Thinking Power Swings Back to the States

THE nation's governors proposed a compromise plan on Medicaid reform that President Clinton called ''a huge step in the right direction.'' As control shifted to the states, the poor would no longer have an ''entitlement'' to health care, but rather a ''guarantee.'' The governors also presented their ideas on welfare reform, putting greater emphasis than Congress has so far on subsidized child care for working mothers.

''Positive and constructive,'' the president said, noting that Sen. Bob Dole had also reacted favorably.

On closer examination, the governors' proposal may show flaws. But it seems remarkable that they could come to Washington and, in three days, lift the Medicaid, welfare, and budget issues out of what looked like a hopeless partisan deadlock. It was as though they waved a magic wand to make federal officials come out of their frozen postures.

We may be witnessing a historic shift, not only of power, but of thinking power, from the central government back to the states. I can remember how it was 30 years ago. State governments seemed comatose, and an activist federal government under President Johnson was pushing out money and programs to localities to build a Great Society.

When budget director Alice Rivlin was a Brookings scholar in 1992, she traced how the federal government extended its reach - first, at the end of the 19th century, to meet the excesses of big business, then in the 1930s Depression, to cope with economic needs beyond the capacity of the states. Political scientist Luther Gulick wrote then, ''It is a matter of brutal record. The American state is finished.''

But, by the start of the 1980s, federal influence had peaked, and power began shifting back to state capitals. Now the state capitals are buzzing beehives of thought and planning. And the federal government - especially in an election year that inhibits constructive, nonpartisan action - now seems enmeshed.

So it was not just flattery when Mr. Clinton told the governors, ''You have contributed to the climate that will help us to balance the budget.'' He was underscoring a moment in history when the states appeared to have come back into their own.