As a New York native, it pains me to say this, but Utah is pretty awesome. From the four-day, 40-hour workweek to smart health reforms, the state is a trailblazer. And now two Utah state legislators, Michael Waddoups and David Clark, have advanced an extremely exciting new policy idea.
Let’s select a few programs — say, education, transportation and Medicaid — that are managed mostly by Utah’s government, but with significant federal dollars and a plethora of onerous federal interventions and regulations.
Let Utah take over these programs entirely. But let us keep in our state the portion of federal taxes Utah residents pay for these programs. The amount would not be difficult to determine. Rather than send this money through the federal bureaucracy, we would retain it and would take full responsibility for education, transportation and Medicaid — minus all federal oversight and regulation.
We recognize that, financially, this is not the best deal for Utah. We would not receive our share of debt revenue used in these programs, and Utah taxpayers would continue to pay our share of the interest on the national debt used for these programs in other states.
Even so, we believe we can operate these programs more efficiently and productively without federal strings and mandates.
I tend to think that we need to federalize Medicaid while downloading education, transportation, and some other transfer programs to the states, but this is another way to align incentives and allow for robust policy experimentation.
Some New Yorkers fear that if we allow for more federalism in social welfare, we’ll see a beggar-thy-neighbor dynamic in which more generous states will become “welfare magnets” for poor people from other, less generous states. I haven’t seen a lot of good empirical evidence on this front, but my sense is that attracting domestic migrants is pretty much always a good thing. Moreover, I think that poor people tend to move in search of job opportunities rather than benefits. If the U.S. moved in the direction of more competitive federalism, I’m confident that states like New York, New Jersey, and Pennsylvania would flourish — if we did indeed federalize Medicaid, some of these states could sharply reduce spending and become low-tax havens while others will try to offer a mix of high taxes and lavishly-funded, high-quality public services.