| May 8, 2013

Competitive Federalism Can Help Rebuild America

The “old” is the idea that the American government has limited powers, and that those powers are mostly reserved to the states, where “the people” can put strict limits on their exercise.

The “new” is an effort to give fresh meaning and renewed impetus to the foundational principles that the central (read: federal) government—those who are today drawing more and more power to the nation’s capital in Washington, D.C.—can and should be cautious in exercise of power, and sensitive to the Ninth and Tenth Amendments, the last two articles in the Bill of Rights.

The all-but-sainted David Brown, trustee emeritus of the Heritage Foundation and founder of OCPA, is advancing these ideas on all fronts, including through the recently established Liberty Foundation (

In that group’s new treatise, “Competitive Federalism,” OCPA research fellow Matt A. Mayer makes a bold case for operational reforms that could, if implemented, amount to constitutional reforms. Rather than attempt to undo the federal Leviathan all at once, he proposes a restrained set of changes that would, nonetheless, make a real difference in real time (a decade or two, in my estimation).

His idea? Let’s pull these three specific areas of public policy out of federal control, returning them to the states and the people: Medicaid, education, and transportation.

As Mayer notes, Americans sent $2.331 trillion to the federal government in 2010. The U.S. government sent $564 billion of that back to the states for spending in Medicaid, education, and transportation.

Mayer summarizes a bill of particulars: “The ‘progressive’ vision of a centralized administrative state has left us with health care outcomes that are actually regressive, costing too much and delivering too little, schools that fail to educate children, and transportation policies that place the whims of special interests ahead of the needs of America’s drivers.”

His bold ideas, one by one, follow.

Medicaid is now the top cost-driver in state governments. (As I have pointed out, this took place just four years ago in Oklahoma, when health costs soared past common education as the top annual cost-increase sector.) In 2010, the feds sent roughly $285 billion down to the states for Medicaid, while spending another $120 billion on their own. Why not have the states take over the whole thing?

Federal education spending and liabilities placed on the states amounted to $204 billion in 2010. In “visioning” a brighter future, Mayer soars: “Imagine if federal education spending never left the states, but went directly into our classrooms.” Not Lennon-esque, but a nice image.

Then, there’s transportation, where the feds allocated more than $75 billion for projects around the country. Mayer’s analysis concludes 35 cents of every federal transportation dollar is siphoned off for other purposes.

Mayer makes his case pragmatically, but distills his underlying points from the wisdom of James Madison, Alexander Hamilton, John Jay, Benjamin Franklin, Thomas Jefferson, George Washington, and other founders.

You know, Hamilton envisioned economic competition and variation in the states as a blessing, writing in Federalist 44: “Competition of commerce would be another source of contention.” It might be hard to believe now, but Hamilton thought most real taxation powers would stay in the states. Although states pursued vigorously distinct economic regulations after the Civil War, in the Populist and Progressive Era the case began to made for sameness (and centralization) of regulatory powers.

Mayer distills some 150 years of history this way: “The nationalization of our lives implicitly contained an anti-competitive mentality. Liberal-progressive adherents abhor competition and seek to mandate an equality of outcomes in both our public and private lives.” This is taking us toward the European Union model, rather than a 21st century version of competitive federalism.

One of Mayer’s best sentences is a study in the wisdom of brevity: “Confrontation divides us; competition energizes us.”

During my years in Washington, D.C., I often observed—in debates with advocates of powerful, centralized government—that the main street in Stillwater, Oklahoma, looked and “felt” different than the waterfront in San Francisco, California. The framers envisioned that the American states could and would be “laboratories of democracy”—that the State of New York would approach some things differently than did the Commonwealth of Pennsylvania. In an age of diversity, what’s wrong with that?

As OCPA president Michael Carnuccio observes in an introduction to the report, “Americans understand competition.” Yet every year, it seems more and more areas of governance are pulled to D.C., and away from the state, and the people. Although that may seem inexorable, there is nothing inevitable about this.

Millions of Americans understand that something is broken in our modern system. They just might be ready to take a fresh look—centered on a trio of key policy issues—at leaving at least many powers to “the states, and the people.”

After all, as Carnuccio puts it, “the states had to ratify the Constitution for it to take effect.”

Americans will need carefully crafted educational reminders that federal power is best limited to “certain enumerated powers only,” as James Madison put it in Federalist 39. The closest any American president has come to getting this right in my lifetime was Ronald Reagan, who often said, “The states created the federal government, not the other way around.”

The subtitle of Mayer’s excellent report is “Leveraging the Constitution to Rebuild America.”

Sign me up, and let’s get to it.

Patrick McGuigan (M.A. in history, Oklahoma State University) is editor of He is the editor of seven books on legal policy, and the author or co-author of three books, including Ninth Justice: The Fight for Bork.

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