During a brief visit to Egypt last month, Supreme Court Justice Ruth Bader Ginsburg praised the U.S. Constitution for its “grand general ideas that became more effective” in the many years since it was established as the law of the land. She also added, however, that she would look elsewhere if she were a young Egyptian seeking to craft a new constitution. Instead, she urged her audience to look to South Africa’s post-apartheid constitution, with its far more comprehensive bill of rights.
A number of conservatives have reacted furiously, accusing her of disrespecting the U.S. Constitution and failing to appreciate its unique virtues. But that’s a low blow. Her basic point was that the U.S. Constitution failed to give due regard to the interests of anyone but men of European origin, a criticism which is entirely fair and almost universally accepted.
The deeper problem with Ginsburg’s remarks is that while some of the “grand general ideas” embedded in America’s constitutional settlement have “become more effective” over time, one of its grandest — that the United States should be a federation of states that compete for the allegiance of citizens — has been badly undermined.
As legal scholar Michael Greve argues in his new book, “The Upside-Down Constitution,” our most pressing maladies — from the galloping growth of public debt at all levels of government to the creeping regulatory sclerosis that threatens to choke off economic prosperity — can be traced to the abandonment of the constitutional vision of James Madison and Alexander Hamilton.
From the New Deal era on, Americans have come to believe that federalism is about “states’ rights,” with conservatives defending the prerogatives of state governments and liberals favoring the expansion of federal power. But for Madison and Hamilton, federalism was not about protecting the interests of state governments. Rather, it was about protecting the interests of citizens.
Under a unitary government, citizens have very little choice about the laws and regulations that shape their lives. You can move out of the country, but that’s a big step to take in a world of jealous nation-states, and there is no guarantee that you’ll find a better deal.
Federalism introduces a different possibility. State and local governments can compete for citizens by pursuing a variety of different strategies. One state might devote itself to offering the highest-quality public services, even if that means imposing fairly high taxes. Citizens who value good public services over having as much disposable income as possible will gravitate toward that state over time. Meanwhile, another state might emphasize keeping taxes as low as possible, even if that means that public services are lackluster. And then there will be many states in between, carefully tweaking their offerings to keep their economies and populations growing. Many liberals believe that this kind of competition will become a “race to the bottom,” in which states compete to be the stingiest. This neglects the fact that there are many Americans who really want government to be more generous, and who are willing to pay for the privilege.
Imagine, however, if these states could milk the federal government for resources, and get taxpayers across the country to pay for public services in any given state. This is precisely what’s happening today.
To taxpayers in State X, it suddenly seems as though public services have gotten much cheaper. They haven’t, of course. Uncle Sam is making up the difference, whether by hiking federal taxes or piling up debt. But this illusion encourages overspending at the state and local levels. Why not lower student-teacher ratios, even if it doesn’t improve student performance? Why not increase compensation for public workers? After all, public workers vote in large numbers and we can pay them in pension obligations that some future politicians will have to handle. If overspending brings free-spending state governments to the brink of collapse, well, the federal government will just have to bail them out, as it did in President Obama’s 2009 fiscal stimulus law.
The availability of “free money” undermines competition. Without infusions of money from Washington, D.C., states that run the most efficient public services would reap the benefits by cutting taxes or offering still more public services. But when Uncle Sam picks up the tab for state spending, the pressure to innovate goes away. In effect, the federal government has allowed the states to form an anti-competitive cartel.
The result has been an astonishing increase in state and local spending — and in state and local taxes. Between 1953 and 2008, federal taxes as a share of gross domestic product have been between 18 and 20 percent. State and local taxes, meanwhile, went from 5 to 15 percent. At the same time, Americans became more mobile. So, at a time when competition between the states should have been tougher than ever, state and local governments have been putting the squeeze on citizens.
What we need to do is return to the competitive federalism envisioned by Madison and Hamilton. One approach would be to more clearly divide responsibility between the federal government and the states. In his first term as president, Ronald Reagan called for a “big swap” in which the federal government would take responsibility for Medicaid while state governments would take over all other social welfare programs. Three decades on, that still looks like the best way to fix our broken federalism — and to finally put a stop to overspending.
But if we keep going down the same road, I’m with Ginsburg: The people of Egypt should look elsewhere for constitutional wisdom.
A number of conservatives have reacted furiously, accusing her of disrespecting the U.S. Constitution and failing to appreciate its unique virtues. But that’s a low blow. Her basic point was that the U.S. Constitution failed to give due regard to the interests of anyone but men of European origin, a criticism which is entirely fair and almost universally accepted.
The deeper problem with Ginsburg’s remarks is that while some of the “grand general ideas” embedded in America’s constitutional settlement have “become more effective” over time, one of its grandest — that the United States should be a federation of states that compete for the allegiance of citizens — has been badly undermined.
As legal scholar Michael Greve argues in his new book, “The Upside-Down Constitution,” our most pressing maladies — from the galloping growth of public debt at all levels of government to the creeping regulatory sclerosis that threatens to choke off economic prosperity — can be traced to the abandonment of the constitutional vision of James Madison and Alexander Hamilton.
From the New Deal era on, Americans have come to believe that federalism is about “states’ rights,” with conservatives defending the prerogatives of state governments and liberals favoring the expansion of federal power. But for Madison and Hamilton, federalism was not about protecting the interests of state governments. Rather, it was about protecting the interests of citizens.
Under a unitary government, citizens have very little choice about the laws and regulations that shape their lives. You can move out of the country, but that’s a big step to take in a world of jealous nation-states, and there is no guarantee that you’ll find a better deal.
Federalism introduces a different possibility. State and local governments can compete for citizens by pursuing a variety of different strategies. One state might devote itself to offering the highest-quality public services, even if that means imposing fairly high taxes. Citizens who value good public services over having as much disposable income as possible will gravitate toward that state over time. Meanwhile, another state might emphasize keeping taxes as low as possible, even if that means that public services are lackluster. And then there will be many states in between, carefully tweaking their offerings to keep their economies and populations growing. Many liberals believe that this kind of competition will become a “race to the bottom,” in which states compete to be the stingiest. This neglects the fact that there are many Americans who really want government to be more generous, and who are willing to pay for the privilege.
Imagine, however, if these states could milk the federal government for resources, and get taxpayers across the country to pay for public services in any given state. This is precisely what’s happening today.
To taxpayers in State X, it suddenly seems as though public services have gotten much cheaper. They haven’t, of course. Uncle Sam is making up the difference, whether by hiking federal taxes or piling up debt. But this illusion encourages overspending at the state and local levels. Why not lower student-teacher ratios, even if it doesn’t improve student performance? Why not increase compensation for public workers? After all, public workers vote in large numbers and we can pay them in pension obligations that some future politicians will have to handle. If overspending brings free-spending state governments to the brink of collapse, well, the federal government will just have to bail them out, as it did in President Obama’s 2009 fiscal stimulus law.
The availability of “free money” undermines competition. Without infusions of money from Washington, D.C., states that run the most efficient public services would reap the benefits by cutting taxes or offering still more public services. But when Uncle Sam picks up the tab for state spending, the pressure to innovate goes away. In effect, the federal government has allowed the states to form an anti-competitive cartel.
The result has been an astonishing increase in state and local spending — and in state and local taxes. Between 1953 and 2008, federal taxes as a share of gross domestic product have been between 18 and 20 percent. State and local taxes, meanwhile, went from 5 to 15 percent. At the same time, Americans became more mobile. So, at a time when competition between the states should have been tougher than ever, state and local governments have been putting the squeeze on citizens.
What we need to do is return to the competitive federalism envisioned by Madison and Hamilton. One approach would be to more clearly divide responsibility between the federal government and the states. In his first term as president, Ronald Reagan called for a “big swap” in which the federal government would take responsibility for Medicaid while state governments would take over all other social welfare programs. Three decades on, that still looks like the best way to fix our broken federalism — and to finally put a stop to overspending.
But if we keep going down the same road, I’m with Ginsburg: The people of Egypt should look elsewhere for constitutional wisdom.
