The federal government gives states money to do things they wouldn’t do otherwise. And it also gives states money to do things they would do without federal support. This is bizarre when you think about it. It’s all money that comes from taxpayers.

Federal government transfers to state government are large and growing. Around 40% of Michigan’s budget comes from Washington, up from around 30% two decades ago. Michigan and other states depend more and more on federal money to support their budget. This gives Congress more power over policies in the states.

Some states would operate on their own the same type of programs for which they receive federal aid. Consider Medicaid, a program intended to provide medical services to poor people. States get more federal grants for Medicaid than for anything else.

States already operate many programs to help the poor. If there were no Medicaid, states would likely create their own programs to help low-income people get medical services.

Yet Congress takes money from taxpayers, adds borrowed money and then dangles cash in front of state lawmakers to do something they would do anyway.

It is worse when Congress gets state lawmakers to do something they wouldn’t do otherwise. If spending taxpayer resources on something is unpopular in Lansing, it shouldn’t be foisted on Michigan residents just because Washington funds it. After all, state taxpayers are federal taxpayers, too. If people don’t want state representatives to spend taxpayer funds on a given task, they shouldn’t want their federal representatives to do it, either.

State lawmakers love it when the federal government offers them money. State government revenue is always scarce, and raising more through increasing taxes is a tough political gambit. Getting the federal government to fund something makes state lawmakers’ lives easier. It does not bother Michigan officials that the money received from Washington comes from the same taxpayers who pay state taxes. These officials look at it as “free money,” and only fools turn down free money.

Some people naturally wonder whether Michigan gets a fair deal. Do taxpayers here contribute to Washington more than they get in return? No state has to worry about that. The federal government spends 32% more than it collects in revenue, so from that perspective, all states collect more from Washington than their people send there.

The idea that state governments need to get their fair share from Washington might make sense to state officials, but it is a bad deal for taxpayers. State lawmakers may want the federal government to pay for all their wants and needs. But that money comes from taxpayers, including the taxpayers in their state. Pretending that the money is free and comes from someone else will bankrupt the country.

It’s not as if Congress makes good decisions about how to spend taxpayer money; it sometimes wastes billions on made-up nonsense.

The federal government bailed states out in 2020. Federal lawmakers thought that states would lose a lot of tax revenue when they shut down businesses during the pandemic. But states did not suffer revenue losses. They instead got bailed out during a boom time.

Congress took the country deeper into debt through the bailouts. It risked the financial security of the federal government, penalized taxpayers of the future, and accelerated inflation, all to make states whole for losses they never incurred.

It was a terrible deal. Voters should have found it toxic. Yet I doubt any politician paid a price for this bad decision. A politician is lauded for spending and reprimanded only when frugal.

I remember the debate about the Great Lakes Restoration Initiative, which spends money on projects related to the Great Lakes yet claims no responsibility for restoring them. Regional Republicans and Democrats criticized any suggestion that Congress not waste money on the program.

State lawmakers are in a better situation than members of Congress to respond to their residents’ needs. They are closer to voters. Their districts are smaller. And they’re outside of the bizarre politics of Washington. Sure, state governments are prone to waste their taxpayers’ money, too, but Congress tops them all.

State lawmakers love it when they don’t have to spend from their pot of taxpayer cash. But it is not a long-term solution because all the money still comes from taxpayers.

It would be best if lawmakers stopped pretending that they’re doing good work with so-called free federal money. Congress should let state governments figure out the best way to advance the public’s interest by using money they raise from their own residents.

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