Debt ceiling clash should push states to rely less on federal money
Republicans in Congress seem to be channeling their inner Dave Ramsey and embracing his crazy idea that you shouldn’t spend more than you take in. This isn’t the first time Americans have seen this show, and yet our national debt is now greater than $31 trillion dollars.
Clearly, the crowd that adheres to Ramsey’s “debt is dumb” mantra is losing out to the “debt is a lot easier and more fun” crowd.
Whether this Congress will reach a deal to cut spending is anyone’s guess at this point. If past performance is any indication of future results, then they are likely to once again kick this worn out, dented can down the road that leads to an inevitable cliff.
But what would it look like if Congress decided that saddling future generations with an unbearable amount of debt isn’t ideal, and that the government should start living within its means? This may seem like a far-fetched fantasy, but with our military shooting down UFOs, who knows? Perhaps anything is possible these days.
As much as President Biden wants to scare voters, especially seniors who conveniently vote in large numbers, Congress is not going to cut Social Security benefits. Republicans and Democrats alike understand the dire political consequences of touching entitlement programs. Military spending attracts broad support on both sides of the aisle, so don’t bet on any force reductions or base closings any time soon.
With entitlement and defense spending off-limits, who is likely to face the brunt of any federal spending cuts?
The short answer: the 50 states of this great nation.
When I was a state representative in Michigan, if we had to reduce spending, cutting revenue sharing with local governments was always at the top of the list. And quite frankly, it made a lot of political sense.
Instead of either cutting services or raising taxes — thus enraging their constituents in the process — state legislators would opt to cut off the flow of money to local governments. This shifts the burden and the blame to local elected officials, who then have to raise taxes or cut services. It’s less damaging politically to anger a handful of local elected officials than the vast majority of your voters.
The states should fully expect the federal government to adopt that same mindset. And it’s hard to blame them. These last few years have seen an unprecedented amount of federal dollars going to states. That’s a major problem for anyone who likes having 50 independent laboratories of democracy.
Currently, federal money accounts for 36% of the average state budget. At its current rate of growth, it could reach 50% by 2046. At that point, the states would no longer be independent, but mere pawns of Washington, completely beholden to the whims of a dysfunctional and out-of-touch federal behemoth.
If Uncle Sam decides to stop writing them checks, states will find themselves in a panic at best and an emergency at worst.
The debt ceiling debate needs to be a wake-up call for the states. This doesn’t mean that they need to reject every federal dollar tomorrow, but there should be a serious discussion within state capitols on reducing their reliance on all that “free” money from Washington, D.C. Tying the future of your state to the federal government is both a gamble that Congress will always be there for you and an abdication of your state’s autonomy.
The talking heads may be watching Congress, but Americans should turn their focus to their respective state legislatures and demand a plan to reduce their reliance on Uncle Sam’s greenbacks.
Don’t hold your breath waiting on Congress to cut spending. But you would be just as foolish to hang the fate of your state on the everlasting generosity of the federal government.
Steven Johnson is the Center for Practical Federalism Fellow at State Policy Network.