I’m a fiscally conservative North Carolinian — and I think state taxes should be significantly higher.
No, I haven’t lost my head, or my spine. And while I’m a committed supply-sider, I’m not referring here to projected revenues from a fast-growing economy.
I truly mean North Carolina ought to levy higher state taxes. But only if federal taxes go down by at least as much. That is, I believe large swaths of the federal budget represent an illegal use of the tax and spending powers granted to Congress by Article 1, Section 8 of the United States Constitution. The programs in question provide for neither “the common defense” nor the “general welfare.”
What we call “welfare” spending is a prime example of the problem. When the constitution was drafted and ratified in the 18th century, the prevailing public understanding of the phrase “general welfare” was that it strictly limited the fiscal authority of Congress. As James Madison later put it, the phrase referred to “general and national,” not “local or state” benefit. It was certainly never meant to describe a program giving private individuals money, shelter, food, or other direct benefits.
As originally written, then, the constitution allowed Congress to fund a road or port facility if its main purpose was military, for example, but not if it was to facilitate commerce. Madison and other constitutionally minded presidents repeatedly vetoed bills that violated this principle.
The principle applies only to the federal government, however. Most state and local governments, including those here in North Carolina, operate under no such constitutional limitation. They enjoy a broad “police power” that Washington lacks — a power not just to enact civil and criminal statutes and enforce them but also to levy taxes to fund a wide variety of expenditures.
In other words, regardless of whether you think government should provide a safety net of cash and non-cash benefits, or how such a system should be designed and administered, you ought to be addressing your arguments to governors, state legislators, county commissioners, and the like, not to presidents or federal judges or members of Congress. State and local officials ought to be at least the primary decisionmakers, if not the sole decisionmakers, when it comes to welfare programs.
That’s what the federal constitution requires, properly understood. When during the 20th century progressives argued public pensions for single mothers and the elderly, unemployment compensation, and other welfare programs should be provided by the federal government, they should have used the amendment process to ask the American people to revise Article 1. Instead, progressives ignored the constitution, enacted whatever they wanted, and then reshaped the federal judiciary until it became sufficiently deferential to federal power.
Their gambit worked. Before the 1930s, most federal spending went to the current armed forces, payments to veterans of prior wars, and payments on federal debts that were overwhelmingly incurred during those wars. Today, entitlements and welfare programs comprise most of the (vastly larger) federal budget.
I’m enough of a realist to concede there’s no way to cram the genie back into the bottle. But the current Washington-dominated safety net is unaffordable, unaccountable, and unconscionably destructive of families and the work ethic. In a new book, American Enterprise Institute senior fellows Angele Rachidi, Matt Weidinger, and Scott Winship describe a creative way to strike a better balance between the federal government and the states.
They propose to phase in a 50%-50% match for some $300 billion worth of safety-net programs other than Social Security, Medicare, and Medicaid. States would shoulder more fiscal responsibility for such functions as cash welfare, nutrition assistance, and housing subsidies — but they would also receive vastly more authority to reshape and repackage the programs, along with financial incentives to move families off public assistance altogether (because doing so would count toward a state’s matching requirement).
Such a strategy would make American government as a whole smaller as well as more effective. I’d take that deal in a heartbeat.