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Legal Commentary

: Balkinization

Our defective state constitutions? (Or, does this crisis portend the end of what remains of robust federalism?)

By Jack M. Balkin

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Paul Krugman's column in today's Times, tellingly titled "Fifty Herbert Hoovers," discusses the insanity of the fact that most states are cutting back on public expenditures right now. And why is that the case, beyond the implausible power of fanatical anti-tax libertarians in the hustings? As Krugman writes, "Partly that?s because these governments, unlike the feds, are subject to balanced-budget rules. But even if they weren?t, running temporary deficits would be difficult. Investors, driven by fear, are refusing to buy anything except federal debt, and those states that can borrow at all are being forced to pay punitive interest rates." Of course, what Krugman, Nobel Prize-economist that he is, refers to "balanced-budget rules" can also be described, perhaps more pointedly, as "state constitutional requirements." But, as he notes, even if more states were allowed to run deficits, that still wouldn't resolve the problems involved in states finding people to lend them money, especially since, thanks to the US Constitution, states are prevented from issuing their own currencies. (I DON'T count this as a defect of the US Constitution, incidentally.) In any event,

as more and more states emulate Arnold Schwarzenegger and Tim Strickland--and almost everyone literally and figuratively in between--in asking federal aid to allow them to meet basic expenditures of the modern welfare state, including, say, public education, law enforcement, and provision of emergency medical service (not to mention imprisoning people and inspecting restaurants, etc.), "federalism" will have to be recognized even by members of the Federalist Society as the dessicated notion that it has become in the course of the past century and a half. And this, of course, has nothing to do with the most common post-World War II attack on federalsm, which is the propensity of unregulated states to engage in such things as invidious racial discrimination and the like. No, we are going back to the critiques of the initial Progressive Period, when it was becoming obvious that state autonomy with regard to the economy just didn't make much sense. It really doesn't matter if one actually likes principles of "subsidiarity" that dictate that decisions should be made at the most local level possible. (I think that's a pretty good principle myself). The hooker is the word "possible." Hell, we're realizing that Buchananite fantasies of national "sovereignty" really don't make much sense anymore with regard to the general economy, that a whole bunch of countries are going to have to come together and agree, e.g., on what count as acceptable principles of accounting so that regulators (and investors) can have some idea of what vaunted financial institutions are actually worth and what they're doing with their money.

The challenge facing President-to-be (in only 22 more days, glory be) is speaking candidly to the American people about how many of their accepted understandings of our system(s) are now up for grabs. (And, of course, I hope that sooner or later he'll get around to our dysfunctional Constitution, but I don't need to go down that road today.)

Full post as published by Balkinization on December 29, 2008 (boomark / email).