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Who Is Really Able to Attack Inequality?

David Callahan
New York Mayor Bill de Blasio and Maryland Governor Martin O'Malley are two of the most admired progressives in politics right now. But there's a big difference between these leaders: One has lots of power and the other does not. O'Malley's power was vividly on display Monday when he signed a law that will raise his state's minimum wage in Maryland to $10.10 by 2018. That achievement comes on top of other O'Malley successes that include raising taxes, legalizing same-sex marriage, and repealing the death penalty. 
Bill de Blasio has only been in office for a few months, so it's too early to judge his track record. What is clearly visible at this point are the profound limits on his power. De Blasio's own proposal to raise the minimum wage was swatted aside by a state legislature that, in many ways, couldn't care less what the mayor of New York thinks. Just like his own tax hike plan was dismissed by New York's centrist governor. And there are sure to be other humiliations to come as de Blasio bumps up against the basic reality that much of New York City's future is actually decided in Albany -- or in Washington, which finances the social safety net that keeps more than a quarter of New York's residents above water. 
Harold Myerson recently wrote an article about the exciting rise of a new urban progressivism, and it's a indeed a thing to behold, with de Blasio just one of a number of mayors trying to moving forward agenda items that have stalled at the national level. And, to be sure, there are definitely things that can be accomplished at the city level, and are happening right now. 
But here's the thing: If progressives really want to dream big about moving their agenda without asking Eric Cantor first, the statehouse is where the action is -- especially when it comes to the challenge of tackling inequality. Mayors have few economic levers to pull, and certainly no say over tax policy. But governors do. They can use taxes, economic development funds, higher education budgets, and healthcare dollars to do a lot to reduce income gaps and expand opportunity. 
What's more, it just so happens that many of the greatest zones of prosperity are in blue states controlled by Democratic governors. Think about where the rich people mainly live these days: California, New York, Connecticut, Illinois, Massachusetts, and Maryland. 
Right now, the IRS vacuums up a good share of federal revenues from these states and other federal agencies spend a lot of that money in red states, whether through military spending, Medicaid, Medicare, and so on. And whenever blue state Democrats try to jack taxes on their own affluent coastal constituents, they're blocked by red state lawmakers who speak for some of the poorest places in the country, who -- in effect say, no, we don't want Manhattan and Malibu to pay more. Think about the Affordable Care Act: It's largely financed by a Medicare surtax for wealthy taxpayers and taxes on medical instruments, a burden largely borne by rich people in blue states. In turn, the ACA was on track to pump billions of Medicaid dollars to the red states before many of these states rejected that money -- which would have amounted to one of the bigger wealth transfers from the coasts to the heartland in recent times. 
But imagine if we could just forget about Washington for a while in thinking about inequality and try to make a dent in this problem at the state level. The resources are certainly there and so are plenty of low-income people who need more opportunities. Maybe the next big play in progressive politics is to amp up the fight to achieve greater equity in the blue states and let the red states sit with the consequences of their ideology for a while. Governor O'Malley has shown the progress that's possible. And what we need now is more of the same -- as opposed to the centrist governors that now often rule blue states. 
Focusing on the states doesn't have to be a permanent thing; it could be a strategy of the moment, until the window opens again nationally. But it definitely has implications for how progressive resources are allocated. For example, what if big donors on the left this year, along with the unions and other large grassroots outfits, just said forget about who controls the Senate. It doesn't matter, since Congress is gridlocked anyway. Let's focus instead on primary challenges to centrist lawmakers in the blue states. 
That would be fun to watch, not that we take positions on partisan politics here at Policy Shop. What's intriguing to me is the potential to open broader avenues to attack inequality with public policy.