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Unformatted text preview: ge, it was attempting to use financial leverage to get the
states to follow its policy. The Court held that Congress could deploy its spending power in this way,
but that there was a limit, when the financial inducement was “so coercive as to pass the point at
which pressure turns into compulsion.” Not surprisingly, no case has found such a limit to have been
reached in the 26 years since. Today, the Court said the limit on the federal spending power had
been improperly crossed by Congress in the healthcare reform bill. Rather than the “relatively
mild inducement” the Court found when five percent of South Dakota’s highway funds were at
risk, today’s Court said that losing all of a state’s Medicaid funding was more like “a gun to
the head.” The Court noted that Medicaid spending accounts for over 20% of the average
state’s total budget, whereas 5% of South Dakota’s highway funding was less than one half of
one percent of its total budget at the time. So we now know there is some limit beyond which
the federal government may not go in withholding state funding to incentivize (bribe?) a state
to do Washington’s bidding. 6|Page Federalism DA BDL
Uniqueness – Federal Role in Transportation Decreasing [___] States are taking the lead currently in the absence of federal support for transportation
Scott Thomasson, President, NewBuild Strategies LLC, 2012
(Council on Foreign Relations, Encouraging U.S. Infrastructure Investment
April 2012, http://www.cfr.org/infrastructure/encouraging-us-infrastructure-investment/p27771)
States are already looking at new ways to finance infrastructure as federal funding becomes
uncertain and their own budgets are strained. More states rely on PPPs to share the costs and
risks of new projects, and they are finding new sources of nontax revenues to fund investments, like
tolling and higher utility rates. But at the same time, federal regulations and tax laws often prevent
states from taking advantage of creative methods to finance projects. Federal programs designed
to facilitate innovative state financing are underfunded, backlogged, or saddled with
dysfunctional application processes. Many of these obstacles can be removed by adjusting
regulations and tax rules to empower states to use the tools already available to them, and by better
managing federal credit programs that have become so popular with states and private investors. In
cases where modest reforms can make more financing solutions possible, good ideas should not be
held hostage to "grand bargains" on big legislation like the highway bill or the failed 2010 energy bill.
Congress should take up smaller proposals that stand a chance of passing both houses this year —
incremental steps that can unlock billions of dollars in additional investments without large federal
costs. Any proposals hoping to win Republican support in the House need to ha ve a limited impact on
the federal deficit and focus on reducing, rather than expanding, federal regulations and bureaucracy.
Some progress can also be achieved by circumventing Congress entirely with...
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This document was uploaded on 02/06/2014.
- Spring '14