New York and other localities should be cautious about stepping into the many breaches created by the Trump administration.
What should cities do when the federal government disavows its traditional duties? The question becomes more urgent as the Trump administration withdraws from climate change agreements, eliminates environmental protections, reduces support for science and technology, limits protections for legal immigrants, cuts federal grants that support public services, and shrinks redistributive programs like Medicaid and Head Start. The instinct of some cities is to fill the gap with increased local spending even in areas that fall outside the traditional local domain. Notwithstanding our sympathy with those efforts, we fear the consequences of attempting to address a reduction in the federal “lane” by expanding the local one.
The underlying message of federalism is clear: The feds rightly have responsibility where the benefits of government intervention are clearly national in scope, like national defense or macroeconomic stabilization policy, while local governments should control public goods and services that have an impact in a much smaller geographic area. Politics and law reflect these principles and to some degree define the limits of each government’s responsibilities. Mayors are largely judged on their delivery of core local services rather than their positions on inflation or support for NATO. (And Gov. Hochul appears to agree.) Presidents are held accountable for foreign policy, not sanitation. Constitutions, preemption doctrines and courts help define the scope of congressional and city council authority.
Still, the boundaries are inherently ambiguous, so even in “normal times” each level of government may justify some intrusion into another’s domain. Political differences may induce cities to challenge a federal policy, or the feds to displace localities in an area to which each has a plausible claim. Limits on policing in sanctuary cities sit in uneasy tension with federal immigration policy. Federal prosecutors may usurp the local district attorney’s ability to seek punishment for the same conduct.
But the boundaries have gotten especially muddled as the Trump administration has defunded activities with implications that transcend local boundaries. Should New York City fund health care alternatives for the more than 200,000 New Yorkers who have lost access to state-provided health insurance due to Medicaid reforms? What about City funding of local universities to compensate for reduced federal support for science and technology? The benefits of City intervention into these areas could largely accrue to city residents. But they would also accrue far beyond the city’s jurisdiction, so the City would effectively be funding benefits for residents of other jurisdictions, who don’t pay city taxes. Conversely, in the face of federal withdrawal, City inaction might mean important public goods go wanting.
Some commentators are sanguine about the capacity of cities to fill the gap left by a withdrawing federal government. Benjamin Barber considered cities acting individually or cooperatively to be the remedy for dysfunctional nations along a number of dimensions, including democratic practices, climate change and the fight to reduce inequality. And large, economically powerful cities like New York may have the capacity to provide services at scale that replicate federal functions, at least within a limited area. At the very least, city residents may appreciate the warm glow of feeling that they are doing what they can to try to achieve policy outcomes that they strongly support. Local government, after all, is a valuable forum for civic engagement and education.
While we share concerns about recent federal retreat from those policy areas in which centralized governments are the most effective providers of public goods, we are skeptical about the consequences of city attempts to fill the gap. Our hesitation is rooted in two limits that cities face. First is simply the practical point that cities cannot do much to address problems that transcend their boundaries. Katrina Wyman and Danielle Spiegel-Feld provide a wonderful example in their recent book on New York’s attempts to respond to the Trump-era withdrawal from the Paris Accords and the minimization of greenhouse gas emissions. Even a city as large and wealthy as New York contributes only a small share of global greenhouse gases; complete elimination of New York’s emissions would not make a serious dent in the problem of climate change.
Of course, if local signaling of support for a policy were costless, even its ineffectiveness would not necessarily be an obstacle to city engagement. But that leads to our second source of hesitation before endorsing local action — implementation of consequential policy is never costless.
Cities face relatively hard budget constraints, both practical and legal. At best, ineffective expenditures can crowd out investments in infrastructure, high-quality local public goods and redistributive policies that could tangibly improve the city. At worst, the costs of city efforts to fill gaps left by federal withdrawal can balloon and have a host of unintended negative side effects by causing activities to locate outside the city. New York City’s effort to reduce locally produced greenhouse gases may raise city costs and provide incentives for businesses and households to relocate to less dense areas where their emissions may actually be higher.
This does not mean that cities are incapable of contributing to solutions to national problems. It just means that the local “lane” must be defined to include those areas in which the city has some advantage. Local efforts to adapt to climate change by addressing localized effects (e.g., seawalls or raising homes within floodplains) will be more successful than efforts to mitigate climate change.
As noted recently in Vital City by Sherry Glied, pursuit of affordability is similarly a mixed bag. While the overall inflation rate and the aggregate rate of economic growth are much more susceptible to federal monetary and fiscal policy than they are to any specific city’s choices, there are affordability realms in which cities can play a constructive role. The most prominent is housing, where local strictures on building and redevelopment have reduced supply and raised prices. Federalism theory, local law and politics, and economics all point to addressing this problem at the local level.
On the broader question of local redistribution to compensate for federal failures, we are more aligned with those concerned that too much progressive taxation or spending financed by the rich to benefit the rest is risky. No one knows exactly how far local redistribution can go, or exactly its effects: the propensity of millionaires to move to avoid high taxes is controversial. But few would doubt that redistribution is more costly at the local level than the federal, and we will get less of it if we leave to cities the imposition of redistributive taxes that don’t confer discrete local benefits. Medicaid and Head Start and nutrition assistance cuts by the feds can’t effectively be replaced by city governments.
New York has been here before. The City’s attempt to lead the nation in providing high levels of redistributive services in the 1960s ultimately contributed to the city’s fiscal crisis of the 1970s as those in need of assistance migrated from other jurisdictions and residents who paid the redistributive taxes departed, ultimately resulting in a bankrupt city and the immiseration of those left behind. New York currently faces a budget challenge that has helped keep it away from going down this path again, but it’s important that the City stay in its lane even when the fiscal picture brightens.
It would be nice to think that cities, the engines of so much productivity and creativity, can perform any task as well as any other level of government. But there is a rationale to multilevel governmental systems, and respect for the existence of boundaries among those levels is likely to provide better overall services than the “go it alone” alternative.
