Reform Conservatism's Federalism Blind Spot

Conn Carroll

7/29/2014 10:45:00 AM - Conn Carroll

New York Times columnist Ross Douthat published a must-read column Sunday on, "The New Republican Populism," a subject Townhall Magazine has covered extensively. Douthat writes:

So haltingly at first, and then with increasing seriousness, Republicans began to look for a different path back to power — one tailored to the party’s growing dependence on working-class votes, and one designed to deliver populist substance as well as style.

Thus far they have circled around two broad approaches. One, dubbed “reform conservatism,” seeks to make the welfare state and tax code more friendly to work and child-rearing and upward mobility — through larger wage subsidies, bigger child tax credits, and a substantial clearing-out of the insider-friendly subsidies and tax breaks and regulations that drive up costs in health care, real estate, energy and higher education.

The other, “libertarian populism,” is even more zealous about attacking rent-seeking and crony capitalism, while also looking for other places — criminal justice reform, notably — where a libertarian approach to public policy might benefit people lower on the economic ladder.

These two approaches substantially overlap (with the main difference being a skepticism among the libertarians about targeting tax cuts and subsidies specifically to parents and the poor).

This is an exceedingly fair recap of Reform Conservatism and Libertarian Populism, although if he had more space, Douthat could have more extensively explained why Libertarian Populists are so skeptical of expanding federal government programs that target "parents and the poor."

For example, as Douthat mentions elsewhere in his column, both Sen. Marco Rubio (R-FL) and Rep. Paul Ryan (R-WI) have outlined Reform Conservatism-friendly proposals that would consolidate many of our federal government's anti-poverty programs into one place and then let states decide how best to implement those programs.

Consolidation. More power to states. Sounds great. Maybe conservative even.

But both proposals ignore the reality of our modern administrative state and seem to have completely slept through the Obama administration.

Rubio would funnel all federal anti-poverty programs "into one single agency" that would administer "a revenue neutral Flex Fund" that would transfer money "to the states so they can design and fund creative initiatives that address the factors behind inequality of opportunity."

Ryan wants a pilot program that would allow states to apply for "Opportunity Grants" that would "consolidate several means-tested programs into a new Opportunity Grant program." Under the Ryan plan, states would have to submit "concrete" plans that "would have to meet four conditions."

Both of these proposals suffer from the same flaw: the executive branch would still be entirely in control of writing the regulations and making the implementation decisions for these programs.

Do you trust the same administration that is using the No Child Left Behind law to force Common Core on our states to decide if states have met Ryan's four conditions for Opportunity Grant approval? Do you trust the same administration that is epically abusing its enforcement discretion at the border to rewrite immigration law to fairly administer Rubio's Flex Fund?

The questions answer themselves.

The problem with both the Ryan and Rubio poverty plans is that they increase the power and discretion of the executive branch over the states. Both would be a major expansion of what George Mason University Law School professor Michael Greve calls "cartel federalism," a brand of federalism which is undermining the Founder's true vision. Last year Greve explained:

At the fiscal front, the central problem is the flood of transfer programs that encourage states to “experiment” with federal dollars. The most menacing example is Medicaid, which now consumes almost a quarter of state budgets. For the most part, this is not a result of federal coercion or mandates. It is a result of the states’ voluntary decisions to expand Medicaid so as to attract federal matching funds. The states’ perverse incentive to expand their domestic welfare state on our collective nickel—trillions of nickels—is, again, a federalism problem. So is the moral hazard that attends these arrangements that is, the risk that states will spend themselves to the brink of bankruptcy in hopes of a federal bailout. Greece exemplifies that problem; but then, so does Illinois.

There are better ways to help Americans escape poverty. Specifically, conservatives should push to cut the regressive, job-killing payroll tax. Such a tax cut, paid for by eliminating loopholes that benefit rich coastal elites (like the state and local tax deduction), would create jobs, increase the incentives for people in poverty to work, and put more money in every working American's paycheck.