Strong States Strong Nation

Most of the answers to the nation’s toughest policy questions start in our state capitols where the problem solvers are closest to the people.

Anyone who ever wore his country’s uniform knows the transcendent feeling of marching down the parade ground in step with the rest of your unit. Mine was a little like the country whose flag we proudly carried, made up of men from Indiana, Texas, Rhode Island, Illinois, California, Massachusetts, New York, Mississippi and probably a few more states that now are lost to me in the mists of time. In some ways it was the living embodiment of the union, a strong nation made stronger because of its parts-the states.

There has always been tension, however, between the states and the federal government. Read the Federalist Papers and you’ll find it at the very beginning, 218 summers ago. The bewigged collection of extraordinary gentlemen who framed the new constitution featuring a strong central government argued for months over how strong it should be. Alexander Hamilton, as usual, saw the future: “The compacts which are to embrace thirteen distinct States in a common bond of amity and union, must necessarily be a compromise of as many dissimilar interests and inclinations.”

STATES ARE INNOVATORS

But it is precisely those “dissimilar interests and inclinations” that have spawned in the states a creativity that defines them as the laboratories of ideas. The ability of legislatures to create and shape programs has never been greater. Almost every national policy innovation can be traced back to the states. Old age pensions created by state legislatures were the model for the federal Social security Act. States created programs to compensate workers injured on the job. State legislatures’ approach to health care was the inspiration for the federal Health Insurance Portability and Accountability Act of 1996, which nationalized many of the reforms already enacted in the majority of states. Congress and the Environmental Protection Agency modeled the 1993 Clean Air Act Amendments on California’s innovative air quality program that allows emissions trading in polluted areas and encourages the use of electric cars. And despite the increasing tendency of the federal government toward preemption and mandates, states still claim the role of policy innovators. Privacy protection, the quest for higher standards in education and other initiatives and experiments originated in the states, and the best ideas will continue to do so.

A LONG STRUGGLE

Constitutional scholars differ in their appraisal of the federal- state conflict, but the consensus is that the states are winning a few skirmishes here and there though Hamilton had it right when he predicted a long struggle.

In the mid-90s when the states were showing how innovative they could be when freed of Washington’s rules on welfare, they seemed to have regained at least some of the sovereignty they started to lose, first in 1905, with the Supreme Court’s oft-forgotten Lochner decision that struck down a New York labor law. In the 1930s, the momentum continued to favor a muscular national government as the nation struggled out of the Depression, enacted the New Deal and withstood Court challenges to it. Then came World War II and the Cold War. Only a strong central government could respond to foreign aggression.

The tide seemed to be moving in favor of the states in the 1990s, after devolution, welfare reform, a ban on unfunded mandates and a post-Cold War shift in policy focus to the domestic side from national defense and foreign policy. But at the same time the dark shoals of preemption were looming and Washington was eyeing matters long considered the province of states such as tort law, property rights, telecommunications regulation, insurance and banking, and a score of others.

WAR ON TERROR

It’s become a clich to say that 9/11 changed everything, but it did. The nation once again had to respond to a challenge from forces overseas. Only the outbreak of World War II rivals the current era when the unique abilities of the 50 states are so vital to national defense. Witness National Guard units, federalized for service overseas filled with the military specialists the nation needs, fighting in Iraq and Afghanistan. Making up as much as 40 percent of the forces on the front lines, they often sustain casualties in the same proportion as our regular forces.

Another vivid example is homeland security. It cannot be achieved, and the war on terror cannot be won, by the federal government acting alone. Our borders and airports are a federal responsibility and so are our ports. But can any government, no matter how vast its resources, police the thousands of miles of coastline, the hundreds of harbors that are the nation’s soft underbelly? The determination and vigilance of every firefighter, every police officer, every emergency medical technician are needed if the fight is to be won. And the vast majority of those courageous public servants work at the state and local level.

THE CHALLENGES AHEAD

The first years of the new century have posed enormous challenges to state lawmakers as they coped with the biggest budget crisis in decades, rising Medicaid costs, education mandates from the federal government and the fallout from terrorist threats.

The picture is brighter on the economic front this year. NCSL reports that revenues for the first eight months of FY 2005 are performing better than expected in most states. Inflation and runaway Medicaid costs continue to gnaw away at the higher tax receipts states are seeing, but the fever has broken. More robust revenue coupled with economic growth will reduce the painful trade- offs and belt-tightening of the last three years. The national economy is strong and prospects appear promising as a new fiscal year began.

While the economy is far too big and too complicated for us to glibly assign blame or credit to any one person or group, no one can deny the positive impact on the markets of the recent strong moves to restore public confidence stemming from enforcement actions by state attorneys general. An economic recovery from the dot com bust was out of reach until the integrity of marketplace was restored.

So too with the explosive issue of Medicaid. There’s an old French proverb, “Who lacks health, lacks everything.” That adage might be applied to the dilemma posed by the astonishing annual increases in Medicaid costs, with, perhaps, a slight modification, “Who lacks a way to limit health care costs, lacks everything.”

Medicaid is the elephant in the room both in Washington and state capitals whenever lawmakers gather. Medicaid is 17 percent of state general fund spending, up from 12 percent a decade ago and, if present trends continue, it will soon start squeezing out other parts of state and federal funding.

The political will to act on the Medicaid crisis was first seen in state capitals and now spines are stiffening in Washington, D.C., too. It’s become clear that the ideas that will help solve Medicaid’s deep problems are the ideas being put forward in the states, by governors and by legislators.

STATES MAKE THE NATION STRONG

Policy reform has long started in states thanks to the federal system that encourages states to be, in the words of Justice Brandeis, “laboratories of democracy.” The laboratories have already begun to pour forth ideas that will lead to solutions to some of the nation’s toughest policy issues, whether in the environmental area where states are leading the way on emissions standards, or in education where 49 of the 50 states had testing standards long before Washington produced No Child Left Behind. It’s only a matter of time and political will before some of the exciting new policy ideas bubbling up in capitals will once again demonstrate the capacity states have always had for pragmatic, no nonsense solutions.

James Madison, Hamilton and the rest of the men who gathered in that stifling hot Philadelphia summer long ago would be delighted to see that their concept of strong states, their capitols filled with bright and determined people in search of solutions, is still capable of producing most of the answers to the nation’s toughest policy questions.

Ed Fouhy was the founding editor of Stateline.org, funded by the Pew Charitable Foundation. Today, he freelances from his home in Cape Cod.

Copyright National Conerence of State Legislatures Jul/Aug 2005