Wednesday, February 20, 2013

I does not work, never has (USSR), never will

President Barack Obama’s State of the Union address illustrated what a dead letter federalism is among Democrats. Not that further illustration was necessary.

Federalism holds that the national government should limit itself to things of truly national scope. Things that are primarily of local concern should be left to state and local governments.

Federalism was a big deal to the founders. They wanted an energetic national government, but one that was confined to enumerated national functions. The founders also envisioned a bright line between the federal and state governments, each sovereign within their own spheres.

We are a long way from that. Today, the Democratic Party sees virtually nothing as outside the purview of the federal government. The Republican Party talks a good game about federalism, but usually ends up undermining the principle when it acquires national power.

Today, the lines between the federal government and state and local governments are hopelessly blurred. The federal government spends over $600 billion a year on grants to state and local governments. Arizona state government receives more in federal funds than it raises in general-fund taxes.

Today, state governments operate principally as service delivery mechanisms for federal social-welfare programs. This means that there is no real political accountability for the programs, which is why they grow and function like a blob.

If Medicaid costs are spinning out of control, who’s to blame and who should do something about it? The federal government that provides most of the funding and sets up the basic rules, or the state governments that actually administer the program? The food stamp program has grown astronomically of late. Purely a function of a bad economy, or is there something else going on? Whose job is it to figure that out?

President Ronald Reagan wanted to sort out the blob with his new federalism initiative, clearly making some functions, such as Medicaid, fully federal, while making other functions, including most welfare programs, fully state and local. There were some Democratic governors at the time, including Arizona’s Bruce Babbitt, who were also interested in a sorting out of responsibilities.

But agreement was never reached, nothing of significance happened. So, the blob endured and grew.

Obama proposes to feed it even more. The federal government should establish manufacturing innovation institutes in economically distressed areas and provide incentive grants to states to increase the energy efficiency of homes and businesses.

The federal government should fix 70,000 bridges and create a federal fund to modernize ports and pipelines. The federal government should have a new grant program to get high-school graduates better ready for high-tech jobs. And, according to Obama, the federal government should make sure that every kid has access to high-quality preschool.

The federal government, however, does not have a greater interest in the recovery of economically distressed areas than the states in which they are located, or greater insight into how to turn them around. Every bridge in America is located in a state and local community that has a greater interest in its condition than the federal government.

Every port and pipeline in the United States is located in a state and local community. If there are gains to be had from modernizing them, local governments have a greater incentive to get it done and done right than the federal government.

Every kid in America lives in a state and local community that is more interested in his education and workplace preparedness than the federal government. What do we really have to show for the increased federal involvement in education, under George W. Bush or Obama?

The federal government is broke, and broke in a way that threatens the American economy. Proposals that it do even more are surreal, even if they are supposedly paid for. If there’s loose change to be had, the federal government should use it to reduce the deficit, not further expand its reach.

It’s nowhere on the horizon, but a revival of Reagan’s new federalism discussion is badly needed.

1 comment:

Baxter said...

Yeah - it all started with that damn interstate highway system under Eisenhower (who balanced his budget). We should instead take Reagan's approach (who started the era of massive deficits through supply side tax cuts).

18th century style federalism is hard to maintain in the 21st century. We are one nation, not 50. Practically speaking, the interstate commerce clause applies to almost everything. Each state can't have it's own Social Security or old age healthcare system. It would not be efficient and a "race to the bottom" would reward states that ignored the poor and old while punishing those that chose to help those in need.