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Two Decades of Debate

Federalism is clearly cyclical.


Alan Ehrenhalt

Alan is a Governing senior editor.

Leaf through any newspaper from October 1987, the month Governing was launched, and you might well conclude that nothing much has changed in the world -- or at least the world of state and local government.

Twenty years ago this month, Massachusetts was arguing over whether it could afford the cost of a universal health care law. Colorado farmers were worried that a crackdown on illegal immigration would deprive them of the labor they needed at harvest time. The New York legislature was debating ways to reform its ethics rules and overcome its sleazy reputation. And the op-ed acronym of the month in public policy was CRAB -- crumbling roads and bridges. A national study group was preparing a report warning that an economy built on crumbling infrastructure was like a house built on sand.

We live in a different world now, in a whole variety of ways, but every one of those arguments is still going on. We still don't know how to pay for broad-based health care. Albany needs an ethical bath as badly as ever. Farmers are just as scared of a labor shortage as they used to be. And while the condition of our infrastructure is a slippery thing to measure, it's hard to dispute that we have worn out many more roads and bridges than we have bothered to fix. This was, after all, the summer of the I-35 collapse in Minneapolis.

To those with an even mildly cynical turn of mind, it's tempting to conclude that there is a Sisyphean quality to state and local policy debate. We've spent 20 years rolling lots of big rocks uphill, but we haven't moved many of them out of the way. Albany is still Albany, and I wouldn't risk a lot of money betting that it will be much different in 2027 than it is now.

But the closer you look (or at least the closer I look), the clearer it seems that a purely cynical approach to policy issues -- even the most difficult issues -- misses the reality of what goes on. The problems don't go away, but the terms of the debate change -- often with dramatic consequences for the country as a whole. We move forward, then slip back, then -- sometimes -- move forward again.

Health care is a good example. The bill under discussion in the Massachusetts legislature in the fall of 1987, a key initiative of then-Governor Michael Dukakis, would have financed universal coverage in the state by imposing a tax on employers estimated to be as high as $1 billion. It became law the following year and was a major talking point for Dukakis in his 1988 presidential campaign. But it never went into effect. In the mid-1990s, amid waning interest in health care reform throughout the country, the Massachusetts legislature quietly repealed the employer tax provisions.

And so, in the fall of 2007, the affordability of health care remains an issue in Massachusetts. But the similarities pretty much end there. In the spring of 2006, the state enacted a new universal care law, requiring every Massachusetts resident to have health insurance and splitting the cost in roughly balanced terms among employers, individuals who purchase the coverage and state subsidies for those who cannot afford it.

As in the 1990s, there are serious questions about whether the state treasury will have the funds to handle its part of the bargain. But this law will stay on the books. It was the result of a bipartisan compromise between the Democratic legislature and then-Governor Mitt Romney, a Republican, who talks as much about it as Dukakis talked about his plan in 1988. Hardly anybody in Massachusetts is seriously discussing repeal. That may or may not sound like progress, depending on one's ideology, but it certainly represents change.

Immigration in Colorado is a slightly different case. It was a concern 20 years ago because of a federal law, enacted the previous year, that called for sanctions against any employer who hired an illegal immigrant. "Hundreds of undocumented aliens are losing their jobs," one elected official complained in October 1987. "They are trying desperately to find other ways to survive."

Those fears didn't last very long, however, because the law was sporadically enforced, to put it mildly. This time around, employers in Colorado are worried about a different law, put into effect by the legislature last year, which is actually milder but shows signs of being taken seriously. As Governing reported in July, fewer illegal immigrants are coming to Colorado in 2007 than in past years, and some farmers are desperate for workers. Once again, that may or may not strike you as a good thing, depending on your point of view. But it suggests action rather than futility.

I bring up immigration and health care not only because they remain important subjects but also because they show a clear trend in policy-making power. Both are issues on which the federal government, in two full decades, did essentially nothing, and the states ultimately found themselves forcing the action. The Massachusetts health care law of 2006 has generated serious efforts to provide equally comprehensive coverage in a whole series of other states, including California, where the public burden would be many times as great. Colorado is one of several states that passed their own laws against illegal immigration after assuming for years that this was an issue that only the federal government could deal with.

And that seems to me the most important point to make about federalism in America in the past two decades -- not that the states have solved most of the difficult problems, or even come close, but that they have emerged as the default problem-solvers in a system where the federal government has proved incapable of action.

Welfare reform illustrates this idea in a slightly different way. In the fall of 1987, the subject was, in fact, being debated rather intensely by leaders at both the state and federal levels. Congress came close to enacting a welfare bill at the end of the year and finally did so in 1988 -- with the active assistance of a whole group of governors, including the governor of Arkansas, Bill Clinton.

But the 1988 bill accomplished scarcely anything in dealing with welfare dependence in American cities -- and it had little in common with welfare reform as most Americans came to understand it in the decade after that. The 1988 version was essentially a job-training law -- it did little to move people out of their reliance on the federal dole.

When Congress passed a second version of welfare reform in 1996, it was a dramatically different initiative, based in large part on the failures of the original approach. It imposed strict work requirements and time limits on welfare recipients. It followed closely upon programs implemented in Wisconsin and other states in the years after the first law was enacted. And it has been, by most popular accounts, the most effective domestic reform program of any sort enacted by the federal government in the past 20 years. But it's important to understand what the 1996 welfare law essentially was. It was a transfer of power and authority from Washington to the state capitols.

It turns out that there's a much better way to look at the changing role of states in the federal system than either Sisyphean pessimism or simplistic notions of steady progress. The best way to think about federalism -- maybe the best way to think about governmental history altogether -- is in cyclical terms. There are moments of great optimism in state government, moments when money is generally available and a powerful sense of possibility exists among those charged with thinking up new ideas. Then there are moments when not only the funding but also the creativity seems to dry up.

The fall of 1987, the time when this magazine first appeared, was unmistakably a moment where optimism prevailed. David Osborne was putting the final touches on his influential book, "Laboratories of Democracy," which asserted that states were the true engines of innovation in the governmental system. Overall state spending was actually up 6.3 percent in fiscal 1987 over the previous year.

The laboratories weren't open for long. The national recession that began in 1990 forced most state budgets into serious shortfall and brought with it drastic curtailment in innovation and experiment as well as financing. The sense of possibility returned in the later part of the decade amid the Clinton economic boom, then subsided in the fiscally challenging first few years of the new century -- only to resume more recently, as states stabilized their budgets and ventured into new experiments not only in health care and immigration but most notably on the environment. Concerted state action in dealing with climate change will all but force the federal government to take serious measures of its own within the next couple of years.

It is still a question of steps forward and steps back. The current decade has been a period of state energy and creativity, but also of capricious federal intrusion, often without more than a token fiscal payment from Washington to cover the massive expense that its demands on the states had imposed. The No Child Left Behind law, the Real ID license-security requirement and the ban on state taxation of Internet sales are the three prime exhibits in this category.

And the recent relatively sound condition of state fiscal health is not going to last much longer. The combination of health care costs and other commitments to the aging baby-boom generation will generate serious state budgetary trauma in most of the capitols even before the current decade is out.

So it's likely that many of the laboratories of democracy will close again for a while. Things work that way. But the experience of the past two decades is that when they reopen, it will be at a level of sophistication that allows public policy to move at least a few modest steps in the direction of genuine problem solving. That is one reasonably optimistic thing I can say with some confidence after watching this whole process unfold for the past 20 years.

I have saved the localities for last -- not because they are any less important in the American federal system but because their story seems in many ways a lot simpler.

The year 1987 was, by almost any measure, not a good one for cities and counties in America. They had just lost their most dependable source of outside help, the federal revenue-sharing program that had been launched in the early 1970s, and many of their leaders were close to despair as they sought to figure out how to make up for the loss. "We're getting beaten to a pulp," said Jerry Abramson, the mayor of Louisville. "The federal government has got the cities up against the wall." Fiscal problems aside, the cities were beset by rising crime rates, deteriorating schools and an accelerating departure of middle-class residents.

There's no way that Abramson, who is mayor of his city in 2007 just as he was in 1987, could have foreseen what was going to happen to urban America in the ensuing two decades: an urban revival based on safer streets, recovering downtowns, and more or less stable population, one that has spread from its early coastal beachheads to revive even some of the more deeply troubled old industrial places in the heartland -- cities such as Pittsburgh, Chicago, Milwaukee and Minneapolis. A decade after Abramson made his cri de coeur, John Norquist, then the mayor of Milwaukee, expressed a much different sentiment that was gradually becoming conventional wisdom for much of the nation's urban leadership. Cities, Norquist wrote, had stopped "lining up like beggars at the trough of federal largesse," and they were much better off as a result. Those words seem even truer now than they were when Norquist wrote them.

Localities, like states, continue to face a wide range of difficult challenges, from the quality of their schools and the daunting costs of public transportation to crime problems that seem to be growing worse again. But most of urban America looks better on many fronts than it did when we began publishing this magazine -- and it has made that progress largely on its own, without much help from the outside benefactors it once courted. If that's not a piece of optimism to close on, I'm not sure what is.

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