Taking Back the States

If the states, as Louis Brandeis put it, are the laboratories of democracy, then its only fitting that the 2006 election, which ushered in a host of eager new experimenters, fell just a week before Brandeis 150th birthday. For the first time since 1994, Democrats now control a majority of governorships in the country -- 28 in all. Even as Washington faces the prospect of continuing gridlock, these new governors enter office with the potential to spark a progressive restoration across the country -- and emerge a particularly potent presidential farm team.

The action in government has been in the states for a while now. The federal government has increasingly devolved decision-making to the governors, says Peter Dreier, the E.P Clapp distinguished professor of politics at Occidental College in Los Angeles. This was, in part, an ideological shift: The Gingrich Revolution trumpeted its renewed federalism, enhancing state authority over everything from welfare to Medicaid. States cant deficit spend, so handing them once-federal responsibilities under the rubric of a restored federalism promised to shrink the expansiveness, generosity, and responsiveness of government services. Federalist lipstick? Meet small-government pig.

But its not easy being a service-slashing ideologue on the state level. Republican governors tend to be more liberal than Republican senators and congressmen, Dreier explains. Governors can see the consequences of federal cutbacks and unfunded federal mandates. They see the consequences of letting cities deteriorate. They have to pay for the Medicaid patients. They have to pay for the consequences of housing cuts.

So Republican governors operate in tension with Republican congresses. They need federal appropriations to invest in infrastructure, keep their fiscal status sound, and provide popular services their party finds ideologically objectionable. As Bushs budget director, Mitch Daniels was a supply-sider so committed that Grover Norquist named him 2002s Hero of the American taxpayer. But after becoming governor of Indiana, he promptly broke Norquists heart by raising taxes. Daniels, a crestfallen Norquist cried, was closing Indiana for business! Which is to say, he was governing.

Democratic executives, however, can envision a much more synergistic working relationship with the rest of their party. With Congress now in the hands of Democrats, says Dreier, the Democratic governors will have willing partners in trying to help the governors solve the problems of education, housing, the environment, and so on. Congressional Democrats, both ideologically in sync with their statehouse partners and cognizant of the political benefits their successes make possible (todays governor could be tomorrows president), can use their control of the federal purse to further, not impede, the priorities of their gubernatorial allies.

That vastly brightens the prospects for the new crop of Democratic governors, three of whom in particular appear candidates for actually using their states as laboratories of democracy. Ohios Ted Strickland wants to reinvent a battered economy, New Yorks Eliot Spitzer is determined to tame a cumbersome bureaucracy, and Massachusetts Deval Patrick is shaping the nations first near-universal health-care system.

And maybe, with a dash of congressional cooperation and a bit of luck, they can actually deliver.

Ted Strickland

Post-industrial strength therapy

In 1942, the economist Joseph Schumpeter introduced the concept of creative destruction, capitalisms chaotic process of crushing established companies and replacing them with nimbler, more temporally attuned competitors. In Ohio, however, Schumpeters logic has broken down. As the Toledo Blade reported, since 2000, Ohios businesses eliminated 216,100 manufacturing jobs, 21 percent of its base. But they hatched a mere 40,000 jobs for a net loss of 176,100. Destruction has eclipsed the creativity.

Into this sad story strides Governor-elect Ted Strickland. A steelworkers son from one of the states poorest counties, Strickland speaks slowly, in plodding prose peppered by ums and ahs. He evinces no fear of clichés, and is refreshingly uninterested in impressing outside reporters. In a state that voted for 25 of the 27 last presidents, decided the 2004 election, and will be critical in 2008, Strickland proved the sort of edgeless candidate who compelled political journalists to profile ... his opponent. Last July, the New Yorker spent 6,140 words on the Ohio gubernatorial race and the Republican nominee, Ken Blackwell. The paragraph -- theres only one -- focusing on Strickland begins at word 5,776. He went on to crush Blackwell by almost 25 points.

But Stricklands genial blandness obscures a fairly surprising agenda for Ohio: He wants to restore its mojo. Ohios economic annihilation has harmed more than its economy; its torn apart the Buckeye States self-esteem. And for Strickland, recovery is partly mental.

Ohio, after all, is where John D. Rockefellers Standard Oil was based; where the founders of Firestone, Goodrich, and Goodyear tires made their discoveries and ran their factories; where the Wright Brothers labored. But what was once the engine of industrial America is now a relic of it. Ohio ranks 50 out of 51 states (including the District of Columbia) in its ability to retain educated individuals between 19 and 24 years of age. On an average day, 45 more people leave the state than move into it. Which may be why Stricklands policy platform seems as targeted to restoring Ohios confidence as much as its economy. To the new governor, the two are inseparably linked.

I dont think a single thing needs to be done or can be done to bring about the confidence that you rightly describe has been lost by Ohioans, he says. Instead, there are a lot of things. Almost all of them revolve around education and technology. As a candidate, he says, I visited what I would call some cutting-edge efforts to develop new jobs through new industries. I visited a nanotechnology facility started by a Case Western researcher -- and here his voice quickened and lifted for the first, and only, time in our interview -- another was an advanced-materials facility creating part for heavy equipment but, when you lift them, its like lifting Styrofoam! And I was told the lighter material was stronger, more durable, more resistant to corrosion! Those are just two examples of where I think Ohio may be seeing manufacturing going, without trying to just recapture what has been.

But how do you create an Ohio defined by futuristic materials rather than anachronistic industries? To pick through the detailed policy proposals released by the Strickland campaign, its a combination of educational incentives, targeted investment in advanced industries -- and self-affirmations.

Because of the changing nature of our economy, weve got to have a continuous system of education, Strickland insists. The gateway to this educational system will be a credit-cardsized piece of paper given to every adult learner. Because nothing opens doors in life like a quality education, his campaign literature enthuses, a Strickland administration will issue an Ohio Open Door Card to every adult learner. The card will show in one place all their learning accomplishments, while opening the door to every funding source each individual qualifies for.

Its an odd idea. Businesses, after all, can easily access an applicants educational background, laid out in clean bullet points across their resume. This card, rather, reminds the individual that he or she is educated, skilled, trained in tomorrows industries. One imagines dispirited job-seekers pulling it out in moments of doubt to bear witness to their self-worth. The next policy on the page, AccelerateOhio, promises a free, entry-level certificate that will certify to employers that Ohioans have the skills to get and keep a good job, and help give adult learners confidence in their ability to get a promotion, complete college or certification or move into another career track. Ted Strickland may not feel your pain, but he senses your insecurity.

Even confident, cutting-edge workers need an economy able to utilize their talents, though, lest they emigrate from the state. And Stricklands agenda includes a prominent focus on renewable energy investment -- to the tune of $250 million a year. When I asked Strickland what single policy hed keep if forced to jettison all but one, he answered that he was unequivocally committed to building a new energy industry in Ohio.

Ohio, however, will scarcely be alone in seeking a renewable energy sector: Such plans were a dime a dozen in 2006. But Strickland thinks his state has an edge: I believe Ohio, because of its geographic location, resources, manufacturing history, and workforce, is particularly well-positioned to pursue clean coal technologies, wind power, significantly expanded production of alternative fuels. & It is possible for us to realize some fairly early success in this area, and we are going to make the strongest possible effort to do that. Add in his promise to construct a broadband backbone across Ohio, and hes fulfilled, at the least, the atmospherics and priorities of a 21st-century economy.

But will it work? Reinventing the economy of a Rust Belt state is no small order, as Michigans Democratic Governor Jennifer Granholm can attest. A recent study out of the Cleveland Federal Reserve Bank spelled out Ohios challenge. Analyzing 75 years of comparative state data, the authors found that the largest factor underlying relative income difference in 2004 were patents, followed by education then industry specialization. Patents, here, serve as a rough approximation of a states technological innovation. In 1954, Ohio ranked sixth in patent generation. In 2001, it was 20th. As for college education, in 1940 Ohio ranked 27th. In 2002, Ohio was 39th.

Technology, education, and a bit of confidence in the states innovative abilities may be just the right prescription for Ohio. Whether Stricklands combination of statewide self-esteem building and targeted investments will stimulate such sectors remains to be seen. But if they do, future political reporters may find him a little less gray than they thought.

Eliot Spitzer

The reformer takes on -- government?

No incoming governor this year will enter office with the expectations, the buzz, or the record of New Yorks Eliot Spitzer. Time has named him Crusader of the Year. The San Francisco Chronicle named him Businessperson of the Year. The Nation has recommended him for vice president. The Weekly Standard ran a cover illustration comparing him to Theodore Roosevelt. It is, assumedly, only a matter of time until Sports Illustrated begins gushing over his 360 dunk.

On Election Day, Spitzer outran his hype: He annihilated his hapless opponent with a stunning 69 percent of the vote. Its precisely the magnitude of his victory, however, that has caused some progressives to worry. As one longtime observer of New York politics told me, it was never whether Eliot would win, it was how much he would win by. When Spitzer decided to shoot for 70 percent rather than 55 percent, he assented to certain tradeoffs, compromises, and constraints that could dim his luster for progressives.

Spitzer first burst on to the national scene as a hard-charging attorney general willing to rein in the excesses of capitalists-gone-wild, at a moment when the Securities and Exchange Commission had abandoned that role altogether. He made his name in an explosive suit against Merrill Lynch, whose research department had been hyping stocks in order drum up business for the firms investment-banking division. In the aftermath of the 2000 crash, Spitzers findings provided dispirited investors with an evildoer. Suddenly, the roots of the economic calamity switched from bad luck to villainy, and the nation had Eliot Spitzer to thank for its catharsis and to look to for protection.

In the years since, Spitzer has sued insurers and lenders, mutual funds and power plants. He has terrified multinationals and cowed titans. New York may be just a single state, but its industries are national and its financial sector global. With no one else riding herd on the behemoths of the new economy, Spitzers regulatory powers -- and with them, his celebrity and ambition -- expanded far beyond the Empire State.

While Spitzers energetic brand of oversight may have jarred those accustomed to do-nothing attorneys general, he protested that it was chiefly a product of the devolution of federal power amid a general slackening of regulation. Though he hadnt asked for this moment, he was damn sure going to meet it. Speaking at a panel held by the right-wing Federalist Society, Spitzer explained there has been this tremendous redistribution of legal power away from the federal government & [and] back to the states. Who better than state attorneys general to step into the void?

Spitzer could have let his actions speak for themselves. But he plainly feared that his focus on corporate wrongdoing would be mistaken for rank populism. Accordingly, he has repeatedly cast himself as capitalisms greatest defender. In March of 2004, he took to the pages of The New Republic to publish a full-length statement of principles. [T]he governments proper role, he wrote, is neither that of passive spectator nor lion tamer. The proper role of government is as market facilitator. Government should act to ensure that markets run cleanly as well as smoothly. It should prevent market failures and right them when they occur. And it should ensure that markets uphold the broad values of our culture rather than debase them. In this vision, government action is necessary for free markets to work as they are intended -- in an open, competitive, and fair manner.

It has proved an attractive and durable vision, distinguishing Spitzer as the first politician with a thoughtfully progressive approach to the 21st-century economy. But as Spitzers fame grew, his concern over his reputation heightened. His campaign for governor offered an ideal opportunity to correct the record.

The result has been an almost perfect inversion of government-versus-corporations storyline at which Spitzer has always bristled. Indeed, in a recent speech to the New York State Business Council, Spitzer sought to align himself with the forces of industry against the governments anti-competitive effects. State government, he proclaimed, has done little to alleviate and, in many ways, has contributed to the political gridlock that has prevented us from making the reforms necessary to compete in the 21st-century economy. He then went on to detail his plans for a cut in property taxes.

The speech was not a one-time aberration. What Eliot did on Wall Street, his Web site enthused, can also happen on State Street. His foil throughout the campaign was New Yorks notoriously corrupt and sclerotic state government. He foreswore tax hikes but ran on tax cuts. He promised to focus on [the] workers comp issue early to show business we are serious. His biographer, Brooke A. Masters, says, I think that youll see the crusader focused on the state government this time.

If that doesnt sound like the old Eliot Spitzer, you just werent listening hard enough. Government action, he wrote in The New Republic, must be justified by its ability to define, catalyze, and facilitate the markets core mechanisms; to prevent it from faltering under the weight of its own imperfections; and to uphold the underlying values to which the system is, or ought to be, dedicated. An ineffective state cannot be an effective regulator. His Web site speaks of the need to renew peoples faith in government, and his plans for transparency and reform could well dent the publics perceptions of Albanys dysfunction.

Which is all well and good. The question is, will Spitzers focus on cleaning up government augment his economic progressivism or supplant it? A government incapable of raising new tax revenues will make little headway against the health-care crisis, the deterioration of public infrastructure, or just about anything else. And if government works smoothly but proves incapable of providing what the market cant or wont, the people may grow as restless and resentful against its weakness as they did before its sloth.

Deval Patrick

Health care for all (somehow)

So, bellowed a surprisingly boisterous Michael Dukakis, what can I tell you about my friend Deval?

Having beaten Republican Lieutenant Governor Kerry Healey by 21 percent to become the first ever African-American governor of Massachusetts and Americas second African-American governor since Reconstruction, Deval Patrick has a lot of friends these days. The charismatic Chicago native garners frequent comparisons to his hometown senator Barack Obama -- a Google search for Barack Obama and Deval Patrick returns more than 34,400 results -- but the similarity is more than skin-deep. Like Obama, Patrick is a soaringly eloquent politician who proved able to reach across racial, economic, and ideological lines to construct his winning coalition. His tagline was the Obama-esque, Together, We Can, and it is testament to his political skills that the question Can what? was rarely asked.

An outsider to the clubby, Irish political culture of Massachusetts, Patrick will be the first Democrat to occupy the Massachusetts governorship since Dukakis left to run for president in 1991. He enters at a moment of enormous import. When it comes to what the history books will remember, his race and office may be recorded in smaller type, beneath the implementation of a complicated law passed by his predecessor, Mitt Romney, which could make Massachusetts the catalyst for universal health care in America.

The Massachusetts Health Care Reform Law of 2006 is the first serious attempt by any state to create a coherent, near-universal health system. The plan imposes an individual mandate forcing most every Massachusetts resident to purchase coverage, but subsidizing applicants up to 300 percent of the poverty line and fining employers $295 a year for every employee they dont cover. To help those outside of the employer-based system, it constructs a controlling authority called The Connector which will aggregate the buying power of small businesses and individuals, negotiate insurance costs, and generally act as public advocate for health-care consumers.

Imperfect though it may be, the Massachusetts program is the closest thing to a workable universal health-care structure any state has yet imposed, even if its not yet been scaled up to universality (analysts assume 95-plus percent of the commonwealth will be covered). It falls to Patrick to make it work. Asked on the campaign trail what he thought of the plan, he said, Its not the final word, but it is a step in the right direction, and it needs to be implemented brilliantly.

Implementation remains a tough order, however. Will the Connector be able to offer comprehensive insurance at affordable prices, or will it offer bare-bones packages that dont deserve the label coverage? When can individuals opt out on affordability grounds? And, possibly most destabilizing of all, how will employers react? A $295 tax for not covering their workers, Dukakis told me, is an open invitation to employers to disinsure. Why should they pick it up if the commonwealth is willing to pay? It makes it much tougher on folks who do insure than those who dont.

Will Patrick take on businesses if they start dropping coverage? Thats not yet clear. When I ask John McDonough, head of Health Care for All and a former legislator, who was a prime force in passing the legislation, what Patrick will do, he just sighs. Patrick ran a campaign that was appropriately vague. I have the sense that hes committed to implementing the legislation well, but whether hell want to expend political capital tussling with the business community or changing the individual mandate? I dont think he knows, I dont think any of us know.

Tom Glynn, recently named by Patrick to co-chair his Health Transition Team, suggested that Patrick would eschew any early tussles. Consistently, over the last two or three months of the campaign, he was very strong in supporting the legislation, very respectful of the compromise which he called a delicate balance. The question will come if the delicate balance proves unable to accommodate the rocky transition from law to life.

But Patrick, unlike his predecessor, doesnt shy from the governments role in enforcing universal health care, and appears unlikely to blanch before business opposition. I see health care as a common good, said Patrick, like clean air, safe streets, and effective education -- and so I believe that government has a role to play in assuring that the conditions exist for the health-care system we all want.

That statement, so easy to make during a campaign, means something different now that government is no longer a depersonalized abstraction, but Patrick himself. [Reform] is not going to happen, he admitted during the election, unless someone is really willing to show leadership and risk some political capital to get it done. And I am.

Thats tough talk given the sorry story of health reform in America, but Patrick has a history of succeeding where others have failed. Massachusetts is about to host a confrontation between the intractable problem and the unstoppable politician. And the rest of the country will be watching -- as will his Democratic colleagues as they try to build a progressivism fit for a new century.

Ezra Klein is a Prospect writing fellow.

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