President’s Letter: Independence from DC

With a $14 trillion debt and a $1.3 trillion deficit threatening to bankrupt the federal government, the nation’s attention is focused on Washington DC. But it’s vital that we understand one thing about what’s happening in the nation’s capitol: If the federal government finally does reach the point of financial ruin, South Carolina will be right there with it. Our state accepts massive amounts of federal cash every year, and so we’ll have no immunity from DC’s insolvency.

We’d all like to fix what’s wrong with Washington. We’d like to cut spending, reform entitlements, and get federal bureaucrats out of the private sector. The truth is, though, there’s really only one way we can have a direct and powerful effect on federal spending: we can kick our state’s addiction to federal dollars. And to do that, we have to hold our state lawmakers responsible. Remember: it’s State House politicians who request, accept, and spend federal dollars.

Most South Carolinians, unfortunately, have no idea how much federal money our state consumes in a typical year. State lawmakers play shell games with federal funding, making it extremely difficult for taxpayers to figure out how much of a state agency’s budget consists of funds from Washington. At the Policy Council, it’s our job to know exactly how much every state agency and program depends on the federal government. Unfortunately, legislators and state bureaucrats have made our budget so opaque and convoluted that average citizens simply don’t have the time or resources to figure it out.

Here’s what we know. In 2011, our state government accepted $8.6 billion from the federal government – that’s more than one third of our entire state budget.

It’s important to realize that Washington doesn’t force those federal dollars into our state budget. The feds can make money available, but they can’t make us take it. State agency heads apply for it. Lawmakers approve it in the state budget process. Lawmakers even change our laws in order to “qualify” the state for federal handouts.

And that money isn’t free. Every time we take federal dollars, the federal government imposes new guidelines and mandates and South Carolina loses a little bit more of its power to control the costs of government. The result? We’re no longer in a position to reform our worst-in-the-nation education system because the federal government dictates how we spend the millions upon millions it pours into our system. We’re not in a position to make the state Medicaid program solvent for the simple reason that the federal government, which provides matching funding for the program, won’t let us. And so on.

So who’s responsible? It’s not the President, and it’s not “the Washington politicians in Congress,” as the Speaker of the South Carolina House recently tried to claim. The ones responsible for South Carolina’s dependency on federal money are our state lawmakers. As Senator Tom Davis pointed out in an op-ed recently, “only state officials have the ability to request and authorize the spending of federal dollars, and new state programs are routinely created to ‘draw down’ federal money even though multiple ‘strings’ are attached.”

Over the next year, you’ll hear more from the Policy Council about how South Carolinians can push back against federal dependency. If we’re going to make South Carolina the freest state in the nation, we’ve got to start by cutting the state’s addiction to DC dollars.

The states created the federal government – not the other way around. It’s time our lawmakers started acting like it.

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