Federal Grants vs State and Local Control

The following is from the book Challenge to Freedom by Henry M. Wriston, Harper & Brothers Publishers, © 1943. Wriston's biography on the cover states he received his Ph.D. at Harvard; was a professor of history at Wesleyan and lectured at John Hopkins; was president of Lawrence College for 12 years; and had been, at the time of the writing of this book, president of Brown University since 1937. The book is a sequel to a 1941 book, Prepare for Peace! He wrote about the political climate of the times and how freedom was threatened by too much government planning. The following excerpt are from Challenge to Freedom and concern the threat to states' rights posed by the offering and accepting of federal grants.

From the preface of Challenge to Freedom —

These chapters are written under the shield of academic freedom; they do not reflect the views of fellow members of the Faculty or the Corporation of Brown University.

From the chapter entitled "The Unplanned Planners" —

On his (Mr. Roosevelt's) assumption of the presidency, however, he did not reverse the trend toward centralization which he had criticized. Indeed the fresh emphasis upon national planning accelerated it. Many of the new services of the federal government became powerful levers to break down state responsibility and control of local matters.

It is customary for federal agencies to deal with the states through a document known as "the plan." It consists of an outline of the project which must be carried out in the state in accordance with regulations established in Washington. The word "outline" is often a euphemism. The document is commonly very detailed and may consist of two or more stout volumes.

The plan is "implemented" by means of a budget, which often must be developed in great detail, and which the federal bureau can accept, reject, or amend. Frequently the result is a rigid financial framework which admits of little discretion by state or local officers. Since "federal money" is involved, the requirements seem only reasonable. However, as the late Governor of Maryland, Albert C. Ritchie, pointed out, grants of money are an effective leverage:

Through the expenditure of prodigious sums of public money, and through the conditions the government imposes upon the states before they may receive these funds, American self-government is being destroyed before our eyes.

Grants of money are always made with conditions which impair, if they do not destroy, state freedom of action.

The leverage involved in the grant, and the budget based on the "plan," is reinforced by federal inspectors. Usually the title selected is more urbane than the name used here. In its initial stages, at least, language is employed to make supervision palatable. No one would speak of policing the plan; the favorite word, perhaps, is "co-ordinate"; sometimes the federal supervisor is called a consultant, agent, or representative. These federal inspectors may be helpful or they may be arbitrary; they may be really co-operative or arrogant; their attitude depends upon the agency, the temper of its administration, whether the determination to centralize is open or covert, and sometimes merely upon the disposition of the inspector.

There is a further leverage on the states through the audit. When the federal government first granted subsidies to the states, auditing was simple. The state was required merely to show in its own accounts and by its own methods that the money was spent for the general purposes for which it was appropriated. Since those purposes were expressed in broad terms, rather than a detailed "plan", methods could vary from state to state without serious consequences. Now, however, with intricate plans and detailed budgets, with federal funds and "matching" state funds, the audit has become a major enterprise. It also becomes an instrument of detailed control frequently requiring the use of a specific and rigidly prescribed system of accounting quite different from that of the state.

Leverage upon the states can and often does go even further than through direct or indirect control of personnel. Not infrequently local appointments have to be approved in Washington, effectively putting the selection at the center rather than in the state. This control can be concealed by establishing formal standards regarding training and experience. The requirements may be defended on many grounds, though blueprints do not measure a man and often result in the appointment of a mediocre conformist or a servile careerist rather than a brilliant individual. In any event rigid specifications limit local choices and sometimes amount to virtual dictation of personnel.

There is a lever, however, stronger than any of these. Failure of the state to "co-operate" may lead to withdrawal of the grant. This is always embarrassing to local officials, and usually a threat, or even a hint, of withdrawal is enough to bring them into line. For example, half a million dollars were withheld from Rhode Island for a time because a Washington bureau maintained that the civil service regulations of the state were not wholly satisfactory from its point of view. Of course the acceptance of the "co-operative" program is "voluntary," but state and local officials who do not take advantage of an available federal subsidy are open to serious political sniping. The "federal" money comes from taxes levied upon the citizens of the state. If the state does not "co-operate," none of that tax money comes back. It becomes a contribution to other states. Under these circumstances state officers are often tempted to accept grants even with onerous conditions and can readily be disciplined by gestures toward withdrawal.

Nearly all programs of planning start with assurances that there will be no leverage upon the states, but the process advances very rapidly when, under a passion for equalization and an impatience with the slowness of reform within the states, the bureaucracy consciously makes efforts to exert its leverage. Co-operation merges into control. The net effect has been summarized clearly by an able state financial officer, Christopher Del Sesto:

More and more the management and operations of State departments assisted by Federal funds are being taken away from State officials and lodged with Federal officials.

That is quite different from the purpose of the Tenth Amendment! ....

The centralization of responsibility in a bureaucracy atrophies local government. Federal grants of funds, for instance, have tended to induce cities and towns to build schools without reference to population trends, without the care and economy to which they were previously accustomed, and without taking into full account costs of operation after construction. Surely the citizen can understand public works and choose intelligently between having them with higher taxes or going without. Yet public works have come under leverage and local responsibility has been impaired.

Today, as always before, centralization weakens local government. In eighteenth century France, the France of the bureaucrats, local self-government ...

dwindled to extreme weakness. The old names and forms disguised in some degree, but hardly restrained, the action of the central power. By degrees it fashioned the mind of the people until bureaucracy seemed the only natural form of government.

The process of decay, now as then, is gradual but continuous. What starts as "assistance" to the states develops into something quite different. It transpires that the states are not "able" to carry the plan, or that their co-operation is "inadequate." The most common defect is that their "standards" are not equal to the federal standards. On that ground, there is a persistent effort to develop federal control of education; the states do not provide "equal" facilities. By financial pressure through the central government, "standards" can be improved.

Often federal standards are higher; that fact had best be faced. They are higher not because the federal officials are wiser; there is no evidence to support that contention. They are higher precisely because those officers are not close to the people and do not have to persuade them. Several of the states whose standards have been regarded as low have surpluses in their treasuries. It is not entirely lack of funds, but largely lack of public support which makes progress toward higher standards slow. The traditional American way to meet such a situation is to organize educational campaigns to stir up dormant opinion.

In recent years financial leverage has been developed as a substitute for persuasion. Being insulated from the democratic process, being remote from voter control, the central authorities need consider only the technical aspects of the problem. Costs and other factors relevant to local consideration play only a minor role in bureaucratic plans. That became particularly important when, under the principles of deficit finance, outlets for expenditure had to be widely developed in order to spread "buying power."

With no necessity to persuade the local public and no urge to balance the budget, "standards" can be high indeed. It can be conceded, therefore, without any argument whatever, that if higher professional standards alone are the issue, if we want to be governed by experts without any lively concern for the democratic process, then the planners are correct. Federalization should be speeded up. Administrative management should be further expertized. "Whether they like it or not," to borrow again from the enlightened despot of the eighteenth century, the standards of the states should be made better and more equal.

There is, however, another point of view, scorned by the planners with their exclusive concern for standards. It is nonetheless of supreme importance in a democracy. The process now being followed removes government further and further from the control of the citizen. Indeed it seeks to substitute administrative technique for alert citizenship; it sets up efficiency as its justification and destroys local responsibility. In this sense federal planning in its newer phases effectively assaults the concept of alert citizenship. That way lies the decay of democracy and the triumph of the authoritarian state, which is nothing but bureaucracy enthroned and subjected to the leadership of a demagogue or a dictator.

The American tradition is that it is better to advance standards more slowly, if necessary, in order that they may have genuine democratic support. In a democracy expertism should always be under the control of those who hold the purse-strings, the general public. That is possible only with decentralization. The issue of states' rights is not academic; within it lies the core of the issue between democracy and the authoritarian principle.

There is one further aspect of this trend toward centralized direction which has had almost no public attention. Yet, in a major degree, it defeats the possibility of genuine economic democracy through the planned economy. When as much as possible is left to local and state initiative and control, judgments are decentralized. There is, under those circumstances, no point of leverage where a pressure group can work its will by concentrated attack. It must make its point by argument; it can move only a step at a time in each locality. There is opportunity to test its assertions and consider its proposals.

But the process of concentrating everything in Washington supplies a point of leverage which allows pressure to be substituted for argument. It is only since the federal government has undertaken to rationalize our farm economy that pressure groups operating directly on the White House or on Congress can manipulate the parity concept. It is only since the control of manpower has been centralized that all the force of organized labor management can be exercised at one critical point to produce its desired result.

Centralization, far from strengthening the democratic process, makes government vulnerable to pressure group tactics. Not only does this defeat the democratic ideal; it also impairs the assumed "rational" treatment which the planned economy boasts, for the tactics of the pressure group are the opposite of reason. They are the application of force in the interest of a limited class rather than the use of persuasion toward the public weal.

Centralized direction, by the impairment of the democratic process and the substitution of force for reason at critical points, shows the hollowness of the pretense that it is the interests of "society" that are served. For it introduces between the individual and the total group, which we call society, a "class" which it has been the ideal of American society to avoid. It consolidates special interests and leads them into conflict according to the Marxian thesis, instead of dissipating them according to the historic American purpose and practice.

This excerpt is provided for informational purposes only. It may not be copied and sold for profit. Thanks goes to Susan O. for taking the time, and putting forth the effort, to provide this excellent piece.

╪