Federal Mandates:
Restoring Constitutional Principles

15 March 1996.- Number 4

Adapted from Presentation by Wendell Cox to the
80th Annual Meeting of the
National Association of State Auditors, Comptrollers and Treasurers
Des Moines, Iowa: August 15, 1995


My subject today is Federal Mandates: Restoring Constitutional Principles --- First Principles. This is going to be a controversial presentation. Most of you have not heard most of what I am going to say, and many of you will disagree with what I say.

We live in revolutionary times as the last election demonstrates. Many of us believe that 1994 was just the beginning of a longer term political revolution. Today I will offer some revolutionary ideas on federal mandates, an issue that goes to the heart of the emerging Constitutional debate.

Let me mention that I was a three term appointee to the Los Angeles County Transportation Commission --- appointed by Mayor Tom Bradley. Because of my involvement in transportation, the examples I will use will tend to be from that field --- but the general lessons are the same, regardless of the government function.

First Principles

Today I will discuss four principles --- first principles --- that should be the basis of the continuing debate about federal mandates. Then I will outline three related issues and offer some solutions.

But before moving to first principles, let me advise you of the perspective from which I am operating. It is a democratic perspective --- the perspective that the people are sovereign, not government --- a belief in popular sovereignty. This is important, because through most of history, the people were not sovereign --- and there were governments of men, not of laws. Government was arbitrary --- the people had to follow laws that were derived from the whim of the sovereign. America's supreme contribution to political philosophy and governance is popular sovereignty --- that there should be a government of laws --- the rule of law, not a government of men. Rule of law requires that government abide by the law, and use appropriate legal mechanisms for making or changing laws. Perhaps Abraham Lincoln put it best, when he referred to government of the people, by the people, and for the people.

Now to federal mandates and first principles.

Principle #1

Principle #1 is this:


Of course, you recognize this as the 10th Amendment to the United States Constitution.

It is stated clearly in the Constitution, but it does not reflect today's reality. Indeed, at least one Supreme Court decision essentially declared the 10th Amendment dead.

The 10th Amendment means what it says --- and Congressional actions and court decisions to the contrary notwithstanding, it must be restored to its original meaning. If the nation wishes to grant the federal government powers not enumerated in the Constitution, then there is only one legitimate approach ---- and it is to amend the Constitution of the United States.

Much of what Washington does will not be found in Constitution the United States.

Principle #2

The second principle is this:


This, of course, includes amendments to the Constitution.

But again, the reality is far from the theory. The Supreme Court and Congress have stretched and changed the intent of the Constitution time and time again. Let me give you an example. When your predecessors held the first NASACT conference 80 years ago, there was universal agreement that the word "commerce" in the Constitution meant trade or exchange. This is what was intended when the Constitution was ratified. "Commerce" did not mean transportation. "Commerce" did not mean business. And "commerce" certainly did not mean labor. At no time during the last 80 years was a Constitutional amendment ratified that expanded the meaning of the word "commerce." Yet today, the Supreme Court and Congress act as if the Constitution means all of those things and more.

Let me suggest this. If the Supreme Court and Congress can change the meaning of a single word of the Constitution, then we have a government of men, not a government of laws. If the Supreme Court and Congress can change or nullify the 10th Amendment to the of the Constitution, then the First Amendment is in jeopardy, and none of our Constitutional rights are secure. We need a government of laws that respects the mechanisms for changing the nation's fundamental laws. We have a Constitutional crisis. We must restore rule of law in its fullness.

Principle #3

Now to the third principle:


And of course, this includes federal mandates over local units of governments, since they are all divisions of the states.

A federal mandate is an order or requirement by the federal government that a state, or a local unit of government take some positive action. It doesn't matter whether the order or requirement is a condition of the receipt of federal funding. You will find no general federal mandate authority in the Constitution.

I believe that the Constitution authorizes only two federal mandates ---

1. The federal government may require a state to nationalize its militia.

2. The federal government must require the states to have republican forms of government.

This is not to suggest that the federal government has no power over the states --- it does. But its power is largely a power to prohibit acts that violate the Constitution. For example, the federal government can and should prohibit states and their local units of government from violating the Constitutional rights of individuals.

And notice that I didn't say that the federal government has no broad unfunded mandate authority --- I said it has no broad mandate authority. Constitutionally, funded and under-funded mandates are just as inappropriate as unfunded mandates. They are all wrong.

The unconstitutionality of federal mandates is a significant concept. It means that there should be no such thing as a federal matching grant. There are federal powers, and there are state powers. I know that the Supreme Court found matching grants Constitutional. But, the Supreme Court was wrong. The Constitution does not establish any shared powers.

This is not to suggest that the substance of all federal mandates is inappropriate. It is rather to declare that federal enactment and administration is illegitimate.

Some suggest that mandates are authorized by the "supremacy" clause of the Constitution --- the clause that says the laws of the United States are the supreme law of the land. The founders made it very clear --- and you can find this in the Federalist Papers, the supremacy clause means that, with respect to those powers that are delegated to the federal government, federal law is supreme --- the federal government is sovereign. But the states are also sovereign --- with respect to the powers not delegated to the federal government nor prohibited to them by the Constitution. With respect to these powers, the states are supreme ---- there is no conflict of laws, only a division of responsibility that is clearly delineated in the Constitution.

What does all this mean? With respect to the powers not delegated to the federal government, nor prohibited to the states, the states, respectively, or the people are sovereign. With respect to such powers, the federal government has no more business interfering in the affairs of Alabama or Massachusetts than it has interfering in the affairs of the Mexican state of Sonora, the Canadian province of British Columbia, the German state of Bavaria, or Scotland. It's as simple as that.

Principle #4

The fourth principle is this.


This is not simply a Constitutional imperative, but it is also a practical imperative, and a democratic imperative.

It is a fact of life that people have more control over governments that are closer to home. Virtually everyone agrees that political power should be housed at the level of government closest to the people that is competent to handle the function. The principle is called "subsidiarity" in the European Union.

Think of it this way. Each California voter has 10 times the impact in state elections as in federal elections. Each Iowa voter 100 times. Each Delaware voter 400 times.

There are also economies of scale --- the economies of scale of lobbying. Over-centralization of power makes it simpler for spending interests to have influence --- because it is less expensive to influence one federal government than 50 state governments or 20,000 municipal governments.

We see this in the way that Washington, DC spends our money. Think of the silly ways federal money is used. Let me give you just one example.

The federal government is contributing $600 million to build a light rail line in Portland, Oregon that will cost $10,000 per year for each new passenger that it attracts --- that's enough to lease each new passenger three new Ford Tauruses. And the federal government's own reports say that the line will have virtually no impact upon air pollution or traffic congestion. If Portland wants a light rail line --- well and good --- let them pay for it. For that matter, if they want to build a monolith --- well and good --- let them pay for it.

And by the way, they won't. Just two weeks ago, it took all the strength that could be mustered by the spending interests to convince the Oregon legislature to spend one-fifth of the money they need for the next light rail line. They are assuming that Uncle Sam will pay the rest. I am assuming he will not.

This demonstrates an important principle stated by Nobel Laureate Milton Freidman,

that people are more careful with their own money than with other people's money.

And indeed it is true. Oregon is more careful with its own money than with money from South Dakota, Tennessee, or Connecticut. It's just human nature.

We must no longer pretend that federal money comes from somewhere else. States and localities must stop spending federal money on things they wouldn't buy if they were paying the tab. It is our money. Or more accurately, our children's money and our grand-children's money.

And so, around the world, devolution is occurring. In Europe, regions are seeking power from central governments, and the same trend is underway elsewhere. In fact, in Europe there is a phrase that expresses the condition when functions are handled too far away from the people --- they call it democratic deficit. Where government is too remote from the people, there is a democratic deficit. I hope that we can import the term to America, and then eliminate the condition.

We need to devolve power to the level of government closest to the people, and we need to do so at the same time as we remove virtually all federal mandates.

Related Issues

Now to the related issues.

The first one is very simple. We must live within our means. This means that we must spend no more to perform a public service than is necessary --- when we spend more than necessary, we are wasting the hard earned money of the people. We must face up to a difficult situation.

The Congressional Bi-Partisan Commission on Tax and Entitlement Reform has reported that within 20 years federal revenues will cover only entitlements and interest on the national debt. Nothing for defense. Nothing for infrastructure. Nothing for discretionary programs.

And they said more. They said that if current trends continue, federal revenues would have to increase in real terms by 70 percent over the next 40 years. Notice I didn't say federal tax rates --- I said federal revenues. Now, we all know that it is simply impossible to raise taxes high enough to accomplish that. Even recent federal tax increases that pale by comparison have failed to increase federal tax revenues.

And, within seven years, Medicare will be bankrupt.

What does this have to do with federal mandates? So long as Washington tells Jefferson City what to spend, and so long as Albany spends federal money, we are going to pay more than necessary for government --- and we will face a bleak financial future.

But there's more. We all know that we need a growing economy to produce good jobs and more jobs. Government does not create jobs, the private sector does. Harvard economist Dale Jorgerson has estimated that each additional tax dollar taken by government destroys $1.40 in economic growth. Virtually everyone agrees that higher taxes destroy economic growth.

So again, there is the imperative to control government spending, to secure a better future for generations yet to come, and to secure jobs for those who need them today.

The second related issue is the federal unfunded mandate relief act enacted earlier this year. This is radical legislation --- legislation so radical that it couldn't even be brought to a vote in last year's Congress. But what a difference a year makes.

While Congress is to be complimented, the unfunded mandates act is just a small step in relation to what needs to be done. The law is limited to unfunded mandates. The law defines unfunded mandates so narrowly that mandates that are a condition of federal funding are excluded. The law gives no relief with respect to existing mandates. And, the law permits new unfunded mandates by a super-majority vote of Congress. This is not enough.

Washington hasn't quite understood it yet. Let me give you an example. Over the past few months, Congress has agreed that states should be allowed to set their own speed limits. Yet, at the same time, Congress failed to remove federally mandated truck speed limits and appears ready to reaffirm the federal blood alcohol mandate with respect drunk driving. Now why is this?

Are we so suspicious of the Oklahoma legislature that we fear that it will allow rampant drunk driving on the highways of Oklahoma if the federal mandate is lifted? Of course, this is absurd.

Is it that the Oregon legislature is incompetent to establish truck speed limits? Are there but seven people in the entire state of Oregon --- two US Senators and five members of the US House of Representatives --- who, along with 528 people don't even live in Oregon --- who are competent to establish Oregon's truck speed limit? Of course not. The 90 state senators and representatives that the people of Oregon have sent to Salem, all of whom, by the way, live in Oregon --- these elected people are up to the task.

It is time for real federal mandate relief --- not just unfunded mandate relief --- and not piecemeal relief.

Now the third related issue ---

Federal mandates are pervasive. They do not number in the hundreds. They number in the thousands --- perhaps in the tens of thousands or more. Let me give you an example. In 1991, a new federal highway and transit bill was enacted. That bill contains more than 500 federal mandates. And that does not count the mandates that will be found in the 500 pages of federal regulations that supplement the law.

Some of the mandates are very expensive. Others are less expensive. Many simply require your departments of transportation to file a report or to seek a certification from the federal Department of Transportation. But that costs both time and money. Every time highway or transit administrators turn around, they have to be concerned about compliance with federal mandates. Federal law is literally riddled with federal mandates. Piecemeal reform will never do the job.


Now to the solutions.

There has been a lot of talk about block grants but insufficient activity. Block grants should be used to transition federal programs and funding to the states and then from the states to their local levels of government. But not all of the money will be sent to state and local governments. The federal government needs to save some money --- it needs to balance the budget.

The states and their local units of government have the tools to do their jobs, even with less money. The question is whether they have the political will. Let me suggest some readily available strategies.

First, there is privatization including competitive contracting and vouchers. Around the world, governments are saving considerable amounts of money by using the market to ensure that public unit costs are no higher than necessary. This includes left-wing and socialist governments that are sick and tired of paying more than necessary to produce government services. For example, just the removal of a single federal labor mandate in transit would allow transit agencies to implement reforms that would save more money than they currently get from Washington.

And then there is pork. State and local governments are simply not going to spend their own money to build projects that aren't needed. Again, they will be more careful with their own money than they are with other people's money.

But there's more. When state and local governments do spend their own money on projects, they spend it more carefully. In the mid 1980s, the federal Clean Water Act was amended from a grant program to a revolving fund program. This occurred at least partly because the federal General Accounting Office found that when local governments spent their own money on waste-water treatment plants, they were more efficient, they cost less, they did a better job, and they used better technology. Again ... People are more careful with their own money than with other people's money.

And then there's the duplication of effort with respect to federal lobbying. Your state lobbyists are tripping over lobbyists from your largest cities and counties. We need to bring them all home. Let the cities and counties lobby their own state legislatures.

There are other solutions as well.

One is the Federal Mandate Relief Amendment, which has already received the endorsement of the Ohio House of Representatives. Ohio has called upon the Congress to propose a Constitutional amendment to the states that would allow the states to exempt themselves from federal mandates. Remember that we are operating from the assumption that federal mandates are unconstitutional. That being so, the sooner we eliminate them the better. States would simply need to make a finding that the broad public policy goals of the programs would be met by the states or their local units of government. And, these findings would not be subject to judicial review.

Another proposed potential constitutional amendment has greater support. In fact, it is expected that it would be recommended by the proposed Conference of the States. It is the Government of the People Amendment. This Constitutional Amendment would allow two-thirds of the states, acting jointly through their state legislatures, to invalidate federal law, portions of federal law, or any other federal action such as judicial or regulatory actions where the states determine such actions to be unconstitutional. The amendment would exempt this process from judicial review. Ratification of the Government of the People Amendment would establish the states as final arbiter of the Constitution. This is consistent with their existing role as custodian of the Constitution --- which they retain through their final approval of any Constitutional amendments. A mechanism such as this is necessary to establish a higher authority on Constitutional questions than the Supreme Court, since that body has failed so miserably to protect the intent of the Constitution, especially with respect to the sovereign powers of the states.

And, finally, the states are already involving themselves in legal activities to reassert their authority. In some cases, states are refusing to comply with federal orders they believe to be invalid, and are being sued by the federal government. In other cases, states themselves are suing the federal government. An example is a suit by state legislators against the federal government that seeks to invalidate the Ozone Transport Commission, which was established by Congress and given the power to impose California vehicle emission standards on the Northeast. And it is important to understand that legal actions have much broader ramifications --- they can themselves be a lightning rod for focusing public opinion.

In summary, my message is this. The United States has a tradition of government by rule of laws and not by rule of men. Federal mandates are inconsistent with the fundamental law of the United States. And they are pervasive. It is important that steps be taken to remove federal mandates, and this will require a comprehensive, rather than a piecemeal, approach. This is required not only to revitalize the rule of law under the Constitution, but also to conform to the most basic of democratic principles.

Nothing less will be sufficient. Because government of the people, by the people, and for the people is government that is closer to the people.

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