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Federalism, Upended

A half-century ago, a Republican president moved to devolve power from Washington to states and local governments. Today it’s the right that’s trying to turn that around.

Richard Nixon in the Oval Office in 1972.
Richard Nixon in the Oval Office in 1972. He believed in a federal government whose job was to provide financial help to states and localities — and then to get out of the way. (Richard Nixon Presidential Library and Museum)
Richard Nixon would never recognize what’s happened to American federalism since he resigned the presidency in 1974. From a time of bold top-down devolution of federal power to state and local governments, we’ve flipped the script. It’s now a time of bottom-up pressure for a stronger, more centralized federal role, especially on social policy, and this time it’s coming from the traditional enemies of concentrated federal power, the Republican right.

Amid all the scandals of his administration, Nixon was perhaps the last American president who governed with a clear theory of federalism in his head. Nixon boldly proclaimed a “New Federalism,” which distributed tens of billions of dollars in strings-free federal cash to state and local governments, based on a formula. But that program, known as General Revenue Sharing, was just part of Nixon’s vision: He also created new block grants, which distributed additional billions in targeted money for programs like community development, social services, health and job training, and he gave state and local governments a lot of discretion in how to spend that money as well.

Most of all, he genuinely believed in a federal government whose job was to provide financial help to the nation’s subgovernments — and then to get out of the way. It was a very different time, when policy analysts genuinely worried about what to do with all the money that would be freed when the Vietnam War ended.

Nixon staked out a position between what he believed was the too-controlling role of Lyndon Johnson’s Great Society and a federal abandonment of state and local governments. And — please sit down for this one and firmly grab your coffee cup — he actually went on national television to talk to Americans about his theory of federalism. “After a third of a century of power flowing from the people and the states to Washington, it is time for a New Federalism in which power, funds and responsibility will flow from Washington to the states and to the people,” he said in August 1969. Nowadays that all sounds very quaint, but it was vitally important. Nixon was the king of devolution.

Reagan’s ‘Equal Swap’

The Vietnam War ended in 1975, but the anticipated revenue dividend never materialized as inflation rose and economic growth fell in the late 1970s. Then, as always happens with big, sprawling programs, stories about misuse of the New Federalism money began cropping up, and the Carter administration began tightening the screws on state and local governments’ discretion.

The great turning point in this history came in 1982, when (hold on to the rest of your coffee!) Ronald Reagan proposed what he said would be an “equal swap” with the states: The feds would take over the full cost of Medicaid and the states would assume the full cost of food stamps and welfare.

“Ahhh, not so fast!” the governors replied. They smelled what they thought was a trap — being saddled with the political unpopularity of welfare and what they feared were its rising costs — and they tossed away Reagan’s proposal. That turned out to be the single biggest mistake a collection of governors ever made, because since then Medicaid has become the largest and fastest-growing part of every state’s budget, while welfare costs have been more under control. Moreover, it was the last, best chance to engage in a true devolution of power to state and local governments.

Nixon’s New Federalism evaporated away as federal deficits began quickly rising, with the block grants becoming even more snarled with rules and revenue sharing abolished in 1986. Instead of Reagan’s neat apportionment of social services spending and responsibility, welfare, food stamps and Medicaid became increasingly tangled systems that dragged all of the officials into a system whose costs no one could control and no one could manage well.

It ended the golden age of sorting out, a time when there seemed a chance that genuine devolution of power to state and local governments might actually stick.

A New-New Federalism

Fast forward 40 years, to today’s conservative, bottom-up campaign to centralize policy on a huge range of issues, from what books to allow on library shelves to how much to spend on health care.

When the Supreme Court issued its Dobbs decision on abortion in June 2022, there was a brief moment when it seemed that Nixon’s top-down devolution might resurface. In its decision, the court wiped out the precedent set in Roe v. Wade that guaranteed a national right to abortion and passed the decision back to the states.

But with liberals back on their heels, conservatives saw an opportunity to enforce a national ban on abortions, whether through medical procedures or the abortion pill mifepristone. They weren’t content with limiting abortions in ways that varied from one red state to another. Instead, they have mobilized to push abortion policy up from statehouses to Washington. That’s led to a scramble among Republican hopefuls about how best to capture the coalition — and a debate about how activists could pressure Congress to pass some form of a national ban.

The movement has stretched past abortion to proposed limits on transgender rights and gender-transitional medications, a rollback of state environmental actions, and an attack on anything that can be labeled as “woke.” That’s all caught the left flatfooted.

The result is an effort on the right to define a new-new federalism. Instead of Nixon’s effort to shrink the federal government’s power by devolving decisions to state and local governments, we’ve got red states pushing to centralize decisions in Washington.

In his 19th-century classic, Democracy in America, Alexis de Tocqueville described the American system as “neither precisely national nor precisely federal.” It’s now precisely not anything at all.

In the space of half a century, we’ve flipped federalism on its head. Instead of worrying about how to devolve power to the states, we’re seeing a push for a centralization of power so all states could be brought into a single line.

Nixon’s New Federalism and its grant programs are a distant memory. So too is the last real effort to sort out federal and state roles, advanced by Reagan. Those Republicans would not recognize the ones who carry the flag today.

Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.
Donald F. Kettl is professor emeritus and former dean of the University of Maryland School of Public Policy. He is the co-author with William D. Eggers of Bridgebuilders: How Government Can Transcend Boundaries to Solve Big Problems.
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