Some Unsolicited Advice: January 2009

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What experts think President-elect Obama should know about these issues.

There is a grand tradition in the United States of offering the new president lots of suggestions for how to run the country—whether he wants them or not. In that spirit, State Legislatures asked national experts in a variety of areas important to states to offer the new leader of the free world some suggestions. This is neither a comprehensive survey of every public policy issue nor one that draws comment from every possible point of view. The observations, however, do touch on areas that state lawmakers have been wrangling with for some time.

 

ECONOMY

Mark Zandi, chief economist, Moody’s Economy.com.

The new president’s response to the financial panic and recession must include substantial aid to hard-pressed state and local governments. More than half the states already have announced budget shortfalls and more will soon as the bad economy weighs heavily on tax revenues and adds to their costs. Most states conservatively managed their finances during the good times, saving as much as they could given their legal and political constraints. But the nationwide collapse in property values and flagging retail sales have already led to a record collective budget deficit.

Since most state governments are constitutionally required not to run deficits for very long, they are already planning to cut programs. Tax increases may not be too far off. Spending cuts and tax increases are the wrong thing for a struggling economy.

State governments administer most of the nation’s economic safety net programs, including food stamps, welfare benefits, Medicaid and unemployment compensation. There would be no better boost to the nation’s collective psyche than strengthening that net. State and local governments also would be instrumental in administering an increase in infrastructure investment. Such spending would be another effective way to stimulate the economy, and there is little doubt that new bridges, roads, water and sewage treatment facilities are needed. While it is difficult to know just when construction projects will get underway and the money will be spent, this is much less of a worry now, given that the economy’s problems seem likely to continue well into the next decade.

EDUCATION

Chester E. Finn Jr., senior fellow at the Hoover Institution, Stanford University and president of the Thomas B. Fordham Institute.

The next president should turn the No Child Left Behind Act upside down, creating national standards and tests, maybe even a semblance of a national curriculum, and publishing the performance results for every school and district and state in the land in totally transparent and comparable fashion. States (and districts and schools), however, should be given the freedom to decide how and when (and even whether) to attain those standards and what, if anything, to do with districts, schools, teachers and kids that aren’t performing to their satisfaction. The available federal dollars could be spent by states and districts however and wherever they see fit. Washington’s job, in other words, is to send money and report on performance against a common metric. It’s not to run schools or tell people how to run them.

IMMIGRATION

Demetrios Papademetriou, president of the Migration Policy Institute.

What the United States needs is a top-to-bottom, thorough rethinking of its legal immigration system. We need to look at the way we conduct ourselves in regard to admissions of all types. Our current system is based on immigration policy conceived in 1963, passed in ’65 and implemented in ’68. No system devised that long ago could possibly be expected to serve the purposes of a country 45 years later when everything else has changed.

But first we must fix illegal immigration. That’s the issue that sucks the oxygen out of any conversation about immigration. We need to go back to the fundamentals that everyone understood in the past three years but that politics would not allow to move forward. We need a tough, clear, fair and transparent process for legalizing everyone who is here illegally. Then you free up the political will to deal with everything else. You have to have a comprehensive solution.

CLIMATE CHANGE

Barry Rabe, professor of public policy, Gerald R. Ford School of Public Policy at the University of Michigan.

The new president should closely study what states already have done and draw lessons from those experiences for any future federal policy. And the first principle should be: Do no harm. Do not undermine those things states are doing that are successful and could be built upon. Since 1975, Congress has held more than 340 hearings on climate change, with nearly half of these in the current Congress. Yet it is amazing how little discussion there has been of the evolving state role in climate policy or ways in which federal policy might build upon or learn from state experience.

There are carbon cap-and-trade efforts in three different regions of the country; any serious discussion of a federal cap-and-trade bill should begin with an analysis of these regional initiatives and discussion of how early state leadership can be incorporated into any federal policy.

And 28 states have renewable portfolio standards, mandating steady increases in the amount of electricity from renewable sources. Again, any federal consideration of such a policy should begin with careful scrutiny of state experience. Federal legislation should not override earlier state policies. Given this extensive state involvement, America has a unique opportunity to base future policy on real experience—what does and does not work—rather than on theory and speculation.

HEALTH CARE REFORM

Stuart Butler, vice president for domestic and economic policy studies at the Heritage Foundation.

Fundamental federal health reform is going to be a heavy load for the new administration, especially when competing against other policy priorities. One way to make sure progress on health reform is made, without expending too much political capital and without adding unacceptably to the soaring deficit, is to encourage state experimentation. Similar to the welfare reform model, states should have the opportunity to test various approaches to health care reform on a smaller scale, consistent with overall goals set by Congress. The key to this is to provide states with the opportunity to request legislative waivers—not just today’s administrative waivers—to make significant changes in existing programs and use the money to expand coverage.

States could use such authority to explore ideas, such as creating an insurance exchange to enable individuals and families to buy, own and keep health insurance regardless of their job or job status. In addition, states could continue to work at developing models such as premium assistance and consumer-directed care to better serve the Medicaid population.

Short of sweeping federal action on fundamental health reform, the burden to improve health coverage rests with state officials. Supporting state efforts to test ideas on health care reform could go a long way in helping Washington tackle health reform in the future.

STREAMLINED SALES TAX

Maureen Riehl, vice president, National Retail Federation

The new president will face serious and difficult economic conditions and forecasts. The states are in exactly the same precarious boat. So, too, are retailers—the backbone of the American economy. Arduous work on the part of both state government and business over the last nine years has resulted in the Streamlined Sales and Use Tax Agreement, a multi-state tax reform proposal that now needs the support of Congress and the president to meet the goal of interstate applicability. Passage of the agreement will cost the federal government no money. Once federal legislation is passed, it will provide benefits for both states and retailers. The agreement closes a tax loophole for states, which will be permitted to collect sales and use tax dollars from interstate purchases already owed by consumers. For business, it addresses a serious tax discrimination problem: Retailers will no longer be subject to different tax treatment depending on which selling venue they use to reach customers. The agreement also will pay retailer tax collectors for the costs of collecting sales and use tax for the states.

The agreement is pro-business and pro-state government. All sellers and all selling venues will be treated, burdened, reimbursed and rewarded the same. Likewise, states will get tax dollars they are already owed and need to help solve their budget issues.

TRANSPORTATION

Jill Ingrassia, director of federal relations, American Automobile Association.

President-elect Obama should apply the same “can do” approach and attitude that inspired voters nationwide to rebuilding and enhancing the nation’s transportation infrastructure. Reforming the federal transportation program and re-establishing its credibility will take strong leadership.

Transportation drives our economy, ensures personal mobility and enhances national security. It must be considered a national priority. Just as President Eisenhower embraced and made possible the vision of a national interstate system more than 50 years ago, we need a leader who can provide a vision for our transportation future that the public will support. The motoring public cannot be expected to go along with business as usual.