Columnist: American Federalism: Unkempt Garden Needs A Plan

August 12, 2012

By Neal Peirce


America's federal system -- once the distinctive achievement of our system of governance -- is in desperate shape. There is no time to be wasted in looking for remedies.

The system is intended to provide significant powers but also limits through the checks and balances on our federal, state and local governments.

And it's true -- shifts of authority within the federal-state-local sphere still have big impacts, as the Supreme Court's recent decisions on health care and immigration demonstrate.

Money always plays a role, but today's severe fiscal conditions, afflicting all three levels of government, exacerbate tensions and make rational decision-making increasingly difficult. It's a situation made all the worse by the vast resources and fervor of special interest lobbying.

The underlying problem is that we aren't really talking with each other -- surely not seriously, in a mode aimed at agreement. The White House may issue a proposed federal budget for the next year, but Capitol Hill opponents declare it "dead" within a millisecond. Rep. Paul Ryan promotes a multiyear fiscal plan severely restricting the size of government; skeptics barely pause to see if his proposals contain positive elements.

It's time to pause, take a deep breath. This is the recommendation of Parris Glendening, former Democratic governor of Maryland and chair of the National Governors Association, and Republican Thomas Davis, the highly respected former U.S. House member from Virginia.

They've strongly endorsed a "Memo to National Leaders," focused on "America's Invisible Governmental Crisis," issued by a task force organized by the National Academy of Public Administration and the American Society for Public Administration.

The headline idea in that report: Create a new intergovernmental policy council that would have members from all levels of government, with bipartisan appointments -- a model akin to the country's one-time Advisory Commission on Intergovernmental Relations. That bipartisan, "all-governments-on-deck" entity was formed in 1959 and lasted until the 1990s, a victim of Reagan administration hostility during the 1980s and then Clinton administration indifference.

Why a new council? First, it would bring representatives of all levels of government to the table as equals -- not, for example, simply members of Congress at Capitol Hill briefings "talking down" to mayors or county executives as if they were just another special interest group, and not the chosen leaders of independent communities interested in, and responsible for, making the American system of governance function better.

Second, in our heated partisan environment, a new council could be a respected national voice pointing to dangers of today's course while identifying clear alternative approaches.

Third, the council could have the stature and independence to bring up controversial but extremely promising new approaches -- for example, a national consumption, or value-added, tax (VAT), which would take a small cut (percentage) from (BEG ITAL)every(END ITAL) purchase or financial transaction in the nation. Such a tax, akin to levies applied in virtually all other advanced nations, could capture value from today's burgeoning service economy in a way that shows no favorites.

At least, that's the theory. The NAPA-ACIR paper warns, though, that a VAT could be very dangerous -- that if it were applied just by the federal government, desperate to solve its own billowing deficits, it would easily undermine state sales taxes. But other nations -- Australia, for example -- have shown how a national government can create a VAT cooperatively with state and local governments, allowing them to "piggyback" on it for their own basic needs (in the process possibly replacing, altogether, their current sales taxes).

A new ACIR or intergovernmental policy council, properly staffed, clearly independent of any party or level of government, could also build its operations to bypass, as much as possible, typical power games. The old ACIR was plagued by divisions among the organizations representing governors, mayors, county officials and others, each jockeying for special advantage.

But imagine the White House lending strong support, with the president or vice president participating in occasional meetings, with congressional and state and city and county representatives at the same table, trying to mold solutions to America's current deep fiscal emergency.

Then, over time, the new group could keep a careful eye on state and local government fiscal conditions, analyze potential next scenarios, possibly even issue regular reports on state and local fiscal conditions (as the Congressional Budget Office does for federal finances) -- creating timely alerts to guide Congress in its appropriations decisions.

Today's often bitter polarization among groups, the passing of the buck for crucial services, can't likely be solved without a dramatic institutional reform that involves (and respects) all the major parties -- Congress, the executive branch, state and local.

Would a new intergovernmental panel raise concerns, at points along today's fiscal path, of some federal-system players' fear of "losing control"? Yes. But would they have a new, focused opportunity to express their concerns, propose alternatives and help work out compromises? Yes.

And might we all benefit, dramatically? Yes.


Neal Peirce's email address is nrp@citistates.com.

(c) 2012, The Washington Post Writers Group

The opinions expressed in this column are not necesssarily those of the National League of Cities.