One of the biggest priorities of the incoming President is to develop an economic plan.  Included in this economic plan will be the next President’s vision of the Internal Revenue Code and tax policy.   As illustrated by the Economic Stimulus Act of 2008, the Internal Revenue Code is frequently relied upon to influence behavior, including stimulation of the economy.  The 2008 Act included tax rebates for low- and middle-income taxpayers and tax benefits for businesses, with a substantial increase in the expensing limits of Internal Revenue Code § 179. Under § 179, taxpayers are allowed to claim a current deduction for the purchase of tangible personal property used in a trade or business instead of recovering the cost over time by claiming a depreciation deduction.  The maximum allowable deduction under § 179 is now $250,000, although that amount will be reduced to $128,000 in 2009.  The 2008 Act also created a new fifty-percent special depreciation allowance for certain property placed in service during 2008.  Unfortunately, the Act has done little to stabilize the economy, and the next President’s economic plan will also need to address the ailing stock and real estate markets and the overall financial crisis. 

In addition, the next President’s economic plan is particularly critical because it must address the fate of the numerous tax provisions that will sunset at the end of 2010. 

My scholarship focuses on local government law, so you might assume that the next President would have little to do with my area of the law. Quite the contrary. In this era of shrinking government budgets and greater national debt, it is certainly conceivable that our next President will be faced with cutting spending on the federal level. It’s also plausible that Congress and the new President may make cuts in federal aid to state and local governments. I am somewhat agnostic on this issue. I have argued that decentralized decisionmaking leads to the more efficient and effective provision of goods and services, as well as policy outputs. I have also noted that much progressive policymaking occurs on the local level–more so than at the state and federal level. For these reasons, I might be inclined to encourage the new President to continue to fund local governments with block grants for various programs and services. But I also understand the need to get federal spending under control. What I am resolute on, however, is that any such cuts in funding should not be replaced with unfunded mandates for local governments from the federal government.

Federal policymakers, including the President, seem to like to influence matters on the local level. It is one thing to do this through conditions attached to federal funding (I don’t love this approach, either, but I can accept it given that localities can choose to reject the money if they decide the conditions are unacceptable). But it is entirely another thing to attempt to dictate policy on the local level from the federal level without proper funding. Such unfunded mandates run afoul of federalism principles. Moreover, cities (and even states) face drastically different challenges where macro-level policymaking–the “one size fits all” approach–does not make much sense. Localities must have the resources and the autonomy to craft individualized solutions to their unique problems. Hopefully this will include continued aid from the federal (and state) government. But it certainly should not be impeded by unfunded mandates from the federal government. This should be the priority of the new President with regard to local government: Stay out of the way.

Two interesting things happened this weekend that led me to think a bit about sports, the need for identity, and conflict. Part One: As we are on our way this weekend to a baseball game between the Nationals and Padres (neither of which is a particularly important team to my Brewers-Mets-Pirates family), my three sons are discussing for which team they are rooting. My youngest announces that he is not rooting for any team but rather just going to enjoy the game (and the ice cream, popcorn, hot dogs, etc.) My other two boys tell him, rather forcefully, that he has to pick a side, he has to root for a team. “But why?” he asks. And he raises a good point.