American Federalism Put to the Test - Granite Grok

American Federalism Put to the Test

American Federalism

We are about to find out whether American federalism is being put to the test or put to the sword. Illinois Democrats passed a state budget over the weekend.  It kind of makes you wonder why New Hampshire’s legislature is still flubbing around.

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The NH legislature seems to be scratching their collective butts… accomplishing nothing. But that’s Democrat leadership for you. Maybe we should be counting our blessings. If the legislature does nothing, at least they will not deepen the known deficit.

You’re federalized

Interestingly, the Illinois legislature built into their budget billions of dollars in CARES federal funding. Without accepting their assumptions the state will have a gaping deficit (maybe $8.5 Billion). New Hampshire is facing a pretty hefty shortfall too.

The Illinois budget makes an assumption. The $3.5 billion of CARES Act money will be freed up for general spending. For this to be true requires Congress to change the limitations on those funds. They can currently only be spent on expenses directly related to coronavirus.

Illinois’s political gambit is designed to add fuel to Congress debate over a state and local bailout. Illinois has chronically underfunded its pensions. The state is transparently shifting costs from the state to the federal government.

Responsibility is not a Democrat buzz word

Federal dollars should not go toward bailing out state governments. Each state should deal with its own situation as it so chooses. That’s federalism. If Illinois has to file for bankruptcy it will not be the first state to do so. Democrats anticipate the CARES Act funds will be freed up.

Democratic state lawmakers went so far as to include a pay raise for themselves in the budget. Crisis? Not if you are a Democrat legislator. Share the pain? Not if you are a Democrat legislator.

Illinois passed an unbalanced budget. Their budget depends on borrowing and funding from the federal government. The budget as written assumes use of CARES money for non-pandemic expenditures. It also assumes borrowing from the Federal Reserve. Allowing this, the use of CARES Act money for non-virus purposes,  de facto makes Illinois a federally funded satellite of the federal government. It destroys the pretense of state sovereignty.

Adding insult to the injury the legislature gave itself a pay raise while so many are out of work. Democrats in Illinois wrecked the state’s finances. That happened long before the virus. Now they pass a budget, raise their own pay, requiring billions in bailout from the other states.

Conclusion

The Illinois Democrats’ budget is a political gambit. It is an attempt to wreck federalism. It should harden battle lines. Congress should not even consider another stimulus bill. The risk to the fabric of the nation is too high. Illinois want to play chicken. Okay, let them. They are the ones who may wind up as road kill. American federalism is being put to the test.