The Texas Public Policy Foundation's Excellent Stance on Federalism

So, I've had my disagreements with TPPF over their proposed higher education reforms (see here, here, here, and here), but we are very much in agreement on issues of federalism, it turns out. The TPPF has submitted an amicus brief in Eleventh Circuit Court of Appeals in support of the constitutional challenge to the Patient Protection and Affordable Care Act (i.e. health care reform or ObamaCare) filed by 26 states attorneys general. The amicus brief supports and develops an argument in Federal District Court Judge Roger Vinson's ruling that PPACA is unconstitutional. Mario Loyola, an attorney who drafted the brief, describes it for National Review Online:

The case is on appeal from the federal district court for northern Florida, where Judge Vinson struck down the law, holding that the individual mandate exceeds the power of Congress to regulate commerce “among the several States.” Most attention has focused on this aspect of Judge Vinson’s ruling.

Our brief, however, focuses on another part of Judge Vinson’s ruling, namely his extraordinary finding of summary judgment for the government on the Medicaid expansion provisions of the new health-care law. (See pp. 6–13 of the ruling.) The states had argued that these provisions, which require states to expand Medicaid rolls and absorb part of the cost themselves, constitute an unconstitutional commandeering of state governments through a coercive use of conditional federal funds. This issue tests the limits of the Spending Clause (rather than the Commerce Clause) of the Constitution. Among the controlling cases is South Dakota v. Dole (1987), in which the Supreme Court upheld a federal law that threatened states with the loss of five percent of federal highway funds if they did not raise their drinking age to 21.

Writing for the majority, Chief Justice Rehnquist noted, “Our decisions have recognized that, in some circumstances, the financial inducement offered by Congress might be so coercive as to pass the point at which ‘pressure turns into compulsion.’” But in the years since Dole, federal courts have barely paid lip service to the principle of coercion, while in fact upholding virtually every conditional federal grant. Judge Vinson concluded that the federal courts had failed to develop any meaningful doctrine of coercion, and implicitly the federal spending power is unlimited with respect to conditional federal grants. This ruling was perhaps a blessing in disguise. He essentially called the Supreme Court’s bluff: Either affirm coercion in this case, or drop the pretense of a coercion doctrine.

Developing this theme in our brief, we argue that the practice of federal grants to the states conditioned on state compliance with federal policy preferences must have some limit, otherwise there is no way to protect state autonomy or the structure of our Constitution from federal coercion.

Since states retain substantial police powers denied the federal government by the Constitution, establishing limits on the national government's ability to co-opt state governments are critical for maintaining a system of limited national government.these limits are especially important in light of the federal government's broad powers to tax and spend under the Constitution. Since federal taxation can crowd-out the ability of state governments to raise revenue, limits on fiscal coercion are essential for preserving the boundaries on federal power enumerated in Article I, Section 8.