Friday, February 18, 2011

What's Obama doing in Wisconsin?

I haven't done a federalism post in a while, but I woke up and saw this on the Washington Post website and it pissed me off. What is Obama doing wading into this budget brawl in Wisconsin? I'm not following the Wisconsin situation very closely - it's not just about the budget, there is also union stuff there too (which is another fascination of this administration that I don't particularly share), but the point is these are issues to be decided in Madison, not Washington. There are some things like, say, funding for higher education where there is a case to be made that there's a national role in funding scientific research or something like that, in addition to state funding. I don't see how this extends to a state's own budget or the organization of public employees.

To block the measures, a bunch of Democrats in the legislature have skipped town in an effort to deny Republicans a quorum. This sort of thing has precedent, of course. Texas Democrats did it as recently as 2003 to stymie a Republican redistricting effort that they considered grossly unfair. Tom DeLay tried to sic the FBI on them (they politely declined the request), while Willie Nelson brought them whiskey in solidarity. It does back farther than that too - the Pennsylvania Anti-Federalists ditched their legislature to try to block ratification of the Constitution. I like to think of this sort of thing as creative filibustering. I hate that the filibuster has just turned into a super-majority requirement. If a Senator is willing to stand up and read from the phone-book for hours, that's fine. If a Senator wants to hole up in a cheap motel across state lines, that's fine. They exerted some effort. Now its just a pro-forma way of circumventing democracy.


Federalism issues came up in Alex Tabarrok's discussion of "Keynesian politics" yesterday, too. I didn't elaborate too much at the time, but I oughta here. One of the policies he suggests was the somewhat amorphous "funding for states". I've come out against using federal funds to shore up state budgets in the past, and I did in the comment section of this post too. I wrote:

"The real failure of Keynesian politics, we should remember, is at the state level. The reason why government spending was fairly flat despite a huge increase in federal spending is because the feds were essentially filling a hole that the states were digging. How do [we] keep on pushing Keynesian politics AND prepare for the next crisis? Loosen state balanced budget requirements. Then federal fiscal policy will have some traction and states won't be hamstrung."

When the federal government starts solving state problems, states stop solving their own problems, and they don't implement the reforms that would help them do better. Don't get me wrong, I think we're better off since the federal government was able to fill the gap in this particular case than we would have been, but a federal rescue means more federal control, and it means that they can't focus on demand management because they're spending all their money on keeping states afloat.

Tyler Cowen notes a trend in states rejecting federal money as well, and suggests that this represents a new chapter in American federalism. Maybe - we'll have to see. I have always said that health reform needed to look more like welfare reform in the 1990s, with a lot more flexibility at the state level. I'd rather not have it as ad hoc as Cowen is describing here (Arizona getting a waiver to tighten certain requirements), and I'd rather see states bringing new innovative ideas to the table rather than just tightening up old ways of doing things - but we'll see how it goes.


  1. When I was reading Frederic Mishkin's The Next Great Financial Globalization, Mishkin cited the fact that Argentina had states which depended upon the federal government for tax revenues but had their own discretion in spending. The result was states neither economizing in usage of money nor seeking highest value while spending them. It partly aggravated the serious deficit problems in the country.

    On the other hand, Mishkin proudly recounts that in good old America, when New York was strapped for funds, Gerald Ford refused to give a penny and would rather have New York in blackouts than in dependency to federal government.

  2. Because Wisconsin is a 2012 battleground state? From here on out most things Obama does will be about getting re-elected. If he loses in 2012 the gnashing of teeth and the rending of cloth will be funny to watch.


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