Tuesday, July 04, 2017

Federalism? It's not just for racists anymore.

Each day, it seems, the tenor of public discourse in our country deteriorates further. Bill Kristol--editor of the Weekly Standard and a man with deep roots in the conservative movement--asked on Twitter last week how badly Donald Trump is degrading our public discourse. It was an interesting question to consider this July 4th, as we find ours burrowing deeper and deeper into the mud, but it would be mistake not to recognize that we were in this mess well before Trump came along.

As illustrated in these graphs from the Pew Research Center, the antipathy between Republicans and Democrats has been worsening steadily for decades. The resentments of red state and rural America toward urban elites are nothing new. They were, after all, the subtext of the culture wars dating back to Richard Nixon's law and order campaign and Vietnam war protests. Donald Trump is less the creator of the divisions that plague us than a man who knows how to take advantage of them.

It is against that backdrop that David French wrote an article last month in the National Review entitled "We’re Not in a Civil War, but We Are Drifting Toward Divorce." In that piece, French proposed a serious national conversation about the merits of federalism as one possible solution to the deep resentments that have infected our politics. Federalism--the strengthening of the power of the states relative to the federal government--is deeply rooted in the U.S. Constitution, but it is also a word with deep partisan resonance. Nearly four decades ago, just weeks after the 1980 Republican National Convention, newly nominated Republican Party presidential candidate Ronald Reagan gave a speech at the Nashoba County Fair in Mississippi in which he endorsed state rights. It was a speech that strengthened the ties between southern Democrats and the Republican Party, and that also indelibly linked the notion of federalism with southern segregationism and the oppression of minority rights in the United States.

Notwithstanding that history, French's proposal should be taken seriously. A case can be made that a return of public policy and public finances to the states--as originally contemplated in the Constitution--should be compelling to Democrats, as it has long been to Republicans. The current system has become dysfunctional, as gridlock at the federal level is now taken for granted. While each party yearns to win a moment of single-party dominance, that is a poor recipe for stable, long-term policymaking. Democrats should be under no illusion that Donald Trump is the problem; were he to leave office tomorrow, it would do nothing to ameliorate our sectarian animosities. Instead, his supporters would only be more enraged than they already are, more convinced than ever that the elites have stuck it to them once again. Nothing looms to get any easier.

The irony of the rise of Trump and red state and rural resentments felt toward coastal elites is that--from a financial vantage point--red states have a pretty good deal. Each year, with a handful of exceptions, red states get back substantially more money than they send to Washington, DC. This is neither a new nor an accidental phenomenon. When the federal income tax was approved with the passage of the Sixteenth Amendment to the Constitution just over one hundred years ago, it was pushed largely by Democrat populist politicians in southern and western states as a strategy to tax the rich--meaning then, as now, primarily wealthy Republicans. And it worked, to the tune of billions and billions of dollars provided annually to red states, courtesy of blue state taxpayers.

The federal income tax has had several consequences, some intended and some not. It has achieved the primary goal of those that promoted it, as it put in place a systematic flow of subsidies from wealthier, more prosperous states to poorer states. Ironically, however, by creating a mechanism to facilitate the raising of revenue at the federal level, it also engendered a shift in power from the states to the federal government. Therefore, what began as a populist-inspired constitutional amendment led directly to the rise of the centralized state, ultimately planting the seeds for the culture of resentment and populist backlash that Donald Trump rode to the White House.

Prior to the 16th Amendment, the Constitution provided a very different model for public finances, and public policy overall. It envisioned a weaker central government with limited taxing power. Rather than direct federal taxation, it provided that each state would be "apportioned" its share of federal funding required for annual federal budget purposes. Each state--for richer or for poorer--was responsible for remitting an equal contribution to the federal treasury on a per capita basis. In the modern context, there could be several advantages for returning to a federalist apportionment model to replace the federal income tax. First and foremost, as French suggests in his article, it would allow each state to pursue public policies that reflect their own unique culture and politics. Thus, in the area of taxation, California might choose a progressive income tax to raise its required federal apportionment, while Texas might choose a flat tax.

The Constitution similarly envisioned a decentralized structure for public policy and governance. With taxation decentralized under a return to an apportionment structure, public policy at the state level would become more meaningful. Once states were made directly responsible for raising funds to be sent to Washington, the natural political instinct would be to resist shipping that money to Washington, DC, creating a natural institutional brake on spending at the federal level. While Republicans have long seen a return to federalist principles as a means to reduce the overbearing role of the federal government over public policy, a federalist structure that returned both fiscal capacity and policy authority to the states could provide blue states with ability to pursue public policies tailored to their own political priorities and culture. Freed of the disproportionate fiscal impact of the federal income tax, California might choose to use its newfound resources to implement a single payer healthcare system, Hawaii a universal basic income to revamp the social safety net, and New York a return to near-free access to higher education. As a nation, returning fiscal resources and authority to the states would reduce the resources and authority now vested in Washington, DC, and give meaning to the notion of the states as laboratories for public policy innovation.

The political divisions that are so prominent today are by no means bounded by state borders; they are as much urban vs. rural as they are coastal or regional. As such, devolving power back to the states would not make those differences go away. But it would make them more local, and, perhaps, inherently more manageable. The bogeyman that is now Washington, DC would be closer to home--Sacramento, Albany or Austin--and public policy and budget choices would be made closer to where the impacts would be felt. And at the end of the day, residents would be able to vote with their feet as well as at the ballot box, choosing to migrate between states as public policy choices and economic opportunities changed how the states were viewed relative to each other. States would truly become accountable for their own political and policy choices.

Federalism may or may not be an attractive solution for the strident divisions that now plague us, but--notwithstanding the negative connotations of the term in some people's minds--it is one that should not be dismissed out of hand. Perhaps the most important aspect of having such a conversation would be if it led to a recommitment to the unity of our nation, to preserving what we have accomplished as a nation with a strong center. On the other hand, it could change minds in the other direction. When I discussed David French's piece with a long-time lefty friend from New York, he found the notion abhorrent, struck mostly by the notion that it would leave poorer residents of Alabama to the whims of that state's politics. Later in our conversation, however, my friend's view softened a bit, largely reflecting recognition that there might not be any easy fix. "You know, it all goes back to the Civil War. Perhaps we would have been better off if Lincoln had freed the slaves, and then let the southern states go on their way." 

Read it at the HuffPost.

Follow David Paul on Twitter @dpaul.

Artwork by Jay Duret. Check out his political cartooning at www.jayduret.com. Follow him on Twitter @jayduret or Instagram at @joefaces.

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