South Carolina, Stimulus, and Federalism

South Carolina has been notable for its newsworthiness of late—not much of it flattering as Jon Stewart has colorfully appreciated. South Carolina’s current woes and weal bring together a pointed issue about federalism and federal stimulus that should give some pause to the rush to again save the salaries and jobs of teachers nationally, which some in Congress want to do.

Let me say from the outset that as a general matter I support federal expenditures for teachers, and in many ways think that because education is a national good, the federal government should play a much larger role in public education. A child undereducated in South Carolina, a description that unfortunately applies to far too many children, can cause problems for the later adult who may live in Massachusetts. Education is closely linked to our national economy, even if education is not (ordinarily, at least for now, but see . . .) itself an economic activity as a Supreme Court majority claimed, and even if public education is closely tied to its local community. So Congress should fund teachers when States are unable to do so—right?

Federal stimulus creates a problem of democratic accountability—an idea central to Justice O’Connor’s federalism jurisprudence—that has pernicious consequences for both state and federal government. When voters are displeased by deficits or by underfunded public education they may look to different levels of government with different interests. When the federal government props up state government, who do voters hold accountable for what? South Carolina, as with many other states, has many voters anxious and displeased by increasing federal deficits. Yet, at the same time, many of these voters rely on their State’s provision for various public programs such as education. When states fail to provide for the commonweal and the federal government supplements their budgets, the voters do not as easily recognize the underlying problems, and blame Congress for deficits. This is the situation in South Carolina, where legislators seek to cut funding for higher education, while publicly claiming that higher education has been relatively untouched, relying on the fact that federal stimulus funds have been appropriated temporarily to support the State’s universities. This allows federal spending to accommodate a lapse in state government accountability. In South Carolina’s case, the problem begins with a recent legislative decision to eliminate property tax support for education (resulting in a tax cut for all property owners), partially offset by an increase in sales taxes to support education. With sales receipts way down, a fiscal crisis developed from the very outset of the Great Recession.

By contrast, when Congress refuses to appropriate funds to support states, voters may either blame Congress or their local government (or both). The latter situation at least leaves open a more clear presentation of the fiscal problem, but leaves the underlying public need unaddressed. Which raises the question of government responsibility. Who is supposed to be responsible ultimately for public education? Under our current localized system, the states bear the responsibility. So when states make choices about how to (or whether to) fund public education, they should be held accountable. But obviously this is not so simple, because in a state like South Carolina, with an ideological governor who believes in privatizing most government functions, including education, we may have fundamental disagreement about the role of the state in public life (reflected in Governor Sanford’s views and those of his chosen replacement—Nikki Haley, also a favorite of Sarah Palin Republicans). Failing to fund schools may be the point. If this is so, then a Congress who still believes in a robust commonweal will have a greater imperative to step in where current state governments fail to provide. And around we go.

I think Democrats who fear voter backlash about federal deficits would be wise to consider carefully whether public accountability (and public education in the long term) might be better facilitated by not acting to save teachers. It will be difficult to blame Congress for the South Carolina legislature’s failed funding priorities. It is easy to blame Congress for run-away spending. What is more, Congress may get limited praise for providing economic stimulus and educational programs by saving the jobs of teachers. If voters do not sufficiently feel the pain of their local choices, they will not be induced to alter them. The risk, of course, is that voters will learn to live with the pain, and the future generations held so precious by some when considering their future federal indebtedness may face their future insufficiently educated. But a conversation about this risk at least has the virtue of avoiding the alternative politically pernicious two-step—fail to fund education (and other state programs) and then blame Congress for paying the price.  Perhaps the ultimate solution will be for Congress to take on a more direct role in educational funding, creating teacher programs that do not rely on the feckless partnership of states like South Carolina.  But that’s an entirely different conversation that goes behind my short term (and perhaps short-sighted) worry over the present political two-step.

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1 Response

  1. BDG says:

    A lot that is smart and right here…one could as easily substitute “Greece” for “South Carolina” and “debt default” for education. I think that analogy can be useful in thinking our way to alternative solutions to the bitter medicine you’re suggesting.

    More generally, lower-tier governments will always have a big hold-up opportunity when their own collapse will threaten national interests. Even a one-time refusal to pay off the threat (as you suggest) may not be a credible predictor of future refusals — how often will Congress be able to summon up that much political will?

    These are tough issues, but an answer, which Europe seems to be pursuing, is to structure the bailout in such a way as to be excruciatingly painful for local officials — a sort of co-pay to reduce future moral hazard. What is the South Carolina equivalent, do you think?