For decades, the implicit deal between Washington and state capitals has been that the feds would offer chunks of cash, and in return would get commensurate influence over the states’ social policies. Now that flow of federal goodies has begun what figures to be a long-term decline, as the money Washington has available to pass around to the states is squeezed. Already the funds the federal government offered states as part of the 2009 economic stimulus package have nearly run out, and the budget-cutting that has begun in Washington is curtailing the other money available to dole out.
A loss of federal largess means a loss of influence in state capitals—particularly if states succeed in winning more autonomy in running the Medicaid health program for the poor, one area where money from Washington continues to grow.
It was telling that when the nation’s governors gathered in Washington for their annual meeting last weekend, state chief executives from both parties were asking for more freedom from Washington’s rules in order to shape education and Medicaid programs, which are funded jointly by states and the federal government. More than half have asked for an exemption from federal Medicaid rules.
“South Carolina is not going to wait on D.C. anymore,” says the state’s new governor, Republican Nikki Haley. “We’re going to strike out on our own.”
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