If I had to sum up, in one punchy thought, what I learned while doing a graduate degree in Church-State Studies here is what I would say: When in doubt, it is wrong for the government to become “entangled” in the lives of religious groups and people.
There are many ways that this can happen. The government could discriminate in favor of one or more religions. On issues of free speech and association, government leaders could decide that religious faith is uniquely good or uniquely bad, in comparison to other subjects advocated by non-profit groups. It could relate to religious content and work in ways that are different from how it relates to, oh, science, arts, sports, etc., etc.
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