Federalism


I. Introduction 

In the federal system, both the national government and state governments play a role in policymaking. For example, two days after the defeat of a bill in the U.S. Senate that would have required automobiles to get about 40 miles to the gallon by the year 2001 (as opposed to the current 27.5 miles to the
gallon), the states of California and New York began considering legislation to enact similar regulations in their respective states. (Both of these states had some of the dirtiest air in the nation.)

Such a move by the states was made possible by the federal Clean Air Act of 1970 which allowed states to set higher standards for themselves than the federal government required for the nation as a whole. When the state of California enacted legislation requiring a reduction in auto emission in
that state, the U.S. Congress responded by passing the 1990 Clean Air Act which set national standards for auto and industrial emissions.

This story shows that state and local governments, as well as the national government, make policies that have important effects on people's lives. This division of power between the national government and the states is called federalism. States with different interests and different circumstances
(such as California and New York) sometimes move in different directions. In some cases, states such as California take the policy lead, enacting policies that are eventually adopted by other states or by the nation as a whole.

Federalism is complex with the authority of the national, state,and local governments changing from one policy area to another. Sometimes the national government preempts an area of policymaking, totally taking it over. At other times, matters are left entirely to the states and localities.
Often, the authority of each of the governments overlaps with complex combinations of policy made at the national, state, and local levels.


II. Federalism--An American Invention

In the U.S., governmental jurisdictions overlap. The various small governments such as counties, cities, towns, and special districts are all legal creatures of the states. These governments can be created, altered, or abolished at a state's convenience. In contrast, state governments have much more independence. The state governments and the national government together form what is known as a federal system. This system may be the most important single fact about American politics because it affects practically
everything else.

Federalism is a system in which the powers of government are divided between the central government and smaller governmental units. Neither level of government completely controls the other. Each may take independent action.

A federal system differs from either a confederation or a unitary system of government. In a confederation, states unite for some common purposes, but retain ultimate authority and veto power over national policy decisions. In a unitary system, the central government has all the power and can change its constituent units or tell them what to do. Federalism as it exits today is largely an American invention and is not a common way of organizing governments around the world.

American federalism is best understood as a result of the historical process by which the original colonies became independent states, formed a confederation, and then a federal union. Nonetheless, we can gain insight into why the U.S. adopted a federal system if we look at what other countries with similar systems have in common. Most federal systems around the world are found in countries that are geographically large and have regions that differ in terms of economic activity, religion, ethnicity, and language. Federalism, therefore, is associated with size and diversity--two appropriate characterizations of the U.S. as well.

Federalism is one of the key structural characteristics of American government. It affects many aspects of politics, not to mention our view of how well democracy works. Because of its key role in American politics, issues concerning federalism over the years have been a major point of contention in political discussions.

Federalism has both defenders and detractors. The oldest and most important argument in favor of federalism is that the needs, wants, and conditions of a large and diverse country such as the U.S. differ from one place to another. Allowing different states to enact different policies to meet their unique needs enhances popular sovereignty and majority rule because distinct majorities in different states can do what they want instead of being subordinated to a singe national majority.

Nonetheless, critics of federalism point out that different states may pursue unworthy policies. One of the main effects of federalism, for example, was to let white majorities in southern states enslave and then discriminate against black people without interference from the North.

Another argument in favor of federalism is that state and local governments are closer to the people, giving ordinary citizens a good opportunity to know their officials, contact them, and hold them responsible for their problems. Because of federalism, government policies will be responsive to both
the people they are meant to help and the people who pay for them.

In contrast, federalism's detractors argue that geographical closeness may not have little relationship to government responsiveness. In fact, survey data show that Americans are actually better informed about the national government than they are about state and local governments. People who know what government is doing and who vote are better able to insist that the government do what they want than people who are uninformed and uninvolved politically. For this reason, the national government is probably more responsiveness to
ordinary citizens than state and local governments.

Finally, federalism allows state governments to try out new ideas. Individual states can be laboratories to test innovative experimental programs. Moreover, when one political party controls the national government, federalism
allows states with majorities favoring a different party to compensate by enacting different policies. This aspect of diversity in policymaking is related to the Founders' belief that tyranny is less likely when government power is
dispersed. Multiple governments reduce the risks of bad policy or the blockage of the popular will. If things go wrong at one level of government, they may go right at another.

Nevertheless, the critics of federalism believe that experimentation and diversity in policies is not always good. Divergent regulations can cause confusion and inefficiency that spill over from one state to another. In fact, some kinds of government policy simply don't work very well (or don't work at all) without uniform national standards. Pollution control, poverty programs, and tax policies are examples of such programs. Moreover, innovation by local governments can be undercut by competition among communities for wealth and resources. Only a national government can
deal with many aspects of taxes and spending that affect people across state boundaries or that induce competition among states.

Federalism is controversial because concerns how power and resources are distributed within the government. Arguments over the federal system do not just concern abstract institutional arrangements. Federalism affects who receives and who loses valuable benefits from government, and often
determines who pays the bills.

Opinions about federalism vary, depending on ideology and on which political party happens to control the national government at the moment. During the 1960s and 1970s, for example, liberals, minorities, and city dwellers tended to
have much more faith in the national government where liberal Democrats were powerful, then they did in state governments where conservative Democrats and Republicans often had more influence. In the 1980s, when Republican administrations dominated the national government, some of these same liberal groups turned their attention to the states where they had
more influence.


III. The Constitution and Shared Powers

Constitutional federalism has two distinct features. First, the national government and the states divide power: some powers are shared by the two levels of government, while other powers are reserved to one level or the other. Second, the national government itself partly functions through
state-based institutions. While the Supremacy Clause in the Constitution declares the Constitution, laws, and treaties of the U.S. to be the supreme law of the land, the Constitution enumerates what kind of laws Congress has the power to enact. Moreover, the Tenth Amendment declares that the powers not delegated to the U.S. by the Constitution, nor prohibited by it to the states, are reserved to the states or to the people.

The Constitution recognizes a special position for the states in the federal Union. It gave states authority to ratify the Constitution itself and grants states the power to participate in amending the Constitution. Also, the
Constitution provides special roles for the states in the workings of the national government itself.

The Constitution lets states decide who can vote for members of the U.S. House of Representatives; it provides each state with equal representation in the U.S. Senate; and it gives states a role in the complicated system used to choose a president.

Finally, the Constitution sets forth provisions regulating relations among states, including the requirement that each state give "full faith and credit" to the public acts, records, and judicial proceedings of every other state, and
that citizens in each state are entitled to all the "privileges and immunities" of citizens in the several states. Also, fugitives from justice have to be delivered up to a state demanding them back.

Although the Founders clearly intended to establish a federal system, they left vague the exact division of powers between the nation and the states. The current division of authority between the states and the national government reflects nearly two centuries of struggle and conflict through which the national government has emerged as the dominant partner. The working out of the exact nature of state and national government powers has taken place in the courts and legislatures, but also in a civil war.


IV. Struggle over the Working of Federalism

It took a long time after the adoption of the Constitution for the present federal system to emerge. Through a series of milestone events, the national government gained ground in the distribution of power between the states and the national government. This development partly reflected the trends of
increased industrialization and economic growth but it also resulted from bitter and divisive national struggles over a series of issues, especially slavery, race, and regional economic interests. On several occasions, states attempted
to nullify national government laws, including the Virginia and Kentucky Resolutions, the Hartford Convention, and the reaction led by John C. Calhoun against the "tariff of abominations" in 1833.

The early history of the nation demonstrates that questions of federalism are often closely related to such issues as war and peace, civil liberties, and trade. These struggles also point out that people's positions on matters of high
principle, such as the proper nature of federalism, sometimes shift, depending on the immediate issue at stake. For example, the advocates of states rights have sometimes been Northerners, sometimes Southerners; sometimes Republicans, sometimes Federalists; sometimes liberals, sometimes
conservatives. Sides change based on who would gain and who would lose from a particular policy.

A crucial question about federalism in the early years of the U.S. concerned who, if anyone, would enforce the Supremacy Clause. Although the answer turned out to be the U.S. Supreme Court, the Court's power emerged only gradually and haltingly. In the 1793 case of Chisholm v. Georgia, the
Court decided a suit against a state by two citizens of another state.

Not until the early nineteenth century, however, under the leadership of Chief Justice John Marshall, did the Court draw a distinction between the relative power of the national and state governments. In 1803, the Marshall Court declared a national law to be unconstitutional in the case of Marbury v.
Madison.

In 1810, the Court invalidated a state law in the case of Fletcher v. Peck. The Court solidified its position in relation to the states in Martin v. Hunter's Lessee (1816). In this case, the Supreme Court explicitly upheld as constitutional Section 25 of the Judiciary Act of 1789 which allowed the Court to review (and overturn) state court decisions that denied a claim made under the Constitution or laws or treaties of the U.S.

Because of these court cases, the power of the national government gradually increased. It was not, however, until the 1821 Supreme Court case of McCulloch v. Maryland that the supremacy of the national government was firmly established. The case resulted from a dispute between the state of
Maryland and the Second Bank of the U.S., a federal government entity, over taxes imposed by Maryland on a branch of the bank.

The U.S. government claimed that a tax on a national government institution was invalid. Maryland responded that the incorporation of the bank was unconstitutional because it exceeded Congress's powers, and, in any case, states could tax whatever they wanted within their own borders. The
Supreme Court ruled in favor of the national government, stating that the Constitution emanated from the sovereign people. The people made their national government supreme over all rivals, it said, and those powers must be construed generously if the government is to be effective.

Citing the "necessary and proper clause" which authorizes Congress to make all laws it needs for carrying out its named power, the Court declared Maryland's tax on the national bank to be invalid. This case laid the foundation for the steady expansion of what the national government could do. The Court has also limited state government authority, holding that Congress may preempt states from acting in areas where their actions might interfere with federal legislation. This doctrine is known as the federal preemption of state authority.

The northern victory in the Civil War was a crucial event for American federalism. It decisively established that the Union was indissoluble and that states could not withdraw or secede. It also resulted in constitutional changes that subordinated the states to certain kinds of national standards, enforced by the central government.

The most notable constitutional change was the Fourteenth Amendment to the Constitution which established that no state shall "deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws. This amendment eventually became the vehicle by which the Supreme Court ruled that individual rights and liberties guaranteed by the Bill of Rights were protected not only against the national government, but also against the states.

Finally, the Civil War set precedents for an enormous expansion of the federal government's power, particularly that of the president's power in wartime.

Since the Civil War, the activities of the national government have expanded greatly, eventually reaching the present-day situation in which they touch on almost every aspect of daily life and are thoroughly entangled with state
government activities.

Federal influence grew most rapidly during and after the Great Depression and World War II, enhanced by Supreme Court decisions that have allowed a great expansion of national government authority. The passage of the Civil Rights Act of 1964, for example, was based on a broad interpretation of the
commerce clause. The law allows the national government to forbid discrimination in public accommodations on the grounds that public facilities engage in interstate commerce-- something that the Constitution explicitly states that the national government can regulate.

Today, the national government is dominant in many policymaking areas. State and national powers and activities have become deeply intertwined and entangled with one another.

The metaphor that described federalism as a "layer cake" in which national and state powers can be clearly divided is misleading. A more accurate metaphor is that of a "marble cake" in which elements of national and state influence swirl around each other, without any clear boundaries. Another
relevant metaphor is that of "picket fence" federalism, in which certain areas of policy are like fence posts, carrying a mixture of duties and responsibilities from top to bottom of the federal system, crossing the horizontal boards that
represent the national, state, and local levels.


V. National Grants-In-Aid to the States

The marble cake metaphor is especially appropriate for programs in which the national government grants money for use by the states. National grants began, in a sense, at least as early as the 1787 Northwest Ordinance, which
organized the territory of the Midwest north of the Ohio River and east of the Mississippi River. Land grants in the nineteenth century provided a great deal of land to states for help with building roads, canals, railroads, and
establishing schools. Small cash grant programs began around 1900 for agriculture, vocational education, and funding for highways.

The fastest growth in national grants took place in he 1950s, 1960s, and 1970s. By 1980, the annual amount of national grants-in-aid reached $91.5 billion, close to $500 for each person in the country. Grant money to the states increased because Congress sought to deal with many nationwide problems
by setting policy at the national level and by providing money from national tax revenues, while having states and local officials carry out the policies.

Why did Congress fund programs while allowing states and localities to administer them? First, states could not or would not fund many of these programs on their own. Many state and local government officials believed that funding redistributive programs would put them at a competitive
disadvantage in terms of attracting business investment and high income citizens. State and local officials were often reluctant to enact antipoverty programs, for example, because they feared that the taxes needed to pay for the programs would drive off business and industry while the programs
themselves would attract poor people to move to the area.

Second, many federal grants programs began in the 1960s, when the federal government had more money available than state and local governments did. Finally, Congress required local administration of grant programs (rather than establishing federal bureaucracies to manage them) because many of the
programs involved complicated goods and services such as education and health care that could not be administered efficiently at the national level.

Many of the new programs were established through categorical grants, which gave the states money but specified how the money was to be spent and how the programs were to work. In some cases, the federal government gave money directly to localities, bypassing state governments entirely. Funding
for some grants was based on formulas that included such factors as population and poverty level in a state or city.

Categorical grants were controversial. State and local officials frequently complained that national guidelines were too strict and contained too much red tape. They also objected to being forced to do things that they did not want to do. In the meantime, national officials sometimes complained that state and local governments did not always use the money for its intended purpose. Others opposed federal programs because they objected to the goals of the programs. In general, Democrats favored redistributive federal programs while Republicans oppose them.

In the late 1960s, President Richard Nixon proposed his New Federalism program, aimed at reducing federal restrictions of grant recipients. Between 1969 and 1977, the Nixon and Ford administrations loosened national control over grants spending, asking Congress to replace categorical grant
programs with block grants, which gave money to states and localities for more general purposes and with fewer conditions attached than do categorical grant programs. Congress also created the general revenue sharing program,
which provided grant money to state and local governments almost without condition.

By the latter years of the 1970s, however, the momentum to loosen restrictions on grant recipients slowed. Members of Congress who supported grant programs generally distrusted state and local governments to spend money wisely because they feared that special interests on the state and local
level would divert the money from its original targets. Consequently, they insisted that the national government keep tight control over what local governments could do with the grant money.

Beginning in the 1980s, the flow of federal money to the states began to diminish. In 1981, President Ronald Reagan proposed significant cuts in federal grants-in-aid to the states, many of which Congress enacted. By 1984, states and localities were getting only about one-quarter of their revenues from the federal government rather than their accustomed one-third.

The decline in federal grant money reflects the effects of structural factors and political developments. An important structural factor was the decline in the nation's economy which reduced the amount of revenue available for federal
grants.

Political factors also contributed to the decline in grants money. Liberals didn't like block grants and revenue sharing because much of the money went for purposes other than what they had in mind. In the meantime, conservatives objected to categorical grant programs because of red tape and what they
saw as the unresponsiveness of federal bureaucrats to local needs.

Moreover, a number of scholars and journalists wrote books highlighting the inability of national, state, and local officials to implement federal programs efficiently. (Later research found that this conclusion was overstated.)


VI. National Versus Local Control

Federal money, though less abundant than it once was, is still a major source of revenue for states. Moreover, state and local governments actively lobby Washington in hopes of influencing national policy. Nonetheless, the relationship between the national and state governments is not defined
simply by money, but also by control. The national government controls state-administered programs through mandates and conditions.

A mandate is a demand that states carry out certain policies even when little or no national government aid is involved. Many mandates involve federal regulations on civil rights and the environment. Most civil rights policies are based on the Equal Protection Clause of the Fourteenth Amendment to the
Constitution and national legislation such as the 1964 Civil Rights Act and the 1965 Voting Rights Act. National laws and regulations involving the environment have required state governments to set up environmental protection agencies and enforce federal standards that limit the kinds and amounts of pollutants that can be discharged.

Conditions are the most important way in which the national government controls state government actions. A condition is a restriction placed on state action when states use federal money. If states want the money, they have to abide by certain rules and conditions. In theory, conditions are
voluntary because states are not required to accept the aid. In practice, however, there is no clear line between incentives and coercion. Because states cannot generally afford to pass up federal money, they have to accept the
conditions.

During the 1980s and early 1990s, a number of states used their own funds to make up for lost federal dollars. Some states increased their Medicaid programs to help the poor with medical expenses. States such as California and New York adopted innovative environmental policies, moving ahead
of the more cautious Reagan and Bush administrations. As a result, many states were forced to raise sales taxes and excise taxes on gasoline, cigarettes, alcohol, and the like, all of which hit low- and middle-income people particularly hard. Tax increases caused political problems for those
controlling state government, costing a number of governors their jobs as voters expressed their displeasure at the ballot box.


VII. Democracy and Federalism

Federalism is a crucial structural factor that affects many aspects of politics, from the nature of the party system, to the way in which public policy is organized, to the method by which the president is chosen. Federalism makes for a complex policymaking process. At the same time, federalism permits varying responses to different situations. It allows for experimentation and for trying out policies different from those of the particular party controlling the national government.

Federalism makes it possible to implement policies that would not be possible to carry out on the state and local levels. The example of voting rights for eighteen-year-olds is one example. Without federalism and the national government's ability to coerce state and local governments to comply,
there is no guarantee that eighteen-year-olds would be allowed to vote in all areas of the country.

Federalism both enhances and detracts from democracy. On one hand, federalism promotes democracy because it allows state governments to counterbalance actions by the national government that may be unpopular in their regions. It also promotes democracy by allowing people in each community to do what their own majorities prefer, rather than having to
conform to a single national majority.

On the other hand, federalism can interfere with democracy because democratic processes may not work as well at the state level as they do at the national level. In state politics, popular participation tends to be lower; politics
tends to be less visible; interest groups may have an easier time getting their way. Thus political equality may be impaired. The national government may be better able than state governments to mobilize the public, make politics
visible, and ensure that government responds to what ordinary citizens want.