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Policy: Entitlements

Food stamps: A case study on the need for competitive federalism

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Politics,Beltway Confidential,Conn Carroll,Agriculture,Entitlements

As the Republican Party struggles to redefine itself after two consecutive presidential election defeats, a group of scholars is pressing the conservative movement to rethink how it thinks about federalism.

The usual refrain among Republicans is that Congress should always be looking to “return power to the states.” But as George Mason University law professor Michael Greve explains in his book, The Upside-Down Constitution, the manner in which the federal government empowers states matters.

Through “competitive federalism,” states are free to tax and regulate their own citizens as they see fit, and citizens and businesses can then move between the states. This is Greve’s Constitutional ideal.

But under “cartel federalism,” which is what most of our federalist system has degenerated into, the federal government taxes everyone and then gives grants to states to perform services as it sees fit. Greve explains just one problem with cartel federalism:

At the fiscal front, the central problem is the flood of transfer programs that encourage states to “experiment” with federal dollars. The most menacing example is Medicaid, which now consumes almost a quarter of state budgets. For the most part, this is not a result of federal coercion or mandates. It is a result of the states’ voluntary decisions to expand Medicaid so as to attract federal matching funds. The states’ perverse incentive to expand their domestic welfare state on our collective nickel—trillions of nickels—is, again, a federalism problem. So is the moral hazard that attends these arrangements that is, the risk that states will spend themselves to the brink of bankruptcy in hopes of a federal bailout. Greece exemplifies that problem; but then, so does Illinois.

But it is not just blue states like Illinois that are cartel federalism bad actors. Consider this story from The Washington Post:

A record 47 million Americans now rely on the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, available for people with annual incomes below about $15,000. The program grew during the economic collapse because 10 million more Americans dropped into poverty. It has continued to expand four years into the recovery because state governments and their partner organizations have become active promoters, creating official “SNAP outreach plans” and hiring hundreds of recruiters like Nerios.

A decade ago, only about half of eligible Americans chose to sign up for food stamps. Now that number is 75 percent.

Rhode Island hosts SNAP-themed bingo games for the elderly. Alabama hands out fliers that read: “Be a patriot. Bring your food stamp money home.”

“Be a patriot. Bring your food stamp money home.” Those two sentences epitomize everything that is bad about cartel federalism.

 

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