While these steps are essential, their plan risks being incomplete without addressing the structural issues that fuel bureaucratic growth. The best path forward? Federalism— returning federal responsibilities back to the states and bringing power closer to the people.
This is not a novel idea. Conservative thought leaders have long championed the devolution of federal authority as a means of empowering states to innovate, reduce waste, and reconnect government to its constituents. As Ronald Reagan once reminded Americans, "The federal government did not create the states; the states created the federal government." Today, Musk and Ramaswamy can honor our founders’ vision and make it a cornerstone of their efforts.
Restoring federalism also makes financial sense. Research from the Hoover Institution economist John Cogan reveals that the entirety of the federal debt can be traced to federal spending on what were once state and local responsibilities. In 1950, such spending accounted for just 2 percent of GDP; by 2019, nearly two-thirds of federal spending was on programs that were once managed by states. COVID-19 then drove an unprecedented surge in federal aid to states, pushing total expenditures to $6.75 trillion annually.
Had these responsibilities remained with the states, the federal government would likely have a balanced budget and no debt. While we cannot undo the decisions of the past, we now have an opportunity to correct course and set a sustainable path for the future.
The federal government remains essential for safeguarding civil rights and national interests, but its vast size and inefficiency often cause more harm than good. Many programs duplicate state-level efforts, adding unnecessary bureaucracy and costs. For instance, the National Environmental Policy Act mandates detailed federal environmental reviews for federally funded projects, often overlapping with assessments already conducted by state agencies and costing federal taxpayers approximately $1 billion annually.
State environmental agencies are well-equipped to handle these responsibilities. These agencies collectively manage annual budgets exceeding $16 billion and often outperform their federal counterparts while enforcing standards exceeding federal baselines.
For example, California and Texas, with special approval to conduct environmental reviews for certain transportation projects, have shown they can process reviews faster and more efficiently than federal agencies. Similarly, states with approved Occupational Safety and Health Administration plans not only meet or exceed federal workplace safety requirements but also respond more effectively to the unique needs of local industries and communities. Expanding state authority in these areas would streamline governance, reduce red tape, and empower states to tailor solutions to their priorities.
For the Department of Government Efficiency (DOGE) to succeed, it must avoid the temptation of short-term cuts that risk being reversed by future federal leaders. Without a mechanism to enforce lasting change, the return of bureaucratic bloat is inevitable. By devolving responsibilities to the states, DOGE can create a natural enforcement mechanism — state leaders, once empowered, will have every incentive to defend their authority and resist any attempts to re-centralize power in Washington, no matter which political party is in charge.
To achieve lasting reform, DOGE must implement a road map that restores state authority by auditing federal agencies for overlapping functions, transitioning key programs like Medicaid to block grants, and phasing out discretionary grants that undermine state fiscal independence. Federal regulations should also be reviewed to avoid duplication and overreach.
Devolving federal responsibilities to states wouldn’t just shrink the federal government; it would fundamentally strengthen democracy. Localized decision-making gives citizens greater access to their representatives and ensures policies are better aligned with community needs. States, more agile than the federal bureaucracy, are well-positioned to innovate and adapt quickly to evolving challenges.
Moreover, states are required to balance their budgets, unlike the federal government. This fiscal discipline forces most states to manage programs more efficiently and within their means, avoiding the unchecked spending that has fueled federal debt.
If Musk and Ramaswamy hope to leave a legacy, they must avoid the temptation of flashy but ineffective cuts and instead focus on structural reforms that return power to the states. By embracing federalism, DOGE can create a government that is leaner, more resilient, and truly serves its people. With a thoughtful strategy for devolution, DOGE can usher in a new era of American governance. Let the states lead so our nation can thrive.
Jennifer Butler is a senior policy advisor at State Policy Network.
Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
