New Federalism

Over the next few months, most state governments and municipalities will face massive revenue shortfalls, thanks to rising unemployment, falling real estate values, and the absence of capital gains. The bailout could be huge. We should be alarmed that this is not widely discussed in the press or in Washington.

Most states and cities have a balanced budget requirement. Are they going to tax their way back into balance? That doesn't seem likely. Are they going to lay off lots of workers and cut benefits to retirees? Unless someone gets creative, that may be the only option. In states already hard hit by the recession, that option is particularly unattractive.

I propose that we revisit the work of Alexander Hamilton, who famously addressed a similar situation after the American Revolution. The 13 states had borrowed heavily to finance the Revolution and faced a crisis when the war ended. Hamilton proposed that the Federal government assume the debts of the states in exchange for control of the currency and limited ability to tax. Federalism enabled the new United States to get off to a great start -- and eventually to become the biggest economy in the world.

I would like to see the Obama administration implement a new Federalism. The Federal government could assume the debt of cities and states in return for changes in policy and/or governance. What would those changes be? Some of my favorites include eliminating the Electoral College, eliminating California's referendum process (which gives the state practically no flexibility to adjust its budget to changing economic conditions), mandating higher standards for public education, etc.

The same forces that drove our economy over the abyss have been at work in state and local government. Why not address both problems at once?

Comments

[WilliePilgrim]

ah..oh...don't forget the beer volcanoes and stripper poles! Really, man...an increase in alignment is not a bad idea, but it if it's a really good idea, why does it have to be done by increasing the power of the Federal Gov't over it?
How about getting us out of this crazy tax system all together. The IRS should be concerned with whether corporate entities are paying tariffs and duties and handing over the sales taxes, not hounding working joes about whether they earned too much money or paid too much money to have their lawn mowed (did you file a 1099 for your housekeeper or child's tutor?). The income tax for individuals is where one, but only one, of the major obstacles to happiness lies.

[FreedomBeforeDemocracy]

"most state governments and municipalities will face massive revenue shortfalls, thanks to" rampant over spending. How is giving more power to the central government "new federalism"? By not being federalism at all? The only entity more irresponsible than our state/local governments is our federal government. At least most states have balanced budget requirements that they can ignore. The federal government doesn't even appear to have any responsibility.

[zippy2112]

The Federal government could assume the debt of cities and states in return for changes in policy and/or governance.
The goverment should help us out but not at the cost of states rights.

[HMDMSR]

I meant "...no worse than..."

[HMDMSR]

It seems the Huffpost is a favorite among populist Jeffersonians. I think the author is less concerned with why Hamilton's Federalists called themselves "Federalists," than is with the content of some of Hamilton's policies. We'll see by the end of the year how well the 50 fiefdoms have stood up. I'm confused. Why is corruption at the state and municipal level worse than that at the federal level?

[a2burns]

i read the federeralist papers in college !!!!!!!!!!!! federalism no way !!!!!!!!!! only benefits the white man that's it !!!!!!!!!!!!!! you better rethink your article !!!!!!!!!!!

[Rule Of Law]

And only rich, old white men who want to get richer off EVERYONE else, regardless of color!

[Rule Of Law]

There's a reason that greater minds like Jefferson and Madison (the author of our Constitution) differed with Hamilton.

Hamilton was an Elitist who didn't believe in a nation of, by and for the people. He espoused a govt. that was modeled on the one we had just defeated where the governing would be reserved for the privileged classes.

His greatest crime was the Central (now called Federal Reserve) Bank, also closely modeled after that of the Bank of England. Central Banks had amassed power over the monarchies of Europe and much money was to be made by working with them in that system. When Madison threatened to let the Central Bank sundown during his term, Britain began the war of 1812 at the behest of the Bank of England! The war ended as suddenly as it began when Madison had a miraculous conversion and allowed the Bank to live.

Jefferson and Madison were also great supporters of States Rights--to some scholars, the main bulwark against a monarchy in Washington, that prevented the Federal Govt. from overstepping its bounds in State issues. What Roger is suggesting here would undo 250 years of Constitutional history, move even greater power into the hands of the few in DC, and send All of our money directly to the Privately Owned Federal Reserve and its partners on Wall Street.

Bush has already destroyed the Constitution and Wall Street has been given all of our money. We don't need to compound an already terminal problem.

[usna73]

Hamilton can be called an "elitist" because he was,...... ELITE. Yes, smarter and wiser. Obama was recently "accused" of the same. I hope he lives up to the approach. I voted for him.

Hamilton knew that America would not thrive by remaining an agrarian society. Right again.

States rights was not a solution then, nor it is now. Except if you want to break up the Union.

I agree with Roger and in fact, think we should consider a financial arrangement whereby we exchange Social Security obligations for municipal bonds.

The swap could not only shore up the states, but give them room to use funds ( currently proposed as grants) to equalize opportunity for school financing and modernization, removing it from the antiquated model of relying on local property taxes. Another agrarian relic.

[Rule Of Law]

Spoken like---an Elitist!

[RetireGreen]

Roger:
Regarding layoffs and retirement, someone did great creative, and now their is an alternative option. Here is a link to a Free Layoff Prevention Software Tool, that Human Resource managers in governments and corporations can use, to either avoid or reduce layoffs.

http://www.iplanretirement.com/layofftool.html

Help spread the word, there are solutions, we can prevent an economic collapse.

[bookbuck2000]

You do know that Hamilton did not want us to vote on our leadershsip. He was afraid we were not smart enough and would thus be swayed by rhetoric, pretty signs and the booze give aways at the vboting booth. Looks like he i right agian. We get just what he feared a man with no background, no fight for something he beleives in just a great slogan.

[LebronJeremy]

See you don't know that, though. We know GW was a screw-up; he got voted into office by uninformed citizens like yourself.
What I want to know is, you were wrong about Bush, so why would you be right about Obama? What if he turns out to be a great president? What I am saying is, you can't judge Obama before he gets to make a single decision. Your acting like people bought into his rhetoric, when maybe we just didn't buy into the other guy's rhetoric.

[DuPageDem]

Federalism was cooked up by Hamilton and other moneyed interests to make sure trade with the crown continued despite the breakaway. Nevertheless, Hamilton's greatest contribution was to understand that unfettered "free trade" would mean the US would remain a 3rd World sweatshop plundered for its resources. That's why he pushed for our tariff system which created and maintained US manufacturing jobs for 200 years, until the more recent rise of corporate-owned right-wing free traders.

If by "New Federalism" you mean a return to tariffs, a nationally-owned rather than private central bank, and greater regulation of corporations, I'm all for it.

I'm not, however, for expanded Fed authority over cities and states. Washington already has seized too much power under the guise of "security."

[joebhed]

You're right that we need a new federalism, for sure.
Hamilton used the state-federal debate to primarily bring about a private bank of issue in this country as the cornerstone of his federalistic policies.

He was following the lead of the international bankers who controlled the Bank of England at the time.
The scion of the European bankers, Mayer Anselm Rothchild, laid it out as clearly as can be said:
"Permit me to issue and control the nation's money and I care not who makes it laws".

The only way the federal government can provide the type of assistance to states that you describe is through a monetary reform program that negates the rights that the Rothchilds have had since Hamilton.

Dennis Kucinich last week courageously laid out the program needed to abolish the private federal reserve banking system and to replace it with a system of debt-free, government issue of this, OUR, nation's money system.

See his speech here. Very short and to the point.

http://www.youtube.com/watch?v=AR2EtMteHCg&feature=channel_page00

Visit monetary.org for draft legislation that would NOT permit the private bankers to control the nation's money, so that it DOES matter who makes the nation's laws.
Now THAT is a new federalism.
Tell YOUR Congessman to get behind Dennis Kucinich's plan.
Thank you Dennis Kucinich.

[Rule Of Law]

Hi Joe, you always beat me to that Rothschilds quote, dern ya! As DuPage says above here--a nationally owned bank. Death to the FED.

[Donkslayer]

I'm pretty sure your "new federalism" means no federalism. Do you even understand what federalism means? It does't mean "the federal government is chief".

[FederalistElephant]

Amen, The government should just be a high level overseer, States rights should ALWAYS prevail over the Federal Governments wishes. The original purpose of a Federal government was to deal with International relations, fund a national army for the sole purpose of Defense, and to manage the issues related to interstate commerce between the states (the commerce issue has be brutally perverted to the Governments gain)

[zerotimes10]

Maybe we should call it the "New Pollution" as the great writer/performer Beck called it on his Grammy grabbing Record "Odelae" SP? which is now over 10 years old. Where does the time go?

[zerotimes10]

Yes, I've always felt it ironic that The Right Wing of Today draws a parallel to Hamilton as one of their own. Wasn't it Reagan who said government was the problem? That is the opposite of what Hamilton was saying. Hamilton said: "The people are like sheep and should be ruled with an iron fist." Actually the Republicans probably really believe this but that's not what they want you to believe. The Republicans believe in a dumbed down citizenry that can be cowed. I really hate to say or believe that but I have been shown no other reason to not believe it. Stay in school kids and grow up to be well educated activist Liberals. Liberty for All. Right? Isn't that the reason we were founded in the first place? I know being a cynic is cool and it ain't nothin new but we have to believe in the dream. We get there little by little.

[charleydan]

That is sure violating the constitution as if you or politicians cared. The federal government has no right to enter into cities or states sovereignty. If it wants to give it money with strings unattach like wallstreet is unconstitutional but hell they have been doing that forever.

Of course it is all printed money from the federal reserve--google federal reserve chairman's comments and you will find ones like these:

Volcker: The federal reserve a government entity mainly, that pays for government by robbing from the people. The only problem is you have to do it more and more. This is a moral issue of which I am part of.

Bernanke: The federal reserve allows for government to buy elections at the expense of the people with out there knowing. one in a million are aware of this.

[popshobby]

Withholding and payroll taxes pour enormous amounts of money into Washington, and the politicians and bureaucrats there use the money to increase their power. Leave the money with the taxpayers, who will spend it on things they need and want, and have money to take chances on businesses that create jobs.
It's beyond me why we give money to leaders who force us to beg for it back while calling them great.

[FederalistElephant]

The "Income Tax" we all pay was orginally to be sunsetted a few years after the Civil War. The purpose for its implementation was to pay for the rebuilding of the war torn nation. The government, seeing an opportunity to stuff its couffers infinitely, kept making excuses why it should stay in place.

[glockman]

"and limited ability to tax." This is the main problem in your argument, as we've seen that the federal govt. is not interested in limiting its ability to tax. Hamilton caused not too few problems with his desire to grow the size and responsibility of the federal govt. A massive central power can only be a greater detriment to civil liberty, which is why most legislative powers were meant to be reserved for the states. A one size fits all type of governance (education, for example) fails to account for regional/cultural differences of the several states. No, this new Federalism is a very bad idea.

The type of power you are suggesting the feds have is expressly forbidden in the Constitution. And for good reason.