America's Federal Institutions: Arguments Without End
First published: March 31, 2025
The sledge hammers swung at America’s federal institutions in President Trump’s first weeks in office, from USAID and the Veterans Administration to the Department of Education, have shocked many in their speed and scope. But they haven’t come out of nowhere.
Mr Trump has been scathing of what he calls the deep state since his first run for president in 2016, and the federal Department of Education for one was high on his list for demolition back then.
Project 2025, the report from a right-wing think tank seen as a blueprint for a second Trump term when its contents were revealed two years ago, outlined a detailed plan for the department’s abolition. Within it was a proposal for a massive reduction in federal funding for education that its critics predicted would hollow out America’s public school system, and disadvantage students from the poorest homes at all levels of education. (Over half of the department’s annual budget in 2024 went towards supporting state and local education systems, promoting educational equity, and federal grants and loans to higher education institutions and students.)
While candidate Trump repeatedly denied any knowledge or ownership of Project 2025, much of it could yet happen in short order, subject to a so-far compliant Congress having a final word on the education department’s closure.
It’s notable, though, that the US never had a standalone department for education at a federal level before 1979. After an unsuccessful attempt to establish one during the Reconstruction Era, in the wake of the Civil War, more than a century followed during which several other attempts were made to create on. It was the Democrat president Jimmy Carter who finally succeeded in making the case, carving the current department out of the then Department of Health, Education and Welfare.
But the arguments against the new department’s existence didn’t stop. Republicans who espouse traditional American values (read: small government, low taxation, focus on family, and liberty of the individual) have also continued to attack federal involvement in education, not only for its cost in tax dollars but also for its intrusion on matters they argue should be state, local and family matters.
“A government big enough to give you everything you want is a government big enough to take from you everything you have.”
In Ronald Reagan’s first campaign for the presidency in 1980, barely a year after the Department of Education was born, he vowed to eliminate education as a cabinet post; promising two years later that the department itself would be abolished. It was a promise he couldn’t keep, but one that was congruent with the most memorable line from his inauguration speech: “… government is not the solution to our problem; government is the problem.”
Despite continuing calls for the department’s abolition, it never came. Instead, as its programs expanded, the department’s budget ballooned under successive administrations, Democrat and Republican, from an inflation-adjusted $57 billion in 1980 to $268 billion in 2024. [Source: US Office of Management and Budget]
Challenged from the start
The struggle between those advocating for strong federal institutions and those seeking to block, limit or dismantle them has been a defining feature of American political history from the get-go.
Before political parties existed, George Washington’s first presidential term was rattled by endless arguments between his Treasury Secretary Alexander Hamilton and Secretary of State Thomas Jefferson. One of the hardest fought was over the proposed establishment of a fledgling central bank.
In 1791, Hamilton, the most prominent advocate of federal economic power, successfully pushed for the creation of the First Bank of the United States; to stabilize the economy, facilitate credit and act as the government’s banker. It was styled on the Bank of England that had been founded around a hundred years earlier. But opponents, led by Thomas Jefferson and James Madison, argued that it was unconstitutional and concentrated excessive power in federal hands. Congress allowed the bank’s charter to expire in 1811.
A second attempt by the federalists to create a strong central bank in response to the economic disruption caused by the War of 1812 led to a 20-year charter for the Second Bank of the United States in 1816. It would have a similar role to the First Bank, face much the same political opposition and, once again, be forced to close when its charter expired in 1836.
Despite multiple financial crises and commercial bank failures through the rest of the nineteenth century, it took until 1913 for Congress to pass the act that created the nation’s first enduring central bank: the Federal Reserve. But even the permanence of that institution has been frequently questioned, particularly among libertarians, populists and fiscal conservatives who have argued among other things that the Fed’s independence from Congress is unconstitutional; it supports crony capitalism; and that it both contributed to and failed to anticipate the two worst financial crises of the past hundred years: the Great Depression of 1929 and the Global Financial Crisis of 2008.