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Devolution of Power: Rolling Back the Federal State

William. Kovacs

March 2024

Devolution of Power: Rolling Back the Federal State

In my new book, Devolution of Power: Rolling Back the Federal State to Preserve the Republic, I address a question more and more citizens are asking: Can a distrusted federal government unite and govern this polarized country? If not, how do we divide?

Readers should not quickly dismiss the idea of devolving federal domestic powers to the states. First, the federal government is de facto bankrupt. Within a decade, it will be forced to substantially reduce or eliminate the subsidies it gives states to implement over a thousand programs the federal government lacks the constitutional authority or resources to implement. The loss of state subsidies will be the catalyst that ignites the devolution of federal powers to the states.

Second, the federal government and the states had a workable power-sharing relationship until the Great Depression. Moreover, until the early 1900s, the collective budgets of the states were larger than the federal government, and states managed most of the nation’s domestic policies. Since 1980, however, there has been a massive explosion of federal power, evidenced by the fact that 97% of the national debt has been accumulated under the last seven presidents. For the federal government to again be a viable governing entity, it must shrink itself so it can competently manage the essential needs of the nation.

If it is constitutional for the federal government to accumulate power by taking it from the states, it is constitutional for the federal government to return many of these domestic powers to the states.

Devolving power to the states is possible since the U.S. federal government is not the United States, although it acts as its ruler. Instead, it is an instrumentality of the people established to manage their governmental affairs. None of our federal officials are granted power as individuals. They are merely volunteers elected as representatives to temporarily manage our government.

Unfortunately, since the federal government’s creation, the individuals acquiring federal power have skillfully blended the powers of the three federal branches into two competing power structures not established by the Constitution. These power structures are called political parties. As such, citizens are no longer protected by the Constitution; they are protected by Democrats or Republicans, depending on which party controls the government apparatus.

Polls show only 20% of citizens trust the U.S. federal government to do what is right most of the time. Almost half of Americans believe the nation is as close to the edge of a Civil War as it was in 1861. Political commentators, mainly on the political Left, pontificate the U.S. will divide into red and blue states or red states will secede from the Union or reform state boundaries. These commentators would welcome unrest in the red states. They fully grasp that the federal government will use all the emergency powers Congress delegated to it and any force necessary to maintain its stranglehold on every aspect of national life. Americans were given a glimpse of these powers in Covid.

Devolving many domestic federal powers to the states may be the only alternative governing mechanism to keep the Union together. It would allow citizens of the respective states greater freedom to live under policies reflecting values closer to where they live rather than national values imposed on them by a distant government and powerful national advocacy groups that do not understand or care about the needs of citizens. In this new governing structure, the federal government would focus on its essential responsibilities to protect the nation, manage activities that directly (not incidentally) impact interstate commerce, defend the dollar’s value, and reduce the national debt. The states would manage most of the nation’s domestic policies, e.g., crime and punishment, labor and environmental standards, energy production, abortion, economic development, permitting, and immigration other than naturalization.

How the U.S. is governed should concern every American since we live with the consequences of the federal government’s massive debt, regulatory sclerosis, continuous wars, open borders, and a declining ability to protect the nation. In our complex society, the cooperation of all levels of government is needed to make society function efficiently for its people. It’s time the federal government stopped worrying about accumulating power and control over citizens and focused on what benefits citizens.

While commentators in the UK, Scotland, and New Zealand have written about devolving federal power to better manage government, the topic is just now being addressed in the United States.

Unlike many books on government reform, Devolution of Power is not just a list of complaints that leave readers seeking solutions. It provides a roadmap for promoting freedom by unwinding the massive accumulation of federal power by returning many domestic functions to the states. It addresses how to restructure a federal government before it collapses the nation by:

  • Identifying the federal government’s apocalyptic flaws,
  • Setting out mechanisms for trimming the national debt and the federal bureaucracy,
  • Providing options for rolling back federal power,
  • Outlining a restructuring plan to devolve federal power to the states and
  • Describing the character traits needed by elected officials to restore trust in government.

The book laments how Congress has fallen into irrelevancy by delegating its most important powers to the president, including declaring war and national emergencies, unauthorized spending, and ignoring the unconstitutional consequences of presidents making new laws by regulation and Executive Order. The book argues that only when Congress regains control over its legislative and spending powers will it understand it created a federal government too big and complex to govern the nation. At that point, the restructuring process can begin.

A fundamental premise in the book is that until our elected officials rekindle John Locke’s idea that no power is granted personally to any government official, every official must serve as fiduciary, not a self-interested politician. To serve as a fiduciary, elected officials must give all their loyalty to the institution they serve and not to the political party that helped elect them. Only by being loyal to the institution they serve can they check the abuses taken by the other branches of government. Only by actively defending our Constitution’s separation of powers structure, no matter who is in charge of the other branches, can our elected officials restrain government and promote the rule of law.

In the final analysis, Devolution of Power argues that the citizens of the U.S. must understand they are responsible for their government and what it does. Citizens do not have the “just following orders” defense since they elect the individuals who manage their government. The citizens of the U.S. are now confronted with an “either/or” situation. Either citizens elect a government of fiduciaries that limit the power of the federal government, regardless of political affiliation, or they must accept living under an all-powerful federal government that is organized around corruption, deception, and eventually brutal tyranny.

William L. Kovacs, author of Devolution of Power, has served as senior vice president for the U.S. Chamber of Commerce, chief counsel to a congressional committee, chairman of a state environmental board, and a partner in law D.C. law firms. He testified before Congress forty times in his career and participated in hundreds of federal rulemakings. His book Reform the Kakistocracy won the 2021 Independent Press Award for Political/Social Change. 2019, Kovacs received the Albert Nelson Marquis Lifetime Achievement Award from Marquis Who’s Who.

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Enacting Devolution of Power to the States

William L. Kovacs

November 2023

Enacting Devolution of Power to the States

Part III 

The devolution of power from the federal government to the states is highly likely in the next decade. It is not feasible for the U.S. to pay off a $33 plus trillion-dollar national debt that requires annual interest payments of a trillion dollars or more. Debt and deficits will force cuts in federal programs. Many of the cuts will be federal grants to states. When this occurs, devolving national power to the states will be the best option out of a bad situation.

Before a crisis occurs, the feds and the states should negotiate a transition of power to ensure a workable separation of functions and an understanding of the costs involved.

The primary goal of devolving federal power to the states is to alleviate federal fiscal mismanagement as much as possible while enhancing democracy by transferring governmental services to the lowest level of government that can effectively and efficiently manage the programs. It will also require the states to determine which federal programs they want to continue managing and which programs are unneeded within their states. Every program and every level of bureaucracy eliminated saves money for taxpayers.

The federal government has created more government and complexity than it can manage. Devolution of power is essential for the federal government to focus on its most significant responsibilities to protect the nation from threats to national security.

Options for devolving power to the states.

Congress should establish a federal intergovernmental commission to identify the powers to be devolved to the states.

 A federal intergovernmental commission composed of members of Congress, governors, and state legislators would be the most straightforward way to approach this process. The Commission’s task would be to identify all federally exercised powers that could be more efficiently and effectively managed by the states. It could start with the thousand-plus grants that entice states to implement federally designed programs. In 2022, the federal government awarded states $1.2 trillion in subsidies. Since the federal government collects the monies given to the respective states from state taxpayers and only returns a portion of what is collected to the states, the states will be in a better financial situation if they tax their citizens for the programs citizens want and drop the unwanted programs.

As leverage against a resistant federal government, States that are reimbursed only a fraction of the program’s cost could refuse to administer federal programs not wanted by their citizens or unaffordable to the state. If the states decline to administer more than a few federal regulatory programs, they would cause chaos as the federal government lacks the personnel to administer the programs without the help of the states.

Such a move by the states would also demonstrate that the federal government, without state cooperation, cannot manage or pay for the government it has created.

When the work of the Commission is complete, its final product would be introduced in Congress and voted upon under rules established by Congress. The federal intergovernmental commission stands the best chance of success since the states would identify the programs they need and are likely to continue. Conversely, Congress would learn from the negotiations about unwanted programs.

Congress could enact a process similar to the Base Realignment and Closure Commission (“BRAC”) that applies to federal domestic programs imposed on states.

If Congress wants to avoid negotiations with the states and their legislatures, it could construct a Devolution of Power Commission comprised of experts to study and report to Congress on the programs most fitting to be transferred to the states. After receiving the BRAC-type report, Congress could do an up or down vote on the entire package as it does under BRAC, or it could allow amendments to ensure more legislative precision.

Re-constitute the Joint Committee on Reduction of Non-Essential Federal Expenditures (“The Joint Committee.”).

The Joint Committee would be similar to the Congressional Committee established by Congress after WWII to get control of the federal deficit. While the Joint Committee was only a study committee, requiring its recommendations to be submitted to authorizing and appropriation committees, it significantly impacted government budgeting by identifying non-essential federal activities.

Such a process keeps all study and decision-making within Congress. Once the recommendations are made, Congress could establish by rule that it must vote on them as a package. Alternatively, Congress could allow the recommendations to go through the regular committee hearings, markup, and floor debate order.

Use of Interstate Compacts to devolve federal powers to the states.

Interstate compacts are cooperative actions between states to advance specific policies and programs. The compacts can be congressionally approved to ensure they have legal recognition, or they could be informal agreements between states to cooperate.

Formal, congressionally approved compacts with other states are established under Article I, sec.10, cl. 3 of the U.S. Constitution. These formal compacts range from boundary disputes to lotteries, river management, drivers’ licenses, to multi-state tax matters. Ballotpedia provides a list of approved compacts from 1785 to 2018. Compacts can be on any subject that concerns several states. Every formal Compact requires congressional approval, which is very time-consuming. Due to approval complexities, States would be unlikely to submit, and Congress would unlikely approve enough formal Compacts to make any difference in the devolution process. While the formal Interstate Compact approach is doubtful for resolving a large number of programs, it is an option that the states and Congress can utilize on the more significant and controversial issues that would grant federal legal status to multi-state cooperative agreements.

The Southern States Energy Compact is a significant success in bringing economic development to the South. It has eighteen members and was created to encourage economic development among its member states by improving energy, environmental, and technology policies.

Under the informal Compact approach, the participating states would cooperate on specific programs without congressional approval. The downside of this approach is that states are free to withdraw at any time without congressional involvement. Moreover, Congress could terminate informal compacts at any time, assuming Congress can secure the votes to repeal an agreement between states or sue to have the compact declared contrary to federal law or unconstitutional. A good example is the climate change compacts. States with similar policy views are organized into regional working units designed to regulate activities of regional concern. For example, nine states in the Northeast and Mid-Atlantic and three west coast states formed regional compacts to address climate concerns in a manner beyond what was allowed under federal law. The states entering these informal compacts initiated a cap-and-trade process that capped CO2 emissions and authorized the trading of emission credits.

While the informal mechanism is an ad hoc approach to devolving power to the states, it could take several of the most controversial domestic issues off the federal plate, such as abortion, welfare, and illegal immigration, other than citizenship. The states in the various Compacts would address these issues uniformly, which will likely be dramatically different from existing federal policy.

Congress could terminate all federal grants and unauthorized programs and immediately save trillions over a few years.

The most drastic approach to devolving federal power is for Congress to terminate its funding for all unauthorized federal programs and all subsidies to the states to manage federal programs. Under congressional rules, Congress cannot fund unauthorized laws without waiving its rules. If Congress does not have the time or interest to reauthorize programs enacted into law, it should not fund them. Moreover, if Congress stops subsidizing states, the states can eliminate the implementation of unneeded federal programs and fund the needed programs at a cost they can afford. Defunding these many programs immediately reduces the federal government’s budget by around $ 1.7 trillion ($432 billion of unauthorized laws and $1.2 trillion in grants to states).

Congress and the president will likely oppose, as infeasible, any devolution of power to the states. Unfortunately, the federal government faces an either/or situation. Either it relinquishes power and cuts its budget to what is manageable by the nation, or it faces a financial crisis that takes the nation to a dark place. Transferring federal programs to the states is a practical alternative to resurrecting a bankrupt nation.

William L. Kovacs has served as senior vice president for the U.S. Chamber of Commerce, chief counsel to a congressional committee, chairman of a state environmental board, and a partner in law D.C. law firms. His book Reform the Kakistocracy is the winner of the 2021 Independent Press Award for Political/Social Change. He can be contacted at [email protected]

Part I: Fix a Government Too Big to Govern: Devolution of Power to States

Part II: The National Debt Will Force Devolution of Power to the States





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National Debt Will Force Devolution of Power to the States

William L. Kocacs

November 2023

National Debt Will Force Devolution of Power to the States

Part II:  Series on Devolving Power to the States

As the spending minuet plays out between the House and Senate over appropriations, supplemental spending for wars, and government shutdowns, a wall of debt is being built around the Congress. With an estimated $45 trillion national debt by 2030 and interest payments exceeding a trillion a year, reality will force our lawmakers to stop spending. One of their first cuts will be to reduce and eventually eliminate the $1.2 trillion Congress gives to states as a bribe to operate federal programs that the federal government, many times, has no authority to operate. This occurrence will be the beginning of the devolution of power to the states.

How did the federal and state governments get into this bind? More importantly, how do they get out of debt?

The answer is clear: if it’s constitutional to increase federal power, it must also be constitutional to decrease it. This flexibility allows the federal government to return to the states the powers taken from them over the past eighty years. Devolution of power will be the lynchpin that keeps a de facto bankrupt Union together.

The growth of the federal government has been the only unifying ambition of Congress, presidents, and the courts since the dawn of the Republic.

The expansion of federal power started with Chief Justice Marshall’s 1819 decision in McCulloch v. Maryland. Marshall not only solidified all the federal government’s enumerated powers, he broadly applied the ‘necessary and proper clause’ to establish sweeping implied and incidental federal powers. He indicated no phrase in the Constitution limits the use of these implied powers.

His decisions elevated the Supreme Court to being the final arbiter of constitutional issues. By skillfully combining the Constitution’s enumerated powers with its implied powers, Marshall designed a governing structure with few limits on federal power short of a revolution.

While the Supreme Court approved the accumulation of massive federal power early in the Republic, it took until the 1940s for the court to erase the Tenth Amendment and state powers from the Constitution.

The demise of the Tenth Amendment arose when the Department of Labor sought to regulate local wages. States argued wage regulation was not an enumerated federal power in the Constitution. Therefore, such power rested with the states. Unfortunately for the states, a unanimous Supreme Court in United States v Darby (1941) held the Tenth Amendment was merely a “truism” since the substance needs to be determined by what powers are delegated to the federal government from any part of the Constitution. In Darby, the court held the federal government has the constitutional authority to regulate local wages under the Commerce Clause.

The ever-expanding Commerce Clause.

Using its expansive interpretation of the Commerce Clause, the Supreme Court sanctioned the massive growth of what has become the Administrative State. It transformed a country that practiced federalism (a system of governance in which two levels of government control the same territory) into a nation of federal rule. Over eighty years, Congress enacted thousands of laws and over 200,000 regulations that reach almost every activity and product in the nation.

Between 1937 and 1995, the Supreme Court did not strike down a single law expanding federal power. In 1995, it finally struck down a congressional enactment involving gun possession in a schoolyard and another case involving violence against women, finding both to be intrastate, not interstate, commerce. After minimally limiting federal power, the Supreme Court returned to rubber-stamping all future congressional enactments.

Gaps in federal power over states were filled by bribing states to pursue national priorities.

A Brookings study on state budgets noted, “In 1900, states and localities raised $1.75 for every $1 of federal revenue. They performed all government activities except national defense, foreign relations, [federal] court proceedings, and postal services.” While the federal government made grants to the states in this period, those grants generally subsidized existing state programs.

Since the Great Depression, Congress enacted many new social programs, some of which it did not have the constitutional authority to implement. To overcome its constitutional limits, Congress raised federal taxes to generate sufficient funds to make grants to states to incentivize them to implement federal wishes. By 1960, there were 132 state grant programs. Today, federal grant programs range between 1,000 to 1,300. In 2021, these grant programs  cost the federal government $1.2 trillion annually. The federal government taxes the American public to pay for the grants it makes to the states to have federal wishes implemented.

According to the Bureau of Census, federal grants to states in FY 2020 represent 35.9% of state revenues. While states accept these grants, they come with federal handcuffs. Compliance with many federal mandates often distorts state priorities by displacing local programs that may be more significant to the state’s citizens than the federal programs. Receipt of federal funds can require states to provide matching funds, comply with federal regulatory mandates, and increase personnel for program management.

States are beginning to resist oppressive federal regulation.

More than a few states are now resisting implementing federal programs they do not want to administer or are not being fairly compensated for managing.

State frustration with implementing federal programs started with the conflict over sanctuary states and cities during the Trump administration. Over three hundred states and cities refused to enforce federal immigration laws even though they accepted federal grant monies for law enforcement associated with these programs.

The federal-state conflict, however, is over more than Sanctuary cities. Twenty-three states and the District of Columbia have legalized marijuana, notwithstanding it is illegal under federal law.

Additionally, some federal programs only cover a fraction of the implementation cost. States implement approximately 96% of federally delegated environmental programs but only receive 28% of the cost of implementation. At some point, states will refuse to implement the unwanted or underfunded federal programs, or the feds will increase state funding. Making this decision will depend on the financial situation of the federal government.

Federal deficits will be the catalyst to stop state funding.

Complicating state dissatisfaction with the federal grant programs is the federal government’s financial mess.

The federal government’s interest payments for FY 2022 are $475 billion. CBO projects that net interest costs could total $640 billion in 2023 and soar to $1.4 trillion in 2033. The combination of increasing national debt and soaring interest payments on the debt will cause interest payments alone to exceed the total amount of all grants made to states. The federal government will need to find hundreds of billions of dollars annually to service the increased debt, or it will need to find budget reductions, such as state program grants, to remain in the same financial position as today.

The conflicting trends of states not wanting to implement specific federal programs and the federal government not having sufficient money to fully compensate the states for implementing its programs will start the debate over which federal programs should be administered and by whom.

The federal government’s inability to fund state programs will be the catalyst that drives the states to eliminate the implementation of those programs and spark more freedom to implement programs sought by their citizens. Hence, devolution of power will begin.

William L. Kovacs has served as senior vice president for the U.S. Chamber of Commerce, chief counsel to a congressional committee, and a partner in law D.C. law firms. His book Reform the Kakistocracy is the winner of the 2021 Independent Press Award for Political/Social Change. He can be contacted at [email protected]

Part I:  Fix a Government Too Big to Govern: Devolve Power to the States.

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Fix a Government Too Big to Govern: Devolve Power to States

William L. Kovacs

October 2023

Fix a Government Too Big to Govern: Devolve Power to States

For the last several weeks, Congress has been unable to function because of its inability to elect a Speaker of the House of Representatives. Before that, it was an inability to deal with the debt ceiling and the nation’s massive national debt that has been growing for decades. The U.S. Southern border had been opened to drug cartels and terrorists for years. We are depleting our military arsenal, draining our Strategic Petroleum Reserves for political gain at the ballot box, and now the U.S. faces the possibility of wars in Ukraine, Israel, and perhaps the entire Middle East and Taiwan. Most challenging to the U.S. is the formation of a new form of Axis power consisting of Russia, China, Iran, North Korea, and likely some associate members designated as terrorists. Our national defense is so distracted it cannot even identify a Chinese spy balloon traveling over all its top-security military bases.

The list of potential disasters facing the federal government seems to be never-ending.  Why does our federal government continuously have so many problems? The answer might be more obvious than most think. Our political friends in Washington have created a government that is too big to govern. By trying to control every aspect of life, the federal government is putting the entire nation at risk. Perhaps it’s time to devolve many of the domestic powers the federal government accumulated over the last century to the states. Call it a power-sharing arrangement to better manage the nation.

Taking on this topic will be a series of articles that discuss how the federal government has been allowed to grow without any constitutional changes and how the federal government can shrink the monster it has created. But first, is the devolution of power a path worth considering?

While I would argue yes, there are likely very, very few elected officials that would ever support losing the control over citizens they fought so hard to acquire. This first article will explain what devolution of power is and its benefits.

Our Constitution is structured to foster a strong economy while protecting the nation from harm. Until the Great Depression, the respective states had a major role in the domestic affairs of the nation. Unfortunately, the massive accumulation of federal regulatory and taxing power transformed the respective states into mere administrators of federal rule. If the federal government does not allow the country to return to a viable structure of federalism in which states have a serious role in shaping domestic policy, the U.S. is likely to join the many nations that now hold the status of a “once-great power.”

What is Devolution of Power?

Devolution transfers substantial power and authority from the federal government to state and local governments. Devolution differs from decentralization, which merely transfers certain functions from a central location to several locations. Decentralization would be a relevant concept if the federal government were to move its workforce out of Washington, DC.

Making devolution work and its benefits.

For devolution to work, the federal powers transferred to the states must include all powers necessary to implement the policies transferred, including decision-making authority, managerial control of the legal framework for the policies to be managed, and the ability to tax and spend. After the transfer of power to the states, the federal government would cease regulating those activities. .

By assuming such powers, the states will have the capacity to implement all of the programs transferred to them by the federal government or to eliminate current federal domestic programs unneeded or unwanted by its citizens. Moreover, by clearly identifying the powers transferred, devolution allows the nation to operate as a unitary country that legally divides the management of issues between the federal government and the states for efficiency and practical implementation of programs sought by citizens of the respective states. Devolving federal power to the states brings the domestic programs of government closer to the people it serves. It also eliminates an entire level of bureaucracy.

Greater program efficiency.

The programs administered by a state will be smaller in size and administered by government that is closer to those it serves. By having more knowledge of the area and people served, the government administering the programs will be better able to achieve program goals. Greater efficiency results in more government accountability.

Enhances democracy.

In smaller communities, there is less bureaucracy. Participating in decision-making and running for office is more accessible and less costly. Greater participation in democracy builds trust in government. People of ordinary means can seek elected office.

Fosters innovation and trust.

With less bureaucracy to block innovative ideas, there is more focus on solutions and getting the job done than protecting the status quo. Since citizens are more trusting of and familiar with state and local government, they can better evaluate how the government manages the issues of most concern to them, such as health care, crime, taxes, and the economy. Significant citizen participation cannot happen when a distant central government lacks knowledge of the local issues yet controls the process for the resolution of disputes.

Limits bureaucratic power.

Sharing power between different authorities at different levels of government is an effective mechanism for deterring the ability of any government to become too powerful.

Assists with resolving conflicts.

Solutions are easier to achieve when there is an ability of citizens and government to exchange views.

Denationalizes controversial issues.

National governments nationalize all matters before them, from abortion and education to local permitting and economic development issues. When the federal government deals with state and local issues, the national lobbying organizations control the outcome to fit their national objective. For example, it is the national environmental groups that block oil drilling and mineral mining in Alaska, not Alaskans. The same is true for oil and gas pipelines and forest management. National environmental groups control local development across the nation by capturing the federal bureaucracy. By allowing states to control controversial issues, each state will take a different path that is usually more satisfactory to the locals than the advocacy of the national groups. This approach allows citizens the ultimate right to live as they want and to vote with their feet.

By having fewer responsibilities, the federal government will be able to focus on the nation’s defense and national issues. The states can very competently manage most domestic matters. Only through a system of genuine federalism can the U.S. prevent authoritarian rule, a civil war, or a wholly weakened, unstable nation in a world of enemies.

The states can’t afford the programs is a myth.

That answer as to what level of government can afford what will come very soon as the federal government is crushed by its own debt and the surge in interest payments on it. The federal government funds well over 1,000 state programs. Keep in mind, however, that many of these programs are the brainchild of the federal government, and the state is given grants to implement them. Since the federal grants rarely cover the state’s costs, the states end up subsidizing the federal programs.

Most significant, however, is that many unwanted federal programs displace programs important to the states. Also, every dollar the federal government pays the states to implement federal programs is a dollar the federal government took from a citizen of the states. Washington merely collects the tax dollars and returns them to the states, minus its commission.

The question is not who is going to pay. The taxpayer always pays. The real question is, who decides and implements the programs that citizens must pay for?


William L. Kovacs has served as senior vice president for the U.S. Chamber of Commerce, chief counsel to a congressional committee, and a partner in law D.C. law firms. His book Reform the Kakistocracy is the winner of the 2021 Independent Press Award for Political/Social Change. He can be contacted at [email protected]