Trump loves to argue that in the face of the coronavirus pandemic, the states should be left alone to do their own thing.
States’ rights, of course, is a clarion call for conservatives. As with so many things, the reason for this association has to do with race. The southern justification for fighting the Civil War was that they were protecting the states’ rights against an overly aggressive federal government. The next question, however, becomes states’ rights to do what? The answer, of course, is to own slaves.
We saw this disingenuous argument rear its ugly head again after the Civil War, when certain federal officials sought to protect the rights of newly freed slaves. Starting in 1900, for example, an anti-lynching bill was introduced into Congress every year. It didn’t finally pass until this year — 120 years later. The official justification for opposing such an obviously moral bill? States rights.
The reality, of course, is that the totalitarian southern regimes — with Democrats in charge for those of you who think I’m overly partisan — wanted to stop uppity Black people and their allies from standing up to the white terrorism that kept these regimes in power.
The rhetoric of states’ rights became a convenient rallying point for conservatives. When the federal government seeks to impose environmental regulations? That would violate states’ rights. When the federal government seeks to enforce laws to stop abusive behavior by police under color of law? States’ rights. When the federal government seeks to ensure safe workplaces or food? You guessed it. Social security and Medicare? States’ rights again.
The United States is a vast, diverse nation. Controlling its policy is difficult, especially when compared to controlling a relatively small, homogeneous state. When a state wants to behave badly and undemocratically, with local elites abusing their power, the greatest threat to the sandbox they are playing in is the potential of federal intervention. The behaviors themselves might be unjustifiable. But cloak bad behaviors in a blanket of states’ rights claims and you sound downright patriotic.
So Trump’s claims that the states should be the ones to address the crisis have a long history among conservatives. An additional advantage to Trump is that right now, most states hardest hit by the virus are blue states with Democratic governors. Any chance to play partisan games is tempting to Trump, even in the midst of a national crisis. We’ll see how long his opposition to federal intervention lasts when red states are hit as hard as the highly-populated coastal states.
As with so many of Trump’s arguments, this one is specious at best. There is a particular problem with this argument and it has to do with the difference between the state budgets and the federal one.
As everyone knows, the federal government can run a deficit. In other words, on any given year, it can spend more money than it brings in through taxes. The difference is made up with debt. The way the federal government borrows is by selling bonds — essentially promissory notes that will be paid back over time with interest. These bonds tend to pay relatively low interest because of the low risk they represent to the borrowers. The U.S. government has excellent credit. After all, we are borrowing in our own currency.
Efforts have been made to limit the federal government’s ability to operate at a deficit. For example, in 1996 Congress passed a line-item veto, which would allow the President to simply disallow budget items Congress passed. That law was struck down by the Supreme Court. As it turns out, according to the Constitution, when Congress appropriates funds, whether that appropriation is funded or not, the executive has to spend those funds whether the President likes it or not.
Unlike the federal government, however, states do not issue their own currency. They do not control the money supply — that is the domain of the federal reserve. As a result, they can only budget what they can afford to pay back. They can’t play games with currency manipulation the way the federal government can. The result is that, unlike the federal government, they cannot run long-term, on-going budget deficits. Indeed, all states except Vermont explicitly ban such deficits by law.
So this is where the federal government must step in. As economist John Maynard Keynes pointed out, during times of crisis, the federal government can spend, spend, and spend. States, on the other hand, are stuck in a vice. On the one hand, tax revenues go down in an economic crisis. On the other hand, there is greater demand for state services as people lose jobs. As a result, when we are in a real crisis, the only government with the ability to address our growing financial needs is the federal government.
Well, as it turns out, we are in a real crisis. Setting aside the health emergency we face, this is an economic crisis as well. The United States is certainly in recession at this point, and a deep one. Indeed, it appears that in virtually no time, our economy has sunk to Great Recession lows. At the same time, our healthcare system is facing historic demand. So somebody needs to do something.
As I explained above, the states just can’t do it. They do not have the ability to run a big budget deficit in these times of crisis. The federal government, however, can. Just because the federal government has abused this ability during good times does not mean that it should not take advantage of this ability in times of crisis.
The elected officials who are showing the most leadership during this crisis are state officials: consider Democrat Andrew Cuomo or Republican Larry Hogan. But state officials are hamstrung in what they can do. When state budgets are straining to address demand, there is only one entity with the ability to step into the gap: the federal government. It’s time they started to do so.