Nation-Building: A Comparison, Part IV

For the introduction to this series of essays, see the opening paragraphs of the April 2003 issue of “Reflections on Russia.”

Part IV: The Battle over Taxes

America’s Struggle between the States and the “Center”

In the early days of the American Republic, while leaders in various states were drafting state constitutions that balanced liberty and authority, the Continental Congress was struggling with another aspect of the freedom-versus-order problem – the balance between a central government and the rights of the states. The Articles of Confederation, the first Constitution of the United States that went into effect in March 1781, represented an early attempt to resolve this tension, but it did little more than simply legalize what the Continental Congress had been doing. A guiding principle of the Articles was the preservation of the independence and sovereignty of the states, and the Articles denied the power of taxation to the central government. This was a major flaw in the Articles, and any amendment to the Articles required unanimous consent of the member states.

The weakness of the newly formed Union became evident in the 1780s. James Madison noted that the Articles of Confederation were “nothing more than a treaty of amity and of alliance between independent and sovereign states.” The central government not only was prohibited from raising taxes, but also could not regulate commerce or set up federal courts. Shay’s Rebellion in Massachusetts in 1786, which involved an unsuccessful attack on a federal armory by 1,100 rebels, demonstrated to the nation how weak and ineffective the central government was. In the judgment of George Washington and many other leaders, no union could exist without a strong central government – a central government with the power to tax.

The Constitution of 1787 gave new meaning to the term “federal” by setting up a “sovereign union of sovereign states.” The federal government is supreme and sovereign within its sphere, but that sphere is defined and limited by the Constitution. The states are co-equally sovereign within the sphere of their reserved powers. Both federal and state governments derived their authority from the “power of the people,” according to the Founding Fathers.

The year 1794 proved to be the most critical in America’s federal experiment. The nation was struggling with a whole complex of internal problems, plus teetered on the brink of war with England. But then the “Whiskey Rebellion” exploded in Pennsylvania as mountain men in that state objected to a federal tax on distilleries. When the Governor of Pennsylvania refused to enforce the law, President Washington mounted his horse and led a force of 15,000 militiamen from four states into Pennsylvania to quash the revolt. The two ringleaders were caught and convicted of treason, but then pardoned by the President. This was a severe but successful test of the power of the central government in domestic relations and helped to shape the balance between the federal government and state governments. This tension is never finally settled in a democracy, and the distribution of power is often readjusted over time; the key is confining any debate to peaceful means within the rule of law.

Russia’s Struggle between the Regions and the “Center”

In 1989-1990, the efforts by the Soviet Republics to achieve independence from the central ruling authorities in Moscow helped to accelerate the collapse of the Soviet Union. During all the in-fighting between Mikhail Gorbachev and Boris Yeltsin and among the republics and the Party elites in the capital, various regions within Russia tried to take advantage of the chaos to secure their own autonomy, thereby threatening Russia with disintegration. In 1992, a number of republics adopted new constitutions that asserted their sovereignty and declared that their own laws took priority over decrees issued from Moscow. The same struggle that America experienced in the 1780s and 1790s between the power of the central government and the power of the states is now being played out in Russia between the regions and the “center.”

During the early 1990s, a fierce tug-of-war took place in Russia between the parliament and the Yeltsin government. Many regional rulers took advantage of this situation by negotiating deals with President Yeltsin in which he gave them authority over local taxation and control of commerce in return for their support for him. Yeltsin even created new organs of government, including a council of governors, to firm up his alliance with local rulers.

In the summer of 1993, the president’s team organized the Constitutional Conference to draft a new Russian constitution. In the months that followed, tensions emerged among regional bosses who were not interested in supporting a strong presidential system of government that diminished their control. Throughout the 1990s and into the early years of President Putin’s administration, this issue continues to be a point of considerable strain and conflict in Russia, just as it was in America for many decades.

A Critical Decision: Sharing Power

The core issue of distributing power between a central governing authority and local rulers is hardly a new challenge, but it does become more complex when it is played out in the context of large political units covering vast territories. This has been the challenge facing both the United States of America and the Russian Federation. Both nations experienced “colonial rule” – in one case by the British and in the other by a Communist Party elite who ruled as if they were “outsiders” – and people in both countries know what it is like to be controlled by leaders who do not respect them or their rights. In a democracy, ultimate authority must reside with the people based on popular sovereignty. It took the Americans a long time to work this out. The Russians are now struggling with this same issue and, if they decide to develop a true democracy, it will be the first time in their history that power lies with the Russian people.