How does conditional federal spending work, like highway funding tied to drinking age?

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The spending power gives Congress authority to achieve policy goals it cannot reach through direct regulation. When the Tenth Amendment reserves powers to states, Congress can use its Article I, Section 8 spending power as a workaround: offer federal money with conditions. The Supreme Court allows this as long as conditions meet the Dole test. But NFIB v. Sebelius (2012) added an anti-coercion principle: when threatened loss becomes so large that states have no real choice, it crosses from permissible incentive to impermissible commandeering. The Medicaid expansion threat (lose all Medicaid funds, over 10% of state budgets) exceeded this limit, while South Dakota's highway threat (less than 0.5% of budget) did not. This creates a sliding scale where Congress has wide latitude to attach strings to federal grants as long as the strings don't become a noose.

How does conditional federal spending work, like highway funding tied to drinking age?

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