Our federal bonds are fraying.
We Americans increasingly are conditioned to view federalism and, along with it, national unity, in zero-sum terms. And why shouldn’t we? The century-old cookie-cutter-style federalism imposed on this country via Wilsonian progressivism has been stretched far beyond the limits of its design function. It’s grown increasingly threadbare. It’s no longer equipped to accommodate the world’s largest and most diverse economy, much less a culture that is growing increasingly diverse and divided.
The latest evidence attesting to this fact: The uproar among several blue states – California, New York, Connecticut and Oregon, to name a few – over the House Republican tax cut plan.
The House bill would eliminate the most widely-used deduction – income tax – and would cap property tax deductions, the second most-used, at $10,000. Here’s the rub: Many high tax blue states rely heavily on these state and local deductions. Consequently, many middle-class families in these states will end up paying more under the plan.
This is a lesson in history repeating itself – and possibly with dire consequences. This growing dissension among states over tax policy bears remarkable parallels to the vexatious debates over tariff policy in the years leading up to the Civil War. This dissension contributed mightily to the already toxic relations between the manufacturing Northeastern states, which favored high, protective tariffs, and the agrarian, slave-holding, export-oriented Southern states, which insisted on low tariffs levied only to raise essential federal revenue.
And, honestly, why should blue states be expected to foot tax relief for the rest of the country?
Some here in the red hinterland would argue that states that operate expansive and expensive safety nets have backed themselves into tight fiscal corners and no grounds for complaint. But isn’t this their prerogative as sovereign states within a federal union?
This brings me to a social media exchange I had with some friends this morning regarding the future of the country and strategies for restoring some semblance of a social policy, one that accommodates all regions and classes throughout country.
I related to them that for the past generation or so, I’ve striven to become an amateur scholar of post-war politics and economics of post-war West Germany. As a Tory conservative, I believe that there is much that Americans in the highly secularized, post-Christian 21st century can learn from this morally ravaged society.
I especially admire the old West German Christian Democratic party, which strove to restore a measure sanity to a morally and ethically gutted out post-Nazi society. Moreover, I admire deeply the social market economy that emerged after the war. As this term, social market, implies, it was an attempt by the Christian Democratic Chancellor Konrad Adenauer and his fledgling party not only to stave off socialism but also to build a vibrant post-war free-market economy, albeit one that would provide a reasonably generous safety net and collective bargaining for the working class.
Frankly I would like to replicate some version of the social market to American conditions, but the more I reflect on this, the more it occurs to me that this country is simply to big and diverse – not to mention, badly divided – to implement any such system over a vast scale. What worked – and, to a degree, still works – in a relatively organic society like Germany, simply isn’t tenable in this United States. I could marshal a number of historical arguments for his, but in the interests of brevity, I wont.
Under the circumstances, we seem to have drifted far past the point where any kind of humane social order can be established in a nation as large and diverse as the present-day United States. Indeed, the more I think about all of this, the more inclined I am to adhere to the vision a new constitutional order outlined by the late American diplomat and statesman George F. Kennan. Maybe the only viable option for American federalism is to heed his call to devolve power to 10 to 12 smaller entities – constituent republics in which citizens share strong historical and cultural affinities.
We could still share a common market and a common defense, but responsibilities for implementing social policies such as healthcare, social security, etc., would be left more or less exclusively to these constituent republics.
Yes, this amounts to a systemic, radical change, but is there really any other choice? Aren’t many states evolving what amounts to different social and economic systems? California, which possesses the fifth largest economy in the world, has evolved social policies and even a legal system that diverges significantly from much of the rest of the country.
Under the circumstances, should we really be surprised that an increasing number of states are coming to regard federalism as a zero-sum game?