Federalism and Intergovernmental Funds

¶ … Congress of the United States has the power to lay and collect taxes pursuant only to Article 1, Section 8, clause 1 and Article 1, Section 9, clauses 4 and 5, and Article XVI of the United States Constitution. And, the Tenth Amendment of the United States Constitution limits the scope of federal powers. However, the federal government has devised a way to distribute federal funds to state and local governments in such a way that circumvents the Constitution for its own purposes.

Article 1, Section 8, Clause 1 of the United States Constitution states that: The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States." It's difficult to imagine how a grant to an individual local or state government is applicable to the welfare of the entire country.

Individuals in one region of the country often receive federal funds that benefit the residents of another state who have opposing needs and political leanings. Also, the federal government is indirectly violating the intent of the Constitution by distributing federal taxes to local and state governments.

For example, Article XVI of the Constitution says that: The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration." While the government does not lay and collect taxes that breach these requirements, it certainly does ignore these restrictions in the distribution of federal funds. Thus, the federal government is really achieving the same set of objectives that the Constitution tried to prevent.

The Tenth Amendment to the United States Constitution maintains that "The powers not delegated to the United States by the Constitution, or prohibited by it to the States, are reserved to the States respectively, or to the people." In other words, the Tenth Amendment defines the total scope of federal power as being that specifically stated in the United States Constitution and no more.

The federal government allocates block grants to states that are devoted to general purpose with few restrictions, but it also gives out categorical grants with specific purposes and strings attached. These requirements of compliance to some federal scheme hold huge potential to extend the power of the federal government beyond the powers granted in the Constitution. It's ludicrous to tax individuals residing in states and then to send the money back to the local and state governments labeled as federal funds.

First, local and state governments are in a better position to understand and respond to their own budgetary needs without any federal government intervention. Secondly, local and state governments have to waste valuable resources in lobbying efforts to obtain the federal resources.

Thirdly, the local and state governments do not run as efficiently as they should because the funds they receive are viewed as "free money." There's no perceived local political penalty for obtaining and spending the funds because the local and state governments are not viewed by most citizens as being responsible for federal income tax rates. And, involving the federal government in the allocation of local and state funds only bloats the bureaucracy of local, state, and federal governments.

Returning control back to local and state governments is highly desirable and would offer the following advantages: Diverse localities and states provide real choices to U.S. citizens Promotes competition across localities and states Revitalizes local and state government - governments only improve if the stakes are high Grassroots problem solving - involves local communities,.