The states we're in: can ‘laboratories of democracy’ conquer Covid-19?

On 30 June, a bill of at least $765bn came due for the 50 states. Unlike the national government, these jurisdictions cannot print money or run deficits without violating their constitutions. States rely on sales and income taxes for revenue, which along with much of the economy has collapsed under the coronavirus pandemic. Without a big infusion of federal funds, states may have to lay off employees, take a scythe to social service programs and, who knows, maybe defund the police as well.

Federal help may not arrive soon. States received $150bn through the Cares Act for Covid-19 relief and the House passed a successor in May, the Heroes Act, which contains $915bn in flexible aid. But the Senate majority leader, Mitch McConnell, has said he opposes borrowing more, suggesting instead states be allowed to file for bankruptcy.

The New York governor, Andrew Cuomo, called that “one of the saddest, really dumb comments of all time”. Citing four-year balance of payment figures between states and the national government, Cuomo pointed out that his taxpayers “put into that [federal] pot $116bn more than we take out. Kentucky takes out $148bn more than they put in. Senator McConnell, who’s getting bailed out here?”

Cuomo is the biggest star in a constellation of governors made famous by the pandemic. State governments are usually the neglected middle children of federalism: much of their work lacks both the drama of Washington and the fierce politics of school districts and city councils. The hollowing out of local journalism has reduced profiles further. Capital cities are for the most part midsize company towns, chosen to balance big metropolises and rural areas. Outside their states, the names of governors are usually trivia answers.

But this year, many governors are broadcasting daily briefings while Covid-19 case and death counts are tabulated by state as well as nationally. That’s because states decide testing and quarantining protocols, and the Centers for Disease Control and Prevention (CDC) must go through state, county and local governments to implement its directives. It’s also because the current administration has essentially abdicated the role of the federal government in a pandemic, as set up by George W Bush and Barack Obama.

Absent a federal system to distribute medical supplies, governors compete to purchase them on the global market. They make life and death decisions about the reopening of schools, businesses and recreational areas. People protesting against Governor Gretchen Whitmer’s stay-at-home order in Michigan brought their guns into the state senate gallery.

Looking beyond 30 June (and 3 November), more big decisions await. The fate of the Affordable Care Act lies with the supreme court through California v Texas, to be decided in 2021, pitting 21 state attorneys general against another 20. Reapportionment beckons too, with its implications for the balance of power and the shaping of policy agendas.

So it is a good moment to look at the powers of the states in the federal system, and how those powers have been wielded in a period of Republican dominance.

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In the last decade, Republicans built on reapportionment and a backlash against Obama to take control of many state governments. In 2010 Democrats held the governor’s mansion and legislative majorities in 27 states to 14, with eight split. By 2017, Democrats held 14 and Republicans 32, with only three states divided. Today, the count stands at Republicans 21, Democrats 15 and 13 divided. The totals come to 49 because Nebraska has a unicameral legislature, elected on a non-partisan basis.

To understand the reddening of the map, it pays to go back to 1973, when the American Legislative Executive Council (Alec) began devoting attention to state politics. Alexander Hertel-Fernandez has published State Capture: How Conservative Activists, Big Businesses and Wealthy Donors Reshaped the American States – and the Nation, a detailed history of Alec; the State Policy Network, an association of more than 60 thinktanks founded in 1986; and Americans for Prosperity, the grassroots action network created by Charles Koch in 2004. Together this “troika” spends $240m a year lobbying and campaigning at state level.

Alec attests to the virtues of coordinated advocacy. Hertel-Fernandez characterizes it as an uneasy yet stable coalition of business representatives, conservative activists and wealthy donors. Alec writes model bills and brings them, sometimes at all-expenses paid retreats, to state legislators who lack the experience, staff and session time to generate such on their own. Where Republicans have controlled both chambers and governorships, the bills have moved forward.

Tort reform measures were an early success. Organizational effectiveness grew when Alec sorted itself into taskforces by industry sector. Big tech focused on climate change; big oil and gas dominated energy. Another source of power lay in Alec’s low public profile, which persisted until the killing of Trayvon Martin in 2012 led progressives and journalists to Alec’s door via its support for “stand your ground” laws, the Florida version of which was successfully used as a defense for Martin’s assailant, George Zimmerman.

Hertel-Fernandez’s database of model bills from 1995 to 2013 reveals that the most popular topic has been education (charter schools, vouchers, cutbacks of teacher union powers), followed by medical liability. Those are big state budget items.

Still, as Matt Grossman shows in his study, Red State Blues: How the Conservative Revolution Stalled in the States, there have been limits to what Republicans have accomplished. He agrees with Hertel-Fernandez that in the 1990s the GOP became “a full-throated national conservative party responsive to an activist base”, united in pursuing “smaller government, unfettered capitalism, less redistribution, traditional values, social restoration, nationalism, and safety through security in every state”. Reviewing state governments’ outputs and impacts, he finds that Republicans have enacted more abortion restrictions, loosened laws on gun use and ownership and blocked liberal initiatives. They have enlarged their political power by crushing unions and inhibiting voter registration and turnout.

These are no small things, but otherwise the GOP has not moved states right. Republicans have not gotten far on shrinking government programs and regulations. They have not overridden and reversed “the build-up of decades of policy liberalism”. The minimum wage has risen. Only 6% of students are in charter schools and very few receive education vouchers. More states are taking Medicaid money.

Why? Grossman identifies a variety of factors, notably the inertia of the status quo, boosted by the constituencies for big programs they foster.

In The Divided States of America: Why Federalism Doesn’t Work, Don Kettl puts these developments in historical perspective. He traces the dynamics of federalism from its inception. The current division of labor within the compound republic of James Madison’s design has the federal government setting policy directions by issuing laws and regulations and dispensing money to the states, which administrate the programs with private contractors. It’s a top-down but not top-heavy iteration. Since the late 1960s, the welfare state has been mediated and varied by state and local government actions.

For example, a federal agency, the Centers for Medicare and Medicaid Services, distributes one-quarter of all federal spending but has only 6,000 employees, half as many as Harvard Medical School and one-tenth that of the Mayo Clinic. The heavy lifting and often maddening complication of US healthcare results from the processing of CMS dollars. It’s a similar deal with environmental policy, infrastructure, education and prisons.

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Given their overstructured and underfunded condition, what can the states do to square their budgets and better address the pandemic’s havoc?

First, a state’s voters can switch party control. In Virginia, a Democratic majority elected in 2019 passed measures to protect LGBTQ residents, help undocumented migrants, improve the environment, fund roads and other transportation projects via a hike in the gas tax, and become the 38th state of ratify the Equal Rights Amendment, which will put it into the constitution if the courts agree.

Nevertheless, as Grossman would predict, Virginia Democrats fell short in their ambitions. A ban on assault weapons never got a vote in the senate and failed in a house committee. Neither chamber approved a repeal of the right-to-work law. Campaign finance reform has seen little action.

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Second, citizens can vote with their feet. The pandemic has accelerated telework, consumption of streamed cultural products and reliance on shipped goods, making it more palatable for people to live where costs are lower. Taxing Amazon and Netflix at higher rates would be a timely option.

Third, and most important, Louis Brandeis’s adage about the states being the “laboratories of democracy” still carries great potential. Kettl details the trailblazing record of California in enacting car emissions measures accepted by the automotive industry, which could not afford to forgo sales there. He also describes the success of Wisconsin Works, a welfare program initiated by the Republican governor, Tommy Thompson, and adopted throughout the country.

Thus, if and when a state comes up with a workable way to wriggle out of the Covid-19 squeeze, voters, residents, industries, other states and the federal government will take note. That’s the American federalist approach. It’s the best shot we have.