The elite did not need the central government to solve problems it didn't have. The elite have education, health care, housing, jobs if they need them, and clean healthy places to live with little crime. They have nannies for their children, cars for instead of needing public transportation, and so on. And while their money may come from industries that grow fat off of the federal government's largesse, either directly through contracts or through the infrastructure development of the past, the elite baronial class certainly doesn't rely on the efficacy of the central government to solve its problems, other than perhaps on military issues.
More on the flip.
Modern, liberal, representative democracies rely on effective states with accountable governments governed by the rule of law. Since the Supreme Court decision in Bush v. Gore, all three pillars of the American government have faltered and continue to falter, and threaten to undermine the effectiveness of the state. Political decay in America is a reality that can no longer be ignored. There is an incipient oligarchy—not a conspiracy, mind you—that depends not on law, but on its own patrimony of money.
The American Constitution depends on two levels of government: states with general powers limited only by the federal constitution and a federal government with limited powers only as granted in the federal constitution. The federal government itself consists of the familiar three branches, including the two houses of Congress.
The original American state was dangerously ineffective and failed under the Articles of Confederation. The states were in control, and they were controlled by their own baronial class that while democratic in name and not practice still nevertheless had a decent respect for the rule of law. Accountability was as good as anywhere else in the world at the time. But, again, this American state was ineffective. Only its military success against the British (which was in itself a baronial revolt against a central government resisting the former's encroachment on Indian territory) indicated any effectiveness. The Articles failed to resolve disputes between states and between citizens of states with much more efficacy than systems of international law do now. If any crisis had befallen the early American republic, it would not have been able to meet the threat.
The Constitution provided for a stronger, but not yet strong, federal government. The federal government was weak. It could not bring about fundamental change in any of the states. States, not people, were given control over the Senate, which had to approve all laws. The Constitution also put its finger on the scale in favor of small states in presidential elections with the electoral college. The work that went unfinished in Philadelphia—on slavery—left America too sectionally divided and weak to meet a severe crisis had it faced one. If America had been a European state in the Napoleonic Wars, it would have been conquered.
The Supreme Court asserted power that was not explicitly granted to it in the period of the early republic—that of interpreting the Constitution. This strengthened the rule of law if it lessened the accountability of the federal government and again strengthened the states' power through the Senate's power over Supreme Court nominations. Even while this power that Marshall grabbed in Marbury v. Madison may have strengthened the position of the Court vis-a-vis the other branches of the federal government, it was also the first step of increasing the effectiveness of the federal government.
But it would take the Civil War for the American state to begin to show signs of being a world class state. The post Civil War amendments reshuffled the deck and put more power in the federal government. Of the few powers withheld from the states by the Constitution, most significant was the handling of anything other than the most microscopic instances of commerce. This prevented the states from being able to confront the Great Depression. Yet until FDR (or at least Wilson) the federal government wasn't powerful or effective enough to do it either. It took an increase both in the power of the executive and of the central government to create the Welfare state that could meet this challenge. America depended on its private industry to bail it out of the Panic of 1907. After FDR, an effective central government was able to handle it.
The US was more effective militarily, but had never met a true world power head on before World War II. In order to muster the war power and resources necessary to take on not one but two such powers, even greater power had to be concentrated in the executive. Thus, the warfare state was born. This later became, under the Truman administration, the National Security State, a compliment to the Welfare state. Regardless of whether or not the text of the Constitution was amended in 1936 or 1947, both the Court, Congress, and the people generally accepted a change in the proper role of the federal government and the executive branch. Congress only plays a follower and oversight role in "declaring war." Civil libertarians often rue this change. But they can never explain how a more accountable and law abiding decision could be made by Congress in a manner that would not destroy the kind of military effectiveness needed to defend America in the age of the nuclear bomb. Should the filibuster loom over our nuclear strategy? Apparently the US Supreme Court thought so in the Steel Seizure cases, when the Truman administration was attempting to rapidly increase our conventional capability to prevent an over reliance on atomic weapons (see NSC 68). Whose liberty was preserved by letting the shareholders of that steel company charge the government more for war materials?
Throughout these centralizing changes and through the emergence of the "Imperial Presidency" conservative resistance grew. The effective central government that ruled according to law and that was accountable to the people could never stand long in the face of the kinds of racial inequality that still pervaded America. So many challenges had been left unresolved at home that could be confronted with the effectiveness of the federal government.
But in doing so, the privileges of the American baronial class were trampled upon; their power was replaced with the relatively meritocratic central government's power. They resisted, and they continue to resist.
For a time, their successes were limited to the kinds of issues that found mass support in resisting: turning back the tide of civil rights reforms circa 1970 and lowering taxes.
Through a concerted effort beginning in the 1950s, the modern Conservative movement was able to begin to roll back the efficacy of the central government by defunding its efforts, causing fear, uncertainty, and doubt, about their results, and generally doing whatever it took to prevent government from solving problems anymore.
Eventually, these aims came to line up with the wealthy baronial classes interest. The elite did not need the central government to solve problems it didn't have. The elite have education, health care, housing, jobs if they need them, and clean healthy places to live with little crime. They have nannies for their children, cars for instead of needing public transportation, and so on. And while their money may come from industries that grow fat off of the federal government's largesse, either directly through contracts or through the infrastructure development of the past, the elite baronial class certainly doesn't rely on the efficacy of the central government to solve its problems, other than perhaps on military issues.
Destroying faith in the federal government was done both through misfeasance—Vietnam, Watergate, Iran/Contra, failure to regulate Savings & Loans, just about everything the Bush administration ever did—and through cynical acts of distortion meant to undermine the federal governments' credibility, such as the Clinton impeachment and the numerous unremitting assaults on the Obama presidency, including the tax cut, budget, and debt ceiling hostage takings.
But conservatives have also undermined the rule of law. By salting the judiciary with movement Conservatives who believed that it was more important to roll back the federal government than it was for the federal government to be effective, corporate interests have been able to create special deals for themselves—Citibank was able to repeal Glass-Stegall for its own merger; no bid contracts for Cheney's former company; and the series of lawless acts by the Bush administration including torture, holding prisoners without trial in Guantanamo, the use of the justice department to indict political enemies, and the use of classified information to harm political enemies such as Valerie Plame.
But nothing capture the overthrow of Justice Marshall's dictum that the US was a country of "laws, not of men" more than the Bush v. Gore decision. Not only did it undermine the legitimacy of the Supreme Court—perhaps permanently—but it set the tone for the entire lawless Bush presidency. I believe that was the turning point. The fact that a number of Supreme Court justices—those who we entrust with the sacred protection of our Constitution—would reverse their deeply held beliefs about the role of states and federalism to put their preferred candidate in the White House makes lawlessness the rule, not the exception.
Accountability has also been destroyed. Other than for a short while during the pendency of his pardon, only Scooter Libby has been punished at all for the numerous crimes of the Bush administration. Even political accountability failed, returning the same conservative politicians to substantial power after only a 2 year absence.
In the process, the same conservatives have used the undemocratic filibuster to prevent the federal government from responding to the Great Recession (and prevented the government from preventing it in the first place). This reservoir of power, the U.S. Senate, almost completely immune from democratic accountability in times of rapidly approaching peril has killed not just any progressive or liberal change, but also the effectiveness of the state.
The result of these failures will be ever increasing concentrations of wealth into the oligarchy, who are not protected by the central government headed by the President who must be popularly elected every 4 years. They can man their barricades in the states, the US senate and ideological bastions of the South and Mountain West to prevent much from happening by deepening the Hatfield/McCoy vendetta between the parties.
We are taught that the President is not a king; that the king is bad; that the king tramples on freedom. This is largely the view of the aristocracy throughout history. Monarchs have had to depend on the masses for their legitimacy. This is not to say that dictatorial powers are always—even mostly—used for populist reasons. But it's not the President/people balance of power that's out of whack in this country, it's the President/oligarchy balance of power that's out of whack.
The US will continue to suffer political decay until we either evaporate into 50 states rule by local baronial elites, or until the accountable and popularly elected leader is given the same kind of economic power that he currently wields over the military—or at least is given more.
The Bushies believed that they were above the law when they were exercising what they claimed were the president's powers. This only undermined the rule of law and prevented any accountability for it. But Presidents have always tried to accomplish things by getting around Congress. Some of the things the US senate has killed include the League of Nations, civil rights for 80 years, important elements of the New Deal, the public option in the PPACA, and so on—all so that patrician toff senators can preserve their right to unlimited debate, a right enjoyed by no other effective legislature in the world.
The way to improve the effectiveness of the US central government is not to give godlike powers to the president, or exempt him from the law. The way to improve the effectiveness of the government is to give the President more power over areas of policy that require emergency handling the way the National Security state came to give him more power over military matters. One such area—apparent since the Louisiana purchase—has been economic matters.