Why Federal Government Trumps the States

Giving states more control would complicate life for everybody.

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What's so great about the states?

It's obviously fashionable these days to bash Washington and anything associated with the federal government. By contrast, state government now seems to be the last, best hope for democracy. One thing all the Republican presidential candidates seem to agree on is that any policy that can be shifted from Washington to state capitals should be. Mitt Romney and Rick Perry both insist that if there's any government healthcare program at all, it should be run at the state level and not be nationwide, as Obamacare is. Perry has even suggested that Social Security, which has been a federal program since 1935, should devolve to the states. The Tea Party, meanwhile, has made a rallying cry of the 10th Amendment, which says that all powers not delegated to the federal government by the Constitution reside with the states.

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It sounds quaint. But giving Washington less control over our affairs, and the states more control, is a bad idea.

Here's why: People move.

Anybody who has relocated from one state to another knows there's a huge hassle factor associated with simply adapting to a different set of rules. You have to re-register your car and get a new driver's license. Do that a couple of times, and you'll surely become a fan of a national driver's license. Most banks are chartered at the state level, which means you might have to close your old account and open a new one to get all the services you want. Make sure all your checks have cleared! If you run a business, chances are you'll get to spend hours--days?--figuring out how the licenses and permits in your new state differ from those in your old one. Since tax laws are different, make sure to hire a new accountant. And if you ever have to file an interstate lawsuit, you might run out of money just paying the fees for lawyers to dicker over which state should have jurisdiction.

Businesses with regional or national scale would dearly love to operate by one set of standards instead of 50. For years, most automakers that sold cars in the United States produced at least two variants of every model: One for the handful of states that followed California's tough emission rules and another for the majority of states with less-stringent standards. One reason automakers agreed to tough new emission rules recently adopted by the federal government is that the deal meant all states would enforce one national standard. Part of the reason Amazon and other online retailers object to collecting state sales tax on the stuff they sell is the administrative burden of enforcing 50 different tax regimes—including changes that happen every year, as states tweak their tax code.

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There's also the dubious proposition that states manage their business better than the federal government. It's true that nearly all states are required to balance their budgets, which creates a degree of spending discipline. But that's hardly the same thing as responsible government. There aren't too many people in California—which may have a more convoluted set of laws than even the federal government—who seem happy with rising taxes, fleeing businesses, and continual conflict in Sacramento. In the state where I live, New York, corrupt cronyism is rampant and the former governor, Eliot Spitzer, had to resign after getting caught patronizing a hooker.

Even in the sensible Midwest, state government can be a circus. Illinois, where former Gov. Rod Blagojevich tried to auction off a Senate seat to the highest bidder, is so well-run that it had to pass a 66 percent increase in the state income tax this year to assure it didn't go broke. Minnesota partially shut down this past summer when lawmakers couldn't agree on a budget. In Wisconsin and Indiana, lawmakers even split town as a tactical maneuver, while arguing over budget cuts.

It's worth keeping in mind that the national press corps is centered in Washington and New York, and for all its flaws, there are still hundreds of dogged journalists eager to ferret out wrongdoing and pounce on scandalous behavior. The same goes for interest groups like Common Cause and Consumers Union, which tend to focus their limited efforts on national issues rather than local ones. All of that oversight helps keep Washington more honest than it would otherwise be. In state capitals, by contrast, there's far less oversight and a thin press corps that can't possibly keep tabs on every shady deal.

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So let's say the states took over Social Security. Some might manage it responsibly, others would cut benefits when times got tough, and a few would probably debase the program completely. Benefits would differ by state and if you moved you'd have to register with a new government bureaucracy to make sure your checks kept coming. If states all had a different healthcare system, it would basically be the same as what we've got now, except that benefits would be determined by governors' appointed poobahs—most likely big campaign contributors--instead of by insurance-company executives. And in future elections, we'd get to listen to even more tedious arguing between Governor Snappy and Governor Smarmy over which state's bureaucracy is better.

Yeah, there are a lot of problems with the federal government. But 50 different sets of rules isn't one of them.

Twitter: @rickjnewman

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