p. 68 Table 3.1:Authority Relations in Three Systems of Government
p. 70Making a Difference: Candy Lightner
p. 71 How You Can Make A Difference: Drinking Age Laws
p. 72 Table 3.2:The Constitution’s Distribution of Powers
p. 83 Figure 3.1:Fiscal Federalism: Federal Grants to State and Local Governments
p. 84 Figure 3.2:Functions of Federal Grants
p. 88 Issues of the Times: The Complex Web of Federalism
p. 91 You Are the Policymaker:Should Whether You Live Depend on Where You Live?
p. 92 Table 3.3:The Number of Governments in America
p. 94 Figure 3.3:Fiscal Federalism: The Public Sector and the Federal System
p. 95 Real People on the Job: Carol Coleman
p. 96 Get Connected
p. 97 Internet Resources
p. 97 For Further Reading
After studying this chapter, students should be able to:
Describe the three basic forms of governmental structures: federalist, unitary, and confederate.
Identify the ways in which the Constitution determines the powers of state and national governments.
Evaluate how contrasting interpretations of the supremacy clause and the Tenth Amendment lead to divergent views of the scope of state and national powers.
Determine how the policy of national supremacy has developed through Supreme Court decisions.
Describe how the Supreme Court set forth the principle of implied powers in the McCullochv.Maryland case.
Understand the difference between implied powers and enumerated powers.
Describe how the Civil War and the civil rights movement contributed to the development of national supremacy over the states.
List the clauses in the Constitution that define the obligations that each state has to every other state.
Trace the ways in which American federalism has changed over the past two centuries.
Compare the contrasting forms of dual federalism and cooperative federalism.
Describe what is meant by fiscal federalism and assess the role that federal money plays in state policies.
Analyze the ways in which American federalism has positive and negative effects on democracy.
INTRODUCTION The relationships among the federal, state, and local governments often confuse people, yet federalism is at the heart of critical battles over the nature and scope of public policy in the United States. While Republicans have sought to limit the scope of the national government in areas such as welfare and the environment, they have also expanded the scope of government in other areas such as immigration and crime. Understanding the scope and nature of local, state, and national governments is thus critical to learning about the development of public policy in the United States.
DEFINING FEDERALISM We generally speak of three forms of governmental structures—federalist, unitary, and confederate. Federalism is a way of organizing a nation so that two or more levels of government have formal authority over the same area and people. Chapter 3 explores the complex relationships between different levels of government in the United States. It describes the ways that the federal system has changed over two centuries of American government and why American federalism is at the center of important battles over policy. This chapter also looks at the broader concept of intergovernmental relations, which refers to the entire set of interactions among national, state, and local governments. Federalism is not the typical way by which nations organize their governments; there are only eleven countries with federal systems. Most governments in the world today are unitary governments in which all power resides in the central government. Although American government operates under a federal system at the national level, the states are unitary governments with respect to their local governments. In the United States, local governments are legally “creatures of the states”: They are created by the states and can be changed (or even abolished) by the states.
In a confederation, the national government is weak and most or all of the power is in the hands of its components (such as states). The United States was organized as a confederacy after the American Revolution, with the Articles of Confederation as the governing document. Confederations are rare today except in international organizations.
The American federal system decentralizes our politics. For example, senators are elected as representatives of individual states and not of the nation. Moreover, with more layers of government, more opportunities exist for political participation; there are more points of access in government and more opportunities for interests to be heard and to have their demands for public policies satisfied.
The federal system not only decentralizes our politics; it also decentralizes our policies. The history of the federal system demonstrates the tensions that exist between the states and the national government about who controls policy and what it should be. Because of the overlapping powers of the two levels of government, most of our public policy debates are also debates about federalism.
The American states have always been policy innovators. Most policies that the national government has adopted had their beginnings in the states. In many ways, the states constitute a “national laboratory” to develop and test public policies.
THE CONSTITUTIONAL BASIS OF FEDERALISM The Constitution does not refer directly to federalism, and little was said about it at the Constitutional Convention. However, the framers carefully defined the powers of state and national governments. The framers also dealt with a question that still evokes debate: Which level of government should prevail in a dispute between the states and the national government? Advocates of strong national powers generally emphasize the supremacy clause. In Article VI (the “supremacy clause”), three items are listed as the supreme law of the land: the Constitution; laws of the national government (when consistent with the Constitution); and treaties. However, the national government can only operate within its appropriate sphere and cannot usurp powers of the states. By contrast, advocates of states’ rights believe that the Tenth Amendment means that the national government has only those powers specifically assigned by the Constitution.
In United States v.Darby (1941), the Supreme Court called the Tenth Amendment a “constitutional truism” (an assertion only that the states have independent powers of their own and not a statement that their powers are supreme over those of the national government). In 1976, the Court appeared to backtrack on this ruling in favor of national government supremacy (National League of Citiesv.Usery), and still later overturned the 1976 decision (Garciav.San Antonio Metro, 1985).
Four key events have played a major role leading to the growth of federal powers relative to the states: the elaboration of the doctrine of implied powers, the definition of the commerce clause, the Civil War, and the long struggle for racial equality. In McCullochv.Maryland (1819), the Supreme Court ruled that Congress has certain implied powers and that national policies take precedence over state policies. These two principles have been used to expand the national government’s sphere of influence. Chief Justice John Marshall wrote that “...the government of the United States, though limited in its power, is supreme within its sphere of action.” The “necessary and proper” clause (sometimes called the elastic clause) was interpreted to give Congress certain implied powers that go beyond its enumerated powers. National powers expanded after the Supreme Court defined commerce very broadly, encompassing virtually every form of commercial activity (Gibbonsv.Ogden, 1824). The Supreme Court prohibited much federal regulation of business and the economy in the late nineteenth and early twentieth centuries, but had swung back to allowing broader federal powers by 1937.
The Civil War was a struggle over slavery, but it was also (and perhaps more importantly) a struggle between states and the national government. A century later, conflict erupted once again over states’ rights and national power. In Brownv.Board of Education (1954), the Supreme Court held that school segregation was unconstitutional. Southern politicians responded with “massive resistance” to the decision. Throughout the 1960s the federal government enacted laws and policies to end segregation in schools, housing, public accommodations, voting, and jobs.
Federalism also involves relationships among the states. The Constitution outlines certain obligations that each state has to every other state. The Constitution requires states to give full faith and credit to the public acts, records, and civil judicial proceedings of every other state; states are required to return a person charged with a crime in another state for trial or imprisonment (extradition); and citizens of each state are entitled to all the privileges and immunities of any state in which they are located. The goal of the privileges and immunities clause is to prohibit states from discriminating against citizens of other states, but numerous exceptions have been made to this clause (such as higher tuition for out-of-state residents at state universities).
INTERGOVERNMENTAL RELATIONS TODAY This section focuses on three important features: first, the gradual change from dual federalism to cooperative federalism; second, federal grants-in-aid as the cornerstone of the relationship between the national government and state governments; and third, the relative growth of the national government and state governments.
One way to understand the changes in American federalism is to contrast dual federalism with cooperative federalism. Before the national government began to assume a position of dominance, the American system leaned toward dual federalism, a system under which states and the national government each remain supreme within their own spheres. The analogy of layer cake federalism is often used to describe dual federalism because the powers and policy assignments of the layers of government are distinct (as in a layer cake), and proponents of dual federalism believe that the powers of the national government should be interpreted narrowly.
The national government took a direct interest in economic affairs from the very founding of the republic (see Chapter 2). As the United States changed from an agricultural to an industrial nation, new problems arose and with them new demands for governmental action. The United States moved from a system of dual federalism to one of cooperative federalism, in which the national and state governments share responsibility for public policies. Using the analogy of marble cake federalism, American federalism is portrayed as a system with mingled responsibilities and blurred distinctions between the levels of government. Cooperative federalism–which may be seen as a partnership between the national and state governments–began in earnest with the transformation of public attitudes toward the role of the national government during the Great Depression of the 1930s. For hundreds of programs, cooperative federalism involves shared costs, federal guidelines, and shared administration.
Fiscal federalism involves the pattern of spending, taxing, and providing grants in the federal system. Grants-in-aid are the main instrument the national government uses to aid and influence states and localities. State and local aid from the national government amounts to about $375 billion per year. Categorical grants can be used only for specific purposes (or categories) of state and local spending. State and local agencies can obtain categorical grants only by meeting certain qualifications and by applying for the grants. Much federal regulation is accomplished by “strings” that are attached to categorical grants, such as nondiscrimination provisions. The most common type of categorical grant is a project grant, awarded on the basis of competitive applications. Formula grants are distributed according to a formula, based on factors such as population, per capita income, and percentage of rural population.
Complaints about the cumbersome paperwork and numerous federal requirements attached to categorical grants led to the adoption of block grants. Congress implemented block grants to support broad programs in areas such as community development and social services. Block grants provide more flexibility since states and communities have discretion in deciding how to spend the money. The percentage of federal aid to state and local governments in the form of block grants began increasing in 1995 as the new Republican majority in Congress passed more federal aid in the form of block grants, including grants for welfare programs. In recent years states have been burdened by underfunded mandates and unfunded mandates. These require states to spend money to comply with a law of Congress (or, in some cases, a federal court order).
UNDERSTANDING FEDERALISM Federalism was instituted largely to enhance democracy in America, and it strengthens democratic government in many ways. Different levels of government provide more opportunities for participation in politics and increase access to government. Since different citizens and interest groups will have access to the different levels, federalism also increases the opportunities for government to be responsive to demands for policies. Moreover, it is possible for the diversity of opinion within the country to be reflected in different public policies among the states. Different economic interests are concentrated in different states, and the federal system ensures that each state can establish a power base to promote its interests. By handling most disputes over policy at the state and local level, federalism also reduces decision making and conflict at the national level.
Conversely, diverse state policies and the large number of local governments also create some impediments to democracy. Since the states differ in the resources they devote to services like public education, the quality of such services varies greatly from one state to another. Diversity in policy can also discourage states from providing services that would otherwise be available: States are deterred from providing generous benefits to those in need when benefits attract poor people from states with lower benefits. Federalism may have a negative effect on democracy when local interests are able to thwart national majority support of certain policies, and having so many governments makes it difficult for many Americans to know which government is responsible for certain functions.
I. DEFINING FEDERALISM
A. A system of organizing governments.
1. Federalism is a way of organizing a nation so that two or more levels of government have formal authority over the same area and people.
Only 11 out of approximately 190 nations of the world have federal
3. Most governments in the world today have unitary governments in which all power resides in the central government.
4. In a confederation, the national government is weak and most or all of the power is in the hands of its components.
5. The workings of the American system are sometimes called intergovernmental relations, which refers to interactions among national, state, and local governments.
2. Federalism decentralizes our policies (in addition to our politics).
II. THE CONSTITUTIONAL BASIS OF FEDERALISM
A. The word federalism is not mentioned in the Constitution.
B. Eighteenth-century Americans had little experience in thinking of themselves as Americans first and state citizens second.
C. The division of power.
1. The writers of the Constitution carefully defined the powers of state and national governments [see Table 3.2].
2. Although favoring a stronger national government, states were retained as vital components of government.
3. The supremacy clause deals with the question of which government should prevail in disputes between the states and the national government; Article VI states that three items are the supreme law of the land:
a. The Constitution;
b. Laws of the national government (when consistent with the Constitution); and
c. Treaties (which can only be made by the national government).
4. Judges in every state were specifically bound by the Constitution.
5. Questions remain concerning the boundaries of the national government’s powers.
a. The national government can only operate within its appropriate sphere and cannot usurp the states’ powers.
b. The Tenth Amendment states that “powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”
c. There have been variations in the Court’s interpretation of the Tenth Amendment.
D. Establishing national supremacy.
1. Four key events have largely settled the issue of how national and state powers are related: the elaboration of the doctrine of implied powers (McCullochv.Maryland ), the definition of the commerce clause, the Civil War, and the civil rights movement.
2. McCullochv.Maryland (1819) – the case that first brought the issue of state versus national power before the Supreme Court.
a. In this case, the Supreme Court ruled that national policies take precedence over state policies: Chief Justice John Marshall wrote that “the government of the United States, though limited in its power, is supreme within its sphere of action.”
b. The Court also ruled that the Constitution gives Congress certain implied powers (based on the provision granting Congress the power to “make all laws necessary and proper for carrying into execution the foregoing powers”) that go beyond the enumerated powers that are specifically listed in Article I, Section 8.
3. The Court broadly defined interstate commerce in Gibbons v. Ogden, but more recently has limited Congress’ use of the commerce clause. For example, the Supreme Court in its 1996 Seminole Tribe v. Florida decision limited commerce power by declaring that the Eleventh Amendment limited suits to enforce rights granted by Congress under the Commerce Clause.
4. The Civil War (1861-65) – settled militarily the issue that McCulloch had enunciated constitutionally.
5. The civil rights movement – a century after the Civil War, the policy issue was equality.
In 1954, the Supreme Court held that school segregation was
unconstitutional (Brownv. Board of Education).
b. The conflict between states and the national government over equality issues was decided in favor of the national government: throughout the 1960s, the federal government enacted laws and policies to end segregation in schools, housing, public accommodations, voting, and jobs.
6. Federalism involves more than the relationships between the national government and state and local governments: Article IV of the Constitution outlines certain obligations that each state has to every other state.
a. Full faith and credit – States are required to give full faith and credit to the public acts, records, and civil judicial proceedings of every other state.
b. Extradition – States are required to return a person charged with a crime in another state to that state for trial or imprisonment.
c. Privileges and immunities of citizens – Citizens of each state receive all the privileges and immunities of any other state in which they happen to be.
III. INTERGOVERNMENTAL RELATIONS TODAY
A. From dual to cooperative federalism.
1. Dual federalism (“layer cake federalism”) – a form of federalism in which states and the national government each remain supreme within their own spheres
2. Cooperative federalism (“marble cake federalism”) – a form of federalism with mingled responsibilities and blurred distinctions between the levels of government
3. The American federal system leaned toward dual federalism before the national government began to assert its dominance.
B. Fiscal federalism – the pattern of spending, taxing, and providing grants in the federal system.
1. Fiscal federalism is the cornerstone of the national government’s relations with state and local governments.
2. Grants-in-aid are the main instrument the national government uses for both aiding and influencing states and localities.
3. Federal aid to states and localities amounts to approximately $250 billion per year.
C. There are two major types of federal aid for states and localities: categorical grants and block grants.
1. Categorical grants (the main source of federal aid) – grants that can be used only for specific purposes, or categories.
a. State and local agencies can obtain categorical grants only by applying for them and by meeting certain qualifications.
b. Categorical grants come with numerous “strings” (rules and requirements) attached, such as nondiscrimination provisions and punitive cross-over sanctions and cross-cutting requirements that reduce or deny federal funds if certain local or state laws are not passed or if federal guidelines are not met.
c. There are two types of categorical grants:
(1) Project grants – the most common type of categorical grant; awarded on the basis of competitive applications (such as grants to university professors from the National Science Foundation)
(2) Formula grants – distributed according to a formula; states and local governments automatically receive funds based on a formula developed from factors such as population, per capita income, or percentage of rural population (such as Medicare, Aid for Families with Dependent Children, public housing)
2. Block grants - used to support broad programs in areas like community development and social services
a. In response to complaints about the cumbersome paperwork and restrictive federal requirements attached to categorical grants, Congress established block grants to support broad programs.
b. States have discretion in deciding how to spend the money.
D. On the whole, federal grant distribution follows the principle of universalism – that is, something for everybody, even though some money goes where it is not really needed.
There are some occasions when states would prefer not to receive some federal aid – such as when Congress extends a program that is administered by the states and only partly funded by the national government – an underfunded mandate. This means that the states have to budget more funds for the project in order to receive federal grant money.
Medicaid, which provides health care for poor people, is a prime example of a federal grant program that puts states in a difficult situation.
The national government pays between 50 and 83 percent of the bill, and the states pick up the rest.
In 1995, the newly elected Republican majorities in Congress made limiting unfunded and underfunded mandates on state and local governments a high priority.
Of even greater concern to states are unfunded mandates. These require state and local governments to spend money to comply with laws such as the Clean Air Act of 1970 and the Americans with Disabilities Act of 1990 with no financial help from the federal government that enacted the laws.
In addition, federal courts create unfunded mandates for states regarding school desegregation, prison construction, and other policies.
In 1995, Congress passed a law that will make it more difficult for Congress to impose new unfunded mandates.
IV. UNDERSTANDING FEDERALISM
A. By decentralizing the political system, federalism was designed to contribute to the limited form of democracy supported by the founders.
B. Advantages for democracy.
1. Different levels of government provide more opportunities for participation in politics.
2. Additional levels of government contribute to democracy by increasing access to government.
3. Two levels of government increase the opportunities for government to be responsive to the demands for policies.
4. A party that loses strength at the national level can rebuild and groom leaders at the state and local levels.
5. It is possible for the diversity of opinion within the country to be reflected in different public policies among the different states.
6. By handling most disputes over policy at the state and local level, federalism reduces decision making and conflict at the national level.
C. Disadvantages for democracy.
1. The quality of services like education is heavily dependent on the state in which the service is provided; states differ greatly in the resources they can devote to public services.
2. Diversity in policy can discourage states from providing services that would otherwise be available because poor people may be attracted from states with lower benefits.
3. Federalism may have a negative effect on democracy when local interests are able to impede national majority support of certain policies.
4. The vast number of local governments makes it difficult for many Americans to know which government is responsible for certain functions.
D. Federalism and the growth of the national government.
1. The national government took a direct interest in economic affairs from the very founding of the republic [see Chapter 2].
2. As the United States changed from an agricultural to an industrial nation, new problems arose and with them new demands for governmental action.
3. The United States moved from a system of dual federalism to one of cooperative federalism, in which the national and state governments share responsibility for public policies [as seen above].
KEY TERMS AND CONCEPTS Block grants: broad program grants given more or less automatically to states and communities which exercise discretion in how the money is spent.
Categorical grants: grants that can be used only for specific purposes or categories of state and local spending.
Cooperative federalism: where state and the national government responsibilities are mingled and blurred like a marble cake, powers and policies are shared.
Dual federalism: where states and the national government each remain supreme within their own spheres of power, much like a layer cake.
Elastic clause: the statement in the Constitution which says that Congress has the power to make all laws necessary and proper for carrying out its duties.
Enumerated powers: powers of Congress found in Article 1, Section 8 of the Constitution.
Extradition: the Constitution requires each state to return a person charged with a crime in another state to that state for trial or imprisonment.
Federalism: a system of shared power between two or more levels of government.
Fiscal federalism: the pattern of spending, taxing, and providing grants in the federal system.
Formula grants: a type of categorical grant where states and local governments do not apply for a grant but are given funds on the basis of a formula.
Full faith and credit: Article IV of the Constitution requires states to provide reciprocity toward other states’ public acts, records, and civil judicial proceedings.
Gibbons v. Ogden: the 1824 Supreme Court case which further expanded Congress’ power to regulate interstate and international commerce by defining commerce very broadly to incorporate every form of commercial activity.
Implied powers: powers beyond Congress’ enumerated powers which ensure that it can carry out its duties.
Intergovernmental relations: the term used to describe the entire set of interactions among national, state, and local governments.
McCulloch v. Maryland: the 1819 Supreme Court case which established the supremacy of the national government over the states included both enumerated and implied powers of Congress.
Privileges and immunities: the Constitution prohibits states from discriminating against citizens of other states.
Project grants: categorical grants awarded on the basis of competitive applications.
Supremacy clause: Article VI of the Constitution states that the supreme law of the land is the Constitution, the laws of the national government, and treaties.
Tenth Amendment: specifies that powers not delegated to the national government are reserved for the state government or the people.
Unitary government: a system where all power resides in the central government.
TEACHING IDEAS: CLASS DISCUSSION AND STUDENT PROJECTS
Identify a recent natural disaster—droughts in the Midwest, tornados in Oklahoma, hurricanes on the East coast, or forest fires out West—and ask your students to discuss what the role of the federal government should be in response to the crisis. How much responsibility should the states assume? For what? Should the different levels of government react differently than they would in response to the loss of homes or businesses during a financial crisis? Suggest that your class read selections from news magazines from the time period of the crisis to prepare for this discussion. As a second part to the exercise, you might ask students to determine what actions the federal and state governments actually took and present a brief oral or written report.
Assign two groups of students to serve as panels to debate the question: Does the American form of federalism increase democracy, or does it have a negative effect on democracy?
Hold an in-class discussion on the following: How would politics and policies be different in America if there were a unitary system instead of a federal system? Or a confederation instead of a federal system?
Ask students to study the budgets of the local school system, university, or city to determine the various proportions of revenue that the federal, state, and local governments contribute. Would the school district, university, or city benefit from a change in how it is funded?
For class discussion, ask students whether democracy in the U.S. would continue to exist without federalism. If it would, in what ways would it change? Be sure to remind them that unitary democratic systems exist in most European nations.
Assign students either individually or in groups to investigate the funding sources of a “local” project, encouraging them to use sources such as government documents, interviews with elected and appointed officials, and newspaper archives. Who was responsible for the project being funded? Were there any “strings” attached to federal or state monies?
For a reading and writing connection, have students write an analytical essay concerning the changes that could reasonably occur if public education policy was fully nationalized. Ask them to comment about the advantages and disadvantages of having national educational policy goals funded solely by the federal government. For the most part, students may use the textbook as a source for their information by combining the discussion of funding for education with the advantages and disadvantages of federalism for democracy.
Assign students to work in groups on different policy areas (e.g. transportation, agriculture, environment, welfare) by researching President George W. Bush’s most recent budget proposals. What types of grant programs are proposed for distributing funds to state and localities? Are the nature and funding levels of these programs different from Clinton’s budget in 1997?
Discuss the role of the federal, state, and local governments in responding to the 9/11 attack on the World Trade Center in New York City. Should the federal government have done more? Why or why not?
Anton, Thomas. American Federalism and Public Policy. Philadelphia: Temple University Press, 1989.
Beer, Samuel H. To Make A Nation: The Rediscovery of American Federalism. Cambridge, MA: Belknap Press of Harvard University Press, 1993.
Elazar, Daniel J. American Federalism: A View from the States. 3rd. ed. New York: Harper and Row, 1984.
Peterson, Paul A. The Price of Federalism. Washington, D.C.: Brookings Institution, 1995.
Walker, David B. The Rebirth of Federalism. New York: Chatham House
Zimmerman, Joseph F. Contemporary American Federalism: The Growth of National Power. New York: Praeger, 1992.
Federalism. Part of Government by Consent: A National Perspective. A 1989 Insight Media production examining the distribution of power between state and national governments.
Federalism: The National Government versus the States. Number 13 in the series “The Constitution: That Delicate Balance,” produced by the Corporation for Public Broadcasting. This program examines how much power the federal government can exert over state affairs.