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MARK AUSTIN THOMAS: Now that Congress is in recess, campaigning for next month's midterm election is in high gear. National security has been in the headlines, but voters are also weighing a variety of issues — including wage growth and energy prices.

Today we launch our special series that examines many of those issues. It's called The Real Agenda. We start with a look at what happens when a state like California jumps into issues usually reserved for Congress. Jeff Tyler has our story.

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JEFF TYLER: Stem cell research. Auto emissions. Alternative energy. California has taken the initiative to tackle a long list of issues at the state level. Just last week, Gov. Schwarzenegger signed the Global Warming Solutions Act.

EMILY RUSCH: "Which is a bill that requires California to reduce our global warming pollution 25 percent by 2020."

That's Emily Rusch with the advocacy group CALPIRG. She says the Feds, by comparison, have been dragging their feet.

RUSCH: "Time and again, California has really taken steps far beyond what the federal government is willing to do."

And it's poised to go further. If voters approve one proposition on November's ballot, oil companies would pay a fee for drilling. That could bring in $4 billion for energy alternatives, and could add up to new jobs and new industries.

Already, the state influences national standards. Take autos, for example. California represents almost 20 percent of the car market.

University of Southern California professor Jonathan Taplin:

JONATHAN TAPLIN: "It becomes the de facto standard for the rest of the country. Because Ford is not going to make one set of cars for California and another set of cars for Michigan."

But in other ways, Taplin argues that the state doesn't have enough influence. He advocates a kind of radical federalism.

TAPLIN: "Really, the taxing power should be reversed, and we should be paying more of our taxes to our states, and less to the federal government."

The Feds could levy a national sales tax. Income tax, Taplin suggests, would be collected only by the states. That would keep money local to pay for services like education, health care, and infrastructure. Cutting-edge industries too.

TAPLIN: "The notion that the marketplace will magically deliver everything is just not true. The countries like Korea, China, Finland — in which the state helps boost high technology — are the ones becoming the new leaders. And we're falling farther and farther behind."

But sometimes being a pioneer can be a disadvantage to business. Vince Sollitto is spokesman for the California Chamber of Commerce.

VINCE SOLLITTO: "These regulations, these burdens will not exist on any other state, or country, frankly. And so it makes California less competitive. . . . Unique mandates on business in California encourage jobs and businesses to leave."

Automakers, for one, have gone on the offensive. They're suing the state to block tough emissions regulations. If all else fails, businesses can lobby the federal government to preempt a pesky law. Think of it as a kind of Congressional veto power on federalism.

But whatever policymakers think about California voters, it's hard to ignore the consumer will of the world's eighth largest economy.

In Los Angeles, I'm Jeff Tyler for Marketplace.