Federalism in the Obama

Administration

Thomas GaisDirector

The Rockefeller Institute of Government

Skidmore College

February 7, 2013

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Federalism in the Obama Administration Questions:

How have the relationships between the national and state/local governments—or their respective responsibilities and powers—changed during the Obama Administration?

In these current relationships and distributions of power, what are the challenges for effective governance?

Basic points: Obama Administration has a large, activist domestic policy agenda, and that

necessarily means that federalism is critical to its success, even if the Administration cares little about the value of federalism itself

Although its ways of acting on and through the federal system are not unprecedented, they are distinctive in approach and intensity.

But its effectiveness in working through state/local governments is challenged by several developments, including the state fiscal crisis, political polarization, and demographic shifts.

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Role of states in U.S. domestic programsPublic employment as percentage of labor force is neither high nor low compared to other nations

U.S. is distinctive in its reliance on state and local governments to implement domestic policies:Percent of all government employees working in state & local governments

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State and local governments spend most of the money supporting domestic programs in the U.S.Domestic expenditures by different levels of government, 1977-2010

Spending as percent of Gross Domestic Product (GDP)

1st year of Obama Administration

While SLGs spend more, the national government raises more revenues: Government own-source revenues as percent of GDP, 1977-2010

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National

National government assistance to state & local governments, as percent of GDP

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Different levels of government spending money in different ways, but much overlap tooExpenditures, by level of government, in billions of dollars (2010)

  Federal State Local

Environment/natural resources 45 38 160

Public safety 56 68 160

Education 71 255 617

Transportation 93 161 90

Health 909 444 131

Income support/public welfare 1,706 65 46

Major elements of Obama Administration’s assertive form of federalism1) Will spend money—and lots of it

2) Can very assertive, perhaps “coercive”

3) Uses competition to make big changes

4) Exercises executive powers, esp. waivers

5) Opportunistic, in support of policy aims; i.e., does not support “federalism” as goal Uses state discretion to advance policies through states Uses state discretion to advance aims where national

coalitions are blocked

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Growing challenges to the U.S. federal system as a vehicle for policy change: 1) Weakening state revenue system: state government tax revenues, 1995-2012 (in constant 2011 dollars)

In addition to decline in state revenues, greater volatility and uncertainty in taxes; budget pressures too

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2) Another challenge for U.S. federalism: growing spatial mis-match between resources and needs. Population shifts (percent changes, by age, 2000-2010)

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Changes in where social needs are greatest: increasing number of low-income children live in South and Mountain states

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Percent changes in number of low-income children (125 pct of FPL) since 1998

Sources: Census Bureau.

But the states where the most vulnerable children live have the smallest programs to support them

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Education spending per child

Social policy spending per child in poverty

For more on these issues, see http://www.firstfocus.net/library/reports/children-southwestern-states-and-the-federalism-problem

3) Deepening divisions among states; growing polarization and divisions even at state level Responses to welfare reform in 1990s vs. health care

reform in 2010—rejection of health care exchanges

Republican governors have also turned down funding for high speed rail

Less pragmatism among governors, especially on the Right; fewer states have divided party government

Large regional differences in financial rules (tax and spending limits)—greatest in Western states

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4) Federal assistance to states may be less, and less powerful

Federal assistance to state and local governments is, other than Medicaid, largely discretionary—and that will be under severe pressure

SC decision found a limit on the power of congressional appropriations in requiring states to carry out directives attached to the dollars; hard to know where the line will be drawn

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The RockefellerInstitute of Government

The Public Policy Institute of theState University of New York

University at Albany

411 State StreetAlbany, NY 12203-1003

www.rockinst.org

Thomas L. GaisDirectorgaist@rockinst.org(518) 443-5831