How Federalism Can Trump Populism

BERKELEY – America remains deeply divided on many economic and political issues. Just as US President Donald Trump was touting the accomplishments of his first 100 days in office, a federal court, responding to a legal complaint brought by several jurisdictions, temporarily blocked his executive order to strip federal funding from “sanctuary” states and cities.

According to the ruling, Trump’s order violates the Constitution’s separation of powers clause, due-process guarantees, and the Tenth Amendment, which states that, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” In other words, states and cities may cooperate with the federal government by carrying out federal policies; but the Tenth Amendment provides the constitutional basis for them to challenge or resist federal policies that conflict with their own goals (in this case, shielding undocumented immigrants from arrest and possible deportation).

Citizens’ needs vary widely across the country, and federalism helps to ensure that they are addressed. State and municipal governments can implement policies more efficiently when they are free to source local ideas and enter into local partnerships with non-governmental actors.

Local-level pilot programs and policy experiments also accelerate innovation, with authorities able to close ineffective programs quickly and expand those that work. And, because a federalist approach encourages transparency and accountability in how policies are implemented, it also bolsters the public’s trust in government institutions and elected officials. This is why most Americans have maintained their confidence in state and local governments, even as their trust in the federal government has reached all-time lows.

State and municipal officials are often responsible for implementing federal policies – concerning health care, education, employment, law enforcement, and environmental protection – that directly affect people’s lives. And the federal government, for its part, uses a variety of tools to encourage innovation among state and local governments, including waivers, pay-for-performance contracts, and challenge grants. Waivers and state flexibility in Medicaid are at the heart of the fractious political showdown over health care.

During the past decade, many state and local governments have focused their attention on environmental policy. In 2006, 12 states sued the Environmental Protection Agency for its failure to classify greenhouse gases as pollutants, and to regulate them accordingly. In 2007, the Supreme Court issued a 5-4 decision, siding with the states; and in 2009, the EPA concluded that certain greenhouse gases endanger public welfare. That finding provided a basis for the Obama administration’s new auto-emissions standards and Clean Power Plan, which were established to help America meet its commitments under the 2015 Paris climate agreement.

Trump has now signed an executive order to roll back the Clean Power Plan, claiming, ironically, that he wants to weaken federal regulations as a way to return power to the states. Still, many states are already on track to meet the plan’s emissions targets, and have established their own standards for emissions and renewable energy, as well as their own cap-and-trade systems. And many municipal governments have joined the fight against carbon emissions by expanding mass transit and making government buildings more energy efficient.

California is leading the way in these efforts. It has implemented the strictest CO2 emissions standards in the US, and it is a leader in the Under U2 Coalition, a group of 170 national and subnational governments (representing 37% of the global economy) that are committed to achieving the Paris agreement’s emissions targets.

In addition to pursuing their own environmental policies, state and local governments can also resist or undermine federal policies. For starters, they can simply abstain from taking action, as we have seen with some states’ reaction to federal education reforms. Or they can withhold the state-level resources needed to enforce federal laws, as states that have decriminalized marijuana have done, and as sanctuary states and cities are now doing. The immigration showdown will ultimately be adjudicated in the court system; and Trump has already lost his first battles there.

Under federalism – whether cooperative or “uncooperative” – it is often assumed that state and local governments are pursuing the same goals. In fact, there is a deep divide between left-leaning “blue” cities and the right-leaning “red” states where many are located. And there are many ways that state governments can thwart progressive federalism at the municipal level. Cities, for their part, often lack the information and resources necessary for developing and implementing effective policies. A number of organizations have now emerged to strengthen the policy-making capacity of city governments including Michael Bloomberg’s Government Innovation Program, Fuse Corps, Results for America, Social Finance, Third Sector Capital Partners, and USAFacts.

There have been several legal fights recently between city governments and state legislatures over the principle of preemption, which holds that state laws override local laws. According to Preemption Watch, in 2016 alone, at least 36 state governments – most of them Republican-led – preempted cities by introducing laws on a wide range of issues, from minimum wage to environmental protection, gun control, fracking, immigration, and anti-discrimination ordinances. And 42 states have set limits on the taxes and expenditures of their cities.

The political struggle between red states and blue cities will continue to play out in judicial and legislative battles, while giving rise to new citizen-led initiatives. A new movement of grassroots progressive federalism, reflecting the powers conferred on citizens by the Tenth Amendment, has already begun to emerge. It is apparent in huge citizen marches, and in coordinated civil-society initiatives advocating for a national popular vote, congressional redistricting, automatic voter registration, and a higher minimum wage.

Trump did not accomplish much in his first 100 days. But he did unwittingly remind many Americans that the US Constitution delegates substantial political authority to states, cities, and individual citizens. And his administration has only further highlighted the importance of an independent judiciary, where the coming years’ battles among local, state, and federal government entities will be fought.

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