The Edmond Sun


July 9, 2012

'Free' money from feds spurs higher Oklahoma spending

EDMOND — At an Oklahoma Council of Public Affairs speech in Tulsa last year and in other public forums, Indiana Gov. Mitch Daniels has said: “Never take a dollar from a free citizen through the coercion of taxation without a very legitimate purpose. We have a solemn duty to spend that dollar as carefully as possible, because when we took it we diminished that person’s freedom.”

With the new fiscal year now under way — a fiscal year in which our state’s political leaders are spending more than $500 per second (see the Spend-O-Meter at — it is important to ask if there is indeed “a very legitimate purpose” behind all this government spending. Is each dollar being spent “as carefully as possible”?

Even as President Barack Obama is the biggest government spender in world history, Oklahoma’s current political leaders are the biggest government spenders in state history. Total state spending continues to increase every year. Analysts at both liberal and conservative think tanks in Oklahoma agree on this point.

State appropriations account for less than half of this total state spending. Much of the spending is federal money, which many in the political class seem to think of as “free” money. It’s not. As Manhattan Institute fellow Heather Mac Donald recently pointed out: “The federal government’s biggest con game is promoting the fiction that federal dollars doled out to states and localities are ‘free’ money — whether the Medicaid funds at stake in the Obamacare decision, food-stamp reimbursements, job-training money or grants to local colleges for minority education in the sciences. …

“Federal transfers are not even a zero-sum proposition; they are a negative-sum proposition, leaking value at every step of the way, thanks to the costs of collecting federal tax dollars, then trickling them back out to the states’ own costly bureaucracies via federal paper-pushers who write and oversee grant programs.

“And yet this massive Ponzi scheme allows the federal government to wield enormous power in the illusion that it is conferring on states and cities free money from some mysterious external source outside of their own businesses and residents. (The only arguable source of such money from beyond local sources would be money borrowed from China, say, which then gets magnanimously doled out to the states by wise federal bureaucrats, but even there, we — not ‘Washington’ — pay the interest on the borrowed funds.)”

Some Oklahoma politicians object that they shouldn’t take the rap for their spending spree because this federal money is the federal government’s problem. But of course that doesn’t wash. No one is forcing state policymakers to chase all this federal money. Moreover, chasing the federal money spurs higher state spending.

Fortunately, these undeniable truths are now front and center in Oklahoma, thanks to the recent Supreme Court ruling on the president’s health care law. “Our state will have to make some tough decisions,” Oklahoma City University law professor Andrew Spiropoulos recently wrote. “The toughest will be whether to accept the (health-care law’s) bribe to radically expand our state Medicaid program.”

Cato Institute analyst Tad DeHaven, a former budget policy adviser to Sen. Tom Coburn, says state policymakers have become “dangerously reliant on federal money.” In a very real sense, Oklahoma policymakers receive federal bailouts every year. They either don’t know or don’t care that, as Dr. Coburn says, “America is already bankrupt.”

And what are all these federal bailouts accomplishing? What government spending is so important that it justifies borrowing all this money from China?

One of the chief culprits fueling our national debt — and our Oklahoma spending spree — is Medicaid. My colleague Jonathan Small has pointed out that in Oklahoma, “it is the federally induced welfare programs, such as Medicaid, that require ever-increasing state funding matches for the programs’ exploding costs.” That’s why, even before the health-care ruling, OCPA has suggested many reforms to reverse this trend. Unfortunately, state politicians have chosen instead to exacerbate the trend — even resorting to gimmicks and tax hikes to do so.

The econometrics firm Arduin, Laffer & Moore has noted that “federal funds are not ‘free’ and, in fact, contribute a great deal to the unsustainable growth of state government and a resulting decline in economic growth.”

Even the Tulsa World has recognized (albeit in another context) that sometimes federal money is quite simply “generosity we can’t afford.” Certainly conservatives know this. OCPA economists Scott Moody and Wendy Warcholik have shown that chasing federal dollars spurs higher state spending. Indeed, absent the recent run-up in federal grants to Oklahoma, our state’s political leaders nearly would have been able to eliminate the individual income tax.

BRANDON DUTCHER, an Edmond resident, is vice president for policy at the Oklahoma Council of Public Affairs, a free-market think tank.

Text Only
  • 'Too big to fail' equals 'too eager to borrow'

    Four years ago this month, President Barack Obama signed the Dodd-Frank Act into law, promising that the 848-page financial law would “put a stop to taxpayer bailouts once and for all,” he said. But recently, Massachusetts Sen. Elizabeth Warren told a Detroit crowd that “the biggest banks are even bigger than they were when they got too big to fail in 2008.”
    Who’s right?

    July 30, 2014

  • Sheltons travel for better life for family

    Some time around 1865 a mixed-race African American couple, William and Mary Shelton, made their way from Mississippi to east Texas. Nothing is known for certain of their origins in he Magnolia state, or the circumstances under which they began their new lives in Texas.

    July 29, 2014

  • Film critic Turan produces book

    Kenneth Turan, who is the film critic for National Public Radio’s “Morning Edition,” has written a book “Not to be Missed, Fifty-Four Favorites from a Life Time of Film.” His list of movies span the gamut from the beginnings of filmmaking through the present day.
    There are some surprising omissions on his list. While he includes two films, “A Touch of Evil” and Chimes at Midnight” made by Orson Welles, and one, “The Third Man,” that Welles starred in but did not direct. He did not however, include “Citizen Kane,” that was the first movie Welles made, that is  often cited by both film critics and historians as a favorite film.

    July 28, 2014

  • Logan County’s disputed zone

    Watchers of “Star Trek” may recall the episode from the original series entitled, “Day of the Dove.” In this episode, Captain Kirk and his crew are forced by a series of circumstances into a confrontation with the Klingons. The conflict eventually resolves after Kirk realizes that the circumstances have been intentionally designed by an alien force which feeds off negative emotions, especially fear and anger. Kirk and his crew communicate this fact to the Klingons and the conflict subsides. No longer feeding upon confrontation, the alien force is weakened and successfully driven away.

    July 28, 2014

  • Russell leads in Sun poll

    Polling results of an unscientific poll at show that Steve Russell, GOP candidate for the 5th District congressional seat, is in the lead with 57 percent of the vote ahead of the Aug. 26 runoff election. Thirty readers participated in the online poll.

    July 28, 2014

  • Healthier and Wealthier? Not in Oklahoma

    Increased copays, decreased coverage, diminished health care access, reduced provider budgets and increased frustration are all the outcomes of the Legislature’s 2014 health care funding decisions. Unlike some years in the past when a languishing state economy forced legislators into making cuts, the undesirable outcomes this year could easily have been avoided.

    July 26, 2014

  • Medicaid reform a necessity

    Historically, education spending by the state of Oklahoma has been the largest budget item. This is no longer the case. In recent years, the state of Oklahoma spends more on Medicaid (operated by the Oklahoma Health Care Authority) than common education and higher education combined, according to the state’s Comprehensive Annual Financial Report.

    July 25, 2014

  • Remembering lessons from 1974

    This week marks the 40th anniversary of an important milestone in America’s constitutional history. On July 24, 1974, the Supreme Court voted 8-0 to order the Nixon White House to turn over audiotapes that would prove the president and his close aides were guilty of criminal violations. This ruling established with crystal clarity that the executive branch could not hide behind the shield of executive privilege to protect itself from the consequences of illegal behavior. It was a triumph for the continued vitality of our constitutional form of government.

    July 25, 2014

  • RedBlueAmerica: Is parenting being criminalized in America?

    Debra Harrell was arrested recently after the McDonald’s employee let her daughter spend the day playing in a nearby park while she worked her shift. The South Carolina woman says her daughter had a cell phone in case of danger, and critics say that children once were given the independence to spend a few unsupervised hours in a park.
    Is it a crime to parent “free-range” kids? Does Harrell deserve her problems? Joel Mathis and Ben Boychuk, the RedBlueAmerica columnists, debate the issue.

    July 24, 2014

  • Technology that will stimulate journalism’s future is now here

    To say technology has changed the newspaper media industry is understating the obvious. While much discussion focuses on how we read the news, technology is changing the way we report the news. The image of a reporter showing up to a scene with a pen and a pad is iconic but lost to the vestiges of time.
    I am asked frequently about the future of newspapers and, in particular, what does a successful future look like. For journalists, to be successful is to command multiple technologies and share news with readers in new and exciting ways.

    July 23, 2014


The runoff race for the 5th District congressional seat is set for Aug. 26. If the voting were today, which candidate would you support?

Al McAffrey
Tom Guild
     View Results