"The Congress shall have Power To ... provide for the ... general Welfare of the United States" seems broad enough to support the constitutionality of Federal research grants.
The Framers were divided between two possible interpretations of the general welfare clause: one proposed by Madison, and another by Hamilton. Neither interpretation seems to justify giving money to universities.
Madison argued that the general welfare clause was not an indepdent source of power. Rather, the term "general welfare" was (according to him) merely a synonym for the enumerated powers considered collectively. Thus, the general welfare clause did not confer any new authority, but merely functioned as a limitation on the power to tax. Under this interpretation, it is clear that federal research grants are not constitutionally permissible.
Hamilton argued that the general welfare clause was indeed an indepdent source of federal authority, over and above the enumerated powers. However, he did not believe that the spending power was unlimited. He argued: "The only qualification of the generallity of the Phrase in question, which seems to be admissible, is this--That the object to which an appropriation of money is to be made be General and not local." Arguably, education is a purely local rather than "General" (i.e., federal) issue.
If the funds were earmarked for specific schools, I'd agree with you, but not for funds that are generally available even if each individual grant happens to be "local".
I agree, but I would not characterize one who receives money as a "state actor." I was under the impression that this term is normally reserved for government itself, and not applied to private entities who are not acting on the government's behalf.
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I doubt if the government would like for the entities receiving research money to not do the research their grant proposal called for. Rather they are acting to do research on the government's behalf. That basically means that the restrictions on what the government can tell them to do are a combination of they can't have them do things direct employees couldn't do and whatever would be politically unpalatible. The Federal government has a rather broad grant of constitutional powers, a grant I would like to see narrowed and concentrated in the legislative branch rather than either of the other two branches, but to deny over two centuries of Constitutional interpretation "is now water over the dam."