Federalism Notes

Basic Elements of a Federal System

• Federalism involves the division and sharing of powers among national, state, and local levels of government.

• The U.S. Constitution provides general guidelines for the jurisdiction lines between these levels (Articles I, IV, 10th and 16th Amendments).

The Idea of Federalism

• Federalism is a system where national and state governments share power within the same political system.

• Both levels have jurisdiction over individuals.

• The federal system represents a compromise between a strong central government and a league of separate states.

Comparative Perspective on Federalism

• Diverse countries such as the U.S., Canada, Russia, Mexico, Germany, and Brazil employ federal systems.

• Federalism aims to unite disparate groups (based on culture, language, geography, or religion) while respecting their distinct identities.

• The balance of power between central and constituent governments varies across federal systems.

• Political conflicts often arise from defining the balance between national objectives and group needs, as seen with French-speaking Quebec in Canada.

Unitary Forms of Government

• Unitary systems are based on a strong central government, emphasizing unity and alignment.

• Examples include France, Chile, Iceland, Hungary, Finland, and Turkey.

Unitary vs. Federal vs. Confederate Systems

• Unitary Government: Central government is dominant, emphasizing unity.

• Federal System: Balance between central and state governments, and between unity and diversity.

• Confederation: States are dominant, emphasizing diversity; weak central government.

Governmental Units in the U.S. Federal System

• The federal system includes national, state, and local governments.

• National, state, and many local governments are general-purpose governments performing a wide variety of functions (e.g., city governments providing police protection and social services).

• School districts and special districts overlap with general-purpose governments but focus on a single function (e.g., education, water distribution).

• The number of special districts has grown due to their ability to provide services collectively that local areas cannot afford individually.

• Special districts' tasks often extend beyond the boundaries of local general-purpose governments.

• Some local governments (towns or townships) lack the power to perform such functions due to state constitutions and governments.

Federalism Today

• The national government has become more dominant over the past century.

• States have emerged as public policy innovators, especially in education, welfare, and the environment.

• Despite states doing more, the national government has cut funds and increased regulations.

• U.S. Census data determines federal funding for state and local governments.

National Aid to State and Local Governments

• National aid increased sharply after 1960, peaking in 1980 at 227.1 billion in constant 2005 dollars, then declined through the 1980s.

• Aid began rising again in the early 1990s.

• In 2011, aid in constant dollars was estimated at twelve times the 1960 amount.

Federal Grants to State and Local Governments (2016)

• Health: 397 billion

• Income security: 105 billion

• Education: 61 billion

• Transportation: 64 billion

• Other: 35 billion

Government Relationships in the Federal System

• Dual Federalism (Layer Cake): National and state governments are separate and independent, each with its own jurisdiction.

• Cooperative Federalism (Marble Cake): All levels of government are intertwined and work closely together across a wide range of policies, despite occasional conflicts.

Express and Implied Powers of the National Government

• Express powers: Specifically listed in the Constitution (e.g., regulating interstate commerce, coining money, declaring war).

• Implied powers: Allow Congress to make laws “necessary and proper” to execute express powers (Article I).

• McCulloch v. Maryland (1819) interpreted the “necessary and proper” clause expansively, granting broad power to the national government.

• McCulloch also implied the principle of national supremacy.

National Government Jurisdiction

• National finance, interest rates, Federal Reserve, coining money

• Interstate commerce and trade

• Labor, education, environment, social welfare

• Taxation (16th Amendment)

• Domestic security, criminal justice, drug use

• Disaster relief

• National defense, foreign policy, military

Reserved Powers of the States

• According to the Tenth Amendment, powers not delegated to the national government or prohibited to the states are reserved to the states.

• States have “police” responsibilities for the health, safety, and welfare of citizens:- Prevention and prosecution of criminal activities.

  • Regulation of public safety, business, and commerce.

  • Providing universal education.

State Government Jurisdiction

• Education

• Welfare

• Criminal justice

• Marriage/divorce laws, licenses

• Driver’s licenses, auto insurance requirements

• Sales, income, property taxes

• Voter registration, election laws

• Disaster relief funding and procedures

• Public safety

• Public health

Local Government

• States control the structure and powers of local governments.

• Many local governments were granted home rule in the late nineteenth century, allowing them to determine their powers and functions within limits.

• Local government structures can be mayor-council, council-manager, or commissions.

• Local governments provide essential services and can sometimes cause local crises or controversies.

City/Local Government Jurisdiction

• Sanitation (water safety, sewage repair)

• Roads, sidewalks

• School buses

• Fire protection

• Construction regulations, residential construction, land development and permits

• Parks, recreation, festivals, parades

Diversity and Unity in Federalism

• Federalism creates a sense of states being like individual countries with their own laws.

• Moving across state borders means being subject to different standards and regulations.

• The national government provides a certain level of uniformity.

Tensions in Federalism

• Overlap in roles and policies between different levels of government can lead to tensions.

• Competition over influence in policymaking occurs.

Advantages of Federalism

• Suits large countries well.

• Accommodates and promotes cultural and regional diversity.

• Allows policy experimentation at the local level before nationwide implementation (e.g., marijuana legalization, same-sex marriage).

• Can advance civil rights as states have autonomy to initiate legislation against discrimination before the federal government (e.g., women's suffrage).

• Spreads out political power, improving democratic politics and representation.

• Poorer states benefit from federal assistance, grants, and programs.

• Provides Americans with more choices in where to reside due to different opportunities in each state.

Shortcomings of Federalism

• Creates complexity due to separated and shared powers, leading to political gridlock, conflict, competition, lawsuits, and strife.

• States' rights have been used to justify discrimination (e.g., segregation and refusal to desegregate after Brown v. Board of Education).

• Achieving national unity, consensus, and cohesion can be challenging.

• National/federal authorities are geographically remote from many people, weakening democratic politics at the national level.

• Economic differences across the states.

• Race-to-the-bottom dynamics (states lower standards, taxes, and regulations to attract business).

Questions for Reflection

• Do the advantages outweigh the disadvantages of federalism?

• What specific flavor does federalism add to politics compared to a unitary system?

• What is the most important advantage and the most problematic part of federalism?

• Given the diversity of states, what commonalities make a nation? What holds America together?

• What should young people be educated about to build, hold, and improve the country?

• How should we build a common ground in America, given its diversity?

• What state(s) is the best to live and work in and why?

• What state is “most American” and what state is “least American” and why?

• What should be the federal government's response if a state wants to secede?

• Should the federal government incorporate its territories as new member states?

E. Volokh “The American Tradition of Multiculturalism”: Main Points

• Several constitutional principles contribute to multiculturalism in the U.S.

• Multiculturalism has benefits and shortcomings (compare to pros and cons of federalism).

E. Volokh (cont.): Constitutional Provisions Supporting Multiculturalism

• Federalism

• Religious freedom

• Free speech and economic liberty

• Parental rights (choices between private, public, and homeschooling education)

E. Volokh (cont.): Benefits of Multiculturalism

• Increasing minorities members happiness

• Cultural diversity is an engine for the search of truth

• Multiculturalism is a source of valuable citizens

• Multiculturalism is a source of knowledge for dealing with the multicultural world

E. Volokh: Drawbacks of Multiculturalism

• Cultural tensions and even conflicts

• Not all cultures embrace tolerance of others

• Balances multiculturalism and national unity. What do you think about any of these points?

3.1 The Division of Powers

Federalism is a system of government that creates two relatively autonomous levels of government, each possessing authority granted to them by the national constitution. Federal systems like the one in the United States are different from unitary systems, which concentrate authority in the national government, and from confederations, which concentrate authority in subnational governments.
The U.S. Constitution allocates powers to the states and federal government, structures the relationship between these two levels of government, and guides state-to-state relationships. Federal, state, and local governments rely on different sources of revenue to enable them to fulfill their public responsibilities.

3.2 The Evolution of American Federalism

Federalism in the United States has gone through several phases of evolution during which the relationship between the federal and state governments has varied. In the era of dual federalism, both levels of government stayed within their own jurisdictional spheres. During the era of cooperative federalism, the federal government became active in policy areas previously handled by the states. The 1970s ushered in an era of new federalism and attempts to decentralize policy management.

3.3 Intergovernmental Relationships

To accomplish its policy priorities, the federal government often needs to elicit the cooperation of states and local governments, using various strategies. Block and categorical grants provide money to lower government levels to subsidize the cost of implementing policy programs fashioned in part by the federal government. This strategy gives state and local authorities some degree of flexibility and discretion as they coordinate with the federal government. On the other hand, mandate compels state and local governments to abide by federal laws and regulations or face penalties.

3.4 Competitive Federalism Today

Some policy areas have been redefined as a result of changes in the roles that states and the federal government play in them. The constitutional disputes these changes often trigger have had to be sorted out by the Supreme Court. Contemporary federalism has also witnessed interest groups engaging in venue shopping. Aware of the multiple access points to our political system, such groups seek to access the level of government they deem will be most receptive to their policy views.

3.5 Advantages and Disadvantages of Federalism

The benefits of federalism are that it can encourage political participation, give states an incentive to engage in policy innovation, and accommodate

Modern democracies divide governmental power through separation of powers (legislative, executive, judiciary) and federalism (national and subnational levels).

Federalism Defined

Federalism creates two autonomous levels of government, each acting on behalf of the people with authority from the national constitution. Key characteristics include:

• Two levels of government: National and subnational, each elected and assigned different functions. The national government handles nationwide matters, while subnational governments manage regional issues.

• Written national constitution: Requires substantial consent of subnational governments for changes, ensuring broad support for amendments.

• Allocation of authority: Legislative, judicial, and executive powers are formally allocated to both levels, ensuring autonomy.

• National courts: Resolve disputes between government levels, preserving or eroding autonomy through decisions.

• Subnational representation: Subnational governments are represented in the upper house of the national legislature, influencing national lawmaking.

Alternative Systems

• Unitary System: Subnational governments are dependent on the national government, where authority is concentrated. Power can be decentralized through devolution.

• Confederation: Authority is decentralized, and the central government's power depends on the consent of subnational governments. This maximizes regional self-rule but can undermine effective national governance.

Federalism and the Constitution

The Constitution outlines the functioning of U.S. federalism through:

• Enumerated Powers: Article I, Section 8, defines the jurisdictional boundaries of the federal government, including powers to tax, borrow money, regulate commerce, and provide for national defense.

• Elastic Clause: The “necessary and proper” clause enables Congress to create laws to fulfill its responsibilities, expanding national authority.

• Reserved Powers: The Tenth Amendment affirms that powers not delegated to the federal government are reserved to the states. However, shared concurrent powers have become integral to contemporary federalism.

Restrictions on Authority

• Federal Restrictions: Article I, Section 9, prevents measures that deprive personal liberty. The Bill of Rights further ensures government cannot encroach on personal freedoms.

• State Restrictions: Article I, Section 10, prohibits states from treaties, coining money, and levying taxes on imports/exports. The Fourteenth Amendment prevents states from denying citizens their constitutional rights.

• Supremacy Clause: Article VI declares the Constitution and federal law as the supreme law of the land, binding all government officials.

State-to-State Relations

• Full Faith and Credit Clause: Article IV, Section 1, requires states to accept court decisions, public acts, and contracts of other states.

• Privileges and Immunities Clause: States cannot discriminate against out-of-staters by denying them access to courts, legal protection, property rights, and travel rights.

Distribution of Finances

• Sixteenth Amendment: Authorized Congress to impose income taxes, increasing the federal government's revenue and spending power.

• Federal Grants: Transfers of federal money to state and local governments, supporting their activities and encouraging federal policy objectives.

Revenue Sources (2020)

• Federal Government: Primarily from individual income taxes (47%) and payroll taxes (38%).

• State Governments: Primarily from taxes (39%) and federal support (25%). Sales tax and individual income taxes are major components.

• Local Governments: Primarily from property taxes (72%), federal and state grants (30%), and service charges.

Spending (2019)

• Federal Budget: Largest categories are Social Security (24%), health care (24%), and defense (18%).

• State and Local Governments: Major categories are education, public welfare programs, and infrastructure.

The Constitution provides a general framework for federalism, but state and national officials have some flexibility, leading to changes in the balance of power over time.

The Struggle Between National Power and State Power

• Early Conflicts: Alexander Hamilton's Bank of the United States faced opposition from Thomas Jefferson, who argued it exceeded national government authority. The Second Bank of the United States also faced state resistance.

• McCulloch v. Maryland (1819): Upheld Congress's power to create a national bank under the necessary and proper clause and established national supremacy, preventing states from taxing federal property; introduced the doctrine of implied powers.

• Gibbons v. Ogden (1824): Affirmed federal authority over interstate commerce, including navigation, strengthening national power.

• Nullification Crisis: South Carolina opposed tariffs in the 1830s, asserting the doctrine of nullification. The crisis ended with the Force Bill and a compromise tariff act.

• Civil War: The Union victory ended the right of states to secede and led to the ratification of the Fourteenth and Fifteenth Amendments, further shifting power to the national government.

Dual Federalism

• Emergence: Characterized by distinct spheres of authority for state and national governments, with limited overlap.

• Economic Philosophy: Reflected a preference for minimal government intervention in industrial development.

• Regulatory Efforts: Congress passed the Interstate Commerce Act (1887) and the Sherman Antitrust Act (1890) to regulate industries and prevent monopolies.

• Legal Blows: United States v. E. C. Knight (1895) limited federal authority to regulate manufacturing, preserving state control over production.

• Labor Regulations: Lochner v. New York deemed state work hour regulations unconstitutional, protecting individual labor rights.

Cooperative Federalism

• Emergence: Arose from the Great Depression, necessitating coordinated national and state responses.

• Characteristics: Blended jurisdictional boundaries, with both levels of government working together.

• New Deal: Franklin D. Roosevelt's programs faced initial Supreme Court opposition but eventually led to expanded federal powers.

• NLRB v. Jones and Laughlin Steel: Upheld the National Labor Relations Act, allowing Congress to regulate manufacturing and labor relations.

• Lasting Attributes: Nationalization of politics and state flexibility in implementing federal social welfare programs were introduced.

New Federalism

• Premise: Decentralization enhances administrative efficiency, reduces spending, and improves outcomes.

• Implementation: Presidents Nixon and Reagan sought to return authority to the states.

• Omnibus Budget Reconciliation Act of 1981: Consolidated federal grant programs, giving states greater discretion.

• Inconsistent Progress: Reagan faced Congressional opposition and was unable to fully devolve programs.

• Supreme Court Rulings: United States v. Lopez limited the scope of the commerce clause, curbing federal power.

• Post-9/11 Shift: Increased federal power through the creation of the Department of Homeland Security and Transportation Security Administration.

Finding a Middle Ground: Cooperative Federalism versus New Federalism

• Cooperative Federalism Merits:

  • Ensures uniformity in public services.

  • Addresses collective action problems.

  • Maintains programs with positive externalities.

• New Federalism Advantages:

  • Accommodates diversity among states.

  • Better responsiveness to citizens' needs.

  • Fosters policy innovation through state competition.

The national government’s ability to achieve its objectives often requires the participation of state and local governments.

Grants

The national government has used grants to influence state actions as far back as the Articles of Confederation when it provided states with land grants. At the turn of the twentieth century, cash grants replaced land grants as the main form of federal intergovernmental transfers and have become a central part of modern federalism.

Federal cash grants do come with strings attached; the national government has an interest in seeing that public monies are used for policy activities that advance national objectives. Categorical grants are federal transfers formulated to limit recipients’ discretion in the use of funds and subject them to strict administrative criteria that guide project selection, performance, and financial oversight, among other things. Block grants come with less stringent federal administrative conditions and provide recipients more flexibility over how to spend grant funds.

During the 1960s and 1970s, funding for federal grants grew significantly, as the graphic shows in Figure 3.13. The increase since the 1990s is primarily due to the increase in federal grant money going to Medicaid. Health-related grant programs such as Medicaid and the Children’s Health Insurance Program (CHIP) represented more than half of total federal grant expenses.

The national government has greatly preferred using categorical grants to transfer funds to state and local authorities because this type of grant gives them more control and discretion in how the money is spent. There are a couple of reasons that categorical grants are more popular than block grants despite calls to decentralize public policy. One reason is that elected officials who sponsor these grants can take credit for their positive outcomes (e.g., clean rivers, better-performing schools, healthier children, a secure homeland) since elected officials, not state officials, formulate the administrative standards that lead to the results. Another reason is that categorical grants afford federal officials greater command over grant program performance.

Reagan’s “devolution revolution” contributed to raising the number of block grants from six in 1981 to fourteen in 1989. Block grants increased to twenty-four in 1999 during the Clinton administration and to twenty-six during Obama’s presidency, but by 2014 the total had dropped to twenty-one, accounting for 10 percent of total federal grant outlay.

Another noteworthy characteristic of block grants is that their flexibility has been undermined over time as a result of creeping categorization, a process in which the national government places new administrative requirements on state and local governments or supplants block grants with new categorical grants.

Unfunded Mandates

Unfunded mandates are federal laws and regulations that impose obligations on state and local governments without fully compensating them for the administrative costs they incur. The federal government has used mandates increasingly since the 1960s to promote national objectives in policy areas such as the environment, civil rights, education, and homeland security. These types of mandates are commonly referred to as crosscutting mandates. Failure to fully comply with crosscutting mandates can result in punishments that normally include reduction of or suspension of federal grants, prosecution of officials, fines, or some combination of these penalties.

For example, Title VI of the Civil Rights Act of 1964 authorizes the federal government to withhold federal grants as well as file lawsuits against state and local officials for practicing racial discrimination. Finally, some mandates come in the form of partial preemption regulations, whereby the federal government sets national regulatory standards but delegates the enforcement to state and local governments. For example, the Clean Air Act sets air quality regulations but instructs states to design implementation plans to achieve such standards.

The widespread use of federal mandates in the 1970s and 1980s provoked a backlash among state and local authorities, which culminated in the Unfunded Mandates Reform Act (UMRA) in 1995. The UMRA’s main objective has been to restrain the national government’s use of mandates by subjecting rules that impose unfunded requirements on state and local governments to greater procedural scrutiny.

The continued use of unfunded mandates clearly contradicts new federalism’s call for giving

The federal design of our Constitution has had a profound effect on U.S. politics.

The Benefits of Federalism

Among the merits of federalism are that it promotes policy innovation and political participation and accommodates diversity of opinion. On the subject of policy innovation, Supreme Court Justice Louis Brandeis observed in 1932 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.”

Another advantage of federalism is that because our federal system creates two levels of government with the capacity to take action, failure to attain a desired policy goal at one level can be offset by successfully securing the support of elected representatives at another level. Thus, individuals, groups, and social movements are encouraged to actively participate and help shape public policy.

The system of checks and balances in our political system often prevents the federal government from imposing uniform policies across the country. As a result, states and local communities have the latitude to address policy issues based on the specific needs and interests of their citizens. The diversity of public viewpoints across states is manifested by differences in the way states handle access to abortion, distribution of alcohol, gun control, and social welfare benefits, for example.

The Drawbacks of Federalism

Federalism also comes with drawbacks. Chief among them are economic disparities across states, race-to-the-bottom dynamics (i.e., states compete to attract business by lowering taxes and regulations), and the difficulty of taking action on issues of national importance.

Stark economic differences across states have a profound effect on the well-being of citizens.

The economic strategy of using race-to-the-bottom tactics in order to compete with other states in attracting new business growth also carries a social cost. For example, workers’ safety and pay can suffer as workplace regulations are lifted, and the reduction in payroll taxes for employers has led a number of states to end up with underfunded unemployment insurance programs.

The federal design of our Constitution and the system of checks and balances has jeopardized or outright blocked federal responses to important national issues. President Roosevelt’s efforts to combat the scourge of the Great Depression were initially struck down by the Supreme Court. More recently, President Obama’s effort to make health insurance accessible to more Americans under the Affordable Care Act immediately ran into legal challenges from some states, but it has been supported by the Supreme Court so far. However, the federal government’s ability to defend the voting rights of citizens suffered a major setback when the Supreme Court in 2013 struck down a key provision of the Voting Rights Act of 1965.

questions:

Q: Describe the primary differences in the role of citizens in government among the federal, confederation, and unitary systems.
A:
Federal System: Citizens are subject to the laws and jurisdictions of both national and state governments. They participate by electing representatives at both levels, influencing policy at multiple levels.

Confederation: Citizens primarily interact with and are governed by their state governments. The central government has limited direct authority over individuals.
Unitary System: Citizens are primarily governed by the central government, which holds the most authority. Subnational entities have limited autonomous power.

Q: How have the political and economic relationships between the states and federal government evolved since the early 1800s?
A:

Early 1800s: Characterized by debates over the balance of power (e.g., the Bank of the United States). McCulloch v. Maryland (1819) affirmed national supremacy.
Dual Federalism: State and federal governments had distinct spheres with minimal overlap. The federal government's role in the economy was limited.
Cooperative Federalism: Emerged during the Great Depression. The federal government became more involved in state matters through programs like the New Deal.
New Federalism: A push for decentralization and returning power to the states, though this has seen inconsistent implementation.

Q: Discuss how the federal government shapes the actions of state and local governments.
A:
Grants: The federal government provides financial aid to state and local governments. Categorical grants come with specific requirements, while block grants offer more flexibility.
Mandates: The federal government imposes requirements on state and local governments, sometimes without full funding (unfunded mandates). These mandates can cover areas like civil rights, the environment, and education.

Q: What are the merits and drawbacks of American federalism?
A:
Merits:
Promotes policy innovation (states as “laboratories”).
Encourages political participation by providing multiple access points.
Accommodates diverse public viewpoints across states.
Drawbacks:
Economic disparities across states.
Race-to-the-bottom dynamics (states lowering standards to attract business).
Difficulty in addressing issues of national importance due to divided authority.

Q: What do you see as the upcoming challenges to federalism in the next decade? Choose an issue and outline how the states and the federal government could respond.

A:
Issue Choice: Climate Change

Federal Government:

Set national standards for emissions and renewable energy.

Provide grants to states for climate resilience projects.

State Governments:

Implement state-level carbon pricing mechanisms.

Invest in renewable energy infrastructure.

Collaborate with other states on regional climate initiatives.