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Devolving Federal Programs to the States Means Cutting Them

Michael Lipsky

Today the Pew Center on the States released a summary of the differences between the presidential candidates on key issues affecting the states. The summary reflects Governor Romney’s preference for devolving to the states responsibility for critical policy matters.  

Among other things he would replace the Affordable Care Act with state plans, and convert Medicaid and federal job training programs into block grants. 

The proposal to devolve programs to the states has a certain resonance in American political rhetoric. States are famously “laboratories of democracy,” as Justice Brandeis once wrote and Gov. Romney reminded his audience in the first presidential debate. 

There’s a measure of truth to this homily, but it should be understood in context. 

When issues are bubbling to the surface or when Federal lawmakers are conflicted, states can indeed show the way, as they did with child labor laws and labor protections. More recently, states have been bolder than the Federal government on environmental policies, including automobile gas mileage standards, recycling, and cap-and-trade approaches to pollution control. 

For established policies, however, proposals to devolve responsibility to the states typically mean reducing support for them. Devolution through block grants tacitly becomes an excuse to allocate less money, usually on the unexamined assumption that states will be able to eliminate waste and duplication, and tailor the policies to local circumstances. 

Devolution can also mean turning over responsibility for funding to governments which do not have the fiscal resources the Federal government enjoys.  Moreover, the states vary greatly in their capacity to provide for their citizens; Connecticut simply has more resources than Mississippi. 

In addition, because they must balance their budgets every year, unlike the federal government, states must cut programs or raise taxes when the economy falls into recession.  Thus policies devolved to states at the least will be less stable.   

Finally, the flexibility states seek in administering Federal programs is often available without devolution.  In his first term President Obama encouraged states to experiment with federal education programs, and welfare policies.

One might think that states could use their own monies to make up shortfalls when federal block grants came up short. This is clearly implausible in an environment in which cuts may be expected across the policy spectrum. It is certainly unlikely in the unbalanced budget proposals of Governor Romney and Representative Ryan, who would recommend no additional taxes. Without additional revenues states would see federal support decrease by over 20 percent, according to the Center on Budget and Policy Priorities.  

In such an environment, with health care costs rising and schools and law enforcement hurting, no state could be expected to maintain existing levels of support for newly devolved federal policies.