Sunday, January 16, 2005

Red, Blue and Angry All Over

The New York Times
January 16, 2005
Red, Blue and Angry All Over

WASHINGTON — Utah, the reddest of the red states, seems unlikely to protest federal action by a Republican House and president. Yet last fall, as Congress debated a Republican proposal to prohibit states from issuing drivers' licenses to illegal immigrants, Utah was right there, objecting along with liberals and civil libertarians.

Utah is one of 10 states that does not require proof of permanent residency to receive a driver's license. The state legislature reasoned that enabling drivers to buy auto insurance was the state's paramount concern - not their immigration status. So when Congress threatened to take that authority away, officials from Utah and other states rose up to block the proposal.

"Our system has been a success," said Wade Breur, a spokesman for the Utah department of public safety. "Congress should leave it to the state to decide."

Utah is not alone in bristling at what it considers the renewed threat of expanding federal power. Ten years after Newt Gingrich's Republican revolutionaries won control of the House under the banner of states' rights, states across the country are again complaining about the heavy heel of federal authority on everything from taxes to tort law to education to the environment.

But now, the mandates and pre-emptions emanating from Washington are coming not from big-government Democrats but conservative Republicans. And thanks to the party's successes in recent years, more of the state and local officials who are complaining about those actions are Republicans, too.

As a result, the major political battles this year in Washington may not be between Democrats and Republicans in Congress, but between the states and the federal government. "The principle of federalism has gotten lost in the weeds by a Republican Congress that was elected to uphold it in 1994," said Senator Lamar Alexander, a Republican and former governor of Tennessee who is an advocate for states on Capitol Hill. "Conservatives are as bad as liberals about imposing mandates once they come to Washington."

The National Conference of State Legislatures says the problem has grown so large that it has restarted its Mandate Monitor, which had been discontinued in 1995, to scrutinize the cost of federal regulations on states.

Even as Republicans have begun marking the 10th anniversary of the "Contract With America," which called for ending so-called unfunded mandates, the conference estimates that the federal government has fallen $25 billion short in fiscal year 2005 in paying for the requirements it imposes on state and local governments. The biggest problems: Medicaid and President Bush's signature education program, No Child Left Behind, which established ambitious, and costly, testing regimes and performance standards for public schools.

"There's been a big shift toward federal power," said Alan Greenblatt, a writer for Governing magazine, which has covered the issue extensively.

The end of last year's Congressional session offered a hearty taste of the kinds of state-versus-federal conflicts Washington is likely to see more of this year. During debate over a bill to overhaul the nation's intelligence system in November, Republicans inserted provisions intended to push states to standardize drivers' licenses. But the states contended the requirements would cost hundreds of millions of dollars. The measure passed, but the Bush administration agreed to consult with state officials on the regulations.

And when Congress debated whether to extend a moratorium on taxing Internet services, lawmakers from Texas, Tennessee and other states argued that local governments should be allowed to continue taxing telephone calls over the Internet. They won that round, but the battle over Internet taxes has just begun.

Telecommunications and high-tech companies are pushing Congress to expand and make permanent the Internet tax moratorium. States oppose such proposals, contending that as more services and sales move online, their revenues will be cut by billions of dollars if they cannot tax digital commerce.

Blair Levin, a managing director at Legg Mason, a financial services company, said the issue has brought two schools of Republican ideology - opposition to taxes and support for states' rights - into sharp conflict.

"You have a number of Republican senators who are former governors and who are anti-tax, but who understand that if you prohibit states from collecting taxes, you have a really big problem," he said.

The tax battles also underscore a new trend in the struggle between states and the federal government: Where Democrats once imposed mandates on states, Republicans have pushed to pre-empt state powers, particularly on taxes. "Congress once had been pretty hands off as far as state finances were concerned," said David Brunori, a contributing editor with State Tax Notes, a newsletter. "That has changed."

Federal pre-emption may also expand into the area of state regulatory powers. With the rise of aggressive state attorneys general willing to investigate industries from tobacco to securities to insurance and banking, many large corporations have begun turning to Washington for relief. Though they once favored dealing with state regulators, many multinational corporations now would prefer the oversight of a single federal agency.

"It's very difficult for people with operations in 50 states to cope with 50 regulatory schemes," said Lisa Rickard, president of the United States Chamber of Commerce's Institute for Legal Reform.

For similar reasons, business groups have also urged Congress to enact restrictions on lawsuits, a cause President Bush has embraced. "If we had to do this state by state, we'd face too many hurdles,'" said Dr. Donald J. Palmisano, the immediate past president of the American Medical Association.

But state officials argue that tort law has historically been the purview of state legislatures and courts, and they have strongly opposed federal usurpation of their power.

State Senator Michael Balboni, a Republican from Nassau County, supports restricting lawsuits but argues that state legislatures, not Congress, should retain that power, if only because New York's needs are very different from Mississippi's. "I supported George Bush," he said. "But he'd be wrong, and so would the next president, to try to take this away from the states."

Of course, tensions between the federal government and the states are as old as the Republic. But it was not until the 1970's and 1980's, with the successive election of two governors to the presidency, Jimmy Carter and Ronald Reagan, that the modern concept of devolving power to the states began to take hold.

Though many Democrats in Congress initially opposed the movement, it gained steam under President Bill Clinton, another former governor, who signed landmark legislation giving states broad powers to run welfare programs.

But under President Bush, the pendulum has swung back, analysts say. The Sept. 11 terrorist attacks are a major reason, creating bipartisan support for expanding federal authority to hunt terrorists and secure the nation's borders. But Mr. Bush also supports aggressive federal action on many domestic issues. Indeed, it was John Kerry who wanted to leave the issue of same sex marriage to the states, while Mr. Bush called for a constitutional amendment banning them, a position some conservatives criticized.

During the 1996 presidential campaign, Bob Dole, the Republican candidate, carried a copy of the 10th amendment in his pocket. It reads: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

Senator Alexander said he hopes to renew that spirit in Congress this year, but he is not optimistic. "There is this strange disease that affects Republicans as well as Democrats, that as soon as you get away from home, you think your ideas are better than at the grassroots," he said. "It may come back to bite us in an uncomfortable place if we don't remember our promises."