If there is one thing that excites me about reforming the government, it is not the tax code, senate rules, or commercial and industrial policy. No, what excites me is reforming the bureaucracies that actually implement policy. So I will detail my view of a better and totally possible scheme for the federal government, and then gloss over the enormous gap between my idea and what Obama proposed last night, and declare it a great SOTU because for the first time I actually noticed someone in government taking the first steps towards the inevitable role it must play.
So in a better future, if there is to be one, the federal government must abdicate its largely heavy-handed, hammer-like regulatory efforts to more effective regional governance mechanisms. Leaving aside what the best regional governance regime would be (the breadth of these regimes , and the underlying states composing them will necessarily differ by policy sphere), the purpose for the federal government in this future is to create a common framework for evaluating competing regulatory efforts, preventing beggar-thy-neighbor, race to the bottom schemes, and most importantly spurring innovation efforts within these regional regimes. Having established proof-of-concept in one area, a concept can be expanded to others, and if it is resilient and adaptable enough to suit the objectives of all relevant regions, and data suggest it is a dominant and superior mechanism or policy, the federal government could then anoint the policy as a federal guideline and demand that States toe the line.
This is vastly different from today, where the federal government attempts to balance competing claims, while operating with imperfect data, and being forced to implement broadly and wait and see what happens.
The reason Obama gives my idea a chance of succeeding is that already some of his reforms embrace these ideas. From PPACA's ACO's and the Independent Payment Advisory Board and the Center for Medicare and Medicaid Innovation, to the Race-to-the-top education guidelines, these programs present subordinate operators with a mandate to innovate, demonstrate results, and be leveraged for the benefit of all. Unfortunately, Obama has larger fish to fry, and many areas of policy do not receive the attention they require. Here is a shortlist of critical policy areas that desperately need federal government guidance:
- State public pension programs
- State law enforcement
- State budgeting processes
- State legal, criminal justice, and rehabilitation systems
- State transportation spending