From the Dispatch

Private Tax Filing Firm Lobbying to Scrap Successful State Tax Preparation Services

Altaf Rahamatulla — Thu, 26 Aug 2010 12:17:37 -0400

Intuit, a private firm that manufactures TurboTax, has pushed California lawmakers to eliminate the popular, successful, and cost-effective public tax filing services, ReadyReturn and CalFile. These two programs offer millions of low- and middle-income Californians a free and reliable method to calculate and file taxes. They are also wildly popular - ReadyReturns's user satisfaction rate reaches above 98 percent. The state's Franchise Tax Board estimates that in total, ReadyReturn and CalFile save taxpayers between $4 million and $10 million in filing fees and reduces the state's processing and administrative costs by $500,000 a year. Considering the depth of the state's fiscal and economic woes, these savings are sorely needed.

Intuit has spent over $1.25 million in the past five years on lobbying efforts to kill the programs and provided right-wing politicians with over $2 million in campaign support. Their efforts have had a visible impact: conservative state lawmakers have withheld support for domestic violence shelter and police department funding in an attempt to force the elimination of the programs.

In their crusade against government and public structures, the anti-tax movement is joining the opposition to these types of tax preparation programs because a dependable, popular, and cost-effective government service does not suit their hackneyed and hollow messaging.

As Professor Dennis J. Ventry Jr. of the UC Davis School of Law notes, "[a]bolishing ReadyReturn and CalFile would hurt Californians. Intuit's alternative would cover fewer taxpayers and provide fewer services; it would cost individuals millions of dollars in preparation fees (much of which Intuit wants to pocket); and it would kill two programs that actually save the state money. It doesn't add up for anyone. Except Intuit." Accordingly, this effort to eliminate a successful government program that saves money and assists millions of taxpayers follows the pattern of right-wing behavior at both the state and federal level -- placing the interests of large corporations and the very wealthy over middle class families and effective economic and fiscal policy.

Resources

California Budget Bites - Summer Doldrums Reveal Yet Another Threat to Ready Return
Progressive States Network - Right-wing Budget Hypocrisy: Taking Recovery Funds, Denouncing Deficits and Promoting Costly Tax Cuts
The Los Angeles Times - Intuit just won't quit

Right-wing Budget Hypocrisy: Taking Recovery Funds, Denouncing Deficits and Promoting Costly Tax Cuts

Altaf Rahamatulla — Thu, 19 Aug 2010 13:52:00 -0400

Right-wing officials have consistently expressed opposition to the federal recovery effort, even as they take credit for the American Recovery and Reinvestment Act's (ARRA) impact on economic growth.

In the past few months, conservative governors who routinely criticize the federal government's state fiscal relief and job creation efforts, including Minnesota Gov. Tim Pawlenty, Virginia Gov. Bob McDonnell, Texas Gov. Rick Perry, and New Jersey Gov. Chris Christie, heavily relied on recovery funds to balance steep shortfalls in their respective state budgets and touted projects that were only made possible by the Recovery Act.

Perhaps the most notorious recent example is South Carolina Gov. Mark Sanford. Sanford previously likened the Recovery Act to "slavery" and filed a bogus lawsuit to prevent South Carolina from using ARRA funds, but signed legislation in June to expand eligibility for unemployment benefits in order to access $97.5 million in federal spending to support ailing unemployment insurance funds.

Right-wing Senators and Congressional members harped on inflated short-term deficit concerns to oppose the recent extension of aid for Americans out of work and the approval of critical support for teacher jobs. Yet, conservatives continue to promote the extension of the economically unsound Bush tax cuts for the wealthy. As the Pew Economic Policy Initiative notes, financing the extension of these Bush-era tax cuts would cost $3.1 trillion over the next ten years. On top of that, these tax reductions do not stimulate the economy -- in fact, one federal dollar spent on Bush tax cuts results in only 29 cents in market activity, according to estimates by Moody's.

Alternatively, progressive actions such as increased infrastructure spending, providing aid to state governments, and extending unemployment benefits all yield considerably higher returns and have consistently proven to be significant catalyst of national economic growth.

The hypocrisy of right-wing officials is indicative of the their misleading rhetoric and the hollowness of their failed economic and fiscal policies.

Tax Limitation Rules Costing States Big Bucks in Downgraded Bond Ratings

Nathan Newman — Thu, 05 Aug 2010 16:28:56 -0400

When state governments make it nearly impossible to raise taxes to pay their bills, their creditors apparently get very nervous and increase their costs to borrow money. In the case of Arizona, whose dysfunctional tax cuts we've documented in the past, it means that last month, Moody's Investors Services lowered Arizona's debt rating for the second time in less than a year. And as analyst Lee Cokorinos notes:

When Moody's downgraded the state of Arizona's credit rating this past week, it pointed to "voter initiated spending mandates and a requirement for a 2/3 majority vote of the state legislature or vote of the people to increase revenues" as part of the reason. Such measures, Moody's said, "have introduced an above average degree of inflexibility to state finances."

Similarly, when Fitch Ratings cut California's bond rating last month, Reuters blamed the downgrade at least partly on the fact that, "The Golden State is one of just three states that require a two-thirds majority vote from each legislative house to pass budgets."

California and Arizona are not considered to share much beyond terrible current economies-- but the bond markets have noticed both share tax limitation rules that have made balancing their budgets in hard times nearly impossible. And both states are paying for those anti-tax rules with lowered bond ratings and higher costs for taxpayers to borrow money.

Senate Approves FMAP and Schools Funding -- But At the Cost of Food Stamp Cuts

Altaf Rahamatulla — Thu, 05 Aug 2010 16:24:40 -0400

This week, the U.S. Senate finally overcame a filibuster by conservative Senators to move emergency Medicaid funding through the first half of 2011 and provide key funding for education jobs. The legislation will provide a 3.2 percent increase in federal medial assistance percentages (FMAP) paid for Medicaid through the first quarter of next year, a 1.2 percent increase through the second quarter, and $10 billion toward state educational systems. This action is critical for state budgets and will protect both medical services and education programs in states across the country.

Budget Hysteria Pushes Misguided SNAP Cuts: Due to over-hyped long-term deficit concerns, the total cost of the package is offset by spending cuts and closing a tax loophole for multinational corporations. According to the Congressional Budget Office, the bill would reduce the deficit by $1.4 billion over the next decade.

Unfortunately, the bill cuts Supplemental Nutrition Assistance Program (SNAP) benefits, or food stamps, by $12 billion beginning in 2014. Lawmakers justified this reduction by asserting that the cuts will bring down benefits to pre-Recovery Act levels and the cost of food has decreased more than expected.

Yet, participation in the program has reached record highs, making this action an especially harmful approach. Further, the Senate's action is imprudent economic policy as families receiving food stamps readily spend their money on basic necessities, which boosts short-run demand and fosters market activity. Mark Zandi, chief economist at Moody's Economy.com, specifically finds that each federal dollar spent on food stamps creates $1.73 in market demand.

More Recovery Dollars Needed in States: Unemployment remains at 10 percent and according to a new report by the National League of Cities, National Association of Counties, and the U.S. Conference of Mayors, local governments may cut up to 500,000 jobs in the next two years, substantially degrading the amount and quality of essential service provision. Misguided and inflated deficit hysteria should not supersede supporting working families and job creation in hard-hit local economies.

Federal Recovery Efforts Saved 8.5 Million Jobs, Stopped Depression

Nathan Newman — Thu, 29 Jul 2010 11:49:48 -0400

When big bank speculation crashed the economy, millions were driven into unemployment. But, according to a new study by two leading economists, the combination of the Troubled Asset Relief Program (TARP) loans to banks, loosening of the money supply, and federal stimulus funds for states and individuals, helped stop a far worse potential full-out Depression that would have left an additional 8.5 million Americans without jobs on top of the 8 million who have lost their jobs since the recession started-- what would have been a nearly doubling of the job loss due to the economic crisis.

The study was written by the bipartisan team of Alan Blinder, a former Vice-Chair of the Federal Reserve, and Mark Zandi, a former McCain economic advisor and head of Moody Analytics. One thing the authors emphasize is the sheer magnitude of the economic collapse faced by the Obama Administration as it came into office: In early 2009, "Real GDP was falling at about a 6% annual rate, and monthly job losses averaged close to 750,000." While the lost jobs have not been regained, the economy was stabilized and GDP growth of nearly 3% began. As the authors note:

The stimulus has done what it was supposed to do: end the Great Recession and spur recovery. We do not believe it a coincidence that the turnaround from recession to recovery occurred last summer, just as the ARRA [federal stimulus plan] was providing its maximum economic benefit.

To put the cataclysm faced by the Obama administration in perspective, the economists estimate that the direct budgetary costs of the recession plus lost revenue due to the economic collapse added up to $2.35 trillion, or about 16 percent of G.D.P. By comparison, the savings and loan crisis of the 1980s cost only about $350 billion in today’s dollars.

Federal Support of the States Decisive for Economic Stabilization: With state revenues plunging due to the recession, the authors specifically highlight the importance of recovery funds that went to the states to forestall job-destroying budget cuts. The authors emphasize that "[s]tate and local government aid is another especially potent form of stimulus with a large multiplier," creating economic growth for every dollar spent.

Unfortunately, the federal spending for the states mostly just counterbalanced revenue losses at the state level, meaning the federal aid was a "defensive stimulus" that "saves jobs rather than creates them." The federal government needed to commit to a much larger job creation program to really counterbalance the revenue losses at the state level.

TARP Bank Bailout Program More Successful, Less Costly Than Media Hype: One unique aspect of this report is its focus on quantifying the jobs saved by TARP and related programs to restore credit in the financial industry. The authors estimate that "the financial-rescue policies are credited with saving almost 5 million jobs." And while headlines blared that TARP would cost $700 billion, in fact, most of the money spent was in the form of loans and equity investments, part of which have been repaid. In the end, the authors estimate that the TARP program will end up costing taxpayers less than $100 billion.

The economic success of TARP and related programs in saving jobs should not obscure the fact that the money used could have done even more to improve corporate responsibility in the financial industry. Analysts like Dean Baker at the Center on Economic and Policy Research have rightly criticized the fact that companies like Goldman Sachs received billions of financial rescue dollars without being required to restrict executive compensation or take many other actions in the public interest. This all emphasizes the need for both the recently passed financial reform law as well as federal and state revenue increases targetting those who benefited from successful recovery programs to help fund job creation for those who still need help.

A Success Despite Program Limits: Still, as Blinder and Zandi argue, the financial rescue package helped to "restore stability to the financial system and to end the freefall in housing and auto markets" just as the ARRA recovery plan saved jobs throughout the economy. 8.5 million jobs saved is only a start in light of the almost 15 million Americans that still face unemployment, but that success was critical in avoiding a Despression that would have turned a challenging budget and jobs situation into a completely catastrophic one.

Resources:
Alan Blinder and Mark Zandi - How U.S. Policy Ended the Great Recession
Dean Baker - Goldman Sach's Golden Parachute

NJ Privatization Panel Report Pushes Ideology Rather than Facts

Altaf Rahamatulla — Thu, 29 Jul 2010 11:48:07 -0400

Since he took office earlier this year, New Jersey Gov. Chris Christie has waged an ideological war on state employees and programs, and advocated for unsustainable and costly privatization schemes. Even in light of overwhelming public opposition to privatization and the significant pitfalls associated with these types of initiatives, the Governor established a privatization task force by executive order in early April, seeking to identify $50 million in savings.

The panel, composed of lobbyists, business interests, and pro-privatization advocates, issued its recommendations earlier this month. The report proposes privatizing programs across the board, including toll booth collections, preschools, state parks, prison food services, bus routes, and car emission inspections. However, the report's conclusions unabashedly promote conservative ideological desires in place of hard data or rigorous research. For instance, a recent In The Public Interest article points out:

The report's extravagant cost-saving claims are unsupported by any detailed data (the tables are littered with 'TBD'- cost savings 'to be determined'), and the scarce figures provided raise more questions than they answer... On p.15 the report claims the state can save $3.2 million by privatizing its One Stop Career Centers, then on p. 31 says 'direct state spending' on the program 'is $3.2 million annually.' Are we to believe the private sector will run these centers for free?

The report has been roundly criticized by several sources, from environmental groups to elected officials. New Jersey Senate President Steve Sweeney reflects, "[c]ertainly state government needs to operate in a more cost-effective way, but our history with privatization is dotted with instances where we’ve had to go back and spend more just to clean up mistakes. We cannot rush into privatizing just for privatization’s sake." The state’s troubled history with privatization is well-documented. For instance, the state has dealt with the Motor Vehicles Commission distributing contracts to politically connected vendors in the 1980s, millions of dollars wasted on contractors for vehicle inspections, the imprudent implementation of the E-Z Pass toll system that was fraught with high cost and delays due to private contractors, and currently, the mismanagement of over 200 lease agreements and contracts with private vendors operating on public land.

That privatization continues to move forward despite such a poor track record reflects pure ideology that the private market delivers the most efficient outcomes, even without demonstrable results. As Progressive States Network has previously detailed, legislative action to limit privatization is necessary to safeguard against the loss of accountability and public revenue that these misguided schemes often produce.

Resources:
Food & Water Watch - Has Water Privatization Gone Too Far in New Jersey?
In The Public Interest - NJ Privatization Report Claims Savings without Evidence
The New Jersey Privatization Task Force - Report to Governor Chris Christie
Progressive States Network - Critics Resisting New Jersey Governor's Push for Further Privatization
Progressive States Network - New Jersey Voters Reject Privatization
The Star-Ledger - NJ Environmental Groups Slam State for Mismanaging Private Vendors at State Parks
The Star-Ledger - NJ Democrats Criticize Christie Administration Report Suggesting Privatization

New Jersey Voters Reject Privatization

Altaf Rahamatulla — Thu, 24 Jun 2010 13:11:14 -0400

On June 15, voters in Trenton, New Jersey, soundly rejected a proposal to sell a majority of Trenton Water Works' infrastructure, including pipes, water towers, and tanks, to a private company. For several years, Trenton Mayor Douglas Palmer argued that water privatization would generate immediate revenue for the cash-strapped city and end its obligation to maintain aging infrastructure in surrounding townships. Community activists, unions, and the Stop the Sale campaign, successfully challenged the Mayor's plan. In the weeks leading up to the vote, polling indicated that 95 percent of city residents disapproved of the initiative.

Opponents of the sale found that selling the city's "most valuable asset" to a private corporation would have resulted in an approximate loss of $25 million annually, a cumulative decline of $400 million in revenue over the next 20 years, an inevitable increase in local taxes, and higher water rates.

History of Consumer Losses in Other Cities: Though water privatization is not as common as other contracted services, there are several problems associated with the effort. For example, following a $38 million fine for pollution resulting from inadequate maintenance of the city's sewer and water systems, the Atlanta City Council signed a 20-year, $428 million contract with the private firm, United Water. The deal led to massive layoffs, a 12 percent rise in sewer bill rates, incidence of slow repairs, and substantial revenue loss due to poor water metering. The City Council voted to rescind the contract in 2002, a move that saved Atlanta millions of dollars per year.

NJ Gov. Christie Pushing Privatization: Even in light of overwhelming public opposition to privatization and the significant pitfalls of these actions, New Jersey Gov. Chris Christie established a privatization panel by executive order in early April, seeking to identify $50 million in savings. As part of this initiative, the Governor has proposed privatizing functions of the New Jersey Network (NJN), the only non-partisan public television and radio news source that exclusively covers the state. Not only would privatization threaten news coverage in the state, but it would also risk the loss of state assets, such as broadcast licenses, towers, studios, and media equipment.

Several organizations are working diligently to protect the state's assets and resist privatization, including the Communication Workers of America (CWA), AFL-CIO, and Free Press. Progressive lawmakers are intent on restoring funding to the network and pushing back against the effort to privatize. Asm. John Wisniewski introduced A 2949, which establishes the New Jersey Public Media Corporation, allowing NJN to operate as a state agency with more autonomy in the areas of hiring, procurement of equipment, leasing of assets, and labor relations. As Progressive States Network has previously detailed, legislative action to limit privatization is necessary to safeguard against the loss of accountability and public revenue that these misguided schemes often produce.

Resources:
AFL-CIO - Trenton Voters Say 'No' To Private to Water
Blue Jersey - Can NJN and NJ News Survive Twin Threats?
Communication Workers of America - NJN Budget,Privatization, Assets, News, and Alternative Structure
Progressive States Network - Critics Resisting New Jersey Governor's Push for Further Privatization
Progressive States Network - State House Reporting and Public Broadcasting on the Chopping Block
The Star Ledger - Trenton Water Works to Settle Divisive Issue
Stop the Sale - The Facts about the Water Deal

Debating Federalism: Conservative False History and Hypocrisy vs. Progressive Collaborative Federalism

Nathan Newman — Tue, 15 Jun 2010 11:57:36 -0400

Conservative state leaders have promoted legislation in states across the country claiming that the health care reform law is an unconstitutional overreach of federal power. While just a handful of the bills were enacted (and most were roundly rejected in states where they were introduced), these attacks on the federal health law are the most prominent example of increasing right-wing legislative agitation declaring various federal laws and actions a violation of the constitution.

Right-Wing “States Rights” Bills: Alaska, Arizona, Idaho, Montana, South Dakota, Tennessee and Wyoming have declared that federal firearm regulations don’t apply to weapons manufactured in those states. Utah has rejected not only the federal health care reform bill, but declared federal lands subject to state eminent domain and asserted the “inviolable sovereignty of the State of Utah under the Tenth Amendment to the Constitution.” Alabama, Alaska and Wyoming have joined Utah in passing resolutions generally denouncing the supposed violations of their state sovereignty. And right-wing legislators have introduced bills to institute a “constitutional tender” requiring a gold standard for money in their states, declaring federal cap-and-trade proposals unconstitutional, making it a state crime for federal agents to arrest anyone in a state without permission from a county sheriff, and more generally nullifying claims by the federal government to regulate most interstate commerce.

Challenging the Right-Wing Constitutional Narrative: The challenge for progressives from this “states rights” movement is not that any of these laws are likely to survive in court, but that conservatives too often get away with claiming to stand for constitutional values without significant challenge from progressives. The reality is that the right wing has no credibility in promoting their states’ rights arguments and should be challenged more directly. As this Dispatch will outline, their arguments fail on multiple grounds:

First, conservative constitutional history is dead wrong. The progressive vision of collaborative federalism between federal and state governments clearly reflects the “original intent” of the Constitution’s creators – including those who promoted the Constitutional Amendments enacted throughout our history.
Second, conservative leaders are constitutional hypocrites, talking about “states rights” even as they support federal laws that restrict state authority in order to protect corporate special interests.
Finally, unlike conservatives, progressives practice real respect for state authority by promoting and supporting state innovation and flexibility, a far more compelling practice of federalism than the rigid and false constitutional doctrine promoted by the right wing.

Progressive legislative leaders need to clearly engage the public and promote our story of a Constitution that was meant to promote a vigorous federal power in promoting equal rights and the general welfare, even as federal leaders should respect and strengthen the capacity of states to take action beyond minimum standards set by the federal government.

Resources
Tenth Amendment Center - Tenth Amendment Movement
The New York Times - States’ Rights Is Rallying Cry for Lawmakers

Table of Contents:

- Conservatives Have Constitutional History Wrong

- Conservatives are Hypocrites in Using Federal Power to Undermine State Authority

- Progressives Promote a Collaborative Federalism that Respects State Authority

- Highlighting the Progressive Model of Collaborative Federalism

Conservatives Have Constitutional History Wrong

Conservative activists try to sell a history of a federal government designed to be weak with limited power, where national leaders without sanction by the American people have taken on responsibilities and powers reserved to state governments. Such a story just flatly misrepresents constitutional history.

The 1787 Constitution Promoted Strong Federal Power: Even when the Constitution and the initial Amendments were drafted in the 18^th century, limited federal power was not what was envisioned by those who drafted. It was George Washington who deployed troops in Pennsylvania to collect excise taxes on distilleries in the suppression of the so-called Whiskey Rebellion of 1794, John Adams who enacted the 1798 Alien and Sedition Acts to regulate newspapers across the country, and Thomas Jefferson who negotiated the Louisiana Purchase and carved out new states. And, as the Supreme Court Justices appointed by those founding drafters of the Constitution said in 1819 in their McCullough v. Maryland decision, affirming the wide authority of the federal government:

Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are Constitutional.

In fact, the progressive complaint of the period before the Civil War was that federal power was vigorously deployed but for the wrong ends. The federal government and courts intervened to overturn state debt relief laws meant to benefit small farmers and other debtors and generally attacked other state laws seen as infringing property rights.

And most obviously, federal government power was used to protect slave owner interests, including overturning state laws in the North seen as impeding the return of runaway slaves. State laws requiring a fair hearing to establish a former slave status before federal agents could return a free black to the South under the Fugitive Slave Act were struck down by federal courts. The Dred Scott case outraged Northern voters because it declared that Southern slaveholders could bring slaves into free territories and ignore the laws freeing slaves voluntarily brought into those jurisdictions.

The Civil War and the New Birth of Freedom Expanding Federal Authority: Where the present-day Tenth Amendment proponents fail history utterly is in systematically denying that the Civil War and the subsequent Amendments enacted ushered in a new Constitutional order in regard to federalism. (The following history is drawn partly from the Brennan Center for Justice’s A New Birth of Freedom: The Forgotten History of the 13th, 14th and 15th Amendments).

The immediate post-Civil War amendments – the 13^th, 14^th and 15^th - created a new constitutional mandate of not only freedom and voting rights for freed slaves, but more broadly gave Congress the “power to enforce, by appropriate legislation” (Section 5 of the 14^th Amendment) the protection of the “privileges or immunities” of Americans overall and to protect them from state abuses denying them “life, liberty or property.”

The “founding fathers” of this new post-Civil War constitutional order would back up these Amendments with federal laws of wide scope, including the Civil Rights Acts prohibiting both public and private discrimination and a federal Freedmen’s Bureau that would operate schools, provide health care, and directly operate other programs in states throughout the South.

Senator John Sherman of Ohio, the brother of General Sherman, summarized the expansive “original intent” of those who drafted the post-Civil War Amendments: “[it] secures to every man within the United States liberty is its broadest terms," with all the enforcement power for Congress needed to make that liberty a reality. While federal courts would back off from the expansive meaning in the wake of the Klan-related violence that ended Reconstruction, modern federal laws supporting health care and education provide exactly the same liberty for the American people that those who enacted the Freedmen’s Bureau’s education and health care programs saw as necessary for liberty in the wake of the Civil War.

Enhanced Federal Authority under the Sixteenth and Seventeen Amendments: Nearly fifty years after the Civil War Amendments, the Progressive era would see new demands for wealth redistribution and stronger federal regulation of corporate power. These populist demands would be embodied in the passage of the Sixteenth Amendment establishing the income tax and the Seventeenth Amendment allowing direct election of U.S. Senators, which would each further these goals and restructure federalism.

A federal income tax was recognized as more than a revenue source; by deciding who was taxed and who was not, it would be a tool of regulation by the federal government of the economy as well. As conservative Seventh Circuit Judge Frank Easterbrook said at a Federalist Society event in 2006, bemoaning this change:

The Sixteenth Amendment gave the federal government the power to control one hundred per cent of the entire economy. It can tax income. It can not tax income - achieving its goals via tax expenditures, that is - by encouraging those things that aren't taxed. It can tax and then subsidize using the dollars that it's just collected from you, or it can grant the dollars back on condition. So that combination of powers… gives the federal government control over almost anything it chooses to control.

If the Sixteenth Amendment changed the budgetary nature of federalism in favor of federal authority over economic activity, the Seventeenth Amendment, which required the direct election of U.S. Senators, changed the political nature of federalism. Structurally, “states rights” had their strongest embodiment in the original Constitutional clause that allowed state legislatures to control the election of Senators, meaning that those Senators would beholden to the institutional interests of state governments.

The direct election of U.S. Senators, joining the direct election of Congressional Representatives, meant that the federal government was now responsible directly to the individual voter and only to the individual voter. In The Seventeenth Amendment and the Death of Federalism, Professor Ralph A. Rossum notes, again unhappily from his conservative viewpoint, that "the original federal design has been amended out of existence and is no longer controlling—in the post-Seventeenth Amendment era, it is no more a part of the Constitution [than] the Constitution’s original fugitive slave clause."

While conservative courts would resist this progressive constitutional revolution for two more decades the New Deal courts would finally establish the broad principle that popular power expressed at the federal level would trump corporate interests.

Contradictions in “States Rights” Rhetoric: The fundamental contradiction in conservative constitutional arguments over federalism is that, even as some activists try to ignore every Amendment after the Tenth to sustain their attacks on federal authority, many other conservative activists, including many in the Tea Party movement, are agitating to repeal the Sixteen and Seventeen Amendments precisely because they admit those later Amendments have eliminated the original limits on federal authority. And this regret about the passage of the 17^th Amendment extends even to conservatives on the Supreme Court; in a speech reported in the Harvard Crimson in 2004, Supreme Court Justice Antonin Scalia said that the 17^th Amendment was “a bad idea.” Ultimately, conservatives can’t claim the enduring importance of the Tenth Amendment while denouncing the later constitutional amendments that superseded it.

Resources
Brennan Center for Justice - A New Birth of Freedom: The Forgotten History of the 13th, 14th and 15th Amendments
Professor Ralph A. Rossum - The Seventeenth Amendment and the Death of Federalism
Federalist Society - Are Constitutional Changes Necessary to Limit Government?

Conservatives are Hypocrites in Using Federal Power to Undermine State Authority

Beyond the false history and contradictions involved in conservative constitutional rhetoric, the reality is that conservatives in history and today have never respected state authority when it is marshaled on behalf of progressive policies. In fact, despite conservative constitutional history mythology, right-wing legal decisions preceding the New Deal were incredibly hostile to state authority, striking down a series of state laws from the minimum wage to railroad regulations in the name of federal supremacy, preempting any state law that came close to any area of presumed federal authority (whether Congress had created a law in that area or not), and more generally circumscribing state authority under a doctrine called "substantive due process."

Right-Wing Legislative Assault on State Authority: In the present, nothing illustrates the hypocrisy of the conservative movement on federalism more than the current debate on cracking down on abuses by the financial industry. Early in this past decade, state predatory lending laws which sought to limit abuses by subprime lenders were shut down by the Bush Administration using the club of federal power, yet conservative groups largely supported that wildly destructive attack on state authority. And when progressive federal leaders sought to restore greater authority to state legislatures and attorneys general to target abuses in their states by national banks, conservative elected leaders and organizations lined up to support amendments to undermine that increased state authority over local financial abuses.

As we have described in the past, this is just part of a multi-decade fight by the conservative movement to undermine state authority to act on behalf of workers, consumers, civil rights and environmental protection. In fact, the conservative majority in Congress voted over 57 times between 2001 and 2006 to preempt state laws, including action to preempt state limits on air pollution, to preempt state regulation of contaminated food, and to block tougher state regulation of Internet "spam."

The Conservative Legal Assault on State Authority: With pro-corporate appointments to the courts by conservative Presidents, courts not only upheld the preemption of local predatory lending laws, but supported the overturning of pro-union state laws, radically reduced punitive damages against Exxon-Mobil approved under state law, and exempted medical device manufacturers from liability under state laws if the FDA approved the device.

And this hypocrisy on federalism extends to groups supposedly speaking on behalf of state interests, including the American Legislative Exchange Council (ALEC). In multiple legal briefs, ALEC has called for using federal law and the federal Constitution to overturn state laws - from striking down Chicago gun regulations to forcing Michigan to allow mail-order wine sellers to sell to their residents from out-of-state to overturning a Massachusetts state law that prohibited state agencies from doing business in Burma.

Conservative Health Care Proposals Highlight Hypocrisy: Nothing highlights this conservative hypocrisy on state authority more than the health care debate. Even as the right-wing denounces the recent federal health reform law as violating state authority, the main planks in conservative health proposals proposed by Congressional leaders have been far clearer attacks on state authority.

When conservative leaders controlled the U.S. House of Representatives, they repeatedly approved bills allowing insurance companies to sell across state lines and ignore local state consumer protections. “These plans will undermine state insurance reform efforts designed to spread costs broadly,” noted Ami Gadhia from Consumers Union, publisher of Consumer Reports, at the time.

Similarly, the other most touted reform proposed by conservative leaders has been to override state medical malpractice laws through "tort reform" where patients would lose legal rights they previously had under individual state law. When President Bush was touting “medical malpractice reform,” the National Conference of State Legislatures emphasized its opposition to “any federal preemption of state authority within the civil justice and tort law areas” and the “voiding of state authority and the hard work of so many state legislatures.”

Resources
Progressive States Network - The Predatory Lending Bubble and How the Feds Made it Worse
Progressive States Network - The Assault on the New Deal Preemption Standard
Progressive States Network - Hypocrisy of "State Rights" Conservatives on Health Care
U.S. House Oversight and Government Reform Committee - Congressional Preemption of State Laws and Regulations
Open Salon- What the Right Won't Admit About Tort Reform

Progressives Promote a Collaborative Federalism that Respects State Authority

Progressives should proudly contrast their far more consistent respect for state authority. While progressives support strong minimum federal standards of protection for individuals and communities, they also far more consistently protect state authority and strengthen state capacity to take action to meet local needs and goals beyond those minimal standards.

The New Deal and The Great Society Strengthened Regulatory and Budgetary Capacity of States: The New Deal may have strengthened federal action, but it also specifically empowered states to act in areas like the minimum wage and child labor, which previously had been blocked by federal courts, and the New Deal Supreme Court was far more willing to allow states to regulate in areas where the federal government was also taking action.

As we have detailed, progressives have always made strengthening the budgetary capacity of states to act on local problems more effectively a priority. Under the Great Society, for example, grant-in-aid programs from DC to the states increased 68% in real dollars between 1964 and 1968. Notably, the federal recovery act promoted by President Obama last year directed most of its dollars not through direct federal programs but through the states where local leaders would have the flexibility to use those dollars to address state budget and job development needs.

Obama Administration Strengthened State Authority: On the regulatory front, the Obama administration last year emphasized its new commitment to respecting state regulatory rules by issuing a broad Memorandum on Preemption to all heads of executive departments and agencies, ordering them to avoid the preemption language routinely included in Bush-era regulatory preamble statements or in codified regulations unless there is "full consideration of the legitimate prerogatives of the States and with a sufficient legal basis for preemption." This commitment to respecting state authority was embodied in the administration’s recognizing the authority of California and thirteen other states and the District of Columbia to take action on “clean car” regulations – state action blocked by the previous administration – and incorporating those state standards into its own plan for tighter auto emission and gas mileage standards.

New Federal Health Care Law Embodies Collaborative Federalism: As an example of progressive federalism, even as the new federal law provides for stronger minimum standards for health care, it was designed to give great flexibility to states on how implementation would work in each state and was designed to strengthen the capacity of states to address specific local needs.

As the National Academy for State Health Policy describes, “States will have a significant role in the implementation of federal health reform.” This includes flexibility in how to design the health exchanges where consumers will purchase insurance, full preservation of state authority to establish stronger consumer protections than any federal standards, and even the ability to opt-out of the whole federal system where states can demonstrate a plan to achieve the goals of broader coverage more effectively. This latter option, described in the bill's Sec. 1332, makes it possible for states to combine all available subsidies that would normally flow to individuals and businesses into an alternative state system.

Resources
Progressive States Network - Restoring State Authority: An Agenda to Restrict Preemption of State Laws
Progressive States Network - Obama Affirms Importance of State Policy Innovation by Making California Emissions Rules a National Standard
David Walker - The Rebirth of Federalism
The White House - Memorandum on Preemption
National Academy for State Health Policy - Supporting State Policymakers' Implementation of Federal Health Reform

Highlighting the Progressive Model of Collaborative Federalism

What this history emphasizes is that progressives need to more aggressively challenge conservative posturing that they are the defenders of federalism. Progressives can highlight not only that conservatives promote a false history to justify their attacks on health care and other legislation, but they also practice a deep hypocrisy in failing to respect the state authority when they themselves control the levers of federal power.

Progressives should more clearly highlight the principles of collaborative federalism that have been embodied in progressive practice since the New Deal:

respect state regulatory authority to take action beyond minimum federal standards;
provide federal funding to strengthen state capacity, and;
design federal programs to allow flexibility in state implementation to meet local needs.

Ultimately, the American debate over federalism was never supposed to be about “states rights” – as if the rights of one specific government body over another was some sacred principle – but rather about how best to embody the will of American voters to address national goals while preserving the flexibility and liberty to meet specific local needs within that national framework.

The rigid legalistic federalism promoted by the right is wrong not only on historical grounds, but also because it fails to provide a practical framework for addressing the creative tension between national goals and local needs. Instead, the progressive model of collaborative federalism continues to be the only framework to address that tension and which reflects the rich tradition of constitutional reform that has brought this nation from its founding through the Civil War to the New Deal and into the present day.

Maine Voters Reject Tax Reform Initiative, but Approve Infrastructure Investment

Altaf Rahamatulla — Thu, 10 Jun 2010 16:58:23 -0400

This past Tuesday, Maine votersconsidered legislation which would have reformed the state's tax structure and bond measures that will bolster infrastructure investment.By a large margin, Mainers rejected a law passed last June, LD1495, to lower the top income tax rate from 8.5 percent to 6.5 percent for state residents earning less than $250,000 annually by broadening the sales tax to include different services and shifting tax burden to nonresidents by increasing the meals and lodging tax from 7 to 8.5 percent.

Supporters of the reform initiative, most notably, Maine AFL-CIO, some regional Chambers of Commerce, the Maine Council of Churches, and the MaineCenter for Economic Policy Institute (MECEP), contended that itrepresented the most substantial reform of the state's tax code in almost four decades. Overall, MECEP found that the "modestly...progressive" package would have provided "direct help for families struggling to survive in this troubling economic climate, and it is money that will stay in the local and state economies and buoy Maine small businesses." Opponents, including conservative groups, the state's Realty Association, and businesses tied to the tourism industry,who argued against shifting some of the state's tax burden to tourists and expanding the sales tax base to include different categories of services, gatheredthe necessary signatures to place the issue up for referendum as Question 1.

While the legislation would have reduced the income tax burden for 95 percent of Maine families and made it easier to apply and receive property tax relief through the state's circuit breaker program, advocates believe the campaign to support reform faltered due to the complexity of the message. While many voters readily saw expanding the sales tax base to services as a tax increase, they were skeptical that the state would deliver on lowering the income tax burden. Sen. Joe Perry, one of the authors of the legislation, reflected on the results, "I never thought I'd seethe public vote to raise their own taxes."

The ballot defeat additionallyindicates that while the current sales tax in most states is outdated and designed for an industrial economy in which most consumer spending went to buying goods, expanding the sales tax to services is still a challenging message to articulate to voters.

Although Mainers rejected changes to the state's tax structure, voters made clear that they support spending for long-term investments to spur economic development by approving bond measures for "$26.5 million for an offshore wind energy demonstration site, related manufacturing and campus energy conservation; $47.8 million for highways, railroads and marine facilities; and $10.25 million for clean water projects."

State Broadband Awardees May Apply For Additional Funds

Fabiola Carrion — Thu, 10 Jun 2010 16:51:25 -0400

State governments may seek additional funding for up to three additional years on broadband projects. The announcement comes from the National Telecommunications and Information Administration (NTIA) who recognized that "better data and strategic planning are needed on the state level.

Launched last year, NTIA's State Broadband Data and Development Grant Program assists states in gathering data on the availability, speed, and location of broadband services. Originally funded for a two-year period, it has now been extended to five. States can now apply for three additional years of mapping and data collection work, as well as other initiatives, including state broadband task forces or advisory boards, technical assistance programs, local or regional technology planning efforts, and programs to promote increased computer ownership and Internet usage.

As we detailed in a previous Dispatch, the American Recovery and Reinvestment Act apportioned billions of dollars in funding for state broadband initiatives, of which more than $100 million in grants have already been distributed. One example of these efforts is Maine's "Three-Ring Binder" network, which was launched thanks to $25.4 million awarded by the NTIA to reach the under-served and unserved rural areas of Maine. Rep. Cynthia Dill introduced LD 1778 to classify dark fiber as a utility and broadband provider to create a broadband sustainability fund to support "last mile" high-speed Internet infrastructure.