A reckoning in the states
The latest issue of American Habits looks at fiscal federalism through the lens of several states. When I started thinking deeper about the level of federal dependency at the state level today, a symbolic image came to mind: Soviet satellites from the Cold War era. Anybody familiar with 20th-century history knows the satellite states were stale and corrupted but were teeming with people who longed to spark a renaissance of freedom. I used the imagery as a backdrop to write a piece in The Hill, calling on states to begin cutting the cord from Washington.
As Washington continues its reckless spending spree, the states are allowing themselves to be pulled down in the slop, too. Will they keep tethering themselves to an unsustainable and risky funding source, or will they reclaim a principled federalism, one that empowers them to chart their own course? Just as pressing is this question: are the states true advocates for reform, or have they become another obstacle to fixing our broken national government?
Our first interview is with Meghan Portfolio of the Yankee Institute who offers us an overview of Connecticut. Portfolio points out that on paper there are a lot of positives in Connecticut, particularly given they are less reliant on federal funds than most other states. “On paper, we’re not so bad. Our rainy-day fund is one of the best in the country,” she says. She delves into how straying off that path and busting through the state’s spending caps has real consequences.
American Habits also talked with Woody White given his breadth of experience in serving at the local and state governmental levels in North Carolina. White implores lawmakers to stop being “potted plants” but strive to be proactive and courageous in their efforts at reform.
Staying with North Carolina, Brian Balfour of the John Locke Foundation writes candidly about what real fiscal discipline requires in his state. I’ve worked with Balfour for several years, and in my mind, he’s one of the very best at distilling budget and spending issues out there today.
Over in Missouri, Elias Tsapelas of the Show-Me Institute details how Missouri’s growing reliance on federal funds is fueling unsustainable budgets and eroding their state sovereignty.
Reeve Bull, director of Virginia’s Office of Regulatory Management, makes the case for state-level REINS Act initiatives to help revive fiscal discipline and greater government accountability through legislative oversight.
Will states keep clinging to a broken fiscal lifeline, or reclaim their independence?
Sam Aaron of the South Carolina Policy Council addresses why oversight committees and state-level DOGE efforts can be vital in getting control of budgets, but a need to empower them to make real spending reforms is a must. “Recommendations are helpful, but if taxpayers are being asked to prop up an agency to identify inefficiencies and streamline regulations,” writes Aaron, “then lawmakers must be prepared to act on those recommendations.”
John Hendrickson of Iowans for Tax Relief calls on lawmakers to reduce reliance on federal funds while embracing a renewed commitment to constitutional federalism such as adopting contingency budget plans like Utah. Hendrickson also offers a profile of President Calvin Coolidge’s commitment to federalism and his philosophy of limited government. Coolidge’s relevancy will only expand as America strays from the enduring principles that he preached as a civic educator throughout his political career.
I offer a short essay on our federal debt that ties this issue together with the fiscal nightmare at the federal level. Not only has our federal spending careened out of control but the public urgency has increasingly faded as debt skyrockets. Washington’s dysfunction makes one thing unmistakably clear: it’s time for the states to step up and take the lead in restoring fiscal responsibility.
Finally, while there are plenty of stats and numbers in this issue, the larger call should remind us that this issue ultimately points us to the inheritance given to us by our founders, which is the American habit of self-governance. It’s a call to recover not only our fiscal sanity but the deeper civic virtue that once anchored our republic.
