Government money always came with strings. Trump is just pulling them a lot harder.
Growing up in the 1970s, I remember one of the more bizarre spectacles of that decade’s energy crisis: police cars deliberately slowing down the freeways.
The new national speed limit was 55 miles-per-hour, and Americans were not enthusiastic about it. On Highway 15 that connected Los Angeles to Las Vegas, the California Highway Patrol deployed dozens of “pace cars” blocking every lane of the highway, driving at 55 and forcing everyone behind them to do the same.
In other parts of the country, the rule seemed even more absurd. Montana had long allowed motorists on its highways to drive at any speed that was “reasonable and prudent.” Suddenly, Montana too had to impose a maddeningly slow 55-mile-per-hour maximum on its wide-open highways. Its own law explicitly acknowledged why: the limit would remain in place as long as federal law required it as a condition for receiving federal highway funds.
Why did California, Montana, and eventually every other state go along?
Money.
Until the 1970s, speed limits had always been a state and local matter; there was no national speed limit. But in response to the oil crisis, President Richard Nixon signed the Emergency Highway Energy Conservation Act in 1974, stipulating continued federal highway funding on states adopting a 55-mile-per-hour limit. The “temporary” emergency measure was later made permanent, until its unpopularity forced its final repeal in 1995.
Americans hated the infamous “Double Nickel” speed limit. When I learned to drive, even before I got a car, I bought a radar detector to detect cops using radars. A decade later in 1984, rocker Sammy Hagar turned the resentment into a national anthem of highway rebellion: “I Can’t Drive 55.”
Around that time when Sammy Hagar was playing on my car radio (while I used my radar detector to exceed the 55 MPH speed limit), was when I – or more specifically, my younger brother – experienced the government’s heavy hand again. The drinking age, like speed limits, had always been a state and local matter. But now the federal government sought to force every state to raise its drinking age to 21. I was grandfathered in when my state’s drinking age was raised above 18, but my brother, two years younger than me, had to wait until 21 to legally have a drink.
Many states resisted, but resistance was futile. New York’s Assembly actually voted down a 21-year drinking age in 1984. Then President Reagan signed the National Minimum Drinking Age Act providing that states maintaining a lower age would begin losing federal highway funds—5 percent initially and eventually 10 percent. This was enough to make New York and every other holdout state eventually cave. One last holdout, South Dakota, challenged the law all the way to the Supreme Court, and lost.
Whether 55 was the right speed limit or 21 a sensible drinking age is not the issue here. The issue is how Washington got its way: it controlled the money.
Loose Strings Eventually Get Pulled Tight
Government money is often presented as if it were free money: a grant, a subsidy, an appropriation, a research award. Take the money and use it for some worthwhile purpose. Of course, no government money is “free” since it must be paid for with taxes. However, it is also not free in the sense that there are always strings attached: there is no such thing as government money without the government having the power to tell you how to use it.
The conditions may be modest at first. They may even seem unobjectionable. And for years the strings may hang loose enough that recipients hardly notice them. Then a new administration takes office and pulls.
This is what American universities, cultural institutions like the Kennedy Center, the Smithsonian Institution and its museums like the National Museum of African American History and Culture, the National Parks, and numerous cities and states, are discovering under President Donald Trump.
Consider the universities. For decades, universities eagerly built vast research enterprises and rapid enrollment growth around federal funding. After World War II, Harvard, Columbia, and other major institutions came to depend on billions of dollars in federal grants, contracts, and student tuition subsidies. Whatever formal conditions accompanied those programs, universities plainly did not expect Washington to use cancer research funds, medical grants, and scientific funding as bargaining chips over who they admitted, who they hired, how they disciplined students, or what political viewpoints were represented on campus.
Then along came Trump.
In April 2025, the new administration presented Harvard with a remarkable list of demands. Among other things, Harvard was told to change its hiring and admissions policies, restructure parts of its governance, provide admissions and hiring data to federal auditors, and arrange outside audits of the “viewpoint diversity” of its students, faculty, and staff, department by department. If not, there would be consequences.
Harvard found out those consequences when it initially refused.
Within hours of its refusal, the administration froze $2.2 billion in research grants and $60 million in contracts. Additional funding was subsequently targeted. Earlier, Columbia University had already lost $400 million in federal grants and contracts. After months of pressure, it caved in to a number of the Trump administration’s demands, and ultimately had to forgo $221 million in funding for having the temerity of not doing the government’s bidding.
Harvard fought back in the courts. A federal judge later ruled that the Harvard funding freeze was unlawful, and the administration appealed. But the damage was done. The court ruling did not change the fundamental fact that government control always exists when there are subsidies. Moreover, despite the ruling in Harvard’s favor, the Trump administration has found new ways to reduce Harvard’s funding. A subsidy always implies coercion, sooner or later.
The universities have not been the only targets. The Trump administration has used the “power of the purse” to attempt to force states to cooperate with its campaign against immigrants. So-called “sanctuary cities” and states have seen Trump’s administration threaten to withhold transportation, homelessness, and disaster aid unless they order their police departments to work with ICE. So far, courts have blocked those efforts as exceeding executive authority.
The old highway trick has even returned. In 2026, the Trump administration withheld more than $73 million in highway funds from New York after the state refused federal demands to revoke non-citizen immigrants’ commercial driver’s licenses. New York sued.
More than fifty years after Washington told the states, “Drive 55 or lose your highway money,” this method of coercion is being used again.
Trump Didn’t Invent This, But He Is Far More Brazen
Trump didn’t invent subsidy coercion, although he is far more brazen in using it. Presidents of both political parties have discovered that the federal power of the purse can be used to control.
In one highly publicized case, Democratic President Obama’s Education Department used Title IX to reshape university disciplinary procedures for sexual-misconduct cases. Its infamous 2011 “Dear Colleague” letter instructed universities to use a preponderance-of-the-evidence standard and strongly discouraged direct cross-examination between accuser and accused. Critics said these new procedures stripped college students and faculty accused of sexual misconduct of their legal rights to due process. Regardless of whether this was the right approach to sexual misconduct on campus, universities did not have a choice. The lever behind the seemingly innocuous Dear Colleague “request” was a cudgel: the threat of the loss of billions of dollars of federal financial assistance.
Another example of using federal spending to achieve control came with Obamacare. The 2010 Affordable Care Act required states to expand Medicaid or potentially lose their existing federal Medicaid funding, a huge amount of money (then over $250 billion). In 2012, the Supreme Court held that this went too far. The threatened monetary loss was so large that the states no longer had a meaningful choice. Chief Justice John Roberts famously described it as “a gun to the head.”
Subsidies Inherently Entail Coercion
A subsidy does more than transfer money. It changes the relationship between the giver and the recipient.
Imagine a university that receives no government money. The U.S. president may denounce its admissions policies, curriculum, faculty, or politics. He can complain all he wants. But he has little ability to make the university obey him. (Hillsdale and Grove City College are two notable colleges that have refused all government funding, in order to maintain their independence on a number of issues.)
Now suppose that a university receives hundreds of millions or billions of dollars each year from Washington. The “power of the purse” changes everything.
The university may tell itself that the money is for scientific research, not politics. It may assume that the government will respect academic independence. Perhaps administrations do exactly that for twenty or thirty years. But the dependency is always there, lurking under the surface.
Eventually, someone arrives in Washington who decides to use it. The subsidy is like a leash that can lie slack for years. The fact that nobody is pulling it today does not mean it isn’t there.
This is why the current university protests against Trump appear disingenuous. Universities are right to object when government officials attempt to dictate whom they hire, what they teach, or which political viewpoints their faculty should represent. Such actions violate academic freedom, freedom of speech, and can impair scientific progress.
But the same universities spent decades pushing for and accepting the financial relationship that made such threats possible. They wanted government money, but without government control. Now they are discovering that is a contradiction. Government money and control cannot be separated.
The Solution: End Subsidies, Separate State and Economy
In my May 2026 essay, “How to End Cronyism,” I made a similar argument for ending cronyism, where businesses seek favors from the government. Using the First Amendment’s separation of church and state as an analogy, I argued for the separation of state and economy.
The First Amendment does not try to create a fairer system for distributing government favors among Episcopalians, Catholics, Baptists, Jews, Muslims, and atheists. It simply and cleanly (more or less) removes the federal government from the business of establishing and subsidizing religion in the first place. Religious freedom is protected by taking away a government’s ability to fund (establish) particular religious sects.
Economic life needs the same principle. The current spectacle of Trump using the threat of withholding money to coerce institutions across America is strong evidence.
Government should protect individual liberty by providing and protecting the institutions that safeguard it: property rights, enforcing contracts, punishing fraud and force, and providing impartial courts. But it should not pick winners and losers via subsidies, preferential loans, bailouts, grants, tariffs, exemptions, and other economic favors that inevitably entwine government with the private sector.
This principle applies to universities and all the other institutions and jurisdictions that Trump – and prior presidents – have threatened.
If universities, museums, and research labs want independence from Washington, they should not be financed by Washington.
If states want genuine autonomy, the federal government should not be able to tax their citizens, send part of the money back to state capitals, and then announce the conditions under which they may receive back their own money.
Critics will immediately ask what happens to all the worthy (and some not so worthy) activities currently receiving government support: scientific research, education, healthcare, infrastructure. This is a worthwhile question that requires a separate, fuller discussion. But note that all of these things have been provided abundantly and privately in the past, before government ever got involved. And despite the huge amount of government subsidies that today crowds out private money, there is still considerable private funding in all of these areas, including areas such as basic scientific research, where more than 50% comes from private, non-governmental sources.
The advantage of private funding is that it is voluntary and there are multiple sources, not one monolithic source that can become politicized and used to effectively control private institutions.
Government funding is different because government ultimately operates through coercion. Give it financial control over an institution and, sooner or later, a politician will be tempted to turn that financial control into political control.
We Must Cut the Strings
Trump did not create the federal spending power. He did not invent conditional grants and subsidy coercion. He did not invent the practice of using federal money to coerce cities, states, and institutions to do the things Washington wants.
Nixon did it. Reagan did it. Obama did it. Presidents of both parties have been doing this for decades.
Trump has merely dispensed with the pretense that this money did not come with strings attached. His brazenness makes the underlying relationship harder to ignore.
People who dislike Trump’s university policies may hope that courts restrain him or that the next administration uses federal funding more responsibly. But that leaves the machinery intact for the next president… and the president after that.
And conservatives cheering Trump’s use of federal money against universities should imagine the same power in the hands of a future progressive administration demanding ideological changes they despise.
Payback will be hell, but the hell will be revisited back and forth like a wrecking ball with each succeeding administration. And in the interim, Americans will progressively lose their individual freedom – freedom of speech, academic freedom, and scientific freedom – as the government increasingly exercises control over our lives.
The problem is not simply who is pulling the strings. The problem is the strings, which are the unavoidable consequence of subsidies.
There is no durable way to have vast government subsidies while guaranteeing that politicians will never use them as leverage. The solution is not a doomed, quixotic search for better people to control the money, nor a dog-eat-dog never-ending partisan fight for spoils. The solution is to take the money, and therefore the power, completely out of the government’s hands.
When government pays the bills, government calls the shots.
Liberty requires taking away that power. End government subsidies across the board (with a suitable transition period). Then lock in the new policy with a new Constitutional amendment that separates State and Economy.
