Wednesday, March 11, 2009

Even Economic Fools Have Constitutional Rights


Governor Mark Sanford of South Carolina, it seems, does not wish to seek some 700 million dollars in federal stimulus funds unless he can use the money to pay down the state's debt. Governor Sanford's justifications are outlined in this letter.

Needless to say, I do not agree with Governor Sanford's assessment of the best way to deal with the current economic crisis. Even given the budget annualization difficulties he points to in his letter, the reasonable course of action is to take the money and do everything he can to stimulate South Carolina's economy as quickly as possible. For example, he could work with federal officials to structure the federal payments in ways that fit best with South Carolina's budgeting rules. His attempt to try to pay down the state's debt in the middle of a recession of this magnitude seems perverse; it is a little like FDR's very unwise decision to try to balance the federal budget in 1937, which sent the country back into an economic tailspin. The country would have been far better off if he had just continued to run deficits.

That, however, is not the reason I write this post. It is this constitutional question: Governor Sanford says he doesn't want the money except to pay down debt; the state legislature has passed a concurrent resolution (which the Governor cannot veto) saying that it wants the money with all the federal strings attached. The federal stimulus bill says that a concurrent resolution is all that is necessary; this provision was inserted in the bill in order to do an end run around GOP governors like Sanford who might refuse federal funds either because of political grandstanding or because of their lack of a basic understanding of economics.

I think this provision may not be constitutional. Unless you can demonstrate that under South Carolina law, the South Carolina Legislature, acting alone, speaks for the State, it would seem to me that the governor's consent is necessary.

Spending Clause jurisprudence requires that the state freely consent to conditional grants by the federal government. But not just any state official may give consent. The question of who is authorized to give consent to accept federal funding is a question of South Carolina state law, not federal law. Federal law can offer the states money to enforce federal mandates and even to pass legislation, but what it may not do is decide which state official is authorized to consent to federal grants that bind the state and its operations.

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