Reviving federalism should be top priority for the GOP

In his State of the Union address, Reagan proposed to nationalize health care financing for the poor, terminate the federal role in welfare and return to the states 43 major federal grant programs along with 28 billion federal dollars in excise taxes to pay for them. Most proposals for rebalancing federal responsibilities actually handed the federal government responsibility for income maintenance programs, yet Reagan believed, rightly in my view, that an AFDC block grant would be preferable, to give states the flexibility to pursue more effective anti-poverty approaches tailored to local economies. This, of course, is what later enabled welfare reform.

Going further, the Reagan White House also envisioned transferring all responsibility for welfare to the states as part of a broader “swap,” including a formula for transferring revenues. Reagan had championed this new federalism in his 1976 and 1980 presidential campaigns, but after meeting fierce opposition from the establishment of both political parties, the Reagan White House abandoned the effort. But the beauty of Reagan’s swap remains undiminished. It would allow the states to do what they do best while encouraging real spending restraint. As conservatives seek new ideas for the post-Obama era, reviving federalism should be at the top of the list.