Alice Rivlin, who passed away earlier this month, was best known as a federal policy trailblazer — inaugural director of the Congressional Budget Office, first female director of the Office of Management and Budget (OMB) and vice-chair of the Federal Reserve Board. But she also was a champion for federalism—or balanced power among federal, state, and local governments.

A half century before academics, journalists, and politicians became fixated on regional differences in economic prosperity, Alice pioneered (with Selma Mushkin at the now defunct Advisory Commission on Intergovernmental Relations) a method to measure the ability of state and local governments to provide a basic set of goods and services to their residents.

As CBO director, Alice oversaw the publication of seminal analyses of city fiscal, economic, and social conditions. And, in 1992, Alice wrote “Reviving the American Dream” – a favorite of then-governor Bill Clinton. The subtitle – “The Economy, the States, and the Federal Government” – explains why.

Alice argued forcefully for devolving education, housing, infrastructure, and more to states and localities while leaving health care responsibilities to the federal government. The feds would send states big checks (via new federal taxes on energy or consumption), get the federal budget deficit under control to keep interest rates low, and then get out of the way.

Alice didn’t argue for this devolution as a proponent of states’ rights. Far from it. Alice believed in a robust federal government. But, as an economist, she was also a firm believer in specialization and “dividing the job.” Having governments focus on what they did best would also help rebuild public trust, she thought.

While her federalism agenda wasn’t adopted, Alice’s 1992 guidance and warnings still loom large in today’s domestic policy debates over issues such as Medicaid expansion and federal support for higher education.

Read the entire blog “Alice Rivlin Made State and Local Governments Better, Too“, by Tracy Gordon and Richard Auxier on the Tax Policy Center website.