Federalism - Forging a Nation

Federalism:Forging a Nation

33The question of the relation of the states to the federal

government is the cardinal question of ourConstitutional system. It cannot be settled by theopinion of one generation, because it is a question

of growth, and each successive stage of our politicaland economic development gives it a new aspect,

makes it a new question.

Woodrow Wilson1

Senate Republican Leader Trent Lott declared it a triumph for those who believethat the answers to Americas problems are more likely to be found in Albany,Sacramento, and Jackson than in Washington. Senator Daniel Patrick Moynihan,an outspoken critic of the legislation, called it the most brutal act of social policy sinceReconstruction. He claimed that within a decade the legislation would push morethan a million children into poverty.2

At issue was the nations program of assistance for poor families and whether theprogram would be directed by the national government or the states. Since the 1930s,the program had been run out of Washington as an entitlement policy, which meantthat every American family who met the eligibility criteria was entitled to assistance.For many liberal Democrats, it was the cornerstone of the idea that no needy Americanfamily, wherever it resided, would be denied help. Individual states had some leewayin deciding the amount of support a needy family would receive each month, but theyhad to participate in the program and contribute to its funding.

The new legislation ended this federal guarantee of cash assistance, replacing itwith a system of cash grants to the states, which would assume responsibility for car-ing for welfare recipients and getting them into jobs. The legislation fulfilled the long-held desire of conservative Republicans to reduce welfare dependency and movewelfare recipients into tax-paying jobs. It also met their goal of reducing the power ofthe federal government. Under the new program, states would have to support aneedy family for five years but could deny benefits if, after two years, an able-bodiedadult refused to accept a job or job training. And after five years, a state could uncon-ditionally deny benefits to poor families.

The 1996 Welfare Reform Act is one of thousands of controversies during Ameri-can history that have hinged on whether national or state authority should prevail.Americans possess what amounts to dual citizenship: they are citizens both of theUnited States and of the state where they reside. The American political system is afederal system, one in which constitutional authority is divided between a national gov-ernment and state governments: each is assumed to derive its powers directly fromthe people and therefore to have sovereignty (final authority) over the policy responsi-bilities assigned to it. The federal system consists of nation and states, indivisible andyet separate.3

This chapter on American constitutionalism focuses on federalism. The nature ofthe relationship between the nation and the states was the most pressing issue whenthe Constitution was written in 1787, and this chapter describes how that issue helpedshape the Constitution. The chapters closing sections discuss how federalism haschanged during the nations history and conclude with a brief overview of contempo-rary federalism. The main points presented in the chapter are the following:

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The power of government must be equal to its responsibilities. The Constitutionwas needed because the nations preceding system (under the Articles ofConfederation) was too weak to accomplish its expected goals,particularly those of a strong defense and an integrated economy.

Federalismthe Constitutions division of governing authority between twolevels, nation and stateswas the result of political bargaining. Federalism wasnot a theoretical principle, but a compromise made necessary in 1787 bythe prior existence of the states.

Federalism is not a fixed principle for allocating power between the national andstate governments, but a principle that has changed over the course of time inresponse to new political needs. Federalism has passed through several distinctstages during the nations history.

Contemporary federalism tilts toward national authority, reflecting the increasedinterdependence of American society. However, there is a current trendtoward reducing the scope of federal authority.

FEDERALISM: NATIONAL ANDSTATE SOVEREIGNTY

The delegates to the Philadelphia convention in 1787 included many of thenations most prominent leaders, such as George Washington and BenjaminFranklin. Not all of Americas top leaders were at the convention, however, andmany of them were steadfastly opposed to a strong national government. Whenrumors circulated that the convention would propose a new form of govern-ment rather than an amended Articles of Confederation, Patrick Henry, an ar-dent supporter of state-centered government, said that he smelt a rat. Afterthe convention had adjourned, he realized that his fears were justified. Whoauthorized them, he asked, to speak the language of We, the People, insteadof We, the States?

68 P A R T O N E Foundations

Patrick Henry was a leadingfigure in the AmericanRevolution (Give me libertyor give me death!). He lateropposed ratification of theConstitution on grounds thatthe national government shouldbe a union of states and notalso of people.

The questionpeople versus states?was dictated by the experience withthe Articles of Confederation. The government of the Articles (see Chapter 2) wasa union of states rather than also of people. The result was an inherently weak na-tional government, since its strength rested entirely on the states willingness tocooperate. If they refused to contribute to the collective effort, the national gov-ernment had no sure way to make them comply. Georgia and North Carolina, forexample, contributed no money at all to the national treasury between 1781 and1786, and the national government could do nothing more than to implore themto pay a fair share of the costs of defense, diplomacy, and other national policies.The only realistic solution was a government based on the people. If ordered topay taxes, individuals would either do so or face consequencesimprisonmentor confiscation of propertythat most of them would choose to avoid.

Although the need for a national government based directly on the peoplewas therefore a goal of the writers of the Constitution, they also wanted to pre-serve the states as governing bodies. When Virginias George Mason said hewould never agree to a union that abolished the states, he was speaking for vir-tually all the delegates. The Philadelphia convention thereby devised a systemof government that came to be known as federalism. Federalism is the divisionof sovereignty, or ultimate governing authority, between a national governmentand regional (that is, state) governments. Each directly governs the people andderives its powers from them.

American federalism is basically a system for dividing authority betweensovereign national and state governments (see Figure 31). The system givesstates the power to address local matters in separate ways, thus providing for aresponsiveness to local values and differences. At the same time, federalism givesthe national government the power to decide matters of broad national scope ona uniform basis. In practice, there is some overlap between state and national ac-tion, but there is also a division of responsibilities. The national government hasprimary responsibility for national defense and the currency, among other things,while the states have primary responsibilities for such policy areas as public ed-ucation and police protection. The national and state governments also havesome concurrent powers (that is, powers exercised over the same areas of policy);for example, each has the power to raise taxes and borrow money.

A federal system is different from a confederacy, which is the type of gov-ernment established by the Articles. A confederacy is a union where the statesalone are sovereign. The authority of the central government is derived from

C H A P T E R 3 Federalism: Forging a Nation 69

Figure 31Federalism as a GoverningSystem: Examples of National,State, and Concurrent PowersThe American federal systemdivides sovereignty between anational government and thestate governments. Each isconstitutionally protected inits existence and authority,although their powers overlapsomewhat even in areasgranted to one level (for exam-ple, the federal governmenthas a role in education policy).

National powers Concurrent powers State powers

National defenseCurrency

Post officeForeign affairs

Interstate commerce

Charter local governmentsEducation

Public safetyRegistration and voting

Intrastate commerce

Loan and borrow moneyTaxation

Law enforcementCharter banksTransportation

federalism A governmentalsystem in which authority isdivided between two sovereignlevels of government: nationaland regional.

sovereignty The ultimateauthority to govern within acertain geographical area.

confederacy A governmentalsystem in which sovereignty isvested entirely in subnational(state) governments.

the states, which can, at will, redefine the central governments authority. Fed-eralism is also different from a unitary system, in which sovereignty is vestedsolely in the national government. In a unitary system, all regional and localgoverning units are subject to national authority. The people are citizens or sub-jects only of the national government, and the other governments derive theirauthority from the national government, which can, in theory at least, abolishthem or redefine their authority.

In a federal system, because the national and state governments are bothsovereign, each has powers that are not subject to the others discretion. More-over, each is protected constitutionally in its existence and from undue interfer-ence by the other in the conduct of its lawful affairs.

Federalism was invented in America in 1787. It was different not only froma confederate or unitary system but also from any form of government theworld had known. The ancient Greek city-states and the medieval HanseaticLeague were confederacies. The governments of Europe were unitary in form.The United States of America would be the first nation to be governed througha true federal system.

The Argument for FederalismUnlike many other decisions made at the Philadelphia convention, federalismhad no clear basis in political theory. Federalism was a practical necessity: therewas a need for a stronger national government and yet the states existed andwere intent on retaining their sovereignty.

Nevertheless, the Framers developed arguments for the superiority of thistype of political system. Federalism, they said, would protect liberty, moderatethe power of government, and provide the foundation for a strong and ener-getic national government.


HOW THE UNITED STATES COMPARES

Federal Versus Unitary Governments

Federalism involves the division of sovereignty be-tween a national government and subnational (suchas state) governments. It was invented in 1787 in or-der to maintain the preexisting American states whileestablishing an effective central government. Sincethen a number of other countries have established afederal government, but most countries have a uni-tary government, in which all sovereignty is vested inthe national government. In some cases, countrieshave developed hybrid versions. Great Britains gov-ernment is formally unitary, but Parliament hasgranted some autonomy to regions. Mexicos systemis formally federal, but in actuality nearly all power isconcentrated in the national government.

COUNTRY FORM OF GOVERNMENT

Canada Federal

France Unitary

Germany Federal

Great Britain Modified unitary

Italy Modified unitary

Japan Unitary

Mexico Modified federal

United States Federal

Sweden Unitary

unitary system A govern-mental system in which thenational government alone hassovereign (ultimate) authority.

Protecting LibertyTheorists such as Locke and Montesquieu had notproposed a division of power between national andlocal authorities as a further means of protecting lib-erty. Nevertheless, the Framers came to look uponfederalism as part of the Constitutions system ofchecks and balances (see Chapter 2). AlexanderHamilton argued in Federalist No. 28 that the Ameri-can people could shift their loyalties back and forthbetween the national and state governments in orderto keep each under control. If [the peoples] rightsare invaded by either, Hamilton wrote, they canmake use of the other as the instrument of redress.

Moderating the Power of GovernmentTo the Anti-Federalists (opponents of the Constitution), the sacrifice of statespower to the nation was as unwise as it was unnecessary. They argued that adistant national government could never serve the peoples interests as well asthe states could. In support of their contention, the Anti-Federalists turned toMontesquieu, who had concluded that a small republic is more likely than alarge one to respect and respond to the people it governs. When governmentencompasses a small area, he argued, its leaders are in closer touch with thepeople, have a better understanding of their needs, and a greater concern fortheir interests.

James Madison took issue with this argument. In Federalist No. 10, Madisoncontended that whether a government serves the common good is a function notof its size but of the range of interests that share political power. The problemwith a smaller republic, Madison claimed, is that it is likely to have a dominantfactionwhether it be large landholders, financiers, an impoverished majority,or some other groupthat is strong enough to take full control of government,using this power to advance its selfish interests. A large republic is less likely tohave such an all-powerful faction. If financiers are strong in one area of a largerepublic, they are likely to be weaker elsewhere, and the same will be true ofother interests. By this reasoning, Madison concluded that political control in alarge republic could not be won by a single interest but would require a joiningof interests, each of which would be forced to limit its demands and to respectthe interests of others. Extend the sphere, said Madison, and you take in agreater variety of parties and interests; you make it less probable that a majorityof the whole will have a common motive to invade the rights of other citizens.

Strengthening the UnionThe most telling argument in 1787 for a federal system, however, was that itwould overcome the deficiencies of the Articles. The Articles had numerousflaws (including a very weak executive and a judiciary subservient to the statecourts), and two of them were fatal: the government had neither the power totax nor the power to regulate commerce.


Alexander Hamilton (17571804)

Alexander Hamilton was justthirty-two years old when he servedas a delegate to the constitutionalconvention in Philadelphia. A strongnationalist, his Federalist Papers essays con-tributed to the ratification of the Constitution. GeorgeWashington appointed him to be the first secretary ofthe treasury, where he developed plans for the FirstBank of the United States and for placing the federalgovernment on a sound financial footing. He was fa-tally wounded in a duel with Aaron Burr, a politicaland personal foe.

Whats Your Opinion?Large Versus Small RepublicsDuring the debate overratification of the Constitution,Americans argued overwhether liberty and equalitywould be better protected bythe states or by the nation.The Anti-Federalists arguedthat a small republic wascloser to the people andtherefore would do more toprotect their rights. JamesMadison countered by sayingthat a large republic waspreferable because it wouldhave such a diversity ofinterests that compromiseand tolerance among variousgroups would be required.

In your view, which side inthis argument has the weightof American history behind it?

Under the Articles, Congress was given responsibility for national defensebut was not granted the power to tax, and so it had to rely on the states for themoney to maintain an army and navy. During the first six years under the Arti-cles, Congress asked the states for $12 million but received only $3 millionnoteven enough to pay the interest on Revolutionary War debts. By 1786 the na-tional government was so desperate for funds that it sold the navys ships andhad fewer than a thousand soldiers in uniformthis at a time when Englandhad an army in Canada and Spain occupied Florida.

Congress was also expected to shape a national economy, yet it was power-less to do so because the Articles forbade interference with the states commercepolicies. States imposed trade barriers on each other. Connecticut placed ahigher tariff on finished goods from Massachusetts than it did on the samegoods shipped from England. New Jersey imposed a duty on foreign-madegoods shipped from other states. New York responded by taxing goods fromNew Jersey shipped through New York ports.

The Articles of Confederation showed the fallacy of the adage That govern-ment is best which governs least. The consequences of an overly weak authoritywere abundantly clear: public disorder, economic chaos, and inadequate defense.

The Powers of the NationThe Philadelphia convention met to decide the powers of the national govern-ment. The delegates had not been sent to determine how state governmentshould be structured. Accordingly, the U.S. Constitution focuses on the lawfulauthority of the national government, which is provided through enumerated andimplied powers. Authority that is not in this way granted to the national govern-ment is leftor reservedto the states. Thus the states have reserved powers.


It could take weeks to traveloverland or by ship from themost distant points in theAmerican states. The greatsize of America whencompared with Europeancountries was used as anargument by both those whofavored a strong union andthose who opposed it.

Enumerated PowersArticle 1 of the Constitution grants to Congress seventeen enumerated (ex-pressed) powers. These powers were intended by the Framers to be the basis fora government strong enough to forge a union that was secure in its defense andstable in its commerce. Congresss powers to regulate commerce among thestates, to create a national currency, and to borrow money, for example, wouldprovide a foundation for a sound national economy. Its power to tax, combinedwith its authority to declare war and establish an army and navy, would enableit to provide for the common defense. In addition, the Constitution prohibitedthe states from actions that would interfere with the national governments ex-ercise of its lawful powers. Article 1, Section 10 forbids the states to make treatieswith other nations, raise armies, wage war, print money, or make commercialagreements with other states without the approval of Congress.

The writers of the Constitution recognized that the lawful exercise of na-tional authority would at times conflict with the actions of the states. In such in-stances, national law was intended to prevail. Article 6 of the Constitutiongrants this dominance in the so-called supremacy clause, which provides thatthe laws of the United States . . . shall be the supreme law of the land.

Implied PowersThe Framers of the Constitution also recognized that an overly narrow defini-tion of national authority would result in a government incapable of adaptingto change. Under the Articles of Confederation, Congress was strictly limitedto those powers expressly granted to it, inhibiting its ability to respond ef-fectively to the countrys changing needs after the Revolutionary War. Con-cerned that the enumerated powers by themselves might be too restrictive ofnational authority, the Framers added the necessary and proper clause, or, asit later came to be known, the elastic clause. Article 1, Section 8 gives Congressthe power to make all laws which shall be necessary and proper for carryinginto execution the foregoing [enumerated] powers. This grant gave thenational government implied powers: the authority to take action that is notexpressly authorized by the Constitution but that supports actions that areso authorized.

The Powers of the StatesThe Framers preference for a sovereign national government was not sharedin 1787 by all Americans. Although Anti-Federalists recognized a need tostrengthen defense and interstate commerce, they feared the consequences ofa strong central government. The interests of the people of New Hampshirewere not identical to those of Georgians or Pennsylvanians, and the Anti-Federalists argued that only state-centered government would protect and pre-serve this diversity.

The Federalists responded by asserting that the national government wouldhave no interest in submerging the states.4 The national government would takeresponsibility for establishing a strong defense and for promoting a soundeconomy, while the states would retain nearly all other governing functions,


enumerated (expressed)powers The seventeen powersgranted to the national govern-ment under article 1, section8 of the Constitution. Thesepowers include taxation andthe regulation of commerce aswell as the authority to providefor the national defense.

supremacy clause Article 6 ofthe Constitution, which makesnational law supreme overstate law when the nationalgovernment is acting withinits constitutional limits.

necessary and properclause (elastic clause) Theauthority granted Congressin Article 1, Section 8 of theConstitution to make all lawswhich shall be necessary andproper for the implementationof its enumerated powers.

implied powers The federalgovernments constitutionalauthority (through the neces-ary and proper clause) to takeaction that is not expresslyauthorized by the Constitutionbut that supports actions thatare so authorized.

Why Should I Care?

including oversight of public morals, education, and safety. The national gov-ernment, Madison said, would neither want these responsibilities nor have thecompetence to fulfill them.5

This argument did not persuade the Anti-Federalists that their fears of apowerful national government were unfounded. Even some of the Americanswho were otherwise inclined to support the proposed constitution worried thatit would lead to an overly powerful national government. The supremacy andnecessary and proper clauses were particularly worrisome, because they pro-vided a constitutional basis for future expansions of national authority. Suchconcerns led to demands for a constitutional amendment that would protect thestates against encroachment by the national government. Ratified in 1791 as theTenth Amendment to the Constitution, it reads: The powers not delegated tothe United States by the Constitution, nor prohibited by it to the States, are re-served to the States. The states powers under the U.S. Constitution are thuscalled reserved powers.

FEDERALISM INHISTORICAL PERSPECTIVE

Since ratification of the Constitution two centuries ago, no aspect of it has pro-voked more frequent or bitter conflict than federalism. By establishing two lev-els of sovereign authority, the Constitution created competing centers of powerand ambition, each of which was sure to claim disputed areas as belongingwithin its realm of authority.

Federalism: Who GovernsAffects YouWhen Americans think about the question whogoverns, they usually think in terms of whetherthe Republicans or the Democrats are in power.For much of Americas history, however, the ques-tion evoked thoughts of federalism. Would thenation decide? Or would the states decide?

Even though Americans are governed moreuniformly today than in the past, the issue ofstate or nation is still a critical one. Abortion isperhaps the preeminent example. The SupremeCourts Roe v. Wade (1973) decision made thechoice of an abortion a constitutionally protectedright in some circumstances. Before then, abor-tion was governed strictly by state laws, andmost states banned it entirely. States still havesome authority in the area (for example, they canimpose a parental-consent requirement on minors

in some circumstances), but they are preventedby federal law from outlawing it entirely.

Federal power has also lost out to statepower in some policy areas. For example, twofederal actsthe Age Discrimination Act and theAmericans with Disabilities Acthave recentlybeen judged not to apply to the actions of stategovernments. State governments have broad dis-cretion in their treatment, for example, of elderlyand disabled employees and job seekers.

The list of examples could be extended, butthe point would be the same: how you are gov-erned depends to a degree on who does the gov-erning. Policy issues are not determined solely bywhether the Republicans or the Democrats arein charge. They are affected also by whether thedecisions are made in Washington or the statecapital. For that reason, every American has astake in how power is divided between the na-tional and state governments.

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reserved powers The powersgranted to the states underthe Tenth Amendment to theConstitution.

Conflict between national and state authority was also ensured by thebrevity of the Constitution. The Framers deliberately avoided detailed provi-sions, recognizing that brief phrases would give flexibility to the governmentthey were creating. The document does not define what is meant by the neces-sary and proper clause, does not list any of the states reserved powers, doesnot indicate whether the supremacy clause allows the states discretionary au-thority in areas where state and national responsibilities overlap, and does notindicate how interstate commerce (which the national government is empow-ered to regulate) differs from intrastate commerce (which presumably is re-served for regulation by the states).

Not surprisingly, federalism has been a contentious and dynamic system,its development determined less by constitutional language than by thestrength of contending interests and by the countrys changing needs. Federal-ism can be viewed as having progressed through three historical eras, each ofwhich has involved a different relationship between nation and states.

An Indestructible Union (17891865)The issue during the first era, which lasted from the Constitutions beginningsin 1789 through the end of the Civil War in 1865, was the Unions survival.Given the state-centered history of America before the Constitution, it wasinevitable that the states would dispute national policies that threatened theirseparate interests.

The Nationalist View: McCulloch v. MarylandA first dispute over federalism arose when President George Washingtons sec-retary of the treasury, Alexander Hamilton, persuaded Congress to establish theFirst Bank of the United States. Thomas Jefferson, Washingtons secretary ofstate, opposed the bank on the grounds that its activities would benefit com-mercial interests and would harm small farmers, who in Jeffersons view werethe backbone of the new nation. Jefferson claimed that the bank was unlawfulbecause the Constitution did not explicitly authorize the creation of a nationalbank. Hamilton and his supporters claimed that because the federal govern-ment had constitutional authority to regulate currency, it had the impliedpower to establish a national bank.

Hamiltons view prevailed when Congress in 1791 established the FirstBank of the United States, granting it a twenty-year charter. When the bankscharter expired in 1811, however, Congress did not renew it. Then in 1816, Con-gress established the Second Bank of the United States over the objections ofstate and local bankers. Responding to their complaints, several states, includ-ing Maryland, attempted to drive the Second Bank of the United States out ofexistence by levying taxes on its operations within their borders. Edwin Mc-Culloch, who was head cashier of the U.S. Bank in Maryland, refused to pay theMaryland tax, and the resulting dispute reached the Supreme Court.

John Marshall, the chief justice of the Supreme Court, was, like Hamilton, astrong nationalist, and in McCulloch v. Maryland (1819) the Court ruled deci-sively in favor of national authority. It was reasonable, Marshall concluded,to infer that a government with powers to tax, borrow money, and regulate


commerce could establish a bank in order to exercise those powers properly.Marshalls argument was a clear statement of implied powersthe idea that,through the necessary and proper clause, the national governments powersextend beyond a narrow reading of its enumerated powers.

Marshall also addressed the meaning of the Constitutions supremacyclause. The state of Maryland argued that it had the sovereign authority to taxthe national bank even if the bank was a legal entity. The Supreme Court re-jected Marylands position, concluding that valid national law prevailed overconflicting state law. Because the national government had the power to createthe bank, it could also protect the bank from actions by the states, such as taxa-tion, that might destroy it.6

The McCulloch decision served as precedent for future assertions of nationalauthority, including a second landmark decision by the Marshall Court. In Gib-bons v. Ogden (1824), the Court ruled on the power of Congress to regulate com-merce. The state of New York had granted a monopoly to Aaron Ogden tooperate a ferry between New York and New Jersey. When Thomas Gibbons setup a competing ferry under a federal coastal licensing agreement, Ogden triedto prevent Gibbons from operating it. Marshall invalidated the New York mo-nopoly, saying it intruded on Congresss power to regulate commerce amongthe states. Going further, Marshall ruled that Congresss power extended into astate when commerce between two or more states was at issue.7

Marshalls opinions asserted that legitimate uses of national power tookprecedence over state authority and that the necessary and proper clause andthe commerce clause were broad grants of national power. As a nationalist,Marshall was providing the U.S. government the legal justification for expand-ing its power in ways that fostered the development of the nation as a nationrather than as a collection of states. This constitutional vision was of utmost sig-nificance. As Justice Oliver Wendell Holmes Jr. noted a century later, the Unioncould not have survived if each state had been allowed to determine for itselfthe extent to which national authority restricted its actions.8


A first dispute over federalismwas whether the Constitutionallowed the creation of a Bankof the United States (shownhere in an early nineteenth-century painting). TheConstitution had a clause onthe printing of currency butnot on the establishment ofa bank itself.

The States-Rights View:The Dred Scott Decision

Although John Marshalls rulings helped strengthennational authority, the issue of slavery posed a grow-ing threat to the Unions survival. A resurgence ofcotton farming in the early nineteenth century re-vived the Souths flagging dependence on slaves andheightened white southerners fears that Congressmight move to abolish slavery. Southerners conse-quently did what others have done throughoutAmerican history: they devised a constitutional argu-ment to fit their political needs. John C. Calhoun ofSouth Carolina argued that the Constitution had cre-ated a government of states . . . not a government ofindividuals.9 This line of reasoning led Calhoun to his famed doctrine of nul-lification, which declared that each state had the constitutional right to nullifya national law.

In 1832 South Carolina invoked this doctrine, declaring null and void atariff law that favored northern interests. President Andrew Jackson retortedthat South Carolinas action was incompatible with the existence of the Union,a position that was strengthened when Congress authorized Jackson to use mil-itary force against South Carolina. The state backed down when Congressagreed to amend the tariff act slightly.

The clash foreshadowed a confrontation of far greater scope and conse-quence: the Civil War. War between the states would not break out for anotherthirty years, but in the interim, conflicts over states rights intensified.10 West-ward expansion and immigration into the northern states were tilting power inCongress toward the free states, which increasingly signaled their determina-tion to outlaw slavery in the United States at some future time. Attempts to finda compromise acceptable to both the North and the South were fruitless.

The Supreme Courts infamous Dred Scott decision exemplifies the conflict.Dred Scott, a slave, applied for his freedom when his master died, citing a fed-eral lawthe Missouri Compromise of 1820that made slavery illegal in a freestate or territory. Scott had lived in the North four years, but the Supreme Courtin a 7-2 decision ruled that slaves were property and that persons of Africandescent were barred from citizenship and thereby could not sue for their free-dom in federal courts. The Court also invalidated the Missouri Compromise,declaring that Congress had no authority to outlaw slavery in any part of theUnited States.11

The Dred Scott decision outraged many northerners and contributed to asectional split in the majority Democratic party that enabled the RepublicanAbraham Lincoln to win the presidency in 1860 with only 40 percent of the pop-ular vote. Lincoln had campaigned for the gradual, compensated abolition ofslavery. By the time he assumed office, seven southern states had already se-ceded from the Union. In justifying his decision to wage civil war on thesestates, Lincoln said, The Union is older than the states. In 1865 the superiorstrength of the Union army settled by force the question of whether national au-thority would be binding on the states.


John C. Calhoun (17821850)

John C. Calhoun was a championof states rights and of slavehold-ing. He was Andrew Jacksons firstvice president, but he resigned thatpost after Jackson came out stronglyagainst Calhouns doctrine of nullification. Calhounthen returned to the U.S. Senate to fight for his pro-posal. Later Calhoun secured passage of a gag rule thatfor a period prohibited the discussion of slavery inthe Senate.

www.mhhe.com/patterson6

The American Civil War was the bloodiest conflict the world had yetknown. Ten percent of fighting-age males died in the four-year war, and un-counted others were wounded. The death toll618,000 (360,000 from theNorth, 258,000 from the South)exceeded that of the American war dead inWorld War I, World War II, the Korean War, and the Vietnam War combined.And this death toll was in a nation with a population that was only one-ninththe size it is today.

Dual Federalism and Laissez-Faire Capitalism(18651937)Although the Civil War preserved the Union, new challenges to federalismwere surfacing. Constitutional doctrine held that certain policy areas, such asinterstate commerce and defense, were the clear and exclusive province of na-tional authority, whereas other policy areas, such as public health and intrastatecommerce, belonged clearly and exclusively to the states. This doctrine, knownas dual federalism, was based on the idea that a precise separation of nationaland state authority was both possible and desirable. The power which onepossesses, said the Supreme Court, the other does not.12

American society, however, was in the midst of changes that raised ques-tions about the suitability of dual federalism as a governing concept. The In-dustrial Revolution had given rise to large business firms, which were using


Southern delegates at theconstitutional conventionsought assurances thatCongress would not bar theimportation and sale of slavesand that their slave-basedagricultural economy wouldbe protected. The photoshows a Civil Warera buildingin Atlanta that was a site ofslave auctions.

dual federalism A doctrinebased on the idea that aprecise separation of nationalpower and state power is bothpossible and desirable.

their economic power to dominate markets and exploit workers. Governmentwas the logical counterforce to this economic power. Which level of govern-mentstate or nationalwould regulate business?

There was also the issue of the former slaves. The white South had lost thewar but was hardly of a mind to share power and opportunity with newly freedblack people. Would the federal government be allowed to intervene in state af-fairs to ensure the fair treatment of African Americans?

Dual federalism became a barrier to an effective response to these issues.From the 1860s through the 1930s, the Supreme Court held firm to the idea thatthere was a sharp line between national and state authority and, in both areas,a high wall of separation between government and the economy. This era offederalism was characterized by state supremacy in racial policy and by busi-ness supremacy in commerce policy.

The Fourteenth Amendment and State DiscretionRatified after the Civil War, the Fourteenth Amendment was intended to protectcitizens (especially black Americans) from discriminatory actions by state gov-ernments.13 A state was prohibited from depriving any person of life, liberty, orproperty without due process of law, from denying any person within its ju-risdiction the equal protection of the laws, and from abridging the privilegesor immunities of citizens of the United States.

Supreme Court rulings during subsequent decades, however, helped to un-dermine the Fourteenth Amendments promise. The Court held, for example,that the Fourteenth Amendment did not substantially limit the power of thestates to regulate rights of person and property14 and that the FourteenthAmendment was not meant to prevent discrimination by private owners of ho-tels, restaurants, and other accommodations that catered to the general public.15

Then, in Plessy v. Ferguson (1896), the Court issued its infamous separate butequal ruling. A black man, Adolph Plessy, had been convicted of violating aLouisiana law that required white and black citizens to ride in separate railroadcars. The Supreme Court upheld his conviction, concluding that state govern-ments could require blacks to use separate railroad cars and other accommoda-tions as long as those facilities were equal in quality to those reserved for useby whites. If one race be inferior to the other socially, the Court concluded,the Constitution of the United States cannot put them on the same plane. Thelone dissenting justice in the case, John Marshall Harlan, had harsh words forhis colleagues: Our Constitution is color-blind and neither knows nor toleratesclasses among citizens. . . . The thin disguise of equal accommodations . . . willnot mislead anyone nor atone for the wrong this day done.16

With its Plessy decision, the Court undercut the Fourteenth Amendmentand allowed southern states to establish a thoroughly racist system of legalizedsegregation. Black children were forced into separate schools that seldom hadlibraries and usually had few teachers, most of whom had no formal training.Hospitals for blacks had few doctors and nurses and almost no medical sup-plies and equipment. Legal challenges to these discriminatory practices weregenerally unsuccessful. The Plessy ruling had become a justification for the sep-arate and unequal treatment of black Americans. For the next seven decades, thestates-rights doctrine was often invoked by white southerners as a guise for theperpetuation of racism.


Judicial Protection of BusinessThrough its rulings after the Civil War, the Supreme Court also provided a con-stitutional basis for uncontrolled private power. The Supreme Court was dom-inated by adherents of the doctrine of laissez-faire capitalism (which holds thatbusiness should be allowed to act without interference), and they interpretedthe Constitution in ways that frustrated governments attempts to regulate busi-ness activity. In 1886, for example, the Court decided that corporations werepersons within the meaning of the Fourteenth Amendment, and thus theirproperty rights were protected from substantial regulation by the states.17 Theirony was inescapable. A constitutional amendment that had been enacted toprotect the newly freed slaves was ignored for this purpose but was used in-stead to protect fictitious personsbusiness corporations.

The Court also weakened the national governments regulatory power bynarrowly interpreting its commerce power. The Constitutions commerce clausesays that Congress shall have the power to regulate commerce among thestates but does not spell out the economic activities included in the grant ofpower. When the federal government invoked the Sherman Antitrust Act (1890)in an attempt to break up a monopoly on the manufacture of sugar, theSupreme Court blocked the action, claiming that interstate commerce coveredonly the transportation of goods, not their manufacture.18 Manufacturingwas deemed part of intrastate commerce and thus, according to the dual feder-alism doctrine, subject to state regulation only. However, because the Court hadpreviously decided that the states regulatory powers were restricted by theFourteenth Amendment, the states were relatively powerless to control manu-facturing activity.

Although the national government subsequently made some headway inbusiness regulation, the Supreme Court remained an obstacle. An example isthe case of Hammer v. Dagenhart (1918), which arose from a 1916 federal act that


After the Civil WarReconstruction, the whitemajority in the South usedthe power of government toenforce a two-race society inwhich the public schools andother public facilities for blackswere vastly inferior to thosefor whites.

commerce clause The clauseof the Constitution (article 1,section 8) that empowers thefederal government to regulatecommerce among the statesand with other nations.

prohibited the interstate shipment of goods produced by child labor. The actwas popular because factory owners were exploiting children, working themfor long hours at low pay. Citing the Tenth Amendment, the Court invalidatedthe law, ruling that factory practices could be regulated only by the states.19

However, in an earlier case, Lochner v. New York (1905), the Court had preventeda state from regulating labor practices, concluding that such action was a viola-tion of firms property rights.20

In effect, the Supreme Court had denied both Congress and the states theauthority to decide economic issues. As the constitutional scholars Alfred Kelly,Winifred Harbison, and Herman Belz concluded, No more complete perver-sion of the principles of effective federal government can be imagined.21

National Authority PrevailsJudicial supremacy in the economic sphere ended abruptly in 1937. For nearly adecade, the United States had been mired in the Great Depression, which Pres-ident Franklin D. Roosevelts New Deal was designed to alleviate. The SupremeCourt, however, had ruled much of the New Deals economic recovery legisla-tion to be unconstitutional. A constitutional crisis of historic proportions seemedinevitable until the Court suddenly reversed its position. In the process, Amer-ican federalism was fundamentally and forever changed.

The Great Depression revealed clearly that Americans had become a na-tional community with national economic needs. By the 1930s, more than halfthe population lived in cities (only 20 percent did so in 1860), and more than tenmillion workers were employed by industry (only one million were so em-ployed in 1860). Urban workers were typically dependent on landlords for their


Between 1865 and 1937,the Supreme Courts rulingsseverely restricted nationalpower. Narrowly interpretingCongresss constitutionalpower to regulate commerce,the Court forbade Congress toregulate child labor and otheraspects of manufacturing.

housing, on farmers and grocers for their food, and on corporations for theirjobs. Farmers were more independent, but they too were increasingly a part ofa larger economic network. Their income depended on market prices and ship-ping and equipment costs.22

This economic interdependence meant that no area of the economy was im-mune if things went wrong. When the depression hit in 1929, its effects couldnot be contained. A decline in spending was followed by a drop in production,a loss of jobs, unpaid rents and grocery bills, and a shrinking market for food-stuffs, which led to a further decline in spending, and so on, creating a relentlessdownward spiral. At the depths of the Great Depression, one-fourth of the na-tions work force was unemployed.

The states by tradition had responsibility for welfare, but they were nearlypenniless because of declining tax revenues and the growing ranks of poor peo-ple. The New Deal programs offered a way out of the crisis; for example, the Na-tional Industry Recovery Act (NIRA) of 1933 called for a massive public worksprogram to create jobs and for coordinated action by major industries. However,the New Deal was opposed by economic conservatives (who accused Rooseveltof leading the nation down the road to communism) and by justices of theSupreme Court. In Schechter v. United States (1935), the Court invalidated the Re-covery Act by a 5-4 vote, ruling that it usurped powers reserved to the states.23

Frustrated by the Court, Roosevelt in 1937 proposed his famed Court-pack-ing plan. Roosevelt recommended that Congress enact legislation that wouldpermit an additional justice to be appointed to the Court whenever a seatedmember passed the age of seventy. The number of justices would increase, andRoosevelts appointees would presumably be more sympathetic to his pro-grams. Roosevelts scheme was resisted by Congress, but the controversy endedwith the switch in time that saved nine, when, for reasons that have never be-come fully clear, Justice Owen Roberts abandoned his opposition to Rooseveltspolicies and thus gave the president a 54 majority on the Court.


During the Great Depression,shantytowns were erected inmost cities by people who hadlost heir jobs and homes. Stateand local governments couldnot cope with the enormousproblems created by the GreatDepression, so the federalgovernment stepped in with itsNew Deal programs, greatlychanging the nature of federal-state relations.

Within months, the Court upheld the 1935 National Labor Relations Act,which gave employees the right to organize and bargain collectively.24 In pass-ing the act, Congress had argued that labor-management disputes disrupt thenations economy and therefore could be regulated through the commerceclause. In upholding the act, the Supreme Court in effect granted Congress theauthority to apply its commerce powers broadly.25 During this same period, theCourt also loosened its restrictions on Congresss use of its taxing and spendingpowers.26 These decisions removed the constitutional barrier to increased fed-eral authority, a change that the Court later acknowledged when it said thatCongresss commerce power is as broad as the needs of the nation.27

In effect, the Supreme Court had finally recognized the obvious: that an in-dustrial economy is not confined by state boundaries and must be subject tosome level of national regulation if it is to serve the nations needs and interests.It was a principle that business itself also increasingly accepted. The nationsbanking industry, for example, was saved in the 1930s from almost completecollapse by the creation of a federal regulatory agency, the Federal Deposit In-surance Corporation (FDIC). By insuring depositors savings against loss, theFDIC gave depositors the confidence to keep their money in banks, enablingmany banks to remain solvent despite the depression.

After the depression era and until recently, the Supreme Court gave Con-gress almost complete discretion in the enactment of policies affecting state gov-ernments and business firms. The extent of Congresss power was evident, forexample, in the 1964 Civil Rights Act, which forbids racial discrimination by theprivate operators of hotels and restaurants on the grounds that they providelodging and food to travelers engaged in interstate commerce.28

Toward National CitizenshipThe fundamental change in the constitutional doctrine of federalism as appliedto economic issues that took place in the 1930s is paralleled by similar changes inother areas. One area is civil rights. As will be discussed in Chapter 5, federal au-thority has compelled states and localities to eliminate government-sponsoreddiscrimination and, in some cases, to create compensatory opportunities for mi-norities and women. In 1954, for example, the Supreme Court held that racialsegregation in public schools was unconstitutional on grounds that it violatedthe Fourteenth Amendment.29

The idea that Americans are equal in their rights regardless of where theyreside has also been applied in other areas. As Chapter 4 will discuss, stateshave been required to broaden individual rights of free expression and fair trial.An example is the Supreme Courts Miranda ruling, which requires police offi-cers to inform crime suspects of their rights at the time of arrest.30

Of course, important differences remain in the rights and privileges of theresidents of the separate states, as could be expected in a federal system. Thedeath penalty, for example, is legal in some states but not others, and states dif-fer greatly in terms of their services, such as the quality of their public schools.Nevertheless, national citizenshipthe notion that Americans should be equalin their rights and opportunities regardless of the state in which they liveis amore encompassing idea today than in the past.


FEDERALISM TODAY

Since the 1930s, the relation of the nation to the states has changed so funda-mentally that dual federalism is no longer even a roughly accurate descriptionof the American situation.31

An understanding of the nature of federalism today requires a recognitionof two countervailing trends. The first is a long-term expansion of national au-thority that began in the 1930s and continued for the next half century. The na-tional government now operates in many policy areas that were once almostexclusively within the control of states and localities. The national governmentdoes not dominate these policy areas, but it does have a significant role. Muchof this influence stems from social welfare policies that were enacted in the1960s as part of President Lyndon Johnsons Great Society program, which in-cluded initiatives in health care, public housing, nutrition, welfare, urban de-velopment, and other areas reserved previously to states and localities.


Americans in an Interdependent World

Citizens of the World, Too?Americans have a form of dual citizenship. They are citizens of their nation and alsoof the state in which they reside. They are subject to the laws of both levels of gov-ernment and enjoy the rights and privileges of each of them.

Are Americans also becoming citizens of the world in a meaningful sense? InThe End of the Nation State, Kenichi Ohmae argues that global economic changeis altering traditional patterns of governing and citizenship. Nations economies arenow less within their own control as a result of mushrooming growth in interna-tional trade. Giant multinational corporations make decisions about production,supply, and pricing that have little relationship to national boundaries and that gen-erate pressure for global free trade and international standards. And of coursethe trend toward international rules is not confined to those rules associated witheconomic globalization. Since its formation after World War II, the United Nationshas issued countless resolutions and directives aimed at the internal affairs ofparticular countries.

In effect, as the world has gotten smaller, nations have faced pressures togive up some of their authority to international bodies. An example is the WorldTrade Organization, which requires its members, including the United States, tofollow open trade policies buttressed by regulations that are designed to promotefair trade among the members. When WTO nations have a dispute, it is reviewedand member states are expected to abide by the findings.

Compared with many nations, the United States has been somewhat reluctantto defer to collective agreements. During the past decade, for example, the UnitedStates has refused to sign the international treaty to ban land mines, has refusedto sign the Kyoto accord to combat global warming, and has refused to back a per-manent international war crimes tribunal. Nevertheless, more so than in the past,the United States, like other nations, has seen a need to give up some control overits national policies. In this respect, Americans are subject to the decisions of in-ternational bodies as well as those of their state and national governments.

The second trend is more recent and involves a partial contraction of na-tional authority. Known as devolution, the recent trend involves the passingdown of authority from the national government to the state and local levels.Devolution has reversed the decades-long increase in federal authority but onlyin some areas and then only to a modest degree.

Stated differently, the national governments policy authority has expandedgreatly since the 1930s, even though that authority has been reduced somewhatin recent years. What follows is an explanation of the first of these trends: theexpansion of federal authority since the New Deal era.

Interdependency and Intergovernmental RelationsInterdependency is a primary reason why national authority increased dramat-ically in the twentieth century. Modern systems of transportation, commerce,and communication transcend local and state boundaries. These systems are na-tional, even international, in scope, which means that problems affecting Amer-icans in one part of the country are likely also to affect Americans livingelsewhere. This situation has required Washington to assume a larger policyrole: national problems ordinarily require national solutions.

This situation has also encouraged national, state, and local policymakers towork together to solve policy problems. This collaborative effort has been de-scribed as cooperative federalism.32 The difference between this system of fed-eralism and the older dual federalism has been likened to the differencebetween a marble cake, whose levels flow together, and a layer cake, whose lev-els are separate.33

Cooperative federalism is based on shared policy responsibilities ratherthan sharply divided ones. An example is Medicaid, which provides health carefor the poor. The Medicaid program is jointly funded by the national and stategovernments, operates within eligibility standards set by the national govern-ment, and gives states some latitude in determining the benefits that recipientsreceive. The Medicaid program is not an isolated example. Literally hundredsof policy programs today are run jointly by the national and state governments.In many cases, local governments are also involved. The characteristics of theseprograms are the following: Jointly funded by the national and state governments (and sometimes by

local governments too) Jointly administered, with the states and localities providing most of the

direct service to recipients and a national agency providing generaladministration

Jointly determined, with both the state and national governments (andsometimes the local governments) having a say in eligibility and benefitlevels, and with federal regulations, such as those prohibitingdiscrimination, giving an element of uniformity to the various state andlocal efforts

Cooperative federalism should not be interpreted to indicate that the statesare now powerless and dependent. States have retained most of their traditionalauthority. In fact, the states have a larger influence than Washington does in


cooperative federalism Thesituation in which the national,state, and local levels worktogether to solve problems.

many policy areas (see Figure 32). Nearly 95 percent of the funding for publicschools, for example, is provided by states and localities, which also set most ofthe education standards, from teachers qualifications to course requirements tothe length of the school day. Moreover, the policy areas dominated by thestatessuch as education, law enforcement, and transportationtend to bethose that have the greatest impact on peoples daily lives. Finally, contrary towhat many Americans might think, state and local governments have nearly sixtimes as many employees as the federal government.


Texas Attorney General JohnCornyn speaks at a gatheringof federal, state, and locallaw enforcement officials.Cooperative federalism bringstogether officials from all levelsof government in joint effortsto solve common problems.

Figure 32Federal and State/LocalGovernment Employees, asPercentage of All GovernmentEmployees Who Work inSelected Policy AreasAlthough federal authority hasreached into areas traditionallydominated by the stategovernments, state and localgovernments still dominatemany policy areas. One indi-cator is the high percentageof government employees inselected areas who work forstate or local governments.Source: U.S. Bureau of the Census,2002. Education Health/

hospitalsJudicial/

legalPolice Natural

resourcesHighways Welfare Parks and

recreation

1%13% 11% 50%

1% 2%9%18%

99% 87% 89% 50% 99% 98% 91%82%

Federal employees State and local employees

Nevertheless, the federal governments involvement in policy areas tradi-tionally reserved for the states has increased its policy influence and has dimin-ished state-to-state policy differences.34 Before the enactment of the federalMedicaid program in 1965, for example, poor people in many states were notentitled to government-paid health care. Now most poor people are eligible re-gardless of where in the United States they live.

Government Revenues andIntergovernmental RelationsThe interdependence of different sectors of modern American society is one oftwo factors that have propelled a larger federal role in domestic policy. Theother is the federal governments superior taxing and borrowing capacity. Statesand localities are in an inherently competitive situation with regard to taxation.A state or locality cannot raise taxes very high without losing residents to aplace where taxes are lower. Moreover, the federal government depends almostentirely on forms of taxation, such as personal and corporate income taxes, thatautomatically produce more revenue as the economy expands. State and localgovernments depend more heavily than does Washington on less flexible rev-enue sources, such as license fees and property taxes. The result is that the fed-eral government raises more tax revenues than do all fifty states and thethousands of local governments combined (see Figure 33). Moreover, Becauseit controls the American dollar, the federal government has a nearly unlimitedability to borrow money to cover its deficits.

Fiscal FederalismThe federal governments revenue-raising advantage has helped make moneythe basis for many of the relations between the national government and thestates and localities. Fiscal federalism refers to the expenditure of federal fundson programs run in part through state and local governments.35 The federal gov-ernment provides some or all the money for a program through grants-in-aid(cash payments) to states and localities, which then administer the program.

The pattern of federal assistance to states and localities during the last fourdecades is shown in Figure 34. Federal grants-in-aid increased manyfold dur-ing this period. A sharp rise occurred in the late 1960s and early 1970s as a resultof President Johnsons Great Society programs. Even at the height of the NewDeal, federal aid had accounted for less than 10 percent of state and local spend-ing. With Johnsons Great Society, however, the figure rose above 20 percent andhas remained in that range ever since. In other words, roughly one in every fivedollars spent by local and state governments in recent decades was raised notby them, but by the government in Washington (see States in the Nation).

Cash grants to states and localities have extended Washingtons influenceover policy.36 Through the funds it provides and the conditions it attaches to theuse of those funds, Washington affects the policy choices of state and local gov-ernments. They can reject a grant-in-aid, but if they accept it, they must spend itin the specified ways. And since most grants require states to contribute match-ing funds, the federal programs in effect determine how states will use some of


Figure 33Federal, State, and LocalShares of GovernmentTax RevenueThe federal government raisesmore tax revenues than allstate and local governmentscombined.Source: U.S. Department of Commerce,2001.

State & local44%

Federal56%

fiscal federalism A term thatrefers to the expenditure offederal funds on programs runin part through states andlocalities.

grants-in-aid Federal cashpayments to states andlocalities for programs theyadminister.

their own tax dollars. Federal grants have also pressured state and local officialsto accept broad national goals, such as the elimination of racial and other formsof discrimination. A building constructed with the help of federal funds, for ex-ample, must be accessible to persons with disabilities.

Nevertheless, federal grants-in-aid also serve the policy interests of state andlocal officials. They have often complained that federal grants contain too manyrestrictions and infringe too much on their authority, but they have been eager toobtain the money, since it permits them to offer services they could not otherwiseprovide. An example is a 1994 federal grant program that has enabled local gov-ernments to put seventy-five thousand additional police officers on the streets.

Categorical and Block GrantsState and local governments receive two major types of assistance, categoricalgrants and block grants, which are differentiated by the extent to which Wash-ington defines the conditions of their use.

Categorical grants are the more restrictive; they can be used only for a des-ignated activity. An example is funds directed for use in school lunch programs.These funds can be used only in support of school lunches; they cannot be di-verted for other school purposes, such as the purchase of textbooks or the hir-ing of teachers. Block grants are less restrictive. The federal governmentspecifies the general area in which the funds must be used, but state and local


Figure 34Federal Grants to Stateand Local GovernmentsFederal aid to states andlocalities has increaseddramatically since the 1950s,although some of the increaseis attributable to inflation. Onedollar in 1955 was worth thesame as five dollars in 2000.In terms of 1955 dollars,federal grants totaled about$50 billion in 2000.Source: U.S. Census Bureau.

200

100

80

60

40

20

0

220

Billions of dollars

240

260

120

140

160

180

Fiscal year1955 57 59 61 63 65 67 71 73 75 77 79 81 83 85 87 89 91 93 95 97 20009969

Federal grants to stateand local governments

categorical grants Federalgrants-in-aid to states andlocalities that can be used onlyfor designated projects.

block grants Federalgrants-in-aid that permitstate and local officials todecide how the money will bespent within a general areasuch as education or health.

officials select the specific projects. A block grant targeted for the health area, forexample, might give state and local officials leeway in deciding whether to usethe money on hospital construction, medical equipment, or some other healthcare activity.

State and local officials have naturally preferred federal money that comeswith fewer strings attached, so they have favored block grants. On the otherhand, members of Congress have at times preferred categorical grants, since


STATES IN THE NATION

Federal Grants-in-Aid as a Percentage of Total State Revenue

Federal assistance accounts for a significant share of state revenue, but the state-to-state variation is con-siderable. Louisiana is at one extreme: 34.6 percent of its total revenue comes from federal grants. Nevadais at the other extreme: only 14.5 percent of its revenue comes from federal assistance. Ironically, states inthe South, where anti-Washington sentiment is relatively high, tend to get a larger percentage of their rev-enue through federal grants than most other states do. Many of the grant programs are designed to assistpeople with low incomes, and poverty is more widespread in the South than in other regions. Moreover,southern states have traditionally provided fewer government services, and federal grants therefore consti-tute a larger proportion of their state budgets.

25% or more

Percentage of state revenue

20.1 24.9%

20% or less

Ark.

Mo.

Wis.Mich.

Ill. Ind.Ohio

Tenn.

Ky.

Ga.

Fla.

S.C.

N.C.

Va. W.Va.

Pa.

N.Y.

Conn.N.J.

Wash.

Oregon

Nevada

Calif.

Utah

Ariz. NewMexico

Colorado

Wyo.Idaho

Montana N.D.

S.D.

Nebraska

Kansas

Iowa

Minn.

Alaska

Hawaii

Okla.

Texas La.

Ala.Miss.

Vt.

N.H. Maine

Del.Md.

D.C.

R.I.

Mass.

Source: U.S. Bureau of the Census, 1999.

this form of assistance gives them more control over how state and local offi-cials will spend federal funds.37 Recently, however, officials at all levels havelooked to block grants as the key to a more workable form of federalism. Thistendency is part of a larger trendthat of devolution.

A New Federalism: DevolutionDevolution is the idea that American federalism will be improved by a shift inauthority from the federal government to the state and local governments. De-volution is reshaping American federalism and is attributable to both practicaland political developments.

Budgetary Pressures and Public OpinionAs a practical matter, the growth in federal assistance had slowed by the early1980s. The federal government was facing huge budget deficits, and large newgrants-in-aid to states and localities were not feasible.

As budgetary pressures intensified, relations among national, state, and localofficials became increasingly strained. A slowdown in the annual increase in fed-eral assistance had forced states and localities to pay an increasingly larger shareof the costs of joint programs. As state and local governments raised taxes or cutother services to meet the costs, taxpayer anger intensified. Some of the grantprograms, such as AFDC, food stamps, and housing subsidies, had not been verypopular before the budget crunch and now came under even heavier criticism.

By the early 1990s, American federalism was positioned for a change. Twodecades earlier, three-fourths of Americans had expressed confidence in Wash-ingtons ability to govern effectively. Less than half the public now held this view.A 1993 CBS News/New York Times survey indicated that 69 percent of Ameri-cans believed that the federal government creates more problems than it solves.

The Republican RevolutionWhen the Republican party scored a decisive victory in the 1994 congressionalelections, Newt Gingrich declared that 1960s-style federalism is dead. Re-publican lawmakers proposed to cut some programs, but even more, theysought to increase state and local control. They proposed to lump dozens of cat-egorical grants into a few block grants, thus giving states and localities morecontrol of how money would be spent.

That Republicans would lead the move to a more decentralized form offederalism was no surprise. Although both parties had initiated expansions offederal authority, Republicans had more often questioned the overall result. Re-publican presidents Richard Nixon, Ronald Reagan, and George Bush all advo-cated some version of a new federalism in which some areas of public policyfor which the federal government had assumed responsibility would be re-turned to state and localities.38

Upon taking control of Congress in 1995, Republican lawmakers acted to re-duce unfunded mandates, the federal programs that require action by states orlocalities but provide no or insufficient funds to pay for it. For example, statesand localities are required by federal law to make their buildings accessible to


devolution The passing downof authority from the nationalgovernment to the state andlocal governments.

the physically handicapped, but Washington pays only part of the cost of theseaccommodations. In the Unfunded Mandates Reform Act of 1995, Congresseliminated some of these mandates, although under threat of a presidential vetoit exempted those that deal with civil rights and liberties. The GOP-controlledCongress also took action to lump additional categorical grants into blockgrants, thus giving states more control over how federal money would be spent.

The most significant legislative change came a year later, when the Repub-lican Congress enacted the sweeping 1996 Welfare Reform Act. Its key elementis the Temporary Assistance for Needy Families block grant (TANF), whichended the decades-old program that granted cash assistance to every poor fam-ily with children. TANF restricts a familys eligibility for federal assistance tofive years, and after two years, a family head normally has to go to work or thebenefits cease. Moreover, TANF gives states wide latitude in setting benefit lev-els, eligibility criteria, and other regulations affecting aid for poor families. Iron-ically, TANF actually increased the level of federal grant spending becauseWashington picked up a larger share of welfare costs. But states gained morecontrol over how the funds would be spent. (TANF and other aspects of the1996 welfare reform legislation are discussed further in later chapters.)

After passage of the 1996 Welfare Reform Act, congressional efforts to rollback federal authority declined sharply. Devolution had hardly rolled back ahalf century of Washington-centered federalism, nor had it blunted new federalassistance programs. Among the federal initiatives enacted recently are grantsfor classroom modernization and the hiring of additional teachers.

Although it is uncertain how far devolution will be extended, Americanfederalism has clearly entered a new stage, where answers to the nations do-mestic problems will be sought less in Washington than in the states and locali-ties. Devolution has resulted in a modification of fiscal and cooperativefederalism rather than their demise. The federal government will continue to be


When the 1994 elections wereover, Newt Gingrich declaredthat 1960s-style federalismis dead. As Speaker of theHouse of Representatives,Gingrich then helped enactmajor changes in federal-staterelations.

a part of the answer to problems in policy areas oncereserved almost exclusively to the states. Because ofthe complexity of modern policy issues and becauseof the interdependency of American society, the stateswill never regain the level of autonomy that they ex-ercised in the early twentieth century. Through devo-lution, however, they have acquired a greater degreeof discretionary authority in some policy areas.

Devolution, Judicial StyleIn the five decades after the 1930s, the Supreme Courtgranted Congress broad discretion in the enactmentof policies affecting state and local governments. InGarcia v. San Antonio Authority (1985), for example, theCourt held that federal minimum wage standardsapply even to employees of state and local govern-

ments.39 States and localities are prohibited from paying their employees lessthan the federally mandated minimum wage.

In recent years, however, the Supreme Court has restricted congressional au-thority somewhat. Chief Justice William Rehnquist and some of the other Re-publican appointees on the Supreme Court believe that Congress in someinstances has encroached on powers properly reserved through the TenthAmendment to state governments. In United States v. Lopez (1995), for example,the Court struck down a federal law that prohibited the possession of gunswithin a thousand feet of a school. Congress had justified the law as an exerciseof its commerce power, but the Court stated that the ban had nothing to do withcommerce, or any sort of economic activity.40 Two years later, in Printz v. UnitedStates (1997), the Court struck down that part of the federal Handgun ViolencePrevention Act (the so-called Brady bill) that required local law-enforcementofficers to conduct background checks on prospective handgun buyers. TheCourt said the provision violated the principle of separate state sovereignty,arguing that the federal government cannot command local officials to ad-minister or enforce a federal regulatory program.41 In Kimel v. Florida Board ofRegents (2000), the Supreme Court held that Congress did not have the author-ity to require state governments to comply with the federal law that bars dis-crimination against older workers. Age discrimination is not among the formsof discrimination expressly prohibited by the U.S. Constitution, and the Courtdeclared that states have the power to decide for themselves the age-relatedpolicies that will apply to their employees.42 In a 2002 case, Board of Trustees ofthe University of Alabama v. Garrett, the Court extended this ban to include peo-ple with disabilities, saying they cannot sue a state for violations of the Ameri-can With Disabilities Act.43

Through these and other recent decisions, the Court has sought to expandstates immunity from federal authority. However, the Court has not repudiatedthe principle established in the 1930s that Congresss commerce and spendingpowers are broad and substantial. In Reno v. Condon (2000), for example, theCourt ruled that the states have to comply with a federal law barring them fromselling to private firms or groups their databases of personal information ob-tained from automobile license applicants. The majority opinion, which was


William H.Rehnquist (1924 )

William H. Rehnquist graduated atthe top of his Stanford Law School

class and almost immediately got in-volved in politics, which led eventually to his appoint-ment to the Supreme Court in 1971 as an associatejustice. President Reagan appointed him chief justicewhen Warren Burger retired from that post in 1986.Rehnquists major contribution to federalism has beena series of decisions that have limited Congresss au-thority to enact laws binding on the states.

written by Chief Justice Rehnquist, declared that the information in these data-bases is an article of commerce and thus is subject to regulation through Con-gresss commerce power. The Court noted that the law also applied to privateresellers and was aimed at regulating the owners of databases, which in thiscase included the states.44

THE PUBLICS INFLUENCE:SETTING THE BOUNDARIES OFFEDERAL-STATE POWER

The ebb and flow in Washingtons power in the twentieth century coincidedclosely with public opinion. The American people have had a decisive voice indetermining the relationship between the federal and state governments.


Should States Have Authority to Legalize Marijuana Usefor Medical Purposes?

Federalism has been a source of uncounted disputes between states and the na-tional government. One of the more unusual is the current controversy over themedical use of marijuana and whether states have authority to create exceptionsto a federal ban on marijuana. California is among a small number of states thatin recent years have enacted laws approving the use of marijuana to relieve painand other symptoms of illness. These laws, however, contradict the federal Con-trolled Substances Act, which prohibits the manufacture, distribution, and use ofvarious drugs, including marijuana. In 2001, the Supreme Court ruled in UnitedStates v. Oakland Cannabis Buyers Cooperative that marijuana has no medicalvalue, a judgment disputed by Lyn Nofziger, who served as an advisor to PresidentRonald Reagan.

Yes: When our grown daughter wasundergoing chemotherapy for lymph cancer,she was sick and vomiting constantly as aresult of her treatments. No legal drugs. . . helped her situation. As a result wefinally turned to marijuana which, of course,we were forced to obtainillegally. With it, she kept herfood down, was comfortableand even gained weight . . . Adoctor should have everypossible medicationincludingmarijuana in hisarmamentarium. If doctors canprescribe morphine and otheraddictive medicines, it makesno sense to deny marijuana tosick and dying patients.Lyn Nofziger, Republicanconsultant

No: The Controlled Substances Actprohibits the manufacture and distributionof various drugs, including marijuana. Inthis case, we must decide whether there isa medical necessity exception to theseprohibitions. We hold that there is not. . . .The statue reflects a determination thatmarijuana has no medical benefits worthyof exception. . . . [Marijuana] has no clearlyaccepted medical use . . . has a highpotential for abuse . . . and has a lack ofaccepted safety for use under medicalsupervision.Majority Opinion, U.S. Supreme Court

During the Great Depression, when it was clear that the states would be un-able to help, Americans turned to Washington for relief. For people without jobsthe fine points of the Constitution were of little consequence. President Roo-sevelts programs were a radical departure from the past but quickly gainedwidespread support.45 The second great wave of federal social programsPres-ident Lyndon Johnsons Great Societywas also driven by public demands. In-come and education levels had risen dramatically after the Second World War,and Americans wanted more and better services from government. When thestates were slow to respond, Americans pressured federal officials to act.46 Pub-lic opinion is also behind the recent rollback in federal authority. The Republi-can takeover in 1995 was in large part a result of Americans increaseddissatisfaction with the performance of the federal government.47

The publics role in defining the boundaries between federal and statepower would come as no surprise to the Framers of the Constitution. For them,federalism was a pragmatic issue, one to be decided by the nations needsrather than by inflexible rules. And indeed, each succeeding generation ofAmericans has seen fit to devise a balance of federal and state power that wouldserve its interests. The historian Daniel Boorstin said the true genius of theAmerican people is their pragmatism; their willingness to try new ways whenthe old ones stop working.48 In few areas of governing has this ingenuity beenmore apparent than in Americans approach to federalism.


SUMMARYA foremost characteristic of the American political systemis its division of authority between a national governmentand the states. The first U.S. government, established bythe Articles of Confederation, was essentially a union ofthe states.

In establishing the basis for a stronger national gov-ernment, the U.S. Constitution also made provision for

safeguarding state interests. The result was thecreation of a federal system in which sovereigntywas vested in both national and state govern-ments. The Constitution enumerates the general

powers of the national government and grants it impliedpowers through the necessary and proper clause. Otherpowers are reserved to the states by the Tenth Amendment.

From 1789 to 1865, the nations survival was at issue.The states found it convenient at times to argue that theirsovereignty took precedence over national authority. Inthe end, it took the Civil War to cement the idea that theUnited States was a union of people, not of states. From1865 to 1937, federalism reflected the doctrine that certainpolicy areas were the exclusive responsibility of the

national government, whereas other policy areas be-longed exclusively to the states. This constitutional posi-tion permitted the laissez-faire doctrine that big businesswas largely beyond governmental control. It also allowedthe states in their public policies to discriminate againstAfrican Americans. Federalism in a form recognizable to-day began to emerge in the late 1930s.

In the areas of commerce, taxation, spending, civilrights, and civil liberties, among others, the federal gov-ernment now has an important role, one that is the in-evitable consequence of the increasing complexity ofAmerican society and the interdependence of its people.National, state, and local officials now work closely to-gether to solve the countrys problems, a situation that isdescribed as cooperative federalism. Grants-in-aid fromWashington to the states and localities have been the chiefinstrument of national influence. States and localities havereceived billions in federal assistance; in accepting thatmoney, they have also accepted both federal restrictionson its use and the national policy priorities that underliethe granting of the money.

Self Quiz


In recent years, the relationship between the nationand the states has again become a priority issue. Power isshifting downward to the states, and a new balance in the

ever-evolving system of U.S. federalism is taking place.This change, like changes throughout U.S. history, hassprung from the demands of the American people.

KEY TERMSblock grantscategorical grantscommerce clauseconfederacycooperative federalismdevolutiondual federalism

enumerated powers (expressedpowers)

federalismfiscal federalismgrants-in-aidimplied powers

necessary and proper clause (elasticclause)

reserved powerssovereigntysupremacy clauseunitary system

SUGGESTED READINGSBeer, Samuel H. To Make a Nation: The Rediscovery of Amer-

ican Federalism. Cambridge, Mass.: The Belknap Pressof Harvard University Press, 1993. An innovative in-terpretive framework for understanding the impactof federalism and nationalism on the nations devel-opment.

Conlan, Timothy. From New Federalism to Devolution. Wash-ington, D.C.: Brookings Institution Press, 1998. Acareful analysis of the changing nature of modernfederalism.

Cornell, Saul. The Other Founders: Anti-Federalism and theDissenting Tradition in America. Chapel Hill: Univer-sity of North Carolina Press, 1999. An analysis ofAnti-Federalist thought, its origins, and its legacy.

Elkins, Stanley, and Eric McKitrick. The Age of Federalism:The Early American Republic, 17881800. New York:

Oxford University Press, 1993. An award-winningbook on the earliest period of American federalism.

Ross, William G. A Muted Fury: Populists, Progressives, andLabor Unions Confront the Courts, 18901937. Prince-ton, N.J.: Princeton University Press, 1993. A valuablestudy of the political conflict surrounding the judi-ciarys laissez-faire doctrine in the 18901937 period.

Thompson, Tommy. Power to the People: An American Stateat Work. New York: HarperCollins, 1996. An argu-ment for state-centered federalism by one of its lead-ing practitioners, the former governor of Wisconsin.

Walker, David B. The Rebirth of Federalism, 2d ed. Chatham,N.J.: Chatham House Publishers, 2000. An optimisticassessment of the state of todays federalism.

LIST OF WEBSITEShttp://lcweb2.loc.gov/ammem/amlaw/lawhome.htmlA site containing congressional documents and debates

from 1774 to 1873.

http://www.statesnews.orgThe site of the Council of State Governments; includes

current news from each of the states and basicinformation about their governments.

http://www.temple.edu/federalismThe site of the Center for the Study of Federalism,

located at Temple University; it offers information

and publications on the federal system ofgovernment.

http://www.yale.edu/lawweb/avalon/federal/fed.htmA documentary record of the Federalist Papers, the

Annapolis Convention, the Articles ofConfederation, the Madison Debates, and the U.S.Constitution.

Federalism - Forging a Nation

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