Is Liberal Federalism the Future of the Left?

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As has been reported widely, the FCC recently changed its so-called “net neutrality” policy, effectively allowing broadband companies such as Verizon and Comcast to adjust their service delivery models to reflect the bandwidth usage of media sites. Net neutrality is a contentious issue, and the New York Times‘ Farhad Manjoo laid out the case for it in 2017:

Net neutrality is intended to prevent companies that provide internet service from offering preferential treatment to certain content over their lines. The rules prevent, for instance, AT&T from charging a fee to companies that want to stream high-definition videos to people.

Because net neutrality shelters start-ups — which can’t easily pay for fast-line access — from internet giants that can pay, the rules are just about the last bulwark against the complete corporate takeover of much of online life. When the rules go, the internet will still work, but it will look like and feel like something else altogether — a network in which business development deals, rather than innovation, determine what you experience, a network that feels much more like cable TV than the technological Wild West that gave you Napster and Netflix.

If this sounds alarmist, consider that the state of digital competition is already pretty sorry. As I’ve argued regularly, much of the tech industry is at risk of getting swallowed by giants. Today’s internet is lousy with gatekeepers, tollbooths and monopolists.

Current FCC Chairman (and former Verizon executive), Ajit Pai, however, actively defended the repeal decision, which unfolded along party lines:

He said the rollback of the rules would eventually benefit consumers because broadband providers like AT&T and Comcast could offer them a wider variety of service options. His two fellow Republican commissioners also supported the change, giving them a 3-to-2 majority.

“We are helping consumers and promoting competition,” Mr. Pai said. “Broadband providers will have more incentive to build networks, especially to underserved areas.”

Earlier this week, I came across an MIT Tech Review post that highlighted the state-level reactions against the FCC’s decision:

Rather than wait for legal challenges to play out, some politicians are already working on legislation to reinstate net neutrality in their states. Two Democratic state senators—Brad Hoylman from New York, and Scott Wiener from California—are championing a bill that would take effect in both states if it gets enough support. Announcing the initiative, Wiener said, “if the FCC won’t stand up for a free and open Internet, then California will.”

I find this reaction interesting because it mirrors the reactions that high-tax states are having to the new GOP tax plan. States like California and New York are moving quickly to invent creative work-arounds to shelter their residents from the $10,000 cap in state and local taxes (“SALT”) in the new laws. As the New York Times recently reported:

Democrats in high-cost, high-tax states are plotting ways to do what their states’ representatives in Congress could not: blunt the impact of the newly passed Republican tax overhaul.

Governors and legislative leaders in New York, California and other states are considering legal challenges to elements of the law that they say unfairly single out parts of the country. They are looking at ways of raising revenue that aren’t penalized by the new law. And they are considering changing their state tax codes to allow residents to take advantage of other federal tax breaks — in effect, restoring deductions that the tax law scaled back.

One proposal would replace state income taxes, which are no longer fully deductible under the new law, with payroll taxes on employers, which are deductible. Another idea would be to allow residents to replace their state income tax payments with tax-deductible charitable contributions to their state governments.

As with net neutrality, liberal states are taking strong and public stances against the aims of the Federal government, a phenomenon that emerged into the mainstream press as soon as President Trump’s Muslim travel ban was announced. After the ban was announced, more than a dozen states led the court challenges that stopped the ban’s first iteration, basing their arguments on a series of claims that ranged from social issues to business damages.

The idea that liberal states might become the principal antagonists to the current administration would signal a remarkable change in the general Federalist position in the U.S. Ever since the civil rights battles of the mid-20th century, the Federalist cause has been closely associated with conservatives who rejected attempts to desegregate their societies. Conservative states argued that Washington, D.C. was overstepping its powers with civil-rights laws and that social issues were the domain of state governments. Indeed, for the last sixty or so years the average American would typically associate Washington with a willingness to “social engineer” a more liberal society and (with some notable exceptions) governors as the ones more often than not pushing back against those changes.

This positioning seems to be changing, however, and while that change is certainly gaining steam under Trump, it did not start with his rise to power. Indeed, back in 2014 Ilya Somin of George Mason Law wrote an prescient piece in the Washington Post about the left’s new take on the Federalist cause:

It is interesting to consider why the current generation of liberal legal scholars often have a more positive view of federalism than their elders. A major factor is the decline in the association between federalism and racism. Liberals who came of age between, say, 1940 and 1975 understandably viewed federalism arguments primarily as a shield for Jim Crow oppression of minority groups. But things have changed over the last thirty years, to the point where, as Gerken argues, state and local governments are often more solicitous of minority group interests than the federal government is. In a previous post on her work, I point out that these developments may over time bring US liberal attitudes towards federalism more in line with those of the left in most other federal nations, where federalism is often seen as the friend of minority interests rather than their enemy.

A second factor is a gradual decline in liberal confidence in the feasibility of rational central planning of an increasingly diverse and complex society. To my mind, most of the left is still overly optimistic about the ability of the federal government to create one-size-fits-all solutions for social and economic problems. But the degree of left-wing optimism on that score is not as great as it was in the heyday of the New Deal and Great Society.

It’s interesting to ask what the genesis of this shift might be, and Jeffrey Rosen suggested in a 2016 Times article that the Left’s evolving view of Federalism might have started back in the second Bush Administration:

After George W. Bush’s second victory in 2004, when Republicans held all three branches of government, progressive scholars and public officials began to rediscover the virtues of what Heather K. Gerken of Yale Law School, the intellectual guru of the movement, calls “A New Progressive Federalism.” David J. Barron, now a judge on the United States Court of Appeals for the First Circuit, wrote an article in Dissent after Mr. Bush’s re-election referring to “the emergence of why-go-to-Canada-when-you-have-federalism discussions within lefty circles.”

Several progressive politicians relied on these arguments, from Barney Frank’s urging the city of San Francisco to use the rhetoric of local control to resist a federal gay marriage ban to Senator Richard B. Blumenthal’s invoking states’ rights when he was the attorney general of Connecticut on issues ranging from banking regulations to banning assault weapons. In fact, you can make a credible case that the most important progressive victories in the Obama era — including health care reform and marriage equality, both originally tested in Massachusetts — emerged from the states during the Bush administration, just as Brandeis anticipated.

 

I suspect that the attitudinal change that Somin and Rosen noted, and which is only accelerating as the Trump administration continues to change the focus of the national government, will continue to increase. Such a change would have serious implications for both political parties, since the prime battleground for left-right debates could shift from Washington to the state capitals. Perhaps in ten years, state house elections will be as critical as today’s national races, which would in turn mean even more money being spent in local elections. Indeed, this is a trend we have also seen of late, and it’s one that challenges the two national parties to strategically apportion state support money for races that would have been much less important a decade ago.

In sum, one of the amazing ironies of this current GOP administration might be that it shifts the locus of the modern Federalist movement from right to left. A major determinant of this possibility will be the tax law challenges, of course. Should states like California and New York successfully undercut the 2017 GOP tax package, we will soon see a significant refocusing of liberal money and labor from the national discourse and out to the newly-emboldened state capitals willing to take up the battle against the conservative agenda.

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