Reviving competitive federalism by reducing federal intervention would help heal political divisions. Large majorities of Americans prefer state rather than federal control over education, housing, transportation, welfare, healthcare, and other activities.218 Americans think that state and local governments provide more competent service than the federal government.219 And when asked which level of government gives them the best value for their tax dollars, two‐​thirds of people say state and local governments and just one‐​third say the federal government.

For these reasons, there has been a shift in public opinion in recent decades in favor of decentralizing government power.220 Americans are in favor of reviving federalism, but the hard part is convincing federal policymakers to start returning power to the states and private sector.

Conclusions

The $750 billion aid system is a roundabout way to fund state and local activities that the deficit‐​ridden federal government cannot afford. The aid system does not deliver efficient public services, but rather delivers bureaucracy, overspending, and federal micromanagement. It undermines policy diversity and political accountability.

The states are entirely capable of funding and operating their own programs. President Reagan’s 1987 executive order on federalism noted, “In most areas of governmental concern, the states uniquely possess the constitutional authority, the resources, and the competence to discern the sentiments of the people and to govern accordingly.”221

President Trump’s most recent budget proposed small cuts to federal aid. But that proposed reform provoked a prominent liberal think tank to issue a study defending aid. The study’s first sentence was, “Federal funds that go to state and local governments as grants help finance critical programs and services on which residents of every state rely.”222 But if aid funds “critical” programs, then federal cuts would prompt the states to fill the void with their own programs, and those programs would likely be superior for the reasons discussed.

It is understandable that federal policymakers are eager to try and fix the nation’s many ills. But they should appreciate that the states can handle domestic policies by themselves and that federal intervention is often counterproductive. The optimism of previous decades about the ability of federal aid programs to efficiently solve state and local problems was misguided.

Congress should work with the Trump administration to identify and eliminate low‐​value federal aid programs. Over the longer run, the aid system should be fully phased out. Americans want more responsive and effective government, and they can get it by devolving power to the states and reviving competitive federalism.

Notes

1. Counts of the number of aid‐​to‐​state programs by various sources are somewhat rough. Figure 1 uses counts from the Advisory Commission on Intergovernmental Relations for 1905–1975, the Office of Management and Budget for 1980–2005, the Congressional Research Service for 2010–2015, and my own count for 2018 based on the OMB method. See endnote 11. Emma Wei assisted with the 2018 count.

2. For the early history of aid, see Chris Edwards, “Federal Aid to the States: Historical Cause of Government Growth and Bureaucracy,” Cato Institute Policy Analysis no. 593, May 22, 2007. And see Paul H. Douglas, “The Development of a System of Federal Grants‐​in‐​Aid I,” Political Science Quarterly 35, no. 2 (June 1920): 255–71; Austin F. Macdonald, Federal Aid: A Study of the American Subsidy System (New York: Thomas Y. Crowell Company, 1928); and Sam J. Ervin, Jr., “Federalism and Federal Grants‐​In‐​Aid,” North Carolina Law Review 43, no. 3 (1965): 487–501.

3. Robert P. Inman, “Federal Assistance and Local Services in the United States: The Evolution of a New Federalist Fiscal Order,” National Bureau of Economic Research Working Paper no. 2283, June 1987. In explaining the growth in aid to states, Inman says, “Congress as an institution for fiscal policy underwent a major transformation in structure from 1969 to 1972, evolving from a legislative body dominated by a few major decision‐​makers with firm control over fiscal affairs to a largely decentralized forum of individual deal‐​makers each required to maximize his or her own net gain from legislative decisions.”

4. President Richard Nixon, State of the Union Address, 1971.

5. Memorandum from President Jimmy Carter, September 9, 1977. Quoted in David B. Walker, The Rebirth of Federalism: Slouching toward Washington (New Jersey: Chatham House Publishers, 1995), p. 143.

6. Daniel P. Schwallie, The Impact of Intergovernmental Grants on the Aggregate Public Sector (New York: Quorum Books, 1989), p. 132. There was a shift from the previous view that grants could efficiently solve externalities to the new view that rent‐​seeking, fiscal illusion, and bureaucratic behaviors better explained the structure of intergovernmental grants.

7. ACIR publications are available at https://​dig​i​tal​.library​.unt​.edu/​e​x​p​l​o​r​e​/​c​o​l​l​e​c​t​i​o​n​s​/ACIR.

8. For a discussion of Reagan’s New Federalism, see Editorial Research Reports (CQ Researcher), “Reagan’s New Federalism,” April 3, 1981.

9. The Office of Management and Budget and the Advisory Commission on Intergovernmental Relations have somewhat different historical counts of the number of grants, but in both cases the drop was about one‐​quarter mainly resulting from the Omnibus Budget Reconciliation Act of 1981.

10. Quoted in Kenneth Jost, “The States and Federalism: Should More Power Be Shifted to the States?” CQ Researcher, September 13, 1996.

11. The figure for 2018 is based on my analysis of the Catalog of Federal Domestic Assistance (CFDA), available at https://​beta​.sam​.gov (formerly www​.cfda​.gov). I included programs of type A, B, and C for state, local, and tribal governments, while excluding programs for private‐​sector recipients. Programs with zero obligations were excluded. Emma Wei assisted with the count. Federal aid program counts should be considered rough, and past counts by the ACIR and OMB differed. The Congressional Research Service provided a count for 2017 of 1,319. See Robert Day Dilger, “Federal Grants to State and Local Governments: A Historical Perspective on Contemporary Issues,” Congressional Research Service, R40638, May 7, 2018.

12. This is a fiscal year estimate from the Budget of the U.S. Government, FY2020, Analytical Perspectives (Washington: Government Publishing Office, 2019), p. 232.

13. Aid programs can also be categorized as either categorical grants or block grants. Most are categorical grants, which target a narrow range of activities and include detailed rules for states to follow. By contrast, block grants fund a broader range of activities and give states more flexibility.

14. Budget of the U.S. Government, FY2020, Analytical Perspectives (Washington: Government Publishing Office, 2019), chapter 17.

15. A recent study by a prominent liberal think tank arguing against President Trump’s proposed aid cuts said, “State and local governments do not have the funds to replace the magnitude of funds that could be lost through cuts.” Yet the federal government is running a $900 billion deficit and does not “have the funds” either. See Iris J. Lav and Michael Leachman, “At Risk: Federal Grants to State and Local Governments,” Center on Budget and Policy Priorities, March 13, 2017.

16. Federalism expert John Kincaid notes, “Just as grants create the illusion of free money for state and local taxpayers, federal deficit spending encourages state and local officials to try to shift costs to the federal government because it appears to be costless and because state and local officials face comparatively hard budget constraints in the forms of constitutional or statutory tax, expenditure, and borrowing limits.” John Kincaid, “The Eclipse of Dual Federalism by One‐​Way Cooperation Federalism,” Arizona State Law Journal 49, no. 3 (Fall 2017): 1075. The first book about the new and growing federal aid system published in 1928 captured the political appeal of federal funding: “The voters have clamored loudly for better standards of service—more and better schools, more and better teachers, more and better roads. At the same time they have voiced no less insistently their demand for lower taxes. State legislators … have cast about for new sources of revenue. One of the richest finds has been the federal treasury.” Austin F. Macdonald, Federal Aid: A Study of the American Subsidy System (New York: Thomas Y. Crowell Company, 1928), p. 5.

17. In addition to legal limits on debt issuance, state budgeting is disciplined by credit ratings on state bond debt. Some states have large unfunded obligations in their worker retirement plans, and so they are not fiscal saints. However, state and local debt and unfunded obligations are a smaller problem than federal government debt and unfunded obligations. Also, some states are quite prudent and have very low debt and unfunded obligations.

18. Gordon Tullock, The New Federalist (Vancouver, Canada: The Fraser Institute, 1994), pp. 74, 128.

19. Tullock, The New Federalist, pp. 74, 128.

20. Dino P. Christenson, Douglas L. Kriner, and Andrew Reeves, “All the President’s Senators,” Legislative Studies Quarterly 42, no. 2 (May 2017): 3.

21. For example, Rep. G. K. Butterfield (D-NC) holds annual grants workshops. See https://​but​ter​field​.house​.gov/​s​e​r​v​i​c​e​s​/​g​rants.

22. Advisory Commission on Intergovernmental Relations, “The Federal Role in the Federal System: The Dynamics of Growth,” no. A-86, June 1981, p. 50.

23. Michael S. Greve, “Big Government Federalism,” Federalist Outlook no. 5, American Enterprise Institute, March 2001.

24. James R. Hines, Jr. and Richard H. Thaler, “Anomalies: The Flypaper Effect,” Journal of Economic Perspectives 9, no. 4 (Fall 1995): 217–26. And see Robert P. Inman, “The Flypaper Effect,” National Bureau of Economic Research Working Paper no. 14579, December 2008. And see Jason Sorens, “Vertical Fiscal Gaps and Economic Performance: A Theoretical Review and an Empirical Meta‐​analysis,” Mercatus Center, February 2016. There may be a time dimension to the flypaper effect. That is, grants may initially raise state spending, but over the longer term the stimulus may subside. See Nora Gordon, “Do Federal Grants Boost School Spending? Evidence from Title I,” Journal of Public Economics 88 (2004): 1771–92.

25. Robert P. Inman, “The Flypaper Effect,” National Bureau of Economic Research Working Paper no. 14579, December 2008.

26. Mike Nichols, Federal Grant$tanding: How Federal Grants Are Depriving Us of Our Money, Liberty, and Trust in Government—and What We Can Do about It (Wisconsin: Badger Institute, 2018), p. 49.

27. Shama Gamkhar and Wallace Oates, “Asymmetries in the Response to Increases and Decreases in Intergovernmental Grants: Some Empirical Findings,” National Tax Journal 49, no. 4 (December 1996): 501–12.

28. Robin Rudowitz, “Medicaid Financing: The Basics,” Kaiser Family Foundation, December 2016.

29. With a closed‐​ended grant, the state spending incentive depends on whether spending is below or above the cap amount. If spending is above the cap amount, further increases do not trigger additional funds from Washington.

30. Economists who support federal aid point to two main advantages. They argue that aid may address externalities or spillovers that states may impose on one another and that redistribution is better carried out by the central government. See Wallace E. Oates, “An Essay on Fiscal Federalism,” Journal of Economic Literature 37, no. 3 (September 1999): 1120–49. But to properly address spillover effects, federal planners would need detailed local information that they usually do not have, and they would need to be guided by the public interest, not political pressures. Experience over the past century shows that aid programs are generally not created and designed to address spillovers. Also note that many actual spillovers, such as those relating to interstate water resources, can be handled by interstate compacts rather than federal programs. Regarding redistribution, aid programs do not redistribute resources to low‐​income states in many cases, even if that were a good idea. On these two theoretical advantages of aid, the ACIR concluded in a major 1981 study on federalism, “The record indicates that federal aid programs have never consistently transferred income to the poorest jurisdictions or individuals. Neither do most existing grants accord with the prescriptions of ‘externality theory.’ ” Advisory Commission on Intergovernmental Relations, “The Federal Role in the Federal System: The Dynamics of Growth,” no. A-86, June 1981, p. 94. And see pp. 53, 54. Finally, note that any possible advantages of aid need to be balanced by the disadvantages, as discussed in this study. A thorough, cross‐​country examination of the pros and cons of aid is in Robin Boadway and Anwar Shah, Fiscal Federalism: Principles and Practice of Multiorder Governance (New York: Cambridge University Press, 2009).

31. Pengyu Zhu and Jeffrey R. Brown, “Donor States and Donee States: Investigating Geographic Redistribution of the U.S. Federal‐​Aid Highway Program 1974–2008,” Transportation 40, no. 1 (January 2013): 203–27.

32. Author’s calculation for 2006 to 2015 of the HTF’s highway account. See Federal Highway Administration, “Highway Statistics 2015,” August 2016, Table FE-221B.

33. This is Inman’s interpretation of Knight’s statistical results. Robert P. Inman, “The Flypaper Effect,” National Bureau of Economic Research Working Paper no. 14579, December 2008; and Brian Knight, “Parochial Interests and the Centralized Provision of Local Public Goods,” National Bureau of Economic Research Working Paper no. 9748, June 2003.

34. Some studies that have found political biases in aid allocations include: Dino P. Christenson, Douglas L. Kriner, and Andrew Reeves, “All the President’s Senators: Presidential Copartisans and the Allocation of Federal Grants,” Legislative Studies Quarterly 42, no. 2 (May 2017); Thomas A. Garrett and Russell S. Sobel, “The Political Economy of FEMA Disaster Payments,” Economic Inquiry 41, no. 3 (July 2003): 496–509; David Albouy, “Partisan Representation in Congress and the Geographic Distribution of Federal Funds,” National Bureau of Economic Research Working Paper no. 15224, August 2009; Pengyu Zhu and Jeffrey R. Brown, “Donor States and Donee States: Investigating Geographic Redistribution of the U.S. Federal‐​Aid Highway Program 1974–2008,” Transportation 40, no. 1 (January 2013): 203; and Massimiliano Ferraresi, Gianluca Gucciardi, and Leonzio Rizzi, “The 1974 Budget Act and Federal Grants: Exploring Unintended Consequences of the Status Quo,” May 29, 2018, available at SSRN​.com.

35. Advisory Commission on Intergovernmental Relations, “The Federal Role in the Federal System: The Dynamics of Growth,” no. A-86, June 1981, p. 94.

36. Advisory Commission on Intergovernmental Relations, “The Federal Role in the Federal System,” p. 106.

37. Rainald Borck and Stephanie Owings, “The Political Economy of Intergovernmental Grants,” Regional Science and Urban Economics 33, no. 2 (2003): 140. Similarly, Robert Inman concluded: “Two alternative hypotheses are examined. The first—that aid is allocated to correct market or political failures in the local public economy or to equalize the provision of meritorious local public goods—generally fails to account for the distribution of federal aid over the past thirty years. The second hypothesis—that aid is allocated to ease the fiscal pressure in the state‐​local sector when, and only when, it is in the political interests of congressional representatives to do so—is supported by the recent data.” Robert P. Inman, “Federal Assistance and Local Services in the United States,” National Bureau of Economic Research Working Paper no. 2283, June 1987.

38. Rainald Borck and Stephanie Owings, “The Political Economy of Intergovernmental Grants,” Regional Science and Urban Economics 33, no. 2 (2003): 140.

39. Clifford Winston, “On the Performance of the U.S. Transportation System: Caution Ahead,” Journal of Economic Literature 51, no. 3 (September 2013): 790.

40. Dean E. Murphy, “Security Grants Still Streaming to Rural States,” New York Times, October 12, 2004. And see Chris Edwards, “Terminating the Department of Homeland Security,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, November 1, 2014.

41. Richard Johnson, “Weighing the Costs: The Unequal Impact of Equal State Apportionment in the United States Senate,” Nuffield College, Oxford, October 20, 2012.

42. Adam Liptak, “Smaller States Find Outsize Clout Growing in Senate,” New York Times, March 10, 2013.

43. For example, the number of governments receiving Community Development Block Grants has increased over the years. See Tracy Gordon, “Harnessing the U.S. Intergovernmental Grant System for Place‐​Based Assistance in Recession and Recovery,” Hamilton Project, Brookings Institution, September 2018, p. 8.

44. Quoted in Advisory Commission on Intergovernmental Relations, “The Federal Role in the Federal System: The Dynamics of Growth,” no. A-86, June 1981, p. 50.

45. Cited in K. Lee, “Apportionment of Federal Grants,” CQ Researcher (formerly Editorial Research Reports), October 16, 1946.

46. A 1975 Congressional Budget Office study cited in Advisory Commission on Intergovernmental Relations, “The Federal Role in the Federal System: The Dynamics of Growth,” no. A-86, June 1981, p. 49.

47. Advisory Commission on Intergovernmental Relations, “The Federal Role in the Federal System: The Dynamics of Growth,” no. A-86, June 1981, p. 48.

48. Advisory Commission on Intergovernmental Relations, “The Federal Role in the Federal System,” p. 94.

49. Budget of the U.S. Government, FY2020, Analytical Perspectives (Washington: Government Publishing Office, 2019), Table 17–4.

50. “Community Development Block Grant Program—CBDG,” HUD​.gov.

51. Brett Theodos, Christina Plerhoples Stacy, and Helen Ho, “Taking Stock of the Community Development Block Grant,” Urban Institute, April 2017, pp. 6, 8.

52. Budget of the U.S. Government, Fiscal Year 2020, Major Savings and Reforms (Washington: Government Publishing Office, 2019), p. 50.

53. Joseph Antos, “The Structure of Medicaid,” in The Economics of Medicaid, ed. Jason J. Fichtner (Arlington, VA: Mercatus Center, 2014), p. 9.

54. Quoted in K. Lee, “Apportionment of Federal Grants,” CQ Researcher (formerly Editorial Research Reports), October 16, 1946.

55. Lauren Camera and Lindsey Cook, “Title 1: Rich School Districts Get Millions Meant for Poor Kids,” U.S. News and World Report, June 1, 2016.

56. Victoria L. Elliott, “Stafford Act Declarations 1953–2016: Trends, Analyses, and Implications for Congress,” Congressional Research Service, R42702, August 28, 2017.

57. Since 1970, the estimated number of Americans living in coastal areas designated as Special Flood Hazard Areas by FEMA increased from 10 million to more than 16 million. See Chris Edwards, “The Federal Emergency Management Agency: Floods, Failures, and Federalism,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, December 1, 2014.

58. It is true, however, that the aid system is funded by the graduated or progressive federal income tax.

59. Randal O’Toole, Romance of the Rails: Why the Passenger Trains We Love Are Not the Transportation We Need (Washington: Cato Institute, 2018), Chapter 13.

60. O’Toole, Romance of the Rails, pp. 165, 168, 215.

61. O’Toole, Romance of the Rails, p. 213. And see the transit section of www​.infra​struc​tur​ere​port​card​.org.

62. Brian M. Rosenthal, “The Most Expensive Mile of Subway Track on Earth,” New York Times, December 28, 2017. And see Brian M. Rosenthal, Emma G. Fitzsimmons, and Michael LaForgia, “How Politics and Bad Decisions Starved New York’s Subways,” New York Times, November 18, 2017.

63. Lori Aratani and Katherine Shaver, “Trump Budget Plan Would Deal Blow to Washington Region’s Transit; Purple Line at Risk,” Washington Post, March 16, 2017.

64. O’Toole, Romance of the Rails, p. 209.

65. O’Toole, Romance of the Rails, p. 211.

66. Gustavo Arellano, “Albuquerque’s $133 Million Electric Bus System Is Going Nowhere Fast,” Los Angeles Times, February 17, 2019.

67. Dan Frosch and Paul Overberg, “How a Train through Paradise Turned Into a $9 Billion Debacle,” Wall Street Journal, March 22, 2019.

68. The Housing Act of 1949 launched a large federal effort of urban renewal, slum clearing, and public housing projects.

69. W. B. Dickinson Jr., “Urban Renewal under Fire,” CQ Researcher (formerly Editorial Research Reports), August 21, 1963.

70. Jane Jacobs, The Death and Life of Great American Cities (New York: Random House, 1961), p. 4.

71. James T. Bennett, Corporate Welfare: Crony Capitalism That Enriches the Rich (New Brunswick, NJ: Transaction Publishers, 2015), chapter 5.

72. William A. Fischel, “Before Kelo,” Regulation 28, no. 4 (Winter 2005): 32–35.

73. Quoted in James T. Bennett, Corporate Welfare: Crony Capitalism That Enriches the Rich, p. 134.

74. Quoted in K. Lee, “Apportionment of Federal Grants,” CQ Researcher (formerly Editorial Research Reports), October 16, 1946.

75. Advisory Committee on Intergovernmental Relations, “The Federal Role in the Federal System: The Dynamics of Growth,” December 1980, Introduction. This is the “In Brief” summary volume.

76. Government Accountability Office, “Federal Assistance: Grant System Continues to Be Highly Fragmented,” GAO-03–718T, April 29, 2003.

77. Government Accountability Office, “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue,” GAO-11–318SP, March 2011, p. 42.

78. The statute is 20 U.S.C. § 33. The regulation page count is mentioned in National Education Association, “NEA Assesses Final IDEA Regulations,” http://​www​.nea​.org/​h​o​m​e​/​1​8​9​0​3.htm.

79. U.S. Department of Education, “40th Annual Report to Congress on the Implementation of the Individuals with Disabilities Education Act, 2018,” December 2018.

80. This is HUD’s entire costs of compensation and purchases ratioed for the share of HUD outlays that was for state aid in 2018. Budget of the U.S. Government, Fiscal Year 2019, Appendix (Washington: Government Publishing Office, 2018).

81. Calculated based on data in Budget of the U.S. Government, Fiscal Year 2019, Appendix (Washington: Government Publishing Office, 2018), p. 159.

82. Calculated based on data in Budget of the U.S. Government, Fiscal Year 2019, Appendix, p. 182.

83. Government Accountability Office, “Federal Disaster Assistance: Improved Criteria Needed to Assess a Jurisdiction’s Capability to Respond and Recover on Its Own,” GAO-12–838, September 2012, p. 41.

84. Paul C. Light, “The True Size of Government,” The Volcker Alliance (website), October 2017.

85. Paul C. Light, “Fact Sheet on the New True Size of Government,” Brookings Institution 2003. And see Paul C. Light, The True Size of Government (Washington: Brookings Institution, 1999), pp. 26–36.

86. From 1960 to 1980, state‐​local spending from federal aid grew rapidly while state‐​local spending from state‐​local own‐​source revenues grew slowly. See Budget of the U.S. Government, Fiscal Year 2019, Historical Tables (Washington: Government Publishing Office, 2018), Table 14.3. Between 1960 and 1980, state‐​local spending from own‐​source revenues increased from 8.4 percent to 9.5 percent of gross domestic product, but state‐​local spending from federal aid jumped from 0.7 percent to 2.4 percent. For employment data, see U.S. Bureau of Economic Analysis, National Income and Product Accounts, Table 6.5B.

87. Government Accountability Office, “Community Development Block Grants: Program Offers Recipients Flexibility but Oversight Can Be Improved,” GAO-06–732, July 2006, p. 14.

88. “Grants and Funding Program Forms,” California Department of Housing and Community Development, hcd​.ca​.gov.

89. Mike Nichols, Federal Grant$tanding: How Federal Grants Are Depriving Us of Our Money, Liberty and Trust in Government—and What We Can Do about It (Wisconsin: Badger Institute, 2018), p. 69.

90. Nichols, Federal Grant$tanding, p. 32.

91. Nichols, Federal Grant$tanding, p. 17.

92. Congressional Budget Office, “Federal Grants to State and Local Governments,” March 2013, p. 31.

93. U.S. Department of Transportation, “U.S. Department of Transportation Secretary Elaine L. Chao Announces $1.5 Billion in BUILD Transportation Grants to Revitalize Infrastructure Nationwide,” December 11, 2018.

94. David Palmer, “Cullman Seeks $14 million Grant for Alabama 157 Widening,” Cullman Times, July 17, 2018.

95. Palmer, “Cullman Seeks $14 Million Grant for Alabama 157 Widening.”

96. Patrick McGuinn, “From No Child Left Behind to the Every Student Succeeds Act: Federalism and the Education Legacy of the Obama Administration,” Publius: The Journal of Federalism 46, no. 3 (2016): 396.

97. For example, California’s application was 606 pages in length and Colorado’s was 762 pages.

98. This program is CFDA 84.351D. Information on it is at https://​inno​va​tion​.ed​.gov.

99. This figure is from a sampling of applications for 2014. Recent award applications are not posted.

100. Government Accountability Office, “Medicaid: Further Action Needed to Expedite Use of National Data for Program Oversight,” GAO-18–70, December 2017.

101. Healthcare provider taxes are a widely criticized example, but there are also other dubious schemes. Regarding provider taxes, see Brian C. Blase, “Medicaid Provider Taxes: The Gimmick That Exposes Flaws with Medicaid’s Financing,” Mercatus Center, February 2016.

102. Government Accountability Office, “School‐​Meals Programs: USDA Has Enhanced Controls, but Additional Verification Could Help Ensure Legitimate Program Access,” GAO-14–262, May 2014, p. 15.

103. Government Accountability Office, “School‐​Meals Programs,” p. 9. A scandal in Chicago public schools made this clear. See Monica Eng and Joel Hood, “School Free‐​Lunch Program Dogged by Abuses at CPS,” Chicago Tribune, January 13, 2012.

104. Eng and Hood, “School Free‐​Lunch Program Dogged by Abuses at CPS.”

105. U.S. Department of Agriculture, Office of Inspector General, “FNS‐​National School Lunch and School Breakfast Programs,” April 2015, p. 4.

106. Chris Edwards and Nicole Kaeding, “Federal Government Cost Overruns,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, September 1, 2015.

107. Patricia Sullivan, “Arlington County to Hire Independent Contractor to Review $1 Million Bus Stop,” Washington Post, June 24, 2013.

108. Chris Edwards, “Update on Arlington’s $1 Million Bus Stop,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, June 26, 2013.

109. Randal O’Toole, Romance of the Rails: Why the Passenger Trains We Love Are Not the Transportation We Need (Washington, DC: Cato Institute, 2018), p. 217.

110. O’Toole, Romance of the Rails, p. 141. See also Randal O’Toole, “Charting Public Transit’s Decline,” Cato Institute Policy Analysis no. 853, November 8, 2018, p. 10.

111. Government Accountability Office, “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue,” GAO-11–318SP, March 2011, p. 48.

112. Eliot Brown, “Complex Design, Political Disputes Send World Trade Center Rail Hub’s Cost Soaring,” Wall Street Journal, September 3, 2014.

113. Robin Boadway and Anwar Shah, Fiscal Federalism: Principles and Practice of Multiorder Governance (New York: Cambridge University Press, 2009), p. 354.

114. David B. Walker, The Rebirth of Federalism: Slouching toward Washington (New Jersey: Chatham House Publishers, 1995), p. 238.

115. John Kincaid, “The Eclipse of Dual Federalism by One‐​Way Cooperation Federalism,” Arizona State Law Journal 49, no. 3 (Fall 2017): p. 1070.

116. James Sherk, “Repealing the Davis‐​Bacon Act Would Save Taxpayers $10.9 Billion,” Heritage Foundation, February 14, 2011.

117. AECOM and Build America Investment Initiative for the Department of the Treasury, “40 Proposed U.S. Transportation and Water Infrastructure Projects of Major Economic Significance,” December 2016, p. 7.

118. Associated General Contractors of Alaska, The Alaska Contractor, Fall 2012, p. 10.

119. National Conference of State Legislatures, “Mandate Monitor,” vol. 6, no. 1, April 1, 2008.

120. Valerie Strauss, “Are States Really Trying to Overcome the Harmful Legacy of No Child Left Behind?,” Washington Post, February 12, 2018.

121. Patrick McGuinn, “From No Child Left Behind to the Every Student Succeeds Act: Federalism and the Education Legacy of the Obama Administration,” Publius: The Journal of Federalism 46, no. 3 (2016): 399.

122. McGuinn, “From No Child Left Behind to the Every Student Succeeds Act,” p. 408.

123. Chris Edwards, “The Federal Emergency Management Agency: Floods, Failures, and Federalism,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, December 1, 2014.

124. Government Accountability Office, “Perspectives on Intergovernmental Policy and Fiscal Relations,” GGD-79–62, June 28, 1979, pp. 2, 9.

125. Milton Friedman, “Why Government Is the Problem,” Hoover Institution Essays in Public Policy no. 39, 1993.

126. Paul C. Light, “A Cascade of Failures: Why Government Fails, and How to Stop It,” Brookings Institution, July 14, 2014.

127. Luke Rosiak, “Many House Members Miss More Than Two‐​Thirds of Their Committee Meetings,” Washington Examiner, September 29, 2014.

128. Quoted in Kenneth Jost, “The States and Federalism: Should More Power Be Shifted to the States?,” CQ Researcher, September 13, 1996.

129. Quoted in Adam Freedman, A Less Perfect Union: The Case for States’ Rights (New York: Broadside Books, 2015), p. 243.

130. Paul H. Douglas, “The Development of a System of Federal Grants‐​in‐​Aid II,” Political Science Quarterly 35, no. 4 (December 1920): 540, 542.

131. Austin F. Macdonald, Federal Aid: A Study of the American Subsidy System (New York: Thomas Y. Crowell Company, 1928), pp. 4, 12.

132. Macdonald, Federal Aid, p. 267.

133. Macdonald, Federal Aid, p. 238.

134. President Calvin Coolidge, State of the Union Address, December 8, 1925.

135. Quoted in George B. Galloway, “Federal Subsidies to the States,” CQ Researcher (formerly Editorial Research Reports), December 13, 1924.

136. James L. Buckley, Saving Congress from Itself: Emancipating the States and Empowering Their People (New York: Encounter Books, 2014), p. xv.

137. Buckley, Saving Congress from Itself, p. xi.

138. Chris Edwards, “The Federal Emergency Management Agency: Floods, Failures, and Federalism,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, December 1, 2014.

139. Steven M. Teles, “Kludgeocracy in America,” National Affairs, Fall 2013.

140. Rebecca Goldstein and Hye Young You, “Cities as Lobbyists,” American Journal of Political Science 61, no. 4 (2017): 864–76. And see Ana Radelat, “State, Local Governments Hire Lobbyists for Influence in DC,” CT Mirror, January 15, 2015. Also see Rick Brundrett, “Millions Spent by S.C. Municipalities on Federal Lobbyists,” The Nerve (website), November 14, 2012.

141. Matt W. Loftis and Jaclyn J. Kettler, “Lobbying from Inside the System: Why Local Governments Pay for Representation in the U.S. Congress,” Political Research Quarterly 68, no. 1 (2014): 194.

142. Management Concepts, for example, offers a couple dozen different courses on aspects of the federal grants process. See www​.man​age​ment​con​cepts​.com.

143. U.S. Economic Development Administration (website), National Economic Development Organizations.

144. Advisory Commission on Intergovernmental Relations, “Fiscal Balance in the American Federal System,” vol. 1, October 1967, pp. 164, 165, 258.

145. Bureau of the Census, Statistical Abstract of the United States (Washington: Government Publishing Office, 2006), Table 415.

146. U.S. Department of Transportation (website), “Metropolitan Planning Organization (MPO) Database.”

147. Government Accountability Office, “Federal Assistance: Grant System Continues to Be Highly Fragmented,” GAO-03–718T, April 29, 2003, pp. 13–14.

148. Economist Wallace Oates notes that even aside from the possibility of interjurisdictional migration, the optimal level of public services will vary from place to place because preferences vary from place to place. But Oates and other economists favoring aid believe that that factor is balanced by other factors favoring centralized provision. Wallace E. Oates, “An Essay on Fiscal Federalism,” Journal of Economic Literature 37, no. 3 (September 1999): 1124.

149. Gordon Tullock, The New Federalist (Vancouver, Canada: Fraser Institute, 1994), p. 119.

150. Exec. Order No. 12612, 52 Fed. Reg. 41685 (October 26, 1987).

151. New State Ice Co. v. Liebmann, 285 U.S. 262 (1932).

152. Adam Freedman, A Less Perfect Union: The Case for States’ Rights (New York: Broadside Books, 2015).

153. Freedman, A Less Perfect Union, p 235.

154. For example, see D. Bradford Hunt, Blueprint for Disaster: The Unraveling of Chicago Public Housing (Chicago: University of Chicago Press, 2009).

155. Randal O’Toole, Romance of the Rails: Why the Passenger Trains We Love Are Not the Transportation We Need (Washington: Cato Institute, 2018).

156. Ari Ashe, “South Carolina to Fill Federal Gap in Charleston Port Deepening Dollars,” Journal of Commerce, June 7, 2018.

157. Liz Segrist, “Charleston Harbor Deepening Project Allocated $17.5 Million in Federal Funding,” Charleston Regional Business Journal, May 25, 2017.

158. For example, see “Delivering Jobs and Driving Growth,” Associated British Ports (website).

159. Chris Edwards, “Privatizing Air Traffic Control,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, April 8, 2016.

160. Chris Edwards, “The Federal Emergency Management Agency: Floods, Failures, and Federalism,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, December 1, 2014.

161. Scott Shane, “After Failures, Government Officials Play Blame Game,” New York Times, September 5, 2005.

162. James F. Miskel, Disaster Response and Homeland Security: What Works, What Doesn’t (Redwood City: Stanford University Press, 2008), p. 6.

163. Rutherford H. Platt, Disasters and Democracy: The Politics of Extreme Natural Events (Washington: Island Press, 1999), p. 277.

164. James W. Fossett, “A Tale of Two Hurricanes: What Does Katrina Tell Us about Sandy?” Nelson A. Rockefeller Institute of Government, January 15, 2013.

165. Dan Frosch and Rebecca Elliott, “Texas Relief Money Caught in Trump Administration Dispute with Puerto Rico,” Wall Street Journal, April 6, 2019.

166. Roger Pilon, “Federalism, Then and Now,” inFocus Quarterly (Washington: Jewish Policy Center, 2015), p. 4.

167. Pilon, “Federalism, Then and Now,” p. 4.

168. James Madison, Federalist no. 51.

169. Exec. Order No. 12612, 52 Fed. Reg. 41685 (October 26, 1987).

170. Greve discusses errors that James Madison made on the issue. He notes that the Constitutional Convention rejected Madison’s proposal of a federal veto on state laws on three occasions, indicating that the Founders wanted to minimize federal government involvement in state and local affairs. Michael S. Greve, Real Federalism: Why It Matters, How It Could Happen (Washington: American Enterprise Institute Press, 1999), pp. 51–57.

171. Greve, Real Federalism, pp. 195–96.

172. Richard P. Nathan, “Updating Theories of American Federalism,” in Intergovernmental Management for the Twenty‐​First Century (Washington: Brookings Institution Press, 2008), pp. 13–25.

173. In an interesting article, Chris Pope quotes a 1961 essay by leftist Canadian academic and future prime minister Pierre Trudeau stating, “Socialists must consider federalism as a positive asset.… The drive towards power must begin with the establishment of bridgeheads … allowing dynamic parties to plant socialist governments in certain provinces, from which the seed of radicalism can slowly spread.” Chris Pope, “Degenerate Federalism,” National Review, May 10, 2018.

174. Wallace Oates quoting Robert Inman and Daniel Rubinfeld in Wallace E. Oates, “An Essay on Fiscal Federalism,” Journal of Economic Literature 37, no. 3 (September 1999): 1138.

175. U.S. Bureau of Economic Analysis, National Income and Product Accounts, Table 3.3, https:apps.bea.govitableindex.cfm.

176. Chung‐​Lae Cho and Deil S. Wright, “Perceptions of Federal Aid Impacts on State Agencies: Patterns, Trends, and Variations across the 20th Century,” Publius: The Journal of Federalism 37, no. 1 (Winter 2007): 111.

177. John Kincaid, “Dynamic De/​Centralization in the United States, 1790–2010,” Publius: The Journal of Federalism 49, no. 1 (Winter 2019): 166–93

178. André Lecours, “Dynamic De/​Centralization in Canada, 1867–2010,” Publius: The Journal of Federalism 49, no. 1 (Winter 2019): 57–83.

179. Chris Edwards, “Did Canada Steal Our Tenth Amendment?,” Cato at Liberty (blog), Cato Institute, October 18, 2011.

180. James L. Buckley, Saving Congress from Itself: Emancipating the States and Empowering Their People (New York: Encounter Books, 2014), xii.

181. Richard A. Epstein and Mario Loyola, “The United State of America,” The Atlantic, July 31, 2014.

182. John Kincaid, “The Eclipse of Dual Federalism by One‐​Way Cooperation Federalism,” Arizona State Law Journal 49, no. 3 (Fall 2017): 1074.

183. Kincaid, “The Eclipse of Dual Federalism by One‐​Way Cooperation Federalism,” p. 1081.

184. The National Association of Highway Engineers wrote the 1916 Federal Aid Road Act, while the American Association of State Highway Officials helped lobby for its passage. See Paul H. Douglas, “The Development of a System of Federal Grants‐​in‐​Aid I,” Political Science Quarterly 35, no. 2 (June 1920): 255–71.

185. Neal McCluskey, “Cutting Federal Aid for K–12 Education,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, April 21, 2016.

186. Quoted in Stanley Kurtz, “The Politics of the Administrative State,” National Review Online, January 8, 2018.

187. The Founders thought that a republican form of government had popular rule and the rule of law, and was not a monarchy. Edwin Meese, Matthew Spalding, and David F. Forte, The Heritage Guide to the Constitution (Washington: Regnery Publishing, 2005), p. 282.

188. Adam Freedman, A Less Perfect Union: The Case for States’ Rights (New York: Broadside Books, 2015), p. 219.

189. Chung‐​Lae Cho and Deil S. Wright, “Perceptions of Federal Aid Impacts on State Agencies: Patterns, Trends, and Variations across the 20th Century,” Publius: The Journal of Federalism 37, no. 1 (Winter 2007).

190. The marble cake metaphor was coined by political scientist Morton Grodzins.

191. Ronald Reagan, “Budget Message of the President,” Budget of the U.S. Government, Fiscal Year 1983 (Washington: Government Publishing Office, February 1982), p. M22.

192. Quoting [Maryland] Farmer. Herbert J. Storing, What the Anti‐​Federalists Were For: The Political Thought of the Opponents of the Constitution (Chicago: University of Chicago Press, 1981), p. 56.

193. James C. Capretta, “A New Safety Net: Medicaid,” American Enterprise Institute, February 2017.

194. James C. Capretta, “Reforming Medicaid,” in The Economics of Medicaid: Assessing the Costs and Consequences, ed. Jason J. Fichtner (Arlington, VA: Mercatus Center, 2014), p. 143.

195. Advisory Commission on Intergovernmental Relations, “The Federal Role in the Federal System: The Dynamics of Growth,” no. A-86, June 1981, p. 95.

196. Steven M. Teles, “Kludgeocracy in America,” National Affairs, no. 17 (Fall 2019): 97–114.

197. Teles, “Kludgeocracy in America.”

198. Teles, “Kludgeocracy in America.”

199. Richard Nathan provides many examples in Richard P. Nathan, “Updating Theories of American Federalism,” in Intergovernmental Management for the Twenty‐​First Century (Washington: Brookings Institution, 2008). Adam Freedman also provides numerous examples in Adam Freedman, A Less Perfect Union: The Case for States’ Rights (New York: Broadside Books, 2015).

200. Robert W. Poole, Jr., Rethinking America’s Highways: A 21st‐​Century Vision for Better Infrastructure (Chicago: University of Chicago Press, 2018), p. 7.

201. Poole, Rethinking America’s Highways, p. 35.

202. Poole, Rethinking America’s Highways, p. 40.

203. Randal O’Toole, Romance of the Rails: Why the Passenger Trains We Love Are Not the Transportation We Need (Washington: Cato Institute, 2018), p. 136.

204. Transportation Research Board–National Research Council, Special Report no. 258, Contracting for Bus and Demand‐​Responsive Transit Services: A Survey of U.S. Practice and Experience (Washington: National Academy Press, 2001), p. 35.

205. Chris Edwards and Robert W. Poole, Jr., “Privatizing U.S. Airports,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, November 28, 2016.

206. Chris Edwards, “Medicaid Reforms,” Down​siz​ing​Gov​ern​ment​.org, Cato Institute, May 1, 2018.

207. Mark Warshawsky, “Mark Warshawsky: Millionaires on Medicaid,” Wall Street Journal, January 6, 2014.

208. Paul H. Douglas, “The Development of a System of Federal Grants‐​in‐​Aid II,” Political Science Quarterly 35, no. 4 (December 1920): p. 523.

209. Rutherford H. Platt, Disasters and Democracy: The Politics of Extreme Natural Events (Washington: Island Press, 1999), p. 91.

210. Quoted in Platt, Disasters and Democracy, p. 58.

211. Jeb Bush, “Think Locally on Relief,” Washington Post, September 30, 2005.

212. Quoted in House of Representatives, Select Bipartisan Committee to Investigate the Preparation for and Response to Hurricane Katrina, “A Failure of Initiative,” February 15, 2006, p. 322.

213. See National Center for Interstate Compacts (website).

214. Pew Research Center, “Public Trust in Government: 1958–2017,” December 14, 2017.

215. Pew Research Center, “Beyond Distrust: How Americans View Their Government,” November 23, 2015.

216. An empirical study found “strong evidence that two aspects of government size—transfer payments and regulatory activity—exhibit persistent long‐​run association with trust in government.” Steven Gordon, John Garen, and J. R. Clark, “The Growth of Government, Trust in Government, and Evidence on Their Coevolution,” John H. Schnatter Institute for the Study of Free Enterprise, June 2017, p. 30.

217. Kincaid, “The Eclipse of Dual Federalism by One‐​Way Cooperation Federalism,” p. 1089.

218. John Samples and Emily Ekins, “Public Attitudes toward Federalism: The Public’s Preference for Renewed Federalism,” Cato Institute Policy Analysis no. 759, September 23, 2014, pp. 3–4.

219. Samples and Ekins, “Public Attitudes toward Federalism,” pp. 21, 23. And see Peter H. Schuck, Why Government Fails So Often: And How It Can Do Better (Princeton: Princeton University Press, 2014), pp. 95–98.

220. Samples and Ekins, “Public Attitudes toward Federalism,” pp. 3–4.

221. Exec. Order No. 12612, 52 Fed. Reg. 41685 (October 26, 1987).

222. Iris J. Lav and Michael Leachman, “At Risk: Federal Grants to State and Local Governments,” Center on Budget and Policy Priorities, March 13, 2017.