The Republican attorneys general of 21 states recently called one aspect of the new coronavirus recovery bill “an unprecedented and unconstitutional intrusion on the separate sovereignty of the States through federal usurpation.” In fact, they said it was “the greatest attempted invasion of state sovereignty by Congress in the history of our Republic.” Ohio’s attorney general then filed suit against the federal government.
What was this outlandish violation? It was a condition placed on a provision granting state and local governments a substantial amount of new fiscal relief — $350 billion — to help offset the costs of responding to the pandemic and related economic crisis. The money is supposed to be used to make schools safe to reopen, provide hazard pay to exposed front-line workers and stave off evictions and foreclosures. But the attorneys general are outraged that Congress has stipulated that fiscal relief money not go instead to offset state tax cuts (whether “directly or indirectly”). This kind of restriction might seem like common sense to some people: Just as Congress does not allow states to spend federal Medicaid dollars building marinas in the districts of powerful state legislators, so it is insisting that this aid money be used for its intended purpose: to help people.
To be clear, if states want to enact tax cuts, they can — and they may still receive federal aid. But in that case, the law reduces the amount of aid by the amount of the state tax cut. The logic is straightforward: If a state has sufficient revenue that it can afford a tax cut, it does not need more federal money.
Unsurprisingly, the states’ argument is beyond flimsy. Nothing in the Constitution entitles the states to transfers of federal funds. (Indeed, congressional Republicans and President Donald Trump spent the final nine months of last year arguing that no such aid was necessary.) And when Congress does grant aid, nothing in the Constitution prohibits legislators from imposing significant conditions on its use.
What’s more, the attorneys general are defending a very strange form of state “sovereignty.” If Ohio’s suit were successful — an unlikely prospect — the result would be that it would end up shifting responsibility for paying for essential local programs from the state itself to the federal government. That’s hardly a recipe for state independence.
Our current system of “fiscal federalism” arose during the New Deal. With states’ finances on the brink of collapse (because high unemployment produced less tax revenue), the federal government offered funding to maintain a range of essential functions, from caring for destitute seniors to building and maintaining infrastructure. The Supreme Court repeatedly rejected claims that providing that aid exceeded the federal government’s powers. It also upheld federal legislation that sought to influence state tax policy with a fairly heavy hand: To get states to enact their own employer taxes to support unemployment compensation systems, Congress imposed a substantial federal tax on employers in states that refused to do so.
Describing this history, conservative Chief Justice William H. Rehnquist wrote — in a 1987 case involving whether the government could withhold federal highway money from states that did not raise the drinking age to 21 — that “Congress may attach conditions on the receipt of federal funds, and has repeatedly employed the power to further broad policy objectives by conditioning receipt of federal moneys upon compliance by the recipient with federal statutory and administrative directives.” In fact, Congress can pressure states to regulate citizens’ behavior in ways that it could not do directly itself. (The chief justice wrote that “the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution.”)
The court has imposed some limits on the conditions Congress may impose on grants to states. For example, in National Federation of Independent Businesses vs. Sebelius (2012), it said Congress could not withdraw Medicaid funding if a state failed to expand Medicaid to provide health care to more low-income people. That would be coercive, the court concluded — a “gun to the head,” Chief Justice John G. Roberts Jr. memorably wrote — because states had come to rely so heavily on that money. But the court also said Congress could have conditioned a new disbursement of money on such a change in policy. Clearly, the condition that the attorneys general are complaining about today applies to a new stream of money.
The court has set out some guidelines for how conditional grants should work. The conditions must be readily apparent on the face of the legislation, so that states can decide whether to accept the grant. (The fact that intense controversy arose mere days after the recovery plan’s signing shows how transparent the condition is.) The court also insists that the condition be logically related to the purpose of the funding. In the case involving highway funding and the minimum drinking age, the link was highway safety. In the present instance, the tie between the purpose and the condition could hardly be clearer. Congress is saying: Use the money for pandemic relief, period.
Constitutionality aside, it’s worth examining the rhetoric of federalism and state sovereignty at play here. Republicans are not saying that their states should be left alone. They argue that they should have the right to take federal money — intended for other purposes — and shift more of the burden of supporting basic state services onto Washington. It is relevant, in this context, that 20 of the 21 attorneys general lodging this objection serve a state that is already a net recipient of federal funds (Utah being the lone exception).
Far from strong, independent sovereigns, the states making this case sound more like petulant adolescents who demand a raise in their allowances — but then quit their paper routes and announce they won’t be raking the leaves. The current Supreme Court is certainly more conservative than its predecessors, but it’s hard to imagine it finding such a stance terribly attractive. The rest of us should scorn this argument as well.