For Policy Reform, Look to the States

Otto Neurath, a prominent socialist political economist 100 years ago, argued that governments in peacetime would work better with wartime-level budgets and procedures. With their $3.5 trillion budget resolution, which has recently been dubbed “a cradle-to-grave reweaving of [the] social safety net,” congressional Democrats have gone full Neurath, citing a range of climate, family, and employment emergencies to justify their plan amid relatively good economic conditions. Much criticism of the Democrats’ plan has focused on the amount of spending and its partisan dynamics, and rightly so. But it is also worth stepping back a bit and noting how old-fashioned the Democrats’ approach to social spending appears, especially when compared to state-level approaches to issues that are important to Americans.

Everyday people are always less ideological than policymakers in Washington want them to be. States often meet them where they are. And while most Americans like the sound of free college, child care, and paid leave (who wouldn’t?), when asked which single issue concerns them most where they live, people worry more about the basics.  For instance, in a new unpublished AEI national survey, the top issues among conservatives, liberals, and moderates alike are crime and high taxes, followed by economic concerns such as the need for good jobs and community problems such as drugs and homelessness. Environmental, immigration, and public health concerns—in the midst of a pandemic, no less—were low on the list. 

When dealing with bread-and-butter issues at the state level, lawmakers in both parties over the past decade have been moving away from the “we can subsidize our way out of this” approach, which still dominates the left’s thinking in Washington (and has come to dominate the thinking of some on the right, too), to removing or rewriting rules that get in the way of people solving problems themselves. Eight years ago, the political scientist Steven Teles argued that the complexity, not the size, of government had become policymakers’ biggest challenge. For example, he highlighted the ways in which our complicated tax code, healthcare regulations, and overlapping K-12 education rules create problems are absent in earlier, more straightforward programs such as Social Security. Federal policymakers may not have taken that argument to heart, but state lawmakers have started to.

State policymakers are no less interested than members of Congress in having a lot of money to spend on policy problems, but they have increasingly focused on this different path, which we might refer to as “decluttering.” Instead of subsidizing important things like costly housing or low-paying jobs, the decluttering mindset seeks to diminish or remove the rules and requirements that drive up the cost of housing or prevent people from seeking higher-paying jobs in the first place. 

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