Power of the Purse V: How Transformations at the National Level Threaten Federalism

David Super

     In four recent posts, I explained how President Trump is seizing large parts of the Power of the Purse from Congress and how this has led to restructuring within Congress, the Executive Branch, and the courts.  In general, those in each branch adept at bipartisan problem-solving have been sidelined in favor of those that are either hyperpartisan themselves or at least unwilling to moderate the President’s hyperpartisanship.  In this final post in this series, I examine how the new, presidentially driven federal Power of the Purse is seriously undermining federalism. 

     I have the utmost respect for the work of Heather Gerken, Jessica Bulman-Pozen, and others describing how states led by the party out of power in the national government may leverage federalism to provide an effective opposition.  We certainly have seen plenty of that since President Trump has resumed office.  My focus here, however, is the reverse.  Rather than considering how oppositional states may force moderation in federal policy, I consider how the President, having seized a sweeping Power of the Purse, may force states to moderate their opposition to his policies. 

     Presidential abuses of the Power of the Purse have been little litigated for the simple reason that the Power of the Purse has resided with Congress.  When federal agencies have reduced states’ funding, it generally has been pursuant to specific statutory directives.  Courts have afforded federal agencies Chevron deference in interpreting those statutes but have not suggested broader federalism concerns are in play. 

     The Supreme Court’s innovations in federalism jurisprudence over the past few decades largely have focused on Congress’s intrusions on states’ prerogatives:  selecting public officials, participating in spending programs offered by the federal government, allocating staff time, and general policymaking.  Cases restraining federal courts’ intrusions on state courts’ jurisdiction are somewhat older. 

     The President’s seizure of the Power of the Purse has opened up a new and far more dangerous threat to states’ sovereignty.  The Court’s concern about fiscal coercion of the states – either from conditions tangential to the nature of the federal funding put at issue or from the enormity of the federal funding at stake – has involved legislation enacted by a Congress in which every state is represented.  Perhaps federalism needed an additional boost from the Court, but the affected states were not entirely defenseless.

     The Trump Administration’s actions threatening or cutting off funds flowing to Democratic states operates independently of any congressional action.  The states that it has targeted most – California, Colorado, Illinois, Minnesota, and New York – contributed no electoral votes to President Trump in any of his campaigns.  None is likely to be decisive in the 2028 presidential election.  He has little political reason to refrain from abusing those states.

     By contrast, all five have Republican representatives who might well resist voting for legislation targeting their home states.  If any one of the five states’ Republican delegations defected, hypothetical funding cut-off legislation could not pass the House.  None of the five target states has a Republican senator, but the frequent need for supermajorities in the Senate makes senators leery of incurring the personal enmity of senators feeling that their state is being singled out. 

     The Administration has made little effort to conceal its punitive partisan motives.  It issues angry press statements about errors, but as a district court noted Thursday “[a] generous reading of the record provided to this Court falls far short of the type of proof which might substantiate the government’s sweeping claims of fraud.”  Its vitriolic denunciations of Minnesota appear to depend entirely on an abuse of pandemic feeding programs that occurred under the first Trump Administration and that was caught and prosecuted under the Biden Administration.  (President Trump deserves no blame for the scandal nor does President Biden deserve credit for the arrests and prosecutions – attributing the routine actions of career civil servants to presidents is deeply deceptive – but the Administration insists on playing that game, which does not reflect well on it.) 

     Data in the two largest programs affected confirms that the Administration’s actions are entirely partisan.  The Department of Health and Human Services measures Medicaid improper payments in about one-third of the states each year.  Two of the Administration’s target states were in the set released this winter:  Illinois had an overall improper payment rate of 1.2% while Minnesota had an overall rate of 2.2%.  By contrast, Idaho’s improper payment rate was 6.1%.  Some blue states that have been less vociferous in opposing the Administration’s policies also had improper payment rates well above those of Illinois and Minnesota. 

     Data from the Supplemental Nutrition Assistance Program (SNAP) tells a similar story.  The payment error rates the Administration released last summer showed two of the target states meaningfully above the national average, one of them almost right around the national average, and two others meaningfully below the average.  By far the highest error rate was Alaska’s, which was more than double that of four of the five target states.  Red Florida and Georgia both also had higher error rates than any of the target states and yet have escaped the abuse the Administration has heaped on its perceived enemies. 

     This is not normal.  During the late 1990s, Texas’s Food Stamp Program had egregious problems:  a high error rate, precipitous declines in participation among eligible working poor families, and some pretty clear violations of federal law.  The Clinton Administration was well aware of these problems but refused to do anything lest its actions be seen as an attempt to embarrass Governor George W. Bush, whom it thought might run for president. 

     The flexibility and relative invisibility of the President equip him to coerce states far better than Congress can.  The President’s effective ability to close programs and interrupt federal funding without congressional approval allows him to buy bits of states’ sovereignty retail.  President Trump purported to pardon Colorado County Clerk Tina Peters from her convictions for tampering with voting machines despite having no such authority over state crimes.  When Colorado declined to release her, the Trump Administration closed an important federal laboratory in Colorado as well as reportedly threatening other federal installations in Colorado and waging its campaign against the state’s funding in human services programs.  Governor Polis relented and commuted Ms. Peters’s sentence.  Whether or not President Trump was holding “a gun to the head” of Governor Polis, his weaponry proved sufficient for the task.   

     Whatever one thinks of Ms. Peters’s conviction – the fact that she was charged and convicted in a deeply conservative county suggests that her actions were far beyond the pale – this is a massive transfer of sovereign power.  When the President can use federal tax dollars to buy the states’ sovereign pardon power, and to effectively legalize violations of states’ election laws, we are well down the road to subordinating states fully to the federal administration.  You can continue to rattle on about your Buffalos or your Golden Gophers, much as Brits fixate on Arsenal or Manchester United and Egyptians obsess about Al Ahly or Zamalek, but the President will get his way on anything he really cares about. 

     Actions of the other two branches of the federal government have facilitated this growing fiscal dictatorship.  Many of the spending cuts in last summer’s One Big Beautiful Bill Act came in the form of large shifts in the costs of Medicaid and SNAP to the states.  (These cuts are difficult to reconcile with Republicans’ image as the party of states’ rights.)  We are already seeing dramatic participation drops in SNAP and likely will see something similar in Medicaid when the most destructive provisions take effect after the midterm elections. 

     These cuts seriously weaken states’ finances, making them more vulnerable to the President’s fiscal threats.  They also raise the question of whether the Administration will fully implement the cuts against states that accommodate the President by praising his initiatives, by turning over confidential information contrary to law, and by adjusting their election laws to his liking. 

     The Supreme Court, too, has hampered states’ abilities to defend themselves.  In April 2025, it held that states lack the irreparable injury required to obtain prompt restoration of federal funds if they can afford to continue the programs in question.  Three months later, it held grantees that cannot afford to pay the cost of a program cannot get funds promptly restored because the federal government likely would not be repaid if it ultimately won the case.  So whether the funding stream is large or small, and whether the state is flush or hard-pressed, the President can withhold federal funds and potentially make the state wait years for the funds to which they are entitled under federal law. 

     With almost all states required to balance their budgets annually, this leaves them with little option.  Ironically, if the President’s blundering with Iran causes a recession, his leverage over states will grow even more.  This threat to states’ sovereignty is vastly greater than those addressed in the Court’s prior federalism jurisprudence.  And a willful President can do far more harm to a state’s finances than a federal court hearing challenge to a state agency’s violation of federal law. 

     Deep Throat told Woodward and Bernstein to “follow the money.”  That is also good advice for those fearing the loss of our democracy.