horizon for the expansion of government at all levels. So long as federal grants promise immediate electoral gains, state officials will discount even ruinous long-term costs to zero: “Take the money and run” (often, for higher office) is the rational course of action. From the smallest earmark to the Medicaid monster (which consumes over 20 percent of states’ budgets), our entire fiscal federalism operates on this principle.
California Governor Jerry Brown is still committed to the high-speed train fantasy. However, his failure to explain where the estimated $100 billion for the project might come from has generated public resistance. California seems bound to do what Ohio, Wisconsin, and Florida have already done: say “no” to the federal funds.
This epidemic of good sense has an obvious source: unsustainable debt levels at all levels of government—in no small measure, a consequence and legacy cost of federal transfer programs—have produced a more realistic calculus. The issuance of yet more state debt tends to alarm voters, and assurances that the feds will agree to make up any future shortfalls or even make good on their commitment produces guffaws: they don’t have the money.
Our officials have driven fiscal federalism into a wall. A few have begun to walk away from the wreck, and that’s a start. What the country needs is a stampede.