Legal Commentary

During the 1990s the Rehnquist Court flirted with the idea of rolling back certain aspects of the New Deal and increasing state immunity from federal control. But it never seriously considered rolling back the most powerful tool for regulating state governments in the federal arsenal-- the use of conditional federal spending. To do that it would have to rethink spending clause doctrines which date back to the New Deal and which were used, among other things, to uphold the Social Security system.

This is one reason why the Rehnquist Court's federalism revolution was largely symbolic: Pretty much all of the protections the Rehnquist Court offered state governments become irrelevant if the federal government uses conditional spending rather than direct regulation to get its way. For example, in exchange for federal funding the federal government can require state officials to enforce federal mandates and it can even require state legislatures to pass laws that the feds write. (To give only one example, in 2000, in U.S. v. Morrison, the Rehnquist Court struck down the civil rights remedy in the federal Violence Against Women Act. But Congress could have required each state to pass its own violence against women act in return for the considerable federal funding that accompanied the original act.)

The Supreme Court's jurisprudence on conditional funding to the states under the spending or General Welfare clause is premised on the idea that conditions on federal grants to the states do not violate the reserved powers of the states under the Tenth Amendment because states always have the right to turn down the funding. For some, this doctrine is little more than a legal fiction: because states in the modern era are so dependent on federal largess, the offer of funding with strings attached is one that the states cannot refuse. Hence no matter what the courts say, the states are really being coerced into accepting federal regulation, which, critics of modern spending clause doctrine would contend, violates the Tenth Amendment.

Upholding the Social Security Act in Steward Machine Co. v Davis in 1937, Justice Cardozo agreed that there might be some point at which "pressure turns into compulsion," but lacking definitive proof of such coercion, conditional federal spending under the General Welfare Clause is constitutional: "[T]o hold that [a state's] motive or temptation [to accept federal money] is equivalent to coercion is to plunge the law in endless difficulties. The outcome of such a doctrine is the acceptance of a philosophical determinism by which choice becomes impossible. Till now the law has been guided by a robust common sense which assumes the freedom of the will as a working hypothesis in the solution of its problems." The Court reaffirmed this idea in South Dakota v. Dole, its most important recent spending clause decision (written, it is worth noting, by that great defender of state's rights, Chief Justice William Rehnquist). The majority pointed out that the mere fact that states agree to regulate their behavior in return for federal grants does not prove that states were unconstitutionally coerced: "We cannot conclude . . . that a conditional grant of federal money of this sort is unconstitutional simply by reason of its success in achieving the congressional objective."

Ironically, then, if one or more states seriously suggests that they may refuse some or all of the stimulus money because of the federal strings attached, this tends to demonstrate that the stimulus bill is a constitutional exercise of the spending power: it is evidence that pressure to accept federal monies has not turned into compulsion, that a genuine offer is being made and that each state can still freely decide whether or not to accept the money.

Whether or not these Republican governors are helping their constituents or hurting them by refusing financial support in the greatest economic crisis since the Great Depression, they are, whether they recognize it or not, helping to legitimate federal power to regulate state governments through the stimulus bill.

Full post as published by Balkinization on February 19, 2009 (boomark / email).