Promote Hoosier Solutions to Hoosier Problems

The State That Works:
Promote Hoosier Solutions to Hoosier Problems

Policy Goal: Measure the impact of federal burdens and mandates on Indiana and work with our Congressional delegation to reduce them.

Vision Plan Goals Served:

  • Goal #1: Increasing private sector employment
  • Goal #2: Attracting new investment in Indiana, with emphasis on manufacturing, agriculture, life sciences and logistics

Policy Steps:

  • Issue an executive order to create an office of federalism by transforming the Office of Federal Grants and Procurement into the Office of State-based Initiatives (OSBI) to oversee all new federalism priorities.
  • Task OSBI to lead a task force to study the impact of federal regulations on the State of Indiana and update this study annually.
  • Task OSBI to work with each state agency to develop a “block grant contingency plan” that would allow the agency to more effectively deploy federal resources without federal strings.
  • Task OSBI to submit the annual federal regulatory report and the block grant report to Indiana’s Congressional delegation.
  • Task OSBI to subject any potential federal grant to a cost-benefit analysis that evaluates any fiscal and regulatory costs associated with the grant.

Rationale:

Federalism is one of the cornerstones of our constitutional system. By reserving broad powers to the states and to the people, federalism protects liberty, enhances accountability, and fosters innovation.[1] As a practical matter, we can apply the principles of federalism to solve our problems locally. The simple fact is that Hoosiers know what’s best for Hoosiers.

Unfortunately, the federal government seems to have forgotten the advantages of federalism. Federal spending has effectively bankrupted Washington. Federal handouts almost always come with expensive strings attached. For example, the Patient Protection and Affordable Care Act (“ObamaCare”) promises to subsidize a state’s expansion of its Medicaid rolls, but independent actuaries have pegged the price to Hoosier taxpayers at more than $2 billion over the next ten years.

Moreover, onerous federal regulations hamstring Hoosier businesses. According to the Small Business Administration, there are currently more than 400 federal regulations that directly affect small businesses.[2] These regulations burden the nation’s economy to the tune of a staggering $1.75 trillion annually. Why has hiring still not picked up across the country? Part of the reason is that the cost of complying with regulations averages $10,585 per employee.[3]

The problem is only getting worse. Since 2009, the Obama administration has finalized 193 “economically significant” rules that cost the economy $100 million or more, and there are more than 4,000 new federal regulations in the federal pipeline. The federal regulatory thicket is growing at a frightening rate (see chart).

That’s why the State of Indiana must take the lead in pushing back against federal mandates that stifle Hoosier ingenuity in finding solutions to public policy problems. To achieve this goal, we will transform the Office of Federal Grants and Procurement into the Office of State-based Initiatives (OSBI). OSBI will catalogue the costs of federal regulations on Indiana by studying data, surveying businesses, and talking to Hoosiers. Every year, OSBI will publish a study of these costs and share them with the Indiana Congressional delegation.

In addition, OSBI will develop “block grant contingency plans” with each state agency. These plans will evaluate whether and how Indiana could use federal funds more effectively if there were no strings attached. Block grants carry an enormous potential to save money and to improve the service that the government provides to its citizens. Moreover, block grants establish local control and promote innovation in areas ranging from Medicaid to worker retraining. OSBI will share the findings from the block grant contingency plans with Indiana’s Congressional delegation in an effort to persuade the federal government to return to the principles of federalism.

Working to educate our Congressional delegation, however, is not enough. We must continue to ensure that Indiana makes smart decisions about partnering with the federal government on programs and projects. With this in mind, OSBI will continue to review all federal grant opportunities and subject each grant to a rigorous cost-benefit analysis that will measure the grant’s fiscal and regulatory costs. If the burdens outweigh the benefits, Indiana can and should tell Washington, “Thanks, but no thanks.”

This proposal will make Indiana a national leader in pursuing the ideals of federalism, in solving problems locally, and in improving its business climate. OSBI will help Indiana resist federal mandates in order to prevent the insidious undermining of state sovereignty that occurs as a state becomes more and more reliant upon federal dollars and the attached strings.

Moreover, OSBI will save the state money in the long run by helping Indiana maintain its fiscal solvency. During the last three years, the federal government has added almost $5 trillion in new debt and had its credit rating downgraded. At the same time, Indiana has generated a structural surplus, earned a AAA bond rating, and has more than $2 billion in reserves. By subjecting federal offers to a cost-benefit analysis, Indiana ultimately will conserve state taxpayer dollars and lower the costs of compliance for its citizens and businesses.

Finally, OSBI will help to shine a bright light on the costs of federal regulations on the state government, on local governments, and on Hoosier businesses. By quantifying the costs of federal regulations and by informing Congress, OSBI will help, over the long run, to reduce the federal regulatory burden.

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[1] See Federalist Papers Nos. 42, 45 (Madison).
[2] See http://www.sensibleregulations.org/resources/facts-and-figures/ (quoting The Office of Information and Regulatory Affairs)
[3] See http://www.nfib.com/press-media/press-media-item?cmsid=60164.
[4] See http://www.sensibleregulations.org/resources/facts-and-figures/. (quoting Unified Agendas)
[5] See http://www.nfib.com/press-media/press-media-item?cmsid=60164.