The Disunited States

"Devolution" -- shifting power from Washington to the fifty states -- is no cure for what ails American government.

THE wisdom of transferring governmental power away from Washington and toward the separate states enjoys something as close to consensus as American politics often sees. Devolution figured in the 1996 presidential election chiefly as a conventional piety, like family values or fiscal rectitude. Bob Dole brandished on the stump his pocket copy of the Tenth Amendment, affirming the principle of state primacy. Bill Clinton endorsed the "inexorable move to push more basic jobs of the public sector back to the state level," and the 1996 Democratic platform featured the taunt "Republicans talked about shifting power back to states and communities -- Democrats are doing it."

Recent surveys conducted by the Gallup Organization, The Wall Street Journal and NBC News, Business Week and the Harris Group, and Hart and Teeter have discovered strong public support for state rather than federal leadership in education, crime control, welfare, job training, low-income housing, transportation, and farm policies. A bellwether poll conducted by Princeton Survey Research Associates in 1995 for The Washington Post, the Kaiser Family Foundation, and Harvard University found that by a margin of 61 to 24 percent, respondents trusted their state governments to "do a better job running things" than the federal government. Except for Jewish and black voters, every subgroup gave the edge to the states, including self-defined liberals, Democrats, and, by 72 to 21 percent, voters under thirty.

A look at the structure of power

Enthusiasm for devolution, among elites and the electorate alike, has already reconfigured public authority. Welfare reform is only the most vivid recent instance of control over policy cascading to lower levels of government.

Budget figures underscore Washington's eclipse. Federal spending is increasingly dominated by transfer programs, interest on the national debt, and the shrinking if still enormous defense budget. Within what most people think of as the government, states and cities occupy a huge and growing share of the terrain. State and local spending -- the majority supported by state and local taxes, but some by federal grants -- is over 13 percent of the gross domestic product: more than seven times the amount of federal domestic spending for other than transfers, debt service, and intergovernmental grants. If Congress and the Administration follow through on their budget-cutting plans, the federal government's domestic role will continue to shrivel. So the United States' public sector -- already about a third smaller, as a share of the overall economy, than the average in other industrialized countries -- will shrink further. Or the relative importance of the cities and states will soar. Or both.


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Some admittedly alluring logic supports the ascendancy of the states. Supreme Court Justice Louis D. Brandeis popularized a resonant metaphor when he wrote that "a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country." Varied state strategies test and winnow policy alternatives, providing the nation with information about what works and what doesn't. Beyond the laboratories-of-democracy scenario, in which diversity invites the discovery and diffusion of best practice, there can be value in diversity itself. Since priorities differ, the country may be better off if constituents can find arrayed within its borders alternative packages of services, regulatory regimes, and tax burdens from which to choose.

A related line of reasoning stresses the virtues of competition. One engine of private-sector efficiency is the constant pressure that enterprises face to match the pace set by ambitious rivals. Extending that logic to government, states that are compelled to compete for citizens and investment must be more creative and more diligent in carrying out the tasks of governance than an unchallenged Leviathan in Washington.

A quite different argument for devolution as a core strategy for public-sector reform is commonest among those with direct experience in or around the federal government. It varies in its details, depending on one's specific exposure to the crippling debt and toxic politics that have come to dominate Washington. But in its essence it boils down to a kind of grim gratitude that since we have wrecked one level of government, the Founding Fathers had the foresight to provide a spare.

There is also a soothing a priori case for predicting that public-sector efficiency will increase as responsibilities flow to lower levels of government. Yet the states have, at best, a slightly milder case of the inefficiency that chronically plagues the federal public sector. And for at least some functions (public schools, license bureaus) claims of superior efficiency ring hollow indeed. Even where decentralization does promise significant economies, it is rare that economic or managerial logic will call for the reassignment of authority away from the central government but then stop at the states. State boundaries have been drawn by a capricious history, and only by accident does a state constitute the most logical economic unit for either making policy or delivering services.

Moreover, devolution is largely irrelevant to the debt service and middle-class entitlements that are straining citizens' tolerance for taxation. The ascendancy of the states, by the most optimistic assessment, will have only a minor impact on the cost of American government. This argument is not based on ideology or economic theory. It is a matter of arithmetic. In 1996 total public spending came to roughly $2.3 trillion. State and local activities, funded by state and local taxes, already accounted for about one third of this total. Another third consisted of check-writing programs, such as Social Security and Medicare. National defense (12 percent of the total), interest on the national debt (10 percent), and federal grants to state and local governments (another 10 percent) accounted for most of the remaining third of the public sector. All other federal domestic undertakings, taken together, claimed between four and five percent of total government spending.

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