Nullification opponents would have you believe that withdrawing from any federal program will unleash a tsunami of chaos. But when North Carolina recently did just that, the end result was more like a beautiful day on the beach.

When the strategy of nullifying federal programs through state non-participation and non-cooperation first started gaining traction, opponents attacked, arguing that states couldn’t legally refuse to participate. But the legal truth forced them to abandon that argument. Under the well-established anti-commandeering doctrine, even the federal courts agree that the federal government can’t force states to enforce federal mandates or implement federal programs. States can legally opt out.

That reality forced opponents of nullification through non-participation to fall back on fear-mongering. Even when conceding that a state can legally refuse to participate, opponents claim that withdrawing from various federal social programs will cause havoc and harm, especially to those most in need.

But what if the opposite were to prove true? What if withdrawing from federal programs actually benefits state residents?

Recent evidence from North Carolina indicates that might be the case.

Last year, North Carolina made the decision to withdraw from the federal extended unemployment benefits program. Opponents went ballistic, calling it a “war on the unemployed.” Guess what? People didn’t die in the street and the economy improved.

According to a Wall Street Journal article, both labor market performance and economic growth improved in the months after extended unemployment benefits were cut.

North Carolina didn’t descend into the Dickensian nightmare critics predicted. For the last six months of 2013, it was the only state where jobless recipients weren’t eligible for extended benefits. Yet during that period North Carolina had one of the nation’s largest improvements in labor-market performance and overall economic growth.

According to the U.S. Bureau of Labor Statistics, the number of payroll jobs in North Carolina rose by 1.5% in the second half of 2013, compared with a 0.8% rise for the nation as a whole. Total unemployment in the state dropped by 17%, compared with the national average drop of 12%. The state’s official unemployment rate fell to 6.9% in December 2013 from 8.3% in June, while the nationwide rate fell by eight-tenths of a point to 6.7%.

Defenders of the unemployment program argue that it was all smoke and mirrors, but digging into the numbers indicates that the job market and economic improvements were real and substantial. Data gathered after the extended benefits expired across the nation bolsters this view.

As of Jan. 1, 2014, the extended-benefits program expired nationwide. Yet there has been no sudden exodus of discouraged workers to the fringes of the national economy. Both job creation and household employment are up. The nation’s employment-population ratio was 58.9% in May, up from 58.6% in December. The labor-market effects of reforming unemployment insurance may not be massive. But they certainly don’t appear to be negative.

We should never allow the federal government to continue exercising unwarranted powers simply due to pragmatic concerns. Even if nullifying an unconstitutional federal program causes short-term difficulties, states should still act. In the long-run, continued concentration of power in D.C. poses a far greater threat than the elimination of a single program. But North Carolina’s experience in ending extended unemployment indicates that those pragmatic concerns don’t even always hold water. Opponents use fear-tactics to bully states into acquiescence.

States need to take action to free themselves from the federal mandates and regulations that inevitably come with their programs. State governments become addicted to the federal funding carrot dangled in front of them and fail to feel the sting of the stick. And opponents of nullification somehow manage to convince everybody that the sting is actually pleasure,

North Carolina has peeled that lie away. Federal actions often hold states back. Monopoly power crushes innovation. It’s time to break the monopoly!


Mike Maharrey

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