(Bloomberg Opinion) -- As Democrats debate how to scale back President Joe Biden’s expansive Build Back Better agenda into something that will fit the roughly $1.5 trillion price tag demanded by Senator Joe Manchin and other moderates, there’s one wonky concept they should keep front of mind: federalism.
Simply put, there are some things the federal government does better on its own — without too much reliance on state governments. Those are the things Democrats should focus on.
Many of the social initiatives under consideration are, in fact, awkward state-federal partnerships and suffer from numerous fundamental flaws. For starters, as Democrats have discovered in the decade since the passage of the Affordable Care Act, hostile state-level elected officials cannot be forced to carry out federal programs in the ways federal officials might want. In addition — as became clear during the pandemic, when they had trouble expanding federal unemployment benefits and distributing federal housing assistance — sometimes states struggle to implement programs they don’t object to.
Beyond that, the very notion that a new initiative requires a state partnership is usually a good sign that it can or should be pursued at the state level.
So the best strategy for Democrats is to rebuild Build Back Better around policies that involve inherently federal functions — mainly, the expanded child tax credit, new tax credits for green energy production, and an expansion of Medicare benefits to cover dental and vision services. They should discard ideas that are essentially state-federal partnerships.
Instead, leadership’s current inclination seems to be to avoid making choices altogether and to reduce costs by scheduling programs to expire. This serves the narrow and immediate goal of keeping their coalition together, but from a policy standpoint it’s short-sighted and irresponsible. Democrats would essentially be betting, against the odds, that they will retain their House majority in 2022 — or that they can persuade congressional Republicans to extend progressive spending measures that passed over their objection.
Neither is very likely.
By contrast, there is ample evidence that once a permanent program is in place, it is very difficult to get rid of it. Not only were Republicans unable to “repeal” the Affordable Care Act in 2017, but every time they attempt to pare back Social Security, Medicare or Medicaid, they get burned.
Simply allowing scheduled expiration to take place, by contrast, is easy. Indeed, a GOP majority can simply refuse to allow a vote on extension legislation, thus allowing members to claim that they support continuing the programs but not requiring them to vote for them.
For Democrats, failing to choose could leave them with $1.5 trillion in spending but nothing lasting to show for it. It’s worth repeating: Reports to the contrary, $1.5 trillion is a lot of money. The idea that it’s somehow inadequate to stand up a few permanent programs is ridiculous.
It’s also worth noting that the reason that Democrats were able to extend health insurance coverage to millions of people a decade ago is that they made a choice to prioritize it. I’ve spoken to many Congressional Democrats and White House staffers who agree that prioritization would be better, but members disagree among themselves as to which items should be prioritized, and nobody has enough clout to dictate an answer. Lurking in the background is a sense that “the groups” (Dem-speak for the constellation of progressive nonprofit entities that share funding sources with the party and come up with many of the actual policy proposals) would prefer a dozen half-loaves to three or four full ones.
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So what should those priorities be? The most obvious are the climate ideas that Manchin hasn’t already vetoed.
To many activists, the Clean Energy Payment Plan, which would have paid utilities to eschew fossil fuel use, was the crown jewel of the package. But Manchin’s not on board with that. What he does seem willing to support is a suite of measures to subsidize the production of zero-carbon energy — as long as this is done in a technology-neutral way that would make carbon-capture technology eligible. These initiatives are actually responsible for a large majority of the projected emissions reduction in Biden’s original plan so all is not lost on the climate front.
When it comes to social welfare programs, however, Democrats should think more about federalism. One of their big ideas is universal preschool. Except it’s not actually universal preschool — it’s more like federal matching grants that will cover up to 40% of the cost of universal preschool.
There are valid reasons for structuring it this way. High-quality preschool should be aligned with kindergarten curricula, and those are designed at the state level. And in some of the jurisdictions where universal preschool has been successful, it’s fully integrated with the school system. (My son, for example, is currently in first grade, but it’s his fourth year at his current school.) Local governments run the schools, so the federal government can’t just parachute in and start preschools.
Reality check: Given how many GOP-run states initially turned down Medicaid expansion plans, which was funded 90% by the federal government, a 40% federal match is hardly going to make preschool widespread, much less universal.
Biden’s child-care proposal is more complicated to describe, and has a number of moving parts. But at its core is a directive to states to develop plans for a new kind of heavily subsidized day-care center. All the money will come from the federal government, but the states will be in charge of many administrative tasks.
The ultimate fate of this plan is anyone’s guess. Under the proposal, states aren’t allowed to opt out and aren’t asked to pay any money. But do they actually have the ability to undertake the complicated planning tasks Democrats are asking of them? And even if they do, are Republican governors actually willing to do them?
My suspicion is that some members of Congress and their outside allies couldn’t answer some crucial questions about the administration of this program, so they chose to punt it to state governments. That’s exactly how last summer’s rental aid fiasco happened — Congress delegated too much to state governments, which have less capacity than the federal bureaucracy.
By contrast, the expanded child tax credit introduced in the American Rescue Plan is a straightforward federal program. It hasn’t been without its own administrative challenges, but those challenges have at least been identified, and some of them (such as the program website) have improved considerably.
If made permanent, the CTC — like the climate initiatives — would be a powerful legacy that is unlikely to be repealed by future Republican congresses. Cutting child poverty in half and reducing greenhouse gas emissions by a third are big accomplishments. But with $1.5 trillion to spend, Democrats have room for at least one more major initiative.
My suggestion is the proposed extension of Medicare to cover dental and vision benefits. Medicare is already a federal program with a big bureaucracy to administer it, and while it will take some time to add new benefits, it’s eminently doable and doesn’t require the cooperation of hostile politicians.
It also has a lot of straightforward, common-sense appeal: There is already a federal program for senior citizens’ health care. Teeth and eyes require health care. Ergo, they should be covered under Medicare. Not coincidentally, these ideas— along with letting Medicare negotiate the price of prescription drugs — are the most popular elements in the package.
Again, the federal nature of Medicare is a powerful argument for prioritizing this proposal. By contrast, Biden’s other big initiative focused on the elderly — more money to provide in-home care — runs through Medicaid, which is a joint state/federal program. That means the administrative rollout will necessarily be more fraught and difficult. It’s not a terrible idea, but if there’s room for only one major new program for the elderly, it’s probably better to set it aside.
These decisions on priorities will disappoint important parts of the Democratic coalition. But the alternative to picking and choosing is to risk the very real possibility that nothing gets done at all.
Advocates for all these awkward state-federal initiatives may be able to take some solace from the fact that most of these policies can be pursued effectively at the state level. Running preschools, subsidizing day-care centers, and providing for in-home health care are all issues within the competency of state governments.
Of course progressives would like to take them nationwide someday. But Justice Brandeis wasn’t wrong when he wrote that states are the laboratories of American democracy. Putting time and organizing effort into improving social welfare programs in states such as California, Massachusetts, Maryland, and New York could build momentum for larger reforms in the years and decades to come. Funding some federal pilot programs that are likely to expire a few years from now, by contrast, will sap the base’s energy and embitter the broader electorate.
Besides, a focus on federalism leaves Democrats in a pretty good place. A big new benefit for kids, an important new benefit for the elderly, and a game-changing investment in green energy: That would be a solid set of legislative achievements. And it would leave room for some of Biden’s smaller ideas, such as enhancements to the school lunch program and increasing the IRS’s enforcement budget (note that both are federal functions). Like I said, $1.5 trillion is a lot of money.
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