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Previous versions of Larson’s proposal included two types of tax increases. First, the 12.4 percent Social Security payroll tax, which currently applies to yearly earnings up to $147,000, would be applied to yearly earnings up to $400,000. Because the current law’s payroll-tax ceiling is indexed to wage growth while the new $400,000 threshold would be unindexed, this “donut hole” would shrink each year until eventually, all workers would pay the Social Security tax on all of their wages. This would immediately increase the effective top marginal tax rate on earned income by twelve percentage points, giving the U.S. one of the highest such rates in the world. Prior versions of Larson’s plan also gradually increased the Social Security-payroll-tax rate, from the current 12.4 percent up to 14.8 percent over the next two decades, so every worker, regardless of his salary, would pay more. In return for higher taxes, Americans would receive two things: a Social Security program that was solvent for 75 years or more, and increased Social Security benefits. Under the 2021 version of the plan, however, Americans would receive neither of those things. In a belated acknowledgment of political reality, the plan eliminates the payroll-tax-rate increase that would have hit low- and middle-income workers. This in turn has dramatic knock-on effects. The payroll-tax-rate increase supplied nearly half of the additional revenues in previous iterations of the plan. Without it, the 2021 version would only be able to add four years, rather than 75, to the life of the Social Security trust funds, and instead of being permanent, the benefit increases that Larson has long promised Americans would last only five years and then be repealed in full. While marrying temporary solvency to temporary benefit increases is an obvious gimmick designed to leverage further tax increases down the road, it also presents ordinary Americans with a clear choice: If they want higher Social Security benefits, they’re going to have to pay for those benefits themselves. Larson’s proposal already hits high earners harder than our political system is likely to accept. In fact, almost no developed countries fund their pension systems with an uncapped payroll tax. But even if they proved politically feasible, the increased Social Security taxes essential to progressives’ reform schemes aren’t likely to be popular with voters. Americans already have greater faith in their personal savings than in Social Security. A 2015 opinion survey published by the Investment Company Institute found that 81 percent of Americans were somewhat or very confident that an IRA or 401(k) account could help them attain retirement security. On the other hand, only 35 percent of Americans in a 2016 survey conducted by the Employee Benefit Research Institute said that they were somewhat or very confident that Social Security would pay them benefits at least equal to what today’s retirees receive. A more recent public-opinion survey confirmed Americans’ preferences. Last year, I commissioned a question in the RAND Corporation’s American Life Panel: “Some Americans are concerned about not having enough income once they retire. If you wished to increase your future retirement income, would you prefer to: Pay higher Social Security taxes while working and receive a higher Social Security benefit when you retire? Or make higher contributions to a private retirement account such as an IRA or 401(k) and receive higher income from that account when you retire?” No matter their gender, race, education level, yearly income, or state of residence, strong majorities of Americans responded that they would rather boost their retirement incomes through personal savings than through expanding Social Security. Overall, 74 percent of Americans preferred increasing their personal savings while just 26 percent favored paying more into Social Security. None of this is to say that Americans would react to a Democratic drive to enact the Social Security 2100 Act by embracing benefit reductions over tax increases. As they did in 2005, Americans could simply choose to kick the can down the road and hope that future generations will pick up the tab. But nearly two decades after President Bush’s failed Social Security reform efforts, the amount of time that we can continue to procrastinate has diminished considerably. One lesson from President Bush’s failure to pass Social Security reform, as well as President Obama’s skin-of-his-teeth passage of the Affordable Care Act despite overwhelming Democratic House and Senate majorities, is that it is much easier to play defense on entitlement reform than to play offense. Republicans can likely defeat a Democratic Social Security-reform plan today as easily as Democrats defeated the 2005 Republican plan. Voters don’t generally require a party that opposes entitlement reforms to put forward its own plan; they will reward it merely for opposing the difficult choices inherent in the other side’s plan. The ultimate solution to this problem has to be genuinely bipartisan Social Security reform. Progressives won’t like that, and I won’t like it either — we both want reform to be done our way. But if lawmakers want Social Security fixed and recognize the difficulty of doing anything large on a purely partisan basis, they need to be willing to split the difference. That could mean increasing benefits for low-income retirees, something that policymakers in both parties have suggested in the past. It could mean some increases in the maximum salary subject to Social Security taxes, targeted benefit reductions, a higher retirement age, or tweaks to the formula used to calculate cost-of-living adjustments. It could also mean enacting universal retirement-savings accounts, either through Social Security or employer-sponsored 401(k) plans.

The conventional wisdom about Social Security is profoundly misguided. According to today’s mistaken consensus, the U.S. as a society cannot afford to allocate the money to pay for the present level of Social Security benefits for retirees in future generations. The solution, it is widely argued, is to cut benefits – either directly by means-testing or indirectly by raising the retirement age or allowing inflation to erode their real value over time. In this narrative, tax-favored private savings vehicles like 401(k)s and IRAs should be expanded in order to compensate for the allegedly necessary cuts in Social Security.

This consensus is not only misconceived in its diagnosis but also mistaken in its prescriptions and potentially disastrous in its consequences. Retirement security is often thought of as three-legged “stool” consisting of Social Security, employer retirement plans, and private savings. Social Security has been far more stable and successful than the other two legs of the stool. The reliance on these other legs of the system has resulted in a retirement security crisis for most Americans, shifting costs and risks onto individuals, even as the benefits of these programs go overwhelmingly to upper-income earners. Yet the current debate is arbitrarily restricted to the chief public component of the American retirement system, Social Security.

The purpose of the program is to provide grants for the creation or expansion of full-time or summer youth service or conservation corps programs. Funds may be used to expand an existing program, but cannot be used to supplant existing funds for any program. The Commission interprets the term "expand" broadly to mean the addition of new participants, an increase in the number of hours or weeks during which the program operates, the involvement of an existing program in new types of service, or the improvement of an existing program consistent with the purposes and requirements of the Act. The Commission interprets the term "full-time" to mean a corps operating 30 or more hours per week for more than six months of the year.

Some have suggested addressing Social Security's financial troubles by removing the cap on taxable earnings and massively importing more funds into the program without making any structural changes. As I have argued in the past, this solution is inefficient, ineffective, and unfair. Given that the rich have already been tapped as new revenue sources for the Affordable Care Act and Medicare (and are being eyed for more), putting them on the hook for Social Security's deficit could spur further tax-avoidance behavior, which would reduce the revenues raised from the tax-cap increase considerably below actuarial calculations. And because the employer share of the payroll tax ultimately falls on workers, such a move would constitute a massive tax increase on the middle class. Most Americans earning more than $142,000 are not wealthy, especially if they live on the coasts, have large families, or have high educational or health expenses. Many will have trouble bearing the additional tax burden if the cap were removed. The volatility of personal income over time also renders such a large tax increase unfair. Many workers only experience high earnings temporarily, or at the close of their careers. According to the SSA, almost 20% of current and future covered workers are projected to earn above the taxable maximum during at least one year, and about a third of the future aged beneficiaries projected to earn over the taxable maximum in 2050 will be below the highest shared-earnings quintile. Taxing above the current maximum, therefore, does not mean one is capturing the earnings of only workers with very high lifetime incomes. Finally, as the SSA actuary observes, removing the taxable-earnings cap fills a declining part of the shortfall over time. If any benefits are credited for the increase in the level of earnings covered, the amount covered is even less. Eliminating the taxable-earnings cap would do little to address Social Security's shortcomings — it may even further undermine the program by weakening national productivity growth, savings, and labor-force participation. To succeed on this front, policymakers will need to pursue more meaningful, structural change.

A means-tested benefit coupled with general revenue financing would be far more progressive than the current program, leaving low earners better off on both the tax and benefit sides of the program. But this would also shift more costs to higher-earning households. Since Social Security is underfunded, payroll tax and general revenue financing could conceivably be combined to help fill the funding gap. For instance, general revenues might initially be employed to ensure that no retirees received less than promised under the new benefit formula, even if they had worked most of their lives under the current benefit formula. Over time, as the maximum benefit payable by Social Security is phased down, the costs of the minimum benefit borne by general revenues might be increased and the payroll tax rate reduced when Social Security’s financial health allows. I here outline a specific policy proposal for budgetary analysis purposes. Implementing this proposal would make Social Security solvent and fix shortfalls that the current pay-as-you-go structure created. Emulating Australia’s retirement system, the federal government would provide all seniors with a benefit equal to 28 percent of the national average wage for single retirees and 41 percent of the average wage for couples. Each employee must be offered and enrolled in a workplace retirement plan, which could be either an employer-sponsored plan or a government-sponsored defined contribution plan similar to the Thrift Savings Plan offered to federal government employees. As in Australia, contributions would be set at 12 percent of employee wages. Unlike in Australia, however, employers, employees, and the federal government would split the contributions. Employers and employees would each contribute an amount equal to 5 percent of employee wages. The federal government would contribute an amount equal to 2 percent of employee wages, up to the national average wage. This federal contribution would be funded by reductions in the tax preference for private retirement savings, with a focus on reducing the net preference for the highest-income fifth of taxpayers. Universal retirement-plan coverage and participation would reduce the need for the federal tax preference. Moreover, higher-income households have demonstrated little difficulty in saving for retirement on their own. All these provisions would be phased in, including introducing the minimum benefit, scaling down the maximum benefit that Social Security pays, introducing mandatory retirement-plan coverage and participation, and scaling up the contribution rate, perhaps by starting at 1 percent of employee wages and increasing each year until the 5 percent ultimate contribution rate is reached. Other provisions would also need to be filled out, such as whether and to what degree retirement-plan balances must be converted to annuities rather than being available as lump sums. CONCLUSION The United States needs innovative thinking on a range of public policy issues, including Social Security and retirement savings. Unfortunately, anyone advocating a more focused Social Security program and increased private retirement savings will likely be accused of wishing to “privatize” the program. But Australia, Canada, New Zealand, and the United Kingdom clearly demonstrate ways to address retirement security that reduce budgetary costs and increase private retirement savings while agreeing with our political and economic traditions. Reforming Social Security to focus on low-earning Americans could eradicate old-age poverty while making the program financially sustainable. The nation should reform its private retirement savings system to close coverage gaps and automatically enroll employees in retirement plans. Compared to other public policy challenges facing the United States, such as health care and education, Social Security and retirement savings are eminently solvable—but only if policymakers willingly step up with creative solutions to politically difficult issues.

The point of this review is that however politically sacrosanct US policymakers might consider Social Security’s tax and benefit formulas to be, there are other ways to attain retirement income security that are compatible with the United States’ basic political and economic traditions. Australia, Canada, New Zealand, and the United Kingdom each have fully functioning economies and democracies and provide well for their retirees while structuring their retirement systems differently from the US Social Security program. HOW SOCIAL SECURITY REFORM MIGHT LOOK I construct a Social Security reform plan built on the general philosophies of retirement programs in the four countries discussed above. The reform plan most closely resembles Australia’s retirement savings model while allowing policymakers to make several significant choices regarding the plan’s ultimate structure. In this reformed Social Security program, retirees would be guaranteed a government-provided benefit equal to 28 percent of the national average wage for single retirees and 41 percent of the average wage for couples, as is done in Australia. For 2022, given that the Social Security Administration projects the average wage will be $61,600, this would produce a benefit of $27,720 for single retirees and $33,880 for couples.14 In each case, these benefits are slightly over twice the federal poverty threshold.15 Using 2022 parameters, in which approximately 55 percent of retiree households are married, 45 percent are single, and there are 2.7 workers for each beneficiary, these benefits would cost approximately 8.8 percent of employee wages. On top of this cost would be expenditures for Social Security’s disability and survivor’s insurance benefits. Moreover, the 2022 cost terms would rise to about 11.4 percent of employee wages as the changing demographics gradually reduce the worker-to-beneficiary ratio to two-to-one.16 Policymakers must face two important questions. First, would this base benefit be means-tested? In Australia, the government-provided benefit is subject to a means test that eliminates benefits for roughly the richest quarter of the retiree population, reduces them for another quarter, and leaves them unchanged for approximately half of retirees. A similar means test in the United States would reduce the cost of the minimum benefit by approximately 38 percent, reducing the long-term cost from 11.1 percent of wages to about 7.1 percent.17 However, a means test acts as an effective tax on retirement savings. For that reason, Australia mandates that all employers offer a retirement plan and that all employees must participate, with contributions funded by employers alone at an amount equal to 12 percent of employee wages, up to a maximum annual wage of about USD 178,000. Together, mandatory personal retirement savings and a means-tested government benefit reduce the cost of Australia’s government retirement system.

Proposed Social Security Reforms. Social Security’s deficits are enormous, but policymakers have many reasonable options available to them that, if adopted, would reduce its costs and burdens and improve its value. Those options, along with their associated savings as estimated by The Heritage Foundation’s Social Security Model, include the following: Increase Social Security’s retirement age and index it to life expectancy so that Social Security’s benefits would automatically adjust to reflect individuals’ longer life spans and additional work capacity.12 This would save $32 billion over 10 years and reduce Social Security’s 75-year shortfall by 29 percent. Shift toward a flat antipoverty benefit so that the program could better align its resources with individuals’ needs and help to prevent more elderly people from living in poverty.13 This would save $645 billion over 10 years and reduce Social Security’s 75-year shortfall by 84 percent. Modernize the program’s spousal benefit to account for the fact that most women earn Social Security benefits based on their own work history. This would save $2 billion over 10 years and reduce Social Security’s 75-year shortfall by 3 percent. Use the chained consumer price index (CPI) for Social Security’s benefit calculations to provide a better adjustment for inflation. This would save $12 billion over 10 years and reduce Social Security’s 75-year shortfall by 11 percent. Reduce the payroll tax to give workers more choice in deciding how to spend or save their earnings. Savings. Collectively, these changes would reduce Social Security’s costs by $681 billion over the next 10 years and cover 126 percent of its 75-year financial shortfall.14 In the long run, these changes would make it possible for Social Security’s payroll tax rate to be reduced by 14.2 percent, from 10.6 percent to 9.1 percent. Social Security Reform: Benefits for Workers and Retirees. These changes would not just solve Social Security’s financial shortfalls, however. They would also make workers and retirees better off. By targeting Social Security’s resources to those with the greatest need, the program would eventually require less of workers’ paychecks. This would enhance the ability of Americans to meet their financial needs throughout their lifetimes, accumulate significantly greater personal savings, and decide for themselves how best to use their own money.

The basic elements of program reform flow naturally from the financial and social developments just described. Consistent with the historical rate of increasing longevity and rising labor-force participation at older ages, the normal retirement age should be raised by one month every two years. This rate of change should also apply to the early retirement age and the maximum claim age (currently 70), as well as the eligibility ages for old- and disabled-widow benefits. As I have explained more fully elsewhere, the adjustment factors for early and late claiming of retirement benefits — which depend on the age when benefits are claimed — are seriously out of date, as both interest and mortality rates have declined since the rules were designed and put into place. Moreover, the rules are inconsistent among categories of beneficiaries — workers, spouses, and widows and widowers — in terms of age ranges and fair adjustment factors. Under current interest and mortality rates, the early retirement reduction for workers should be about 16% lower than current factors. Reducing the early retirement penalty would generally favor poorer and minority populations, who typically claim earlier and have higher than average mortality rates. Delayed retirement credits should be about 6% lower, disfavoring high-income and educated workers who generally claim late. The appropriate dynamic system for shifting the adjustment factors annually is a five- or 10-year moving average for continuous changes to the adjustment factors, which would remove unusual volatility. Policy logic also supports consistency in the factors across beneficiary categories as well as age ranges: Given higher life expectancies and longer working lives, 62 to 72 is now an appropriate initial age range for benefit claims. The basis for the cost-of-living adjustment needs to change as well. The current consumer price index (CPI) for urban wage earners is based on a shrinking data set, and does not reflect the substitution of lower-priced goods and services for higher-priced ones quickly enough. Policy should instead employ the chained CPI for all urban consumers. Social Security benefits should be taxed in a manner consistent with employer-provided pension income, and the existing lower-income thresholds should be phased out over the next 20 years. The resulting increase in income-tax revenue should be transferred to the trust funds. To achieve more fairness among different types of workers, those with at least 45 years of earnings and still working should be exempt from the payroll tax (both employee and employer shares, as well as those of the self-employed). If a worker achieves the 45-year mark before reaching full retirement age, his disabled-worker insurance status should be maintained. To measure a full working career more accurately and fairly in modern times, the number of earning years used to calculate benefits should be raised from 35 to 40 over the course of 10 years. The confusing retirement-earnings tax imposed on earnings above minimal amounts before the full retirement age should be eliminated, as it discourages work. (It was adopted during the Great Depression, when the government wanted to open up positions for younger workers.) Finally, all new state- and local-government workers should be covered by Social Security. As I will explain below, workers currently exempt should be subject to new, more accurate, and more administrable offset-adjustment factors for any Social Security benefits they may have earned. While maintaining survivors' benefits as is, policymakers should eliminate spousal benefits over time. Earnings sharing should be instituted gradually, whereby the earnings records of married individuals are combined and split equally for each year of marriage for the purpose of calculating each individual's Social Security benefit. In the case of multiple marriages and divorces, the sharing should occur with different spouses over the individual's lifetime during each period of marriage. Because the SSA does not have contemporaneous marital data, this change will be administratively challenging for the agency for the time being; however, it does have plans to obtain such data from the states in order to adjudicate Supplemental Security Income (SSI) claims more effectively. To account for increases in earnings inequality, the earnings above the taxable maximum should be removed from the calculation of the average wage index used to adjust the worker's historical earnings record to account for annual wage inflation. Alternatively, the agency can use the median amount. To make Social Security sustainably solvent without levying new payroll taxes, an additional benefit-element adjustment will likely be necessary. Scheduled increases in benefits should be slowed for those under age 61 by applying an annual multiplication factor to their scheduled benefits for as long as necessary to achieve solvency.

Third, and finally, a federalist system of competitive innovation and experimentation is a two-way street: laboratories, after all, can produce "Frankensteins." The inevitable competition among states and cities, which experiment with tax cuts, subsidies, and other incentives to boost local employment by encouraging businesses to (re)locate within them, may culminate in a catastrophic "race to the bottom."104 Domestically, it may deprive local governments of critical tax reve¬nues and degrade public safety, transportation, education, and other public goods (see Chapter 2). Even arguably successful state experimentation in the form of, say, generous unemployment support, adjustment assistance, in-state tuition sub-sidies, or healthcare benefits might attract an influx of immigrants, overwhelm¬ing state resources. When states confront a problem that they cannot realistically address on their own, the case for federal action is greater. Erwin Chemerinsky points to the example of child labor. Because of lower labor costs, businesses in states that permitted child labor enjoyed a competitive advantage over businesses in states that prohibited it. The latter were therefore subject to pressure to repeal the prohibition.105 Many foreign affairs issues resemble child labor insofar as they exceed the capacity of states to act effectively and in conformity with the public good; the problems at issue therefore require federal attention. Unlike many of the local issues that fall within the rubric of traditional state functions106—such as education, crime control, zoning regulations, and public safety—foreign affairs issues ordinarily call for uniformity, not diversity, in approach.

Our third concern arises from the proclivity of states to undermine our national government's conduct of foreign affairs. When the states adopt their own foreign policies, they may sow confusion in the international arena as to our nation's stances. This problem can manifest in numerous ways. The federal government may adopt a foreign policy and assure the international community of its commitment to it. But dissenting states may act at cross-purposes to that federal policy. For instance, the United States policy towards Taiwan (the Republic of China) is a study in nuance and opacity. n35 The idea is to say the minimum that satisfies the People's Republic of China (namely, that there is one China and that we recognize the People's Republic), while not wholly abandoning our longtime ally, Taiwan. n36 But suppose that individual states, including [*56] California, New York and Texas, decided to recognize Taiwan and its pretensions to sovereignty over the mainland. n37 And imagine further that such states sought to favor Taiwan, adopting policies that enraged the People's Republic. Can anyone doubt that these states could hazard our nation's relations with China, leading to heated rhetoric, trade wars, or--more troubling--real ones? Even when states and the federal government have the same general stance toward some foreign matter, seemingly minute differences can generate significant problems. Consider the events leading up to Crosby v. National Foreign Trade Council. n38 In response to Burma's suppression of dissenters, Massachusetts barred state agencies from making purchases from almost any company doing business in Burma, a rather sweeping law. n39 Congress subsequently enacted a more restrained federal response to the suppression, creating some bars on foreign aid and delegating authority to the president. n40 Using that authority, the president barred U.S. persons from investing in Burma. n41 The resultant mess left members of the international community annoyed and flummoxed. The state law threatened to derail effective multilateral diplomacy because, by penalizing foreign companies for doing business with Burma, it effectively punished other nations as well as Burma. n42 Many of our allies formally expressed their displeasure--some even filed complaints with the World Trade Organization alleging that the state act violated international trade agreements. n43 As the European Union (EU) complained in its Supreme Court amicus brief, the state law "created confusion about [*57] which entity speaks for and acts on behalf of American interests." n44 Moreover, the EU explained, such laws "greatly increase the difficulty of the U.S. Government to speak consistently and with one voice [in] foreign affairs." n45

Our second concern is related to the first. Because the states are ignorant, they are prone to offend and inflame foreign nations. States can provoke already hostile or unfriendly regimes, making fraught relations worse. Recall Rudolph Giuliani's ouster of Yasser Arafat from the Lincoln Center, a decision that, to us at least, reflects a certain naivete, namely a failure to appreciate the need to sometimes treat parties that have American blood on their hands with respect. n26 Enemies can, through time and a convergence of interests, become partners, as happened with Germany and Japan. States also can embarrass allies, damaging relationships the federal government has [*55] nurtured over time. For example, dozens of states have denounced the genocide of Armenians. n27 In contrast, the federal government has refused to use that precise word in order to avoid upsetting Turkey. n28 President Obama's decision to refer to "atrocities" instead of "genocide" in a speech commemorating the victims reflects longstanding federal policy and a concern for Turkish sensitivities. n29 Or consider the state legislation at the heart of Arizona v. United States. n30 Arizona made it a crime for unauthorized aliens to work in the state, and it empowered police to arrest persons who they had probable cause to believe were in the country illegally. n31 The law prompted Mexico to take the unusual step of filing an amicus brief in the Supreme Court. n32 In that brief, our southern neighbor explained that the law "caused long-term harm to Mexico-U.S. relations." n33 Suggesting that the federal government agreed with that assessment, an American diplomat conceded to the Chinese that the Arizona statute was a human rights debacle. n34

Second, the relevance of the efficiency rationale in foreign affairs is equally questionable. It is not at all clear that the geographic proximity of the government to the governed promotes efficiency or any other benefit in foreign relations. Phone, email, videoconferencing, and other technologies often provide ample effective channels for both formal and personal exchanges. It makes little apparent difference whether the relevant official on the computer or phone sits in Washington, DC, rather than Springfield, Albany, or Carson City. Furthermore, specialization and division of labor can promote efficiency. Specialists in foreign affairs generally work for the federal government. Washington has comparatively far greater resources and capacity than the states to undertake the many tasks required for the sound conduct of foreign affairs. The federal government includes, and this is by no means an exhaustive list, the Foreign Affairs, Armed Services, and Intelligence Committees of Congress; the Departments of State, Defense, Treasury, Justice, and Homeland Security; the Central Intelligence Agency, Federal Bureau of Investigation, and National Security Agency; and many other institutions and bodies devoted in whole or part to foreign affairs. Federal departments, institutions, and agencies of this sort house and benefit from centuries of institutional memory, terabytes of data, and thousands of employees armed with education and experience in virtually every aspect of foreign policy. That they often err does not suggest that states and cities would necessarily do better. The states possess more limited resources and expertise in most relevant respects. And the federal government’s remoteness from citizens in comparison to state governments may well be a virtue vis-a-vis foreign relations. Distance, both literally and figuratively, from the local concerns, interests, and at times parochial views and prejudices of particular state constituencies, cultivates greater detachment, balance, and providence—all of which tend to foster a more sensible, long-term foreign policy.

2. The Danger of Retaliation against the Entire Nation Above all, however, the Framers stressed a concern at the outset that continues to be politically relevant today: "that the peace of the WHOLE ought not to be left at the disposal of a PART," for "[t]he union will undoubtedly be answerable to foreign powers for the conduct of its members."107 State involvement in the international realm risks conflicts with nations that may retaliate—economically, militarily, or otherwise—against the United States as a whole.108 For the Framers, this was no hypothetical danger. Their experience under the Articles of Confederation underscored the very real threats and concrete retaliatory conduct, including war, that state disregard of national treaty obligations had provoked. Since 1789, the Supreme Court has consistently echoed the same concerns. In 1832, in Brown v. Maryland,109 the Court struck down a Maryland law that required licenses for certain imports, emphasizing that the state law at issue could spark disputes with other nations. "What answer," Chief Justice Marshall asked, "would the United States give to the complaints and just reproaches to which such an extraordi¬nary circumstance would expose them? No apology could be received, or even offered."110 It is one thing, the Court has suggested, for a state to expose itself to the risks of conflict with a foreign power, but it is quite another to arrogate to itself the power to expose its fellow states to those risks. Hence, in the same vein, the Court in 1875 struck down a California law that in effect regulated immi¬gration, and by implication, commerce with foreign nations. The injured nation could not direct a claim for redress to California, the Court observed, because California could: hold no exterior relations with other nations. It [the foreign claim] would be made upon the government of the United States. If that government should get into a difficulty which would lead to war, or to suspension of intercourse, would California alone suffer, or all the Union?111 A century later, in 1979, California imposed an ad valorem property tax on foreign-owned cargo containers. The Court again invalidated the state law, mind¬ful that the "risk of retaliation by Japan ... [was] acute, and such retaliation of necessity would be felt by the Nation as a whole."112 The Court's concerns in this regard are now embodied in the so-called "one voice" doctrine—a putative requirement, inferred from the Constitution's text and structure, that the nation speak with one voice in the realm of foreign affairs. The one-voice doctrine often reflects a reasonable national interest in bolstering the efficacy of American foreign policy. The national interest sometimes benefits from at least the appearance of national unity and popular support. Open conflict between the federal and state governments on key foreign policy questions can undermine national foreign policy objectives. Of course, sometimes the foreign policy of the federal government is less than clear. Yet the federal government’s silence with respect to a particular issue of foreign policy does not neces¬sarily imply an absence of a federal policy. Still less does it indicate that the states should feel free to enter the field. Federal silence, inaction, or ambiguity may be calculated. Sometimes the best policy is to do and say nothing, or deliberately to attempt, with nuance, to leave national policy unclear.113 But the question is whether the doctrine has been expanded beyond the limit of its logic.114

the state with some marginal benefit (e.g., [*785] investment or trade opportunities) that impedes the realization of collective goods by the United States. n303

I. Cacophonous Foreign Affairs The case against state involvement in foreign affairs is easy to make. States are unqualified to act in the international arena because they lack the information and the expertise that comes from continued and sustained engagement in foreign matters. Because of their ignorance and inexperience, states are apt to anger allies and undermine the actions and priorities of the more expert federal political branches. Those untutored in foreign matters should not be suffered to hamper those more informed and skilled, however good the intentions of the former. Further, the international ventures of state officials run counter to popular expectations. Voters expect that local officials will stick to local matters and that federal officials--senators, representatives, presidents--will steer our nation's diplomacy. In sum, foreign affairs federalism, as it operates today, imposes substantial costs and renders the United States disunited before the world. Some scholars disagree with our diagnosis. A few of them claim that state intervention generates weighty benefits. Others suggest that the drawbacks of state freelancing are insignificant, or are manageable. We disagree. This Part highlights the drawbacks of state involvement in foreign affairs. It then maintains that the supposed benefits of many voices in foreign affairs are illusory.

At the beginning of the 21st century, federalism once again proved its resilience as an important form of government and ideological dispensation. This is despite recurrent scepticism about its desirability and appropriateness in a globalising world. In the period prior to World War II, some scholars doubted its relevance in an industrialising society. Harold Laski epitomised scholarly scepticism of the period. He in 1939 said, ‘[T]he epoch of federalism is over’ because of ‘its compartmentalizing of functions, legalism, rigidity and conservatism… [which made it] unable to keep pace with the tempo of modern economic and political life that giant capitalism had evolved’ (cited in Watts 2001: 2). Federalism emerged as an important instrument of nation/state building after the collapse of European colonial empires in the immediate post World War II period (Watts 1994a: 2). In this respect, many post-colonial multi-ethnic countries of Asia and Africa adopted federalism.1 Even if several of these federations failed in their infancy, the role of federalism in balancing the competing and perhaps conflicting demands for autonomy and unity in such countries as India, Malaysia and Nigeria could not be doubted (Rothchild 1966). Since the end of the Cold War, federalism once again emerged into the spotlight because of two contradictory developments. First, the disintegration of the socialist federations of the USSR, Yugoslavia and Czechoslovakia refreshed doubts about stability and durability of multiethnic federations. The continuing standoff in Canada over the question of Quebec’s independence and the frequent political stalemates that characterise federal Belgium strengthen uneasiness about the stability of multi-ethnic federations. Second, in spite of these problems, politicians used to reconstitute multiethnic countries through federalism after the collapse of authoritarian regimes and centralist nation-building projects. For instance, international powers imposed federalism to reconstitute Bosnia-Herzegovina after a bitter war and genocide that accompanied the disintegration of Yugoslavia. Russia adopted federalism to maintain what is left of the Soviet Union. Ethiopia adopted ethnic federalism in 1991 after the end of military dictatorship. Recently, the American led international forces caused the reconstitution Iraq as an ethnic federation following their invasion and occupation of the country in 2003. There are also calls for a federal arrangement for such countries as Sri Lanka and Somalia that were torn apart by decades of bitter conflicts. There is, therefore, a growing interest in the use of federalism as a way of managing ethnically diverse countries. In ethnically divided countries, the hope is that political recognition of cultural and ethnic pluralism through federalism reduces ethnic tensions and conflicts. That is why federalism has been presented as a compromise between ethnicnationalism, which like nationalism in its classical form advocates congruence between nations and states (Gellner 1983: 1; Hobswam 1990: 9), and assimilationist centralization by dominant ethnic groups in multiethnic countries.

Theorists of popular constitutionalism observe that behind Court decisions is a public will; the Court may validate or express vaguely formed public impressions.15 Underlying social pressures and approval, manifested, for example in social movements or elections, may create an environment where it possible for the Court to make pivotal decisions. Small policy adjustments, or new ideas circulating in political discourse, may not alter the distribu¬tion of authority in any significant way, but these first steps give the public a way to shift its perception about the appropriate distribution. They lay the groundwork for bigger, more formal change. Seen this way, major Court decisions or legislative acts—those described as "pathbreaking"—are nearly inevitable once cultural shifts lay the groundwork. The direction of change was already set by cultural forces, and the only question is how far and how quickly the Court will push the federation in a new direction.

Undeniably these shifts in doctrine are meaningful, but that does not imply that the Court is responsible for shaping American federalism. As the reference to Republican appintees should make clear, the Court reflects important changes in the American political system, including the election of Republican presidents far more antagonistic to expanding national power than Democratic presidents since Franklin Roosevelt. It is inaccurate to infer that the Court is exclusively—or even primarily—responsible for shaping American federalism. Instead, other forces may lay the groundwork, with the Court finishing a process begun in other arenas, by other agents.

Popular safeguards—the capacity of the public to enforce the distribu¬tion of authority—accords with the intuition of a wide array of federalism theorists that the ultimate force shaping federalism is the existence of a fed¬eral culture.16 The Framers repeatedly mention the ultimate backstop to the federal bargain would be "the people themselves". In wrapping up the Federalist, Hamilton mentions not the courts, but the people as those who would determine whether authorities had been overreached, for example in determining whether a tax was appropriate (Rakove 1996).17 Despite its theoretically-acknowledged importance, these popular safeguards of federal¬ism are elusive. There exist few attempts to measure them (but see Kam and Mikos 2007 and Cole and Kincaid 2006 and their subsequent surveys). The safeguard emphasized most memorably in the Federalist is structural: fragmentation of national powers and the incorporation of the states in to the federal government's decision-making (making it both federal and national).18 When the federal government's legislative power is separated by bicameralism and checked with an executive veto, policy approval must meet multiple majorities. When states appoint delegates to the federal legislature, federal encroachment is further inhibited. These formal elements of struc¬tural safeguards are most apparent, there are important informal channels as well. Riker (1964) promoted the potential of the party system to prevent cen¬tralization. The party system connecting political organizations and candi¬dates can be an important safeguard of the authority boundary. Political parties create interdependencies between local, state, and federal politicians, what Filippov, Ordeshook, and Shvetsova (2004) refer to as integrated parties. Federations with integrated party systems will see greater respect for the boundaries of federalism than those with disjointed party organizations because when a politician is dependent on his or her party, she is less likely to pursue policies that would damage the interests of politicians at other levels of government. In addition to the judicial, structural, political, and popular safeguards, states work informal channels, private and public, to press their interests as Congress writes laws, activity that was celebrated by Columbia law pro¬fessor Wechsler (1954) and has received much more attention from political scientists in recent federalism scholarship.19 The early input from the states reduces the extent that federal legislation oversteps its boundaries. Nugent (2009) decisively documents the way that states actively monitor, lobby, and often help to craft legislation. Ryan's study of environmental law (2011) supports Nugent's findings; she argues that federal-state bargaining is suf¬ficiently robust that the courts should limit their "safeguarding" activities. Dinan (2011) perceives a similar pattern with regard to the construction of the Affordable Care Act: states provided expertise, used their congressional delegations to threaten to block passage until they achieved desired com¬promises, and when needed, turned to the public to press federal officials to incorporate state demands. The co-decision-making blurs boundaries of responsibility, making it more difficult for voters to hold their representatives accountable (Bednar 2007). Depending on the channel used, states may work through structural safeguards (when they are incorporated into decision-making), political (when they work through their party organization), or popular, when they rally their own publics to contradict national action. And in some cases, their actions fall into a separate class of safeguards: intergovernmental retaliation, sometimes leading them to cooperate with one another in a collective de¬fense, as revealed by Woods and Bowman (2011), sometimes spurring them to push the boundaries of their own authority when they are displeased with the federal government's actions (Arizona's immigration policies, California's environmental standards, Massachussetts' health insurance policy). Indeed, one can find revivals of seemingly discredited arguments in behalf of state "nullification" of offensive national legislation or even threats to secede from an overbearing Union.

Examples of uncooperative federalism abound. For example, red states and blue states alike objected to some of the PATRIOT Act’s expansive surveillance and detention rules as an attack on civil liberties. Rather than just complaining, they instructed their officials not to collect or share certain information with the feds unless the actions accorded with the states’ constitutions. Or consider marijuana. Federal dependence on the states is so pronounced in criminal law that Vanderbilt law professor Robert Mikos has argued that states can “nullify” federal marijuana law by withdrawing enforcement resources. Colorado and Washington have already done so. These changes may be entrenched enough that even Jeff Sessions’s marijuana-hostile Department of Justice won’t be able to change the equation. On other occasions, states have avoided a head-on confrontation with the feds and instead waged wars of attrition. For example, consider the response to the No Child Left Behind Act, perhaps the centerpiece of George W. Bush’s domestic policy. States accepted the federal grant money, but slow-walked reforms and often fudged testing standards. Their recalcitrance won out: The Bush Administration gave up and granted states so many waivers that they effectively gutted the federal program. The war has continued with the Obama Administration, which has struggled to rope states and localities into cooperating with its education agenda.

Let us start with the null hypothesis that state policy activity and the content of the Congressional hearing agenda may well be unrelated to each other. Or rather, given the findings by Baumgartner, Gray, and Lowery (2009) that national attention to issues does influence policy activity in the states, the relevant null hypothesis is that the converse may not be true. Certainly, despite ever more rapid diffusion of policy innovations, not all states focus on the same issues at the same time (Gray et al. 2005). Thus, it is not obvious that the states as whole might influence the national policy agenda in a systematic manner. And even if state agendas moved together in lockstep, much of what attracts the attention of state legislators may well not be what concerns their national counterparts. This would be especially true for a number of issues that are mainly influenced by national policy or on the other hand mainly by state policy. State attention to corrections policy, for example, may be partly related to federal concerns, but the states are the primary force behind corrections policy whereas the federal role is very limited. The reverse is true with regard to other policies of broader national concern, such as nuclear proliferation. Thus, different policy areas of concern to the states feature more or less involvement of the federal government. This might well suggest that, at best, we should expect a more limited impact of state policy activities on the distribution of federal attention to issues in those areas where the states play relatively little role. And last, given Baumgartner and Jones’ (1993) punctuated equilibrium model, legislative agendas are quite sticky, changing only periodically and with some difficulty. If so, then it is not clear that the national policy agenda would respond in anything close to a contemporaneous manner to activity at the state level. For example, the collapse of President Clinton’s national health care proposal in 1994 arguably did lead to greater state attention to health care, but this developed rather slowly over several years as the realization that the national government was, at least for a time, out of the health care game (Gray, Lowery, and Godwin 2007a; 2007b). In sum, there are plenty of good reasons to not expect to find a strong relationship between levels of state policy attention and such attention at the national level.