Can the states do It better? (1995) | THINK TANK

Can the states do It better? (1995) | THINK TANK


Ben Wattenberg: Hello. I’m Ben Wattenberg. Here in Washington, lots of folks think that
big government and big think tanks shape policy. But all across the country, state governments
and state think tanks are tackling serious problems, sometimes with remarkable success. Joining us are some of the people who are
shaking things up at state and regional think tanks. From California, Sally Pipes, president of
the Pacific Research Institute; from Michigan, Joseph Overton, vice president of the Mackinac
Center for Public Policy; from Colorado, Phil Burgess, president of the Center for the New
West; and from Massachusetts, James Peyser, executive director of the Pioneer Institute
for Public Policy. The topic before this house: Can the states
do it better? This week on “Think Tank.” The 10th Amendment of the Constitution says
that the powers not delegated to the federal government “are reserved to the States.” But over the past 50 or 60 years, the federal
government has greatly expanded its authority at the expense of the states. The federal budget is now bigger than all
state and local budgets combined. Many of the members of the new Republican
majority in Congress say they want to shrink the size and role of the federal government
and send power back to the states. They argue that individual states know their
own special needs and can often handle tough issues like crime, health care, welfare, and
education more efficiently than one-size-fits-all federal programs. In the states, the revolution has already
begun. In Wisconsin and New Jersey, tough new laws
limit benefits to welfare recipients. Because of this, New Jersey saw a 13 percent
drop in illegitimate births to welfare mothers, and Wisconsin has reduced its welfare rolls
by 25 percent at a time when the number of welfare recipients was increasing nationally
by 30 percent. In Michigan, the state legislature slashed
property taxes and instead funded public schools with a small increase in the sales tax. And in Massachusetts, annual Medicaid costs
were growing 19 percent per year; state health care reforms cut the increase to only 5 percent
per year. These and other innovations have some states
on the cutting edge of reform. But can they shoulder yet a bigger burden,
and will they be able to manage social programs better than the feds, who so often seem bound
in red tape a mile long? Let us begin the conversation, perhaps once
around the horn, with a short answer to the central question that we’re dealing with
today: Why should the states play a more active role than they are now, and the federal government
a less active role? Sally Pipes: In the recent elections, both
at the federal and the state levels, we have seen a reduction — in people’s views — the
voters rejected big government. It’s time to turn that power of spending
taxpayers’ dollars to the states because the states can manage their funds much better
than a central bureaucracy in Washington. Ben Wattenberg: All right. Jim Peyser of the Pioneer Institute for Public
Policy. James Peyser: Well, you know, I think there
is frequently a combining of small government with federalism, and I’m not sure that’s
always the case. I think perhaps more important, especially
to governors, is the flexibility and accountability that comes with having control over the management
of the programs. And I think a lot of governors are looking
at not so much cutting the programs as much as taking over responsibility for managing
them. And I think the assumption is that that will
produce efficiency gains, but also that there will be programmatic benefits that ensue. Ben Wattenberg: All right. My old friend Phil Burgess from the Center
for the New West, headquartered in Denver. Phil Burgess: Well, Ben, I think there are
three reasons. One is, when the Founding Fathers set up the
national government, it had two parts to it: a central government and a state government. That has been corrupted over the years, especially
since the Civil War. We’ve begun to think of the federal government
as the government and the states as administrative units. That really overlooks some of the tremendous
assets that we have. The second reason is that almost all the innovation
in public management since World War II has happened in state government, whether it’s
legislatures, executives, or the reform of judiciaries. The third reason is that state governments
are closer to the people, and we live in a large, heterogeneous society. One-size-fits-all doesn’t work. The answer to illegal immigration in California
may be very different from the answer in Arizona, and we don’t need people from Washington
coming out and telling us how to do it. Ben Wattenberg: How are we going to make a
living? [Laughter.] No. The — all right, next, Joe Overton of the
Mackinac Center for Public Policy. Joseph Overton: Well, Ben, my first response
would be, given the record of the federal government in the last 30 years, what makes
us believe that the federal government can be involved in really meeting the needs that
our citizens in Michigan have? I think your initial comment about the principle
of federalism embodied in the Constitution was one that was well analyzed and discussed
at this country’s founding. I agree with Phil. We know our people, and it’s not a greater
burden. We are already doing the work. Whether it be through unfunded mandates that
we are trying to be responsive to or whether it’s through receiving funding for programs
where our hands are tied at actually implementing those programs, we are doing the work in the
states. What we want is more flexibility, and we want
more ability to keep that money in our own state. Ben Wattenberg: Joe, you mentioned — put
a time frame on it, the last 30 years, and you sort of “cast asparagus” on the federal
government the previous 30 years. The reason this power migrated to Washington
was the states were regarded, I think, with some merit in certain cases as either racially
segregated or corrupt. I mean, you had vast numbers of scandals at
the state level. Is that correct history, and has that changed? Joseph Overton: Well, first of all — I mean,
if you’re talking about civil rights — that’s only one very small component of what the
federal government is involved in today. We have regulation of industry and commerce
well beyond the authority in the interstate commerce clause. We have regulation of — we have banking
and insurance law. I mean, many of these areas have nothing to
do with those basic civil rights questions is my first response. And secondly, I think in many states, we’re
dealing with those issues. Today, in Michigan for example, we have redundant
civil rights legislation that we deal with, both at the state and federal level. Phil Burgess: Ben, I think the reason why
power came to Washington was because of an economic crisis, not because there was a loss
of faith in the states. We were in a terrible situation in the 1930s,
and power migrated to Washington. But stop and think. The progressive revolution that began a hundred
years ago in Omaha, Nebraska, with the convention really involved innovations at the state level
— the open primary, the inspection of foods, public safety and health. All the major innovations that were later
adopted by the New Deal really started during a very exciting period of state government
innovation from roughly 1890 until 1932. Ben Wattenberg: Yeah, but after that, the
innovations — Social Security, Medicare — they came from the federal government,
didn’t they? James Peyser: I think the world — I think
your comment that the world has changed, or at least the states have changed, actually
is very true. I mean, I think in the end, if you look at
the sort of radical reformers, Tommy Thompson or John Engler or Bill Weld or Christine Whitman,
people like that are not advocating the dismantling of the social welfare safety net that’s
currently administered by the federal level. They’re saying, let us take responsibility
for it because we can manage it better. We can be more accountable, not only to the
beneficiaries but also to the taxpayers. And I think the level of both responsibility,
and also the legal and constitutional infrastructure that’s been built up over the last 30 years,
ensures that the states are not going to fall into the type of behavior that marked, I think,
the pre-civil-rights acts and the pre-civil-rights movements of 30, 40 years ago. Ben Wattenberg: Do you buy that, Sally? Sally Pipes: Yes, I do. And I think that — you know, Governor Wilson
has just said in his recent election that he honors individual responsibility, and he
wants to reward individual opportunity by controlling programs that are offered to the
people. We’ve been through a very difficult recession
in California: We’ve had riots, we’ve had floods, we’ve had earthquakes. And now the state government and Governor
Wilson should be able to manage the taxpayers’ funds. And he’s doing that by reducing taxes over
three years by 15 percent, taking over welfare payments. But we have to have control at the state level
and take that back from Washington. Ben Wattenberg: Anybody, what are the best
programs in your states or regions that are now being considered by — Phil Burgess: Could I just make a — just
a point first — Ben Wattenberg: Sure, go ahead. Phil Burgess: — on the idea that nobody
wants to dismantle any of these programs. I don’t really agree with that. I think that there are a lot of people in
this country who would like to replace the safety net with a springboard, and that’s
going to require dismantling some programs, putting more money back into states and communities
and the back pockets of individuals. I think one of the most important things to
remember about the 10th Amendment that you read in the leadoff to this program is you
left out part of it. It’s to — powers not exercised by the
federal government are retained by the states and the people. And I think there are a lot of impulses in
our part of the country, in the western states anyway, for having more and more responsibilities
undertaken by the civic sector — by the voluntary sector. Ben Wattenberg: Is this the so-called “war
in the West” that we hear about? Phil Burgess: Well, that’s part of it. I mean, the public land — the assault on
the management of public lands by Bruce Babbitt overlooks the fact that the situation in each
of the states — not even in a state, in each of the subregions in a state — the
watersheds differ widely from place to place. Ben Wattenberg: Weren’t you a big fan of
Bruce Babbitt’s when he was governor out there? Phil Burgess: Well, Bruce Babbitt was a governor
of 43 governors I worked for during the time. When somebody is a member of your board of
directors, you’re usually a fan of him, Ben. But no, I think the — and Bruce Babbitt
had some things I agreed with. I mean, he was one of the few Democrats that
was for NAFTA, and that was a good thing, I think. And it was good that he could help lead that. Ben Wattenberg: Right. Phil Burgess: But, you know, his one-size-fits-all,
top-down, scientific management approach to the management of public lands simply doesn’t
work. And that same approach can be found in HHS
and elsewhere. When Bruce Babbitt says, “Look, come up
with a local solution, and I will give you a waiver,” why should states get on bended
knee to get a waiver from an assistant secretary in HHS, or even the secretary of the Department
of Interior? What we have today is a mainframe government
in a PC world, and what we have to do is to understand the American federal system is
tailor-made for a PC world. James Peyser: If I might just carry that one
step further? Ben Wattenberg: Go ahead, sure. James Peyser: I think — just to use your
computer analogy here — the mainframe may be the federal government, but the states
are often the mini-computers. And I think getting down to the PC, which
may be the city government, municipal government, country government, may be in fact be the
more important endpoint for this devolution of power from the federal government. States are just as capable of creating mandates,
funded or unfunded, as the federal government. Ben Wattenberg: On the local municipalities? James Peyser: Absolutely. Joseph Overton: I would like to — I think
one issue that really hits home to us at the Mackinac Center for Public Policy is the issue
of social assistance. I think it’s one program where you — that
can’t be solved by the federal government sending a check to a low-income family in
Michigan. It can’t even be solved by Lansing, our
capital city, sending a check to people. We need to have people working with people
in those programs. We need to begin to rekindle a sense of volunteerism,
responsibility of private or nonprofit organizations, churches, to be involved in that at the local
level where they can know people, keep them accountable, and help them. Ben Wattenberg: Give me some specifics of
what has happened in Michigan in the last few years. I guess Governor Engler has made a big deal
about what he’s been able to do at the state level. Joseph Overton: Right. Exactly right. In fact, I think Governor Engler now is really
taking the lead among the nation’s governors to help reform federal legislation to allow
more flexibility. Bringing money back in the form of block grants
perhaps is a first step. Ben Wattenberg: What is the single best example
that you would — we have people out there that don’t — including me — that don’t
quite follow all of this. Joseph Overton: Okay. One good example is — well, right now, just
to give you background on the problem is that although the federal government dictates that
we will help people, we don’t have the flexibility in the state of Michigan to determine how
we’ll actually be distributing those funds. Our hands are tied. We have applied for waivers and have received
waivers for a program that the governor calls Work First. This program requires that any individual
receiving public assistance who is able-bodied spend 20 hours a week either working or seeking
job training or involved in job training programs. Ben Wattenberg: Did you get the waiver from
the feds? Joseph Overton: We did receive that, and I
think that’s one thing that we can at least give credit to the Clinton administration
for — that they have been supportive for most of these waivers. Ben Wattenberg: What are the best examples
that you can think of that are happening in your case, I guess, Sally, in California? Sally Pipes: We are seeing changes in AFDC:
requesting block grants, getting people, two years and a half and you’re out if you’re
able-bodied, reducing — encouraging people to be work-dependent, not dependent upon welfare. Ben Wattenberg: So that welfare plan, two
and a half years and you’re out, that’s already in effect despite the fact that they
are debating this federally now? Sally Pipes: Right, right, so we have to get
that removed. And another thing is we passed Proposition
187 in California, which means that illegal immigrants are not entitled to welfare benefits,
such as health, education, and general welfare. Now, this is being battled in the courts right
now, but the feds mandate that we pay illegal immigrants for these services. And this is costing the California taxpayers
over $3 billion a year. That is not fair. I mean, we should be able to determine who
is getting funds, who is in our state. And if we cut welfare, we’ll have far less
of an illegal immigration problem in the state of California. Phil Burgess: And if the feds want the illegal
immigrants to have benefits, they should pay for it. Sally Pipes: Right, or take them to Washington. Phil Burgess: I think there is another point,
though, here, and that is — that’s easy to forget, but, you know, I don’t think
people voted to get the federal bureaucracy out of their face just to have a state bureaucracy
put in their face. Joseph Overton: That’s right. Phil Burgess: The biggest enemy of innovations
in education today, Ben, are state bureaucracies that are wholly owned subsidiaries of the
National Education Association, and it seems to me to pretend that there aren’t serious
problems in state bureaucracy is to put your head in the sand. It seems to me that the revolution that Newt
Gingrich represents and the Republican contract represents here in Washington also has to
be repeated in the states. There are some states, like California and
Michigan and Massachusetts and others, that are making tremendous headways on this, but
you know, a lot more needs to be done. Ben Wattenberg: But no state on its own — you
brought up education — no state on its own has yet passed a school choice voucher system
for private schools. Phil Burgess: Right. Sally Pipes: No, but in California, as in
Michigan, we do have charter school legislation allowing a hundred schools. Now, in Pete’s — Ben Wattenberg: Within the public system,
not private charters. Joseph Overton: But the enemy of the charter
schools in almost all the states is the state education bureaucracies. Sally Pipes: But I just want to make the point
that in Pete Wilson’s “State of the State,” he said that by 1997 the 11-volume, 7,500-page
education code will be dismantled. He is getting rid of teacher tenure. He’s going to bring in merit pay. He’s going to empower parents to have control
over their children’s education. This is a very important step. Ben Wattenberg: And those are all things that
he says he can do without federal approval? Sally Pipes: Right. Yes, absolutely. And this is going to — Ben Wattenberg: If he can prevail on the state
senate and the state assembly? Sally Pipes: Right. But — Phil Burgess: And that’s the way it should
be. He doesn’t have to ask, “Mother, may I?”
to the Department of Education to do those things. Sally Pipes: Yes, exactly, Phil. And education is the future of our country
and of the state. Ben Wattenberg: Jim Peyser of the Pioneer
Institute for Public Policy in Boston, what is your sort of best example of what the states
— James Peyser: Well, you mentioned at the outset
the Massachusetts track record on Medicaid management. And essentially what’s happened is they
have converted virtually all of the Medicaid recipients into a managed care system. And under a managed care system, they brought
the — essentially the inflation rate, if you will, down from almost 20 percent to under
5 percent. That’s been done and had to be done hand
in hand with the federal government. But there continue to be tongue wars between
the Medicaid bureaucracy on the federal and the state levels over how to implement this
program, how to determine eligibility, how to determine what’s a reimbursable service. There are all kinds of things that continue
to promulgate skirmishes, and the amount of time that’s wasted focusing on these largely
peripheral issues is immense. And the distraction for the state government
is quite significant. So I think Medicaid is a good example of where
there could be significant reforms and savings at the state level that, by the way, produce
better benefits for those who are receiving the services. Ben Wattenberg: Joe Overton of the Mackinac
Center for Public Policy, which is what, in Lansing? Joseph Overton: No, we’re actually located
in Midland. Ben Wattenberg: In Midland, Michigan? Joseph Overton: Yes. Ben Wattenberg: Tell me how your think tank
works with Governor Engler. I mean, do you — are you an extension of
the state government de facto, or are you working with lots of different people? And has the governor adopted many of the ideas
that have bubbled up from your operation? Joseph Overton: We have a very good relationship
with the Engler administration, but we are very much an independent, nonprofit research
organization. The governor has been very receptive to our
ideas. We have been out front on the issue of educational
choice, charter schools, welfare reform. We have, quarterly, a Michigan privatization
report. Privatization has been a key issue for the
center. We don’t view ourselves as a political organization. We view ourselves as an association of scholars
who are building on the last 40, 50 years of economic scholarship that points out that
central planning just simply cannot work in a complex society. Friedrich Hayek, Milton Friedman, Ludwig Von
Mises, these scholars and recent Nobel Prize winners in economics — I think you see a
trend toward awareness of that. And that’s what we’re working on, to implement
these policies in the state government. Ben Wattenberg: Jim Peyser from Boston, is
that sort of where you come out on it? How do you work with Governor Weld? James Peyser: Well, we have, I guess, a couple
of alumni who are current Weld administration appointees, and that certainly doesn’t hurt
in terms of getting our voice heard. But we are similarly an independent, nonpartisan
group. And we’re out there publishing books and
ideas and promoting them independently of whatever the Weld administration might be
doing. But we hope they’re listening. Ben Wattenberg: Is there cross-pollination
going on among these various state and local think tanks — James Peyser: Very much. Ben Wattenberg: — which most people, I think,
are sort of unaware of, but it’s becoming a major force in American policy. Do you all talk to each other? Sally Pipes: Yes. There is an organization called State Policy
Network. There is Atlas Foundation. There are a number of — just as the focus
is moving away from Washington, the state think tanks do talk. For example, at Pacific, we copied the Pioneer
Institute’s privatization competition a couple of years ago, and in Governor Wilson’s
recent budget last week, he included three of our finalists’ proposals in his budget
to privatize state services. So — Ben Wattenberg: So that’s really one-size-fits-many. I mean, not all. Sally Pipes: Right. Many, yes. Ben Wattenberg: Just as the state legislatures
have their own organization and cross-pollinating. Sally Pipes: Right, and governors’ organizations. Phil Burgess: One size cropped here and there,
cropped here and there, without having to ask for permission, fits some. Ben Wattenberg: Let me just cut this off for
a minute and go on to another area, which is sort of the problems that this might engender. If we allow each state to decide what to do
about things like welfare, for example, you do not have what I guess the economists in
the international trade arena call a race to the bottom. Because if you lower welfare standards, your
tax rate gets lower. Businesses say, oh, great, we’ll come in
there, and then the neighboring state says, oh, we can lower welfare even more. And then you end up without any safety net
for poor people. Now, there are abuses in the welfare system,
but I don’t think anybody wants to really run it out of town. And isn’t that the danger? Joseph Overton: I think that’s to vastly
underestimate the people, at least in our state of Michigan. We have the opportunity in the state to lower
many forms of benefits, whether they be in workman’s compensation and so forth. And yet we continue — even though Michigan
rates are out of line, actually higher than surrounding states, we still find it difficult
to muster the political will to bring those rates in line. I see no difference in welfare programs. People in Michigan want to help people. What they don’t is to have their money wasted
in a Washington bureaucracy or even a Lansing bureaucracy. They want that money to help people. James Peyser: And I think if you look historically
at welfare and Medicaid and some of the other programs states have frequently added to the
entitlement rather than attempted to take away from it, I think we may be seeing a swing
of the pendulum in the other direction. But it’s certainly not any evidence of a
permanent resistance of states to all benefit programs. And I think different states react in different
ways, and they’re going to come to different equilibriums on these various issues. Phil Burgess: I think that’s an important
point. I also — remember, we’re a democracy — I
mean, at the state level, too. And we’re a society that paid $3 trillion
to keep the communists at bay and made great sacrifices. We’re a society that has paid trillions
of dollars for welfare, which we now know didn’t work, and I think we can’t overlook
the quiet destruction of people’s lives that goes on with the current welfare system
run the way it is. And, sure, people are going to make some mistakes,
but we live in a society that most of all, more than anything else, values human talent. And we can’t turn our backs on human beings,
not just because of our Judeo-Christian heritage, but also because of raw economics. And so I think you’re going to see almost
every state making major investments in their human resource base. Ben Wattenberg: All right. Thank you, Sally Pipes, Joe Overton, Jim Peyser,
and Phil Burgess. And thank you! We enjoy hearing from our audience, even when — occasionally — the correspondence is less than wholly salutary. One viewer commented on a remark I made during our program “The new, New Deal”. How will Mr. and Mrs. America — Joe and Jill Six-Pack — how will their life be changed? “Joe and Jill Six-Pack? Really (you) should be able to come up with better terms to describe average Americans.” With little regard, Gordon Matthews, Orange, CA Well Gordon Matthews, I agree, that was a mildly dumb statement. I do say a lot of things quickly, unscripted, unlike this response. That said, how about some alternatives? Given the rebounding economy, we could say Joe and Jill Twelve-Pack, or given the remarkable nature of our audience, how about William and Wendy White Wine? But please keep the mail coming! Email or snail mail, it helps us! Our address is New River Media, 1150 17th Street, NW, Washington DC, 20036. Or we can be reached via email at [email protected] For Think Tank, I’m Ben Wattenberg. Announcer: This has been a production of BJW
Inc., in association with New River Media, which are solely responsible for its content.

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About the Author: Oren Garnes

2 Comments

  1. "Race to the bottom" was and is horrifically wrong. It isn't a race to the bottom, it is just the reverse, it is competition finding the best possible way to service a need/want.

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