State AGs say "Cornhusker Kickback" is unconstitutional.

The Cornhusker Pushback

Excerpt:

Under the "Cornhusker Kickback," the federal government will pay all of Nebraska's new Medicaid costs forever, while taxpayers in the other 49 states will see their budgets explode as this safety-net program for the poor is expanded to one out of every five Americans.

"In addition to violating the most basic and universally held notions of what is fair and just," the AGs wrote last week to the Democratic leadership, the Article I spending clause is limited to "general Welfare." If Congress claims to be legitimately serving that interest by expanding the joint state-federal Medicaid program, then why is it relieving just one state of a mandate that otherwise applies to all states? In other words, serving the nongeneral welfare of Nebraska—for no other reason than political expediency—violates a basic Supreme Court check on the "display of arbitrary power" that was established in 1937's Helvering v. Davis.

Obviously Congress treats different states differently all the time, via earmarks and the like, but in this case there is simply no plausible argument for some kind of "general" benefit. The only state that gains from special treatment for Nebraska is Nebraska—and this actively harms all other states, which will have fewer tax dollars for their own priorities while effectively subsidizing the Cornhusker state.

The 12 Attorneys General are all Republicans, but as it happens their complaints are echoed by the liberal states of New York and California. In a December letter Governor Arnold Schwarzenegger lamented that ObamaCare would impose the "crushing new burden" of as much as $4 billion per year in new Medicaid spending in a state that is already deeply in the red. And in a Christmas Day op-ed in the Buffalo News, New York Governor David A. Paterson protested the almost $1 billion in new costs as well as the "unfairness of the Senate bill" when "New York already sends significantly more money to Washington than it gets back."

The reality is that national taxpayers have subsidized New York and California's social services for years because Medicaid's funding formula rewards higher state spending. That spending helps explain why these two states, plus New Jersey, are in such budget fixes today. But we welcome Mr. Paterson's discovery that redistributing income via progressive taxation is harmful.

"The final bill must provide equitable federal funding to all states," Mr. Paterson insisted, and in that sense Mr. Nelson may be right about his opening the political door. As Democrats merge the House and Senate bills, they may extend the 100% Nebraska deal to all states to shut them up, assuming they can rig the budget math. Of course, that gambit would harm either medical providers, given that state Medicaid reimbursement rates are well below even Medicare's, or Medicaid patients, as more doctors and hospitals simply drop those patients.

We recognize that mere Constitutional arguments won't deter the political juggernaut that is ObamaCare. But no one should be surprised when Americans wonder if this unprecedented federal intrusion into their lives violates our nation's founding principles.

Comment: Meanwhile .... Democratic Leaders Plan Secret Health Reform Deliberations