- The Washington Times - Friday, January 2, 2009




As the list of suitors for assistance under TARP (Troubled Assets Relief Program) grows, there is considerable evidence that the nation’s preoccupation with the economic side of the current financial crisis is obscuring an important formal dimension of the constitutional system fashioned by James Madison and other leading Founders - namely the federal nature of the American republic.

The Founders opted for a governmental arrangement that divided power among different levels of government, and then again within those governments. They viewed such an arrangement as being good for liberty and for competent governance.

State and local officials bellying up to the federal bar for assistance would have us believe there either is no difference between allocating national resources to preserve the integrity of the banking system and allocating such resources to cover the day-to-day obligations of the states and their subdivisions, or that the latter actually is more meritorious than the former.

In point of fact, insuring the health of the nation’s financial infrastructure falls much more naturally to the federal government under the Constitution than insuring the solvency of salary and fringe benefit contracts that are weighing down many states and localities.

Leaving aside the prudence of last fall’s intervention to stabilize the financial system and loosen credit markets, Congress’ authority to regulate interstate commerce, and preserve the health of the national commercial system, supplies good constitutional support for the actions that have been taken by the Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corp. to restore public trust in the financial system.

No similar constitutional argument can be made for federal assumption of obligations that historically have fallen under the states’ police powers: law enforcement, public health/welfare, recreation, and education.

Not only does the Constitution provide little support for much of the aid now sought by governors and local officials from New England to California, but such assistance threatens to weaken a fundamental structural feature of Madison’s “partly national, partly federal” system. His “compound republic” was carefully designed to nurture and protect fundamental liberties while supporting competent government.

The Founders understood that the real home of democracy or self-government is in the localities and the states where people have a genuine shot at managing their own affairs. Local self-government is the nation’s principal nursery when it comes to cultivating good habits and sound opinions. If people believe they have little or no control over programs and services that touch them most directly, or if they believe they can pass along the ill effects (including the costs) of their decisions, they either will withdraw from the public arena or adopt a dangerous “free rider” mentality.

It is not surprising that fear and insecurity are prompting many Americans to plead with federal officials to adopt remedial measures designed to dull the pain of the current financial crisis. At least some of the actions that they seek, however, are consistent with a unitary or consolidationist system of government, not a federalistic system.

These pleas would not have surprised Madison and, indeed, he understood that people will tend to consult their short-term interests in times of crisis. It is for this reason he argued for a representative democracy with devices for “refining and enlarging” the views of the people. Representative legislative institutions - local, state and national - were among the most important of these devices. The independent judiciary was another.

Madison, who was in the civic education business as well as the institution-building business, understood that the burden for cultivating and preserving a civic culture that would support the great aims of the new constitutional republic would pass from generation to generation. Chief Justice John Marshall understood this as well as any of the early Founders, and so his opinions were crafted both to protect governmental powers and institutions as well as to educate public opinion. The Supreme Court will have an opportunity to emulate Marshall later this term in a federalism-related case involving Hawaii’s power to make fundamental decisions regarding its own lands. Members of the Obama administration and new Congress will have that opportunity in a few weeks.

The American federal system has weathered severe challenges in the past. The fact it has done so, however, does not diminish the severity of the threat that federalism faces at this moment. This would not be a good time for the friends of liberty and competent government to let down their guard. All the resources of Madison’s republic will be needed to preserve the health of the federal system as the consequence of the financial crisis reverberate from Wall Street to Main Street.

Madison’s political writings are all about harnessing private interest in the service of the general good. He believed self-government, properly construed and thoughtfully arranged, is defensible on the dual grounds of satisfying human ambitions and enriching human existence. His defense of the federal system cannot be separated from his defense of self-government. The American federal system was not valued by Madison as an end in itself, but as a means for “securing the blessings of liberty to ourselves and our posterity” and for promoting “justice” and the “general welfare.” Policies that weaken the federal system inevitably threaten the noble objectives of the Founders’ experiment in democratic republicanism.

David Marion is Elliot Professor of Government and director of the Wilson Center for Leadership in the Public Interest at Hampden-Sydney College.

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