Washington, DC, USA. The next president faces a crucial choice in how he’ll get along – not just with foreign governments — but with leaders at home in the 50 states. Stop coercing and start cooperating is the advice from Raymond C. Scheppach, executive director of the National Governors Association (NGA), in his latest commentary.

 

Here’s a crucial question for the presumed presidential nominees — Republican John McCain and Democrat Barack Obama — and all the candidates for the next Congress. Are you happy with the status quo in federal-state relations?
 
States have long served as laboratories for creating and testing policies and programs that drive positive change nationally. Yet for more than a decade, the federal-state relationship has been under stress. Looking forward, the nation faces many challenges, and states can play a key role in providing leadership. However, whether governors and states provide separate, independent leadership or leadership within a stronger federal-state partnership will depend on which brand of federalism the next administration and Congress adopt.

 

Cooperation vs. Coercion

 

Federalism scholars often point to two recent periods in which federalism was defined very differently. Between 1980 and 1996, there was “cooperative” federalism, an era ushered in by the Reagan administration and marked by a genuine partnership between states and the federal government. President Reagan engaged in discussions and negotiations with the nation’s governors over a huge swap proposed for domestic programs in which the federal government would take responsibility for all Medicaid and states would take responsibility for transportation and other domestic issues. Although this dialogue did not lead to any major legislative changes, both sides embraced a real federal-state partnership.

 

Cooperative federalism continued through the early years of the Clinton administration, which saw passage of the Unfunded Mandates Reform Act in 1995, and welfare reform in 1996. Both the Republicans in Congress and the Democratic president worked cooperatively with governors to enact these two bills. Welfare reform not only turned an individual entitlement program into a block grant, but it also gave states substantial authority to tailor the program to the needs of their citizens.

 

From the mid-1990s through the present, we have been in a period of “coercive federalism,” where the federal government more often just tells the states what to do. It does not ask for advice or enter into serious negotiation with the states. The best example is the Real ID legislation, enacted in 2005. This law, which in essence requires states to convert their driver’s licenses into de facto national ID cards, will cost states more than $4 billion to implement and is being opposed by a significant number of state legislatures. Despite the fact that they will bear the brunt of the costs, states were not consulted about how the requirements could impact them or how best to build new security features into their existing systems for issuing licenses and IDs.

 

Federalism by Default

 

While it is always risky to look into the crystal ball, I sense that we are at a major turning point in the role of the states in our intergovernmental system. Essentially, the long-term trend of increased centralization of authority in Washington, D.C., may slow dramatically or even be reversed. Two reasons will drive this change.

 

First, the next administration and Congress will have to focus more on international issues, ranging from the wars in Iraq and Afghanistan, to terrorism, to Iran and North Korea and to global economic issues such as the price of oil and other commodities and the value of the dollar — all in an increasingly fragile international financial system. In short, the next administration and Congress will face huge international challenges that could dominate the agenda.

 

Second, on many of the domestic issues such as health care, energy and climate change, states and governors have been providing national leadership over the last decade.

A New Partnership

 

As the next president and Congress begin to set an agenda for 2009, it is critical that they understand both the shift in responsibilities that has taken place over the last decade on domestic issues, as well as the role states can play in helping move the country forward. They should build on states’ leadership and expertise on the major domestic issues. The good news is that states have shown a real policy path on these domestic issues; the bad news is that states could become an obstacle if the federal government continues a coercive approach to federalism.

 

Essentially, the federal government should establish the policy framework, then provide incentives for states to implement the policies with considerable flexibility. Such an approach would use state expertise and leadership to their full potential. Although this may mean less uniformity across states in policies and programs, it will result in more adaptable solutions to domestic challenges and perhaps a stronger national consensus on policy. Most of all, it would help the next Congress and next administration actually deliver to the American people comprehensive legislation on health care, energy and climate change.

 

 

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