Since it appears more and more likely that Congress will approve another economic stimulus package within the next couple of months, every special-interest group under the sun is swarming Capitol Hill for handouts. Yesterday it was the nation’s governors turn as Govs. David Patterson (D-NY) and Jon Corzine (D-NJ) came to the House Ways and Means Committee on their knees begging for cash. Patterson compared the current financial crisis to 9/11 and asked Congress for “a direct injection of federal aid to state budgets.” Corzine implored, “The federal government ignores state and local governments at serious peril.”

If only that was the case. As the lone dissenter on the panel, Gov. Mark Sanford (R-SC), pointed out the federal government has been doing anything but ignoring states. Federally imposed unfunded mandates — including No Child Left Behind, prescription drug regulations and raising the minimum wage — have cost states $131 billion over the last four years. Instead of more federal money and control, Sanford said: “In short, I’d ask members of the committee to simply give the states more freedom. Give us more flexibility. Give us more in the way of control over the dollars we already have and less in the way of costs. Give us more options, not more money with federal strings attached.”

Sanford’s principled refusal of a federal bailout for his state did not end there. His entire testimony is worth a read, but here are some highlights:

The situation we’re now in did not develop overnight, and in the same way it won’t be cured by morning. As the old saying goes, the first step to getting out of a hole is to quit digging. … Our national debt is now over $10 trillion — more than $4 trillion higher than when I left Congress at the end of 2000. … In fact, if this $150 billion stimulus package is passed, this year’s budget deficit could top $1 trillion — adding to the over $10 trillion national debt and making it 70% of a roughly $14 trillion economy. …

Simply throwing money into the marketplace in the hope that something positive will happen ignores the fact that the government has already put over $2 trillion into the system this year using various bailouts and stimulus packages: including $168 million in direct taxpayer rebates this past spring; an $850 billion bailout last month that cost more than we spend on defense or Social Security or Medicaid and Medicare annually; and myriad loans and partial nationalizations of institutions like Freddie Mac and Fannie Mae, JPMorgan Chase, Bear Sterns and AIG. … This year’s $2 trillion plus in bailouts and handouts seems that much more momentous when you consider that federal tax revenues last year were only $2.57 trillion. Simple math demands we ask ourselves if $2 trillion did not ward off the crisis in confidence we’re currently experiencing, then how much can $150 billion more help? …

Essentially, you’d be transferring taxpayer dollars out of the frying pan — the federal government — and into the fire — the states themselves. I think this stimulus would exacerbate the clearly unsustainable spending trends of states, which has gone up 124% over the past 10 years vs. federal government spending growth of 83%. … There seems to be no consequence, and indeed a reward, for unsustainable spending growth by states. In effect, sending $150 billion more to states would produce another layer of moral hazard — already laid bare at the corporate, individual and federal levels in recent years.

We couldn’t have said it better ourselves.

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