Historian Burt Folsom has a very interesting post identifying the parallels between the handful of state governors who are rejecting federal stimulus dollars today and those governors who did the same during the Great Depression:
This question of whether or not to take federal funds also perplexed some of the governors in the 1930s during the massive federal spending of the Hoover and Roosevelt presidencies. For example, in 1932, under the Emergency Relief and Construction Act, welfare was first made a federal function. Before that, states and private charities provided one on one relief service for hungry and jobless people in their communities. With the promise of federal funds, the governor of Illinois (and the mayor of Chicago) declared urgent and dramatic need. In doing so,they secured over $55 million of this fund--more than New York, California, and Texas combined….
Governor Joseoh Ely of Massachusetts asserted his independence from federal aid. "Whatever the justification for relief," Ely said, the fact remains that the way in which it has been used makes it the greatest political asset on the practical side of party politics ever held by any administration." In 1934, Massachusetts succumbed to pressures to take federal funds. Governor Ely retired and James Curley won election to replace him. Under Governor Curley, Massachusetts claimed massive federal need and received over $100 million in federal aid for welfare by 1935. Here was the new game from Washington: Which states could argue most convincingly for need and attract more federal dollars than they paid in?
One of the many dangers of the stimulus bill is that it will remove incentives for states to solve problems they created and encourage states to look to Washington to try to secure more money than they pay in taxes. This is not responsible constitutional government, but grab bag politics and democracy at its worst.