Trickle-Down Stimulus Funds

The Washington Post has a lengthy article today about how, "as tens of billions of dollars in stimulus funds begin to flow across the country, states and federal agencies are gripped by disputes over whether the money is being used in ways that violate the letter or spirit of the legislation."

For example, Kansas is considering saving some of the state funds, even though such a use may not stimulate the economy. Texas is spending a tenth of its transportation funding on a highway loop around Houston, "despite criticism that the project goes against President Obama's call to move away from oil dependence."

Kentucky is planning to use the money to balance its budget. However, critics in Kentucky are (amusingly) angry that the funds won't be used for projects near and dear to their hearts. (As if the money the state spent this year THAT IT DID NOT HAVE isn't sufficient.)

The Washington Post article, predictably, leans towards chastising the state officials for potentially straying the slightest iota from the intent of the nonspecific block grants in the legislation. I'm sure many people will agree, and declare that any deviation from what the master architects created will dilute the impact of the stimulus.

I have a different take -- that federalism might actually be functioning as intended. Though most people remember the powers separated in the federal government (executive, legislative, and judicial branches), the Constitution includes another separation-of-powers division that, sadly, is becoming more of an unfair contest every year: the separation of powers between the national and state governments, as specifically articulated in Article I, Section 10 and the Tenth Amendment (my favorite amendment, by the way).

There is an organizing principle in Catholic social thought called "subsidiarity," which states that, in the words of David A. Bosnich, "Nothing should be done by a larger and more complex organization which can be done as well by a smaller and simpler organization."

In the context of political science, the smaller unit of government, the more closely it approximates a group of people acting consensually. For President Obama's stimulus bill, state officials -- who are more intimately familiar with their ballooning budgets and local needs than the cast of characters in Washington, DC who are determined to control the means of production -- are choosing to disburse the federal funds to best effect. Perhaps their decisions will be better than the feds', perhaps they won't.

I have zero sympathy for the states, which, due to the legal requirement to balance their budgets each year accords them barely more fiscal discipline than the federal government. However, I must confess a sneaking suspicion that any actions which pester those greedily snapping at stimulus funds must be doing something right.

Because what is really infuriating those in the federal government is that they no longer have complete control over who gets the money.