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Chapter 3: American Federalism

Part I: The Logic Behind Federalism

  • Think about this: How can a government serve both the shared interests of nearly 330 million people—and the unique needs of 50 very different states?

  • Shared Sovereignty: A New Idea in 1787

    • The U.S. Constitution created the first modern federal system—a bold shift from earlier forms of government. Before 1787, the idea of shared sovereignty—where national and state governments both hold authority over the same territory—wasn’t just unusual, it was practically unheard of.

  • Why didn’t the Founders push for a different system?

    • Technology and geography

    • Cultural differences

    • Political reality

  • Debating Federalism: National Power vs. State Power

    • The big debate: How much power should the new national government have?

    • Political scientist David Brian Robertson describes two groups:

    • Note: Madison and the Broad Nationalists even proposed that Congress could nullify state laws—not just if they were unconstitutional, but if they seemed unwise. That idea was defeated.

    • Broad Nationalists vs. Narrow Nationalists

    • Broad Nationalists: James Madison, Alexander Hamilton, James Wilson, Gouverneur Morris

    • Narrow Nationalists: Roger Sherman, Oliver Ellsworth, and most small-state delegates

    • Key differences:

      • Broad: Wanted expansive national power, including a legislative veto over state laws

      • Narrow: Wanted limited, clearly defined national powers

      • Common ground: Believed a stronger national government was essential for unity and progress; feared too much national control would undermine states' rights

  • The compromise? A federal system, with:

    • Shared sovereignty between the national and state governments

    • Reserved powers for the states

    • Limits on both national and state authority

    • The Supremacy Clause and Supreme Court as referees when conflicts arise

  • Why Federalism Still Matters

    • Shapes everyday life—from COVID-19 responses to debates over education, healthcare, and public safety.

    • The U.S. Constitution created a balance of power between states and the national government—but that balance isn’t fixed. It evolves with politics, crises, and leadership.

  • A Federal Republic is Fairly Uncommon

    • Larger, culturally diverse countries are more likely to adopt federalism—but most of the world relies on unitary systems, where central governments hold nearly all authority.

Part II: Federalism and the Constitution

  • Power, But Not Always Clarity

  • Full Faith and Credit Clause

  • Privileges and Immunities

  • Extradition

  • The Fugitive Slave Clause (Obsolete)

  • Understanding Constitutional Power

    • Enumerated Power

    • Unenumerated Power

    • Implied/Inherent powers

    • Implied powers can be traced to the powers expressed in the language of the Constitution.

    • Inherent powers derive from national sovereignty. Because the U.S. exists, inherent powers exist.

    • Federal Regulatory Power – The Commerce Clause

    • Federal Supremacy – Supremacy Clause

    • Reserved Power

    • Concurrent Power

Part III: The Good & Bad of Federalism

  • "It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory and try novel social and economic experiments without risk to the rest of the country." — Louis Brandeis

    • Source reference: https://www.youtube.com/watch?v=Lq6uEIuy768&t=5s

  • Other Claimed Advantages of Federalism

    • Accommodating Regional Differences

    • Developing Political Talent

    • Proximity to the People

  • The Other Side — Why Federalism Creates Problems

    • Amendment Process

    • Political Fragmentation

    • Low Participation and Influence

    • “Laboratories of Autocracy”

    • Economic Competition Between States

    • Federalism Blocking National Progress

Part IV: Fiscal Federalism: How Money Shapes Power

  • Why Federalism Isn’t Just About Laws — It’s About Money

  • Fiscal Federalism

  • Categorical Grants — Federal Money with Conditions

  • Block Grants — Federal Funds with Flexibility

  • Money Means Influence: Federal Leverage Over States

    • Federal dollars can come with direct or indirect policy pressure

    • Examples: Drinking Age Mandate; Unfunded mandates

  • Figure 1: Federal Grants as a Share of States' Budgets

    • Description: The share of state budget revenue financed by federal grants over time (FY 1971–2020)

    • Key trend: The share varies across decades, with notable increases during some periods and a general range in the 20s to mid-30s percent; by 2020, the share sits in the mid-30s percentile range

    • Note: Shaded columns indicate recessions

    • Source: Pew analysis of data from the U.S. Census Bureau, 2020 Annual Survey of State Government Finances; and National Bureau of Economic Research

  • Figure 2: Federal Grants Vary as a Share of State Budgets (Map, FY 2020)

    • Range across states: < 30% to 50%+ of state revenue from federal funds

    • 35.9% Share (national average for FY 2020)

    • Source: Pew analysis of data from the U.S. Census Bureau, 2020 Annual Survey of State Government Finances

  • Figure 3: Federal Grants Account for Over a Third of State Revenue (FY 2020)

    • Federal grants: 35.9 ext{ ext{%}}

    • Taxes: 45.8 ext{ ext{%}}

    • Service charges: 10.6 ext{ ext{%}}

    • Other: 7.6 ext{ ext{%}}

    • Note: Taxes include income, sales, and property taxes; Service charges are fees for services; “Other” includes property sales, fines, and revenue from local governments

    • Source: Pew analysis of data from the U.S. Census Bureau, 2020 Annual Survey of State Government Finances

Part V: Federalism in Action

  • Understanding Policy Diffusion

    • Video resource: https://www.youtube.com/watch?v=DRE3ZXIULwo&t=22s

  • Real-world examples in the news (illustrating policy diffusion and conflict between levels of government)

    • In Red States, Gun Reform often means easier access to guns (e.g., Dobbs-era debates and post-Dobbs abortion policy shifts) — NBC/CBS-style coverage (examples cited from Monica Potts and Shawa Mizelle)

    • Two years after Dobbs: Democratic-led states move to combat abortion bans (example coverage 2024)

  • UCF note: Emphasizes the ongoing patchwork created by state versus federal policy in health care, education, and public safety

Part VI: The Future of Federalism: A System Under Pressure

  • Growing Tensions, Complex Realities

    • State governments asserting independence on abortion, climate policy, and gun rights

    • Federal influence remains powerful via funding, regulations, and judicial decisions

    • Presidents from both parties have tested federal authority boundaries; clashes with governors and state legislatures seen through lawsuits, executive orders, and funding battles

  • You’ve seen this play out through lawsuits, executive orders, and funding battles that define today’s federalism debates

Key Trends Redefining Federalism

  • Partisan Polarization

    • Red vs. blue states with sharper policy differences and divergent legal landscapes

  • Fiscal Leverage and Economic Power Plays

    • Federal funding as a major tool to influence state policy

    • Proposals like DOGE, block grant restructuring, and the One Big Beautiful Bill illustrate dollars as leverage to shape state decisions

  • Institutional Shifts and the Courts

    • Courts continually interpret boundaries between federal and state power

    • Rulings on abortion, gun rights, and regulatory authority can escalate tensions and create legal uncertainty

What Comes Next?

  • The future of federalism depends on ongoing power struggles, political leadership, and the choices made by voters

  • Key questions to consider:

    • Will states expand their autonomy, or will national standards override local decisions?

    • How will funding debates reshape public services, healthcare, and infrastructure?

    • Can the system adapt to modern challenges—or will growing polarization weaken shared governance?

Final notes

  • The content shows a spectrum of perspectives on federalism — from arguments for a strong national government to concerns about overreach and loss of state autonomy

  • It highlights the central role of money in shaping policy outcomes (fiscal federalism) and the real-world consequences of policy diffusion across states

  • It also points to the evolving nature of constitutional power via court decisions and political developments

Quick reference: Key terms and concepts

  • Enumerated Powers: powers explicitly granted to the national government in the Constitution

  • Implied Powers: powers inferred from enumerated powers (Example: via the Necessary and Proper Clause)

  • Inherent Powers: powers arising from national sovereignty

  • Reserved Powers: powers retained by the states

  • Concurrent Powers: powers shared by both national and state governments

  • Commerce Clause: basis for federal regulation of interstate commerce

  • Supremacy Clause: federal law takes precedence over state law when in conflict

  • Full Faith and Credit Clause: requires states to recognize each other’s public acts, records, and judicial proceedings

  • Privileges and Immunities: prohibits states from discriminating against citizens of other states in fundamental rights

  • Extradition: process of returning a person charged with a crime to the state where the crime occurred

  • Fugitive Slave Clause (Obsolete): historical clause related to fugitive slaves; superseded by later amendments

  • Laboratory of Democracy: idea that a single courageous state can experiment with novel policies without risking the whole country

  • Coercive Federalism: use of federal dollars to press states into complying with national policy

  • DOGE: reference to a hypothetical or real federal funding consolidation plan discussed in debates about federal grants

  • Block Grants vs Categorical Grants: flexibility vs conditions in federal funding

  • Fiscal Federalism: how money and funding structures shape the balance of power between national and state governments

References and resources cited

  • Brandeis quote on laboratories of democracy (video link provided in slide): https://www.youtube.com/watch?v=Lq6uEIuy768&t=5s

  • News coverage references on abortion, gun policy, and state-federal conflicts (e.g., Dobbs aftermath, state immigration policies, environmental protections)

  • Pew and U.S. Census Bureau data sources for state budget funding shares (Figures 1–3 in the slides)

  • Thematic connections to broader discussions on federalism in historical and contemporary contexts