"Charitable Choice" and Religious "Discrimination"

A friend at the Times and Seasons blog was kind enough to point me to this very detailed post, by Professors Vikram Amar and Alan Brownstein (both very reasonable and respected scholars), about H.R. 27, the "Job Training Improvement Act" recently passed by the House.  "If enacted into law," they write, "this bill will allow religious organizations that receive federal funding to provide social services to the needy to discriminate on the basis of religion in hiring employees to staff these federally-funded programs."

They continue:

H.R. 27 - like previous job training bills -- includes a civil rights provision prohibiting grantees who receive federal funds from discriminating on the basis or race, gender, religion and other listed characteristics. But the bill then adds an exception to this provision, permitting religious providers to discriminate on the basis of religion in hiring.

In doing so, H. R. 27 builds on a relatively new policy trend permitting religious discrimination in hiring in government-funded programs.

Amar and Brownstein believe that H.R. 27 violates the First Amendment's Establishment Clause, "as that Clause has been construed by the Supreme Court."  (That is, not the *real* Establishment Clause.  Sorry.  I couldn't resist.)  "It is unconstitutional for the government to allow religious providers receiving direct grants to discriminate on the basis of religion in hiring, when the employees who are being hired are paid out of public funds to provide public services and benefits in government-funded programs."

I'm open to the argument that, as Amar and Brownstein contend, H.R. 27 is hard to square with Justice O'Connor's opinion in the Mitchell v. Helms case, where she insisted that, notwithstanding the neutrality of a particular funding program, grants of direct aid simply cannot be used for religious purposes.  That said, I'm not sure what this conflict tells me -- if anything -- about the wisdom or morality of permitting religious institutions that deliver federally funded social services to "discriminate" on the basis of religion (or, as one might put it, to "protect and maintain their own integrity and identity while at the same time delivering a service that promotes the common good").

I suppose my primary, and perhaps more pedestrian, concern has to do with the use of the word "discrimination" to describe "religious-mission-sensitive hiring" by religious institutions.  I recognize that, in a sense, the word fits; at the same time, particularly in the context of civil-rights legislation (like H.R. 27), the word "discrimination" almost always carries with it the implied modifier, "invidious."  The premise of Amar's and Brownstein's claims, it seems to me, is that H.R. 27 would permit federally funded agencies to do something "bad" with federal money.  And, that would be bad. 

But why, exactly, is it "bad" for religious institutions to engage in religious-mission-sensitive hiring?  Putting aside Justice O'Connor's views and the state of Establishment Clause doctrine for the moment, why should the possibility that a religious institution -- which is, let us assume, providing a social service efficiently and effectively, and in a "non-discriminatory" way, to the needy among us -- might want to retain, as it provides this valuable service to the common good, its religious identity and integrity bother us at all?

Rick