BERKELEY – The year 2016 was one of ascendant populism in the United States, the United Kingdom, and many other developed countries. With income stagnation, faltering economic opportunities, and a loss of faith in progress fueling widespread discontent, voters backed candidates who promised to return power to the “people” and to shake up systems that mainstream political leaders had “rigged” in favor of a corrupt “elite.” In the US, growing ethnic diversity, smoldering racial tensions, and changing social mores added fuel to the electoral fire.
In the US, long-term erosion of trust in the federal government culminated in Donald Trump’s victory in November’s presidential election: even though President Barack Obama enjoyed high public approval, only 19% of Americans trusted the federal government to do what is right. Given traditional Republican priorities, reflected in President-elect Trump’s cabinet choices, federal government programs (with the notable exception of the military) are likely to be slashed. Ironically, spending cuts for health, education and training, and the environment, along with large regressive personal and business tax reductions, will further enrich the “elite” while undermining programs that benefit the majority of households.
But the major social and economic challenges addressed by federal programs will not disappear. The responsibility to deal with them will merely fall more heavily on state and local governments, which will have to tackle them in innovative ways. Indeed, the answer to Trumpism is “progressive federalism”: the pursuit of progressive policy goals using the substantial authority delegated to subnational governments in the US federal system.
Annual Gallup polls continue to show that a majority of Americans trust their state governments (62%) and their local governments (71%) to handle problems. A 2014 Pew study found that while only 25% of respondents were satisfied with the direction of national policy, 60% were satisfied with governance in their own communities. And the US Constitution allows individual states to function as what Judge Brandeis called laboratories of democracy by experimenting with innovative policies without putting the rest of the country at risk.
There is a long and rich history of successful experiments. State and local governments were leaders in establishing public primary and secondary education systems, as well as state colleges and universities. California, Wyoming, and other states allowed women to vote – an example that encouraged passage of the Nineteenth Amendment (enfranchising all adult women). Welfare-to-work programs in Michigan and Wisconsin served as the model for federal welfare reform under President Bill Clinton, and Obamacare is based on Massachusetts’ health-care system, introduced under Republican Governor Mitt Romney.
Likewise, from 2000 to 2014, by enacting a variety of energy policies – from broad climate action plans to mandated renewable-energy standards – 33 states cut carbon dioxide emissions while expanding their economies. More recently, some states have introduced cap-and-trade systems to put a price on carbon, and many are already on track to meet Obama’s Clean Power Plan targets. Half of all US states have now legalized marijuana in some form, with eight embracing full legalization. Three states have implemented laws offering paid family leave, with a fourth on the way. Nineteen states rang in 2017 with increases in their minimum wage.
The list goes on. Successful examples of progressive federalism can be seen in a wide variety of areas, including health care, prison reform, higher education and job training, entrepreneurship, worker protection and benefits in the “gig economy”, and pay-for-success government contracts. Cooperation, collaboration, and compromise – between private and public actors, for-profit and non-profit organizations, and Republicans and Democrats – are essential features in all of them. They also underpin the myriad examples of policy innovation and civic engagement at the local level described by James Fallows in a recent article and upcoming book.
To promote state and local policy innovation, the federal government often assumes the role of venture capitalist, providing measurable goals and incentives, rather than dictating solutions. Obama championed this approach through statewide competitions like the Department of Education’s Race to the Top program, through federal “social innovation grants” to support state and local governments, and through the Medicaid expansion program. Vice President-elect Mike Pence is proud of the Medicaid expansion he led as Governor of Indiana – though, as of October 2016, 19 states, mainly in the South and Midwest, had opted not to participate, thereby denying health insurance to more than 2.5 million low-income people.
With the world’s sixth-largest economy, a population of nearly 40 million that looks like the future of America, and a united and responsible Democratic government, California is a model of what progressive federalism can accomplish. It has led the way in expanding rights for women, farmworkers, immigrants, and sexual minorities, among others. Similarly, it has been at the vanguard of environmental protection and efforts to combat climate change – from setting tough standards for energy consumption and auto emissions (adopted as federal law in 2016), to pioneering a carbon-pricing system. Governor Jerry Brown recently promised that if the Trump administration cuts federal funding for satellites needed to collect climate data, California would “launch its own damn satellite.”
California can also be a leader of progressive resistance or “uncooperative federalism,” by refusing to carry out federal policies that it opposes. Many cities in California and the state itself already act as “sanctuary jurisdictions,” which protect undocumented immigrants from deportation by limiting cooperation with federal authorities. By law, immigration enforcement is the federal government’s responsibility; in practice, it lacks adequate resources. The massive spending and personnel cuts promised by Trump will exacerbate the shortfall, forcing the federal government to rely even more on state and local authorities to do much of the work. Signaling its opposition, the California legislature recently introduced for consideration new bills to finance legal services for immigrants fighting deportation and to ban the use of state and local resources for immigration enforcement on constitutional grounds.
Trump has already threatened to cut federal funding to sanctuary jurisdictions. But such pressure tactics have been rendered more difficult by a recent Supreme Court decision limiting the use of conditional spending by the federal government to “coerce” state officials into implementing federal policies.
We may remember 2016 as the year populism returned to power in the US. But it may also be remembered as the start of a new era of progressive federalism and resistance, championed by state and local governments trusted by their citizens to help improve their lives and communities.
Laura Tyson, a former chair of the US President’s Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley, and a senior adviser at the Rock Creek Group. Lenny Mendonca, Senior Fellow at the Presidio Institute, is a former director of McKinsey & Company.
By Laura Tyson and Lenny Mendonca