Progressive Federalism

Progressive States Network has regularly detailed the mounting attacks on and preemption of state policy by the federal government in recent years.  The incoming Obama administration is signalling that many of the Bush-era regulations restricting states may be reversed.

There are stark differences between the two presidential campaigns' approaches to federal-state relationships.  Differences range from the amount of funding appropriated for programs run by the states to whether the candidates would strengthen or weaken state regulatory authority.

The new federal mental health parity law, passed as part of the recent $700 billion financial bailout package, is a real piece of help for families around the country. Even better, the law will not preempt stronger state parity legislation. The law will help states achieve their parity goals because it applies to self-insured health plans which are not subject to state regulation.

In a case with national implications for state health reform across the country, the Ninth Circuit Court of Appeals this week in Golden Gate Rest. Ass'n v. San Francisco upheld the employer responsibility provisions of the San Francisco universal health care plan.  The decision follows a preliminary decision earlier in the year that allowed the plan to be initially implemented.

According to The Wall Street Journal, "Fed and Treasury officials have identified the disease. It's called de-leveraging, or the unwinding of debt. During the credit boom, financial institutions and American households took on too much debt."  But let's not buy into a false equivalence of "financial institutions" and those "American households" borrowing beyond their means.

As the Supreme Court marches to the Right, corporate interests continue to thrive at the expense of state regulatory powers.  "This has been a very successful year for the business community," said Miguel Estrada, a Washington appellate lawyer who represents many key corporate interests before courts in Washington, D.C."  This session at the U.S. Supreme Court, as this Dispatch will highlight, had an almost uniform tilt towards business versus state regulatory authority.  In other areas like election law, the tilt was against poor voters who faced restrictions on their right to vote, though the term was a more mixed bag on criminal justice and other issues before the Court.

While the financial crisis developed over a number of years in the subprime mortgage sector, federal regulators were asleep at the wheel as greedy lenders often took advantage of working families.  Worse, when states tried to step in with new state policies to tighten oversight of predatory lenders, federal officials blocked those state consumer protections, making the effects of the meltdown even worse for families. 

In one more example of lax federal agencies being empowered to block tougher state protection of consumers, the Supreme Court ruled yesterday that states are barred from protecting consumers from faulty medical devices, such as breast implants, if the Federal Food and Drug Administration (FDA) has already approved those devices.

States are facing hard budget times this year, with twenty states facing a combined budget shortfall of at least $34 billion for 2009 -- and the President's proposed budget would not only make them worse, but would disproportionately hurt many of the most vulnerable populations in the country.