One More Pitch

In their editorial about the success of the Republican reform of the Federal Food Stamp program, the WSJ editors had this remark toward the end:

Congress ought to reduce the 90% federal payment match for the ObamaCare expansion population on Medicaid….

That would be a small first step, though useful in its way, and it prompts me to push again for something I’ve touted over the years: make Federal transfers to the States, not just for Medicaid, but all Federal transfers, block grants on a declining basis.

Designate the year of enactment as Year0, and tot up the total of all transfers to each State in that year. In Year1, send that amount to each State as a single, no strings attached, block grant. In each year of the interval Year2-Year11, reduce the size of the block grant by 10% of Year1, so that from Year11 on, there are no more Federal funds—which are the tax remittances of all of us American citizens—being sent to the States.

The citizens of each State should not be required to fund the profligacy of other States; those taxes sent to the Federal government should be for the sole purpose of funding the constitutionally mandated expenditures of the Federal government, those expenditures enumerated in Article I, Section 8. Each State’s governing politicians should be required to justify the tax levels and expenditures they want directly to their own constituents.

Of course, there’s one exception to this end of Federal transfers. In the event of a natural disaster that’s beyond the capacity of a State or a region to handle from its own resources, Federal transfers to the State or region would be justified. To hold down the incidence of manufactured emergencies (for instance, excessive spending leading to a risk of fiscal failure), a significant fraction of the transfer, or all of it, should be in the form of loans due in full within, say, five years of the onset of the claimed disaster.