@bradenslen Only if we wanted the economies of different parts of the country to vary drastically. The federal government redistributes money from the richer states (mostly the Northeast and West Coast) to the poorer ones (mostly the Heartland and Deep South).
Part of why the US recovered faster from the Great Recession than the members of the EU was this redistribution. Greece’s economy needed stimulus, but there was no mechanism nor political will to transfer money from Germany.
@Bruce Yeah it sounds nice. But I'm involved in local government and it's crazy how dependent small towns are on Federal grants. Just to put in a sidewalk in a town requires applying for a grant under a Federal program which is partly administered by the state and requires signoff by the regional planning commission. Each federal program has it's own unique requirements which almost demands the town has to hire somebody that specializes in grant applications, plus as in everything today you need to have a lawyer strapped to your back at all times.
So you end up having to deal with 3 levels of bureauacracy Fed., state, regional, huge paperwork, hire expensive consultants all for a sidewalk in a one horse town.
It seems like a lot of taxpayers' money is getting syphoned off feeding paper pushers. If we could eliminate one of those layers we might be better off.
@bradenslen I live in a small town that is dependent on a lot of state and federal funding. That’s not money that is being siphoned off—it is money that simply would not be available were it not for the federal and state grants etc. I live in Western Massachusetts, an area that has been hit very hard first by industrial decline, then by retail collapse, and now by the opioid crisis. If we had to fund schools, roads, and other civil infrastructure solely from local tax revenues, there would be nowhere near enough money to cover it, even if the money are currently paying in state and federal taxes were shifted entirely to local taxes.
@petebrown I'm firmly in the rust belt too. So we increase state taxes and decrease Federal taxes accordingly for routine stuff. Because there is a syphoning off: all those Federal bureaucrats have to be paid then the state bureaucrats have to be paid, then the regional and local. All that money comes off the top.
Now,I don't suggest a meataxe approach, there are local things that the Feds probably should be involved with. Sewage treatment comes to mind, because contaninated water knows no local, state boundaries. It is a "common enemy" to all.
What I am saying, is that at least in my state, the state government has been starving local governments of their share of tax revenues so they can say they are reducing taxes when in reality they are keeping more under state control. And over the decades the states have become complacent and passive, relying themselves on Fed dollars and let the Feds take the heat for rising taxes. All of which makes towns more and more reliant on Federal dollars for even the most basic services and improvements.
I don't think we need the Federal government so entangled in our daily lives. There is a good reason for having a Federal system and I think we have all forgotten how it is suppossed to work.
@bradenslen That sounds infuriating and a real problem. But I think the too much paperwork and bureaucracy nightmare can be solved in other ways than getting rid of federal transfers. Just look at the difference between 1929 and 2008—the near trillion dollars of stimulus wasn’t enough, but it sure helped.
@Bruce Most of that went to bailing out banks plus GM and Chrysler. Federal money for local programs actually decreased for a few years. Note: I'm not talking about highway funds that really didn't go to local governments
@bradenslen I'm not saying they did a great job with the stimulus*, but if multiple major banks had failed and the car companies had folded, we'd probably have had a full scale replay of the Great Depression. I guess one could make the argument that they should have been nationalized instead of bailed out, but that would have taken just as much money.
There are definitely problems with the system and perhaps the federal government should distribute more of the money through the states, so local governments don't have to deal with it directly. I just think that the federal government centrally collecting taxes and redistributing them is, on the whole, better for the country than it not doing so.
* I think the political decision to keep it under $1 trillion was a bad idea. If there had been more money, they could have directed money to local governments at the same time as they stabilized the national economy.