The nation’s Founders understood that “republican principles,” while they should be nurtured and cherished, would not be sufficient in themselves to protect individual liberty. Periodic elections, party competition, voter enfranchisement, and political equality may function to make governing elites more responsive to popular concerns. According to the Founders, “A dependence on the people is, no doubt, the primary control of government, but experience has taught mankind the necessity of auxiliary precautions.”

Among the most important “auxiliary precautions” devised by the Founders to control government are federalism—dividing powers between the national and state governments—and separation of powers—the dispersal of power among the separate executive, legislative, and judicial branches of government.

Decentralization distributes power more widely among different sets of leaders. Multiple leadership groups are generally believed to be more democratic than a single set of all-powerful leaders. Moreover, state and local governments provide a political base of offices for the opposition party when it has lost national elections. In this way, state and local governments contribute to party competition in America by helping to tide over the losing party after electoral defeat so that it may remain strong enough to challenge incumbents at the next election. And finally, state and local governments provide a channel of recruitment for national political leaders. National leaders can be drawn from a pool of leaders experienced in state and local politics.

Decentralization allows more people to participate in the political system. There are more than 89,000 governments in America—states, counties, townships, municipalities, towns, special districts, and school districts. Nearly a million people hold some kind of public office. Most are elected at the state and local levels. (Only 542 are federal officials—1 President, 1 Vice President, 100 U.S. Senators (two from each state), 435 U.S. Representatives, 4 Delegates to the House of Representatives from U.S. territories and the District of Columbia, and 1 Resident Commissioner from the Commonwealth of Puerto Rico.) State and local governments are widely regarded as being “closer to the people.” Thus, by providing more opportunities for direct citizen involvement in government, state and local governments contribute to the popular sense of political effectiveness.

Decentralization makes government more manageable and efficient, especially in a diverse nation where a “one size fits all” approach to delivering services does not always work well. Imagine the bureaucracy, red tape, and confusion if every government activity in every local community—police, schools, roads, firefighting, garbage collection, sewage disposal—were controlled by a centralized administration in Washington. If local governments did not exist, they would have to be invented. Government becomes arbitrary when a bureaucracy far from the scene directs a local administrator to proceed with the impossible—local conditions notwithstanding. Decentralization softens the rigidity of law.

Decentralized government encourages policy responsiveness. Multiple competing governments are more sensitive to citizen views than monopoly government. The existence of multiple governments offering different packages of benefits and costs allows a better match between citizen preferences and public policy. People and businesses often can “vote with their feet” by relocating to those states and communities that most closely conform to their own policy preferences. Americans are mobile. In a given year, some 11 percent of Americans move. Of those, the vast majority (63%) move within the same county, 19 percent to a different county within the same state, 14 percent to a different state, and 3 percent from abroad. Business and industry are also increasingly mobile. Mobility not only facilitates a better match between citizen preferences and public policy, it also encourages competition between states and communities to offer improved services at lower costs.

Federalism encourages policy experimentation and innovation. Federalism may be perceived today as a “conservative” idea, but it was once viewed as the instrument of “progressivism.” A strong argument can be made that the groundwork for Franklin D. Roosevelt’s New Deal in the 1930s was built in state policy experimentation during the Progressive Era earlier in the century. Federal programs as diverse as the income tax, unemployment compensation, countercyclical public works, Social Security, wage and hour legislation, bank deposit insurance, and food stamps all had antecedents at the state level. Indeed, the compelling phrase “laboratories of democracy” is generally attributed to the great progressive jurist, Supreme Court Justice Louis D. Brandeis, who used it in defense of state experimentation with new solutions to social and economic problems.³ Competition among governments provides additional incentives for inventiveness and innovation in public policy.⁴

Political decentralization frequently reduces the severity of conflict in a society. Decentralization is a classic method by which different peoples can be brought together in a nation without engendering irresolvable conflict. Conflicts between geographically defined groups in America are resolved by allowing each to pursue its own policies within the separate states and communities; this avoids battling over a single national policy to be applied uniformly throughout the land.

Federalism in America remains tainted by its historical association with slavery, segregation, and discrimination. An early doctrine of “nullification” was set forth by Thomas Jefferson in the Virginia and Kentucky Resolution of 1798, asserting states’ right to nullify unconstitutional laws of Congress. Although the original use of this doctrine was to counter congressional attacks on a free press in the Alien and Sedition Acts, the doctrine was later revived to defend slavery. John C. Calhoun of South Carolina argued forcefully in the years before the Civil War that slavery was an issue for states to decide and that under the Constitution of 1787, Congress had no power to interfere with slavery in the southern states or in the new western territories.

In the years immediately following the Civil War, the issues of slavery, racial inequality, and black voting rights were nationalized. The Thirteenth, Fourteenth, and Fifteenth Amendments to the Constitution were enforced with federal troops in the southern states during Reconstruction. But following the Compromise of 1876 federal troops were withdrawn from the southern states, and legal and social segregation of blacks became a “way of life” in the region. Segregation was denationalized; this reduced national conflict over race, but the price was paid by black Americans. Not until the 1950s and 1960s were questions of segregation and equality again made into national issues. The civil rights movement asserted the supremacy of national law, especially the U.S. Supreme Court’s decision in Brown v. Board of Education of Topeka, Kansas in 1954, that segregation violated the Fourteenth Amendment’s guarantee of equal protection of the law, and later the national Civil Rights Act of 1964. Segregationists asserted the states’ rights argument so often in defense of racial discrimination that it became a code word for racism.

Indeed, only now that national constitutional and legal guarantees of equal protection of the law are in place is it possible to reassess the true values of federalism. Having established that federalism will not be allowed to justify racial inequality, we are free to explore the values of decentralized government.

Federalism allows state and local officials to obstruct action on national problems. It allows local leaders and citizens to frustrate national policy, to sacrifice the national interest to local interests. Decentralized government provides an opportunity for local “NIMBYs” (not in my backyard) to obstruct airports, highways, waste disposal plants, public housing, and many other projects in the national interest.

Competition among the states, a major feature of federalism, may lead to a “race to the bottom” among the states with regard to welfare assistance and other programs for the poor. States may be encouraged to continuously reduce benefit levels in order to avoid becoming “welfare magnets,” that is, to avoid the migration of the poor to states with more generous welfare programs. But research shows little direct evidence of poor families moving to states for higher benefit levels, or other states lowering benefits to avoid the migration of poor people.⁵

Finally, under federalism the benefits and costs of government are spread unevenly across the nation. For example, some states spend twice as much to educate a child in the public schools as other states (see Chapter 16). Welfare benefits in some states are twice as high as in other states (see Chapter 17). Taxes in some states are twice as high per capita as in other states (see Chapter 14).

Article I, Section , of the U.S. Constitution lists 18 grants of power to Congress. These “delegated,” or “enumerated,” powers include authority over matters of war and foreign affairs, the power to declare war, raise armies, equip navies, and establish rules for the military. Another series of delegated powers is related to control of the economy, including the power to coin money, to control its value, and to regulate foreign and interstate commerce. The national government has been given independent powers of taxation “to pay the debts and provide for the common defense and general welfare of the United States.” It has the power to establish its own court system, to decide cases arising under the Constitution and the laws and treaties of the United States and cases involving certain kinds of parties. The national government was given the authority to grant copyright and patents, establish post offices, enact bankruptcy laws, punish counterfeiting, punish crimes committed on the high seas, and govern the District of Columbia. (See Figure 3-1.) Finally, after 17 grants of express power came the power “to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this constitution in the government of the United States or in any department or officer thereof.” This is generally referred to as the Necessary and Proper Clause or the Implied Powers Clause.

These delegated powers, when coupled with the National Supremacy Clause of Article VI, ensured a powerful national government. The Supremacy Clause was specific regarding the relationship between the national government and the states. In questions involving conflict between the state laws and the Constitution, laws, or treaties of the United States:

Despite these broad grants of power to the national government, the states retained a great deal of authority over the lives of their citizens. The Tenth Amendment reaffirmed the idea that the national government had only certain delegated powers and that all powers not delegated to it were retained by the states:

The states retained control over the ownership and use of property; the regulation of offenses against persons and property (see “Up Close: Federalizing Crime”); the regulation of marriage and divorce; the control of business, labor, farming, trades, and professions; the provision of education, welfare, health, hospitals, and other social welfare activities; and provision of highways, roads, canals, and other public works. The states retained full authority over the organization and control of local government units. Finally, the states, like the federal government, possessed the power to tax and spend for the general welfare.

The Constitution denies some powers to both national and state governments; these denials generally safeguard individual rights. Both nation and states are forbidden to pass ex post facto laws or bills of attainder. The first eight amendments to the Constitution, “the Bill of Rights,” originally applied to the federal government, but the Fourteenth Amendment, passed by Congress in 1866, provided that the states must also adhere to fundamental guarantees of individual liberty. “No state shall make or enforce any law which shall abridge the privileges or immunities of the citizens of the United States; nor shall any state deprive any person of life, liberty or property without due process of law; nor deny to any person within its jurisdiction equal protection of the laws.”

Some powers were denied only to the states, generally as a safeguard to national unity, including the powers to coin money, enter into treaties with foreign powers, interfere with the obligations of contracts, levy duties on imports or exports without congressional consent, maintain military forces in peacetime, engage in war, or enter into compacts with foreign nations or other states.

The Constitution imposes several obligations on the national government in its relations with the states. First of all, the states are guaranteed territorial integrity: No new state can be created by Congress out of the territory of an existing state without its consent. (Nonetheless, Congress admitted West Virginia to the Union in 1863 when the western counties of Virginia separated from that state during the Civil War. Later a “reconstructed” Virginia legislature gave its approval.) The national government must also guarantee to every state “a republican form of government.” A republican government is a government by democratically elected representatives. Presumably this clause in the Constitution means that the national government will ensure that no authoritarian or dictatorial regime will be permitted to rule in any state. Apparently this clause does not prohibit popular initiatives, referenda, town meetings, or other forms of direct democracy. The Supreme Court has never given any specific meaning to this guarantee. Each state is also guaranteed equal representation in the U.S. Senate. Indeed, the Constitution, Article V, prohibits any amendments that would deprive the states of equal representation in the Senate. Finally, the national government is required to protect each state against foreign invasion and domestic violence. The protection against foreign invasion is unequivocal, but the clause dealing with domestic violence includes the phrase “upon application of the legislature or the Executive (when the legislature cannot be convened).” Governors have called upon the national government to intervene in riots to maintain public order. But the national government has also intervened without “application” by state officials in cases where federal laws are being violated. Perhaps the most important direct intervention was President Dwight Eisenhower’s decision to send federal troops to Little Rock High School in Arkansas in 1956 to enforce the Supreme Court’s desegregation decision in Brown v. Board of Education of Topeka, Kansas (see Chapter 15).

The states also play an important role in the composition of the national government. U.S. representatives must be apportioned among the states according to their population every 10 years. Governors have the authority to fill vacancies in Congress, and every state must have at least one representative regardless of population. The Senate of the United States is composed of two senators from each state regardless of the state’s population. The times, places, and manner of holding elections for Congress are determined by the states. The president is chosen by electors, allotted to each state on the basis of its senators and representatives. (See Figure 3-2.)

Finally, amendments to the U.S. Constitution must be ratified by three-fourths of the states. (See Figure 3-3.)

In 1972 when Congress sent the Equal Rights Amendment (ERA) to the states for ratification, it did so with overwhelming support of both Democrats and Republicans in the House and the Senate. National opinion polls and most national leaders, including Presidents Richard Nixon, Gerald Ford, and Jimmy Carter, strongly endorsed the simple language of the proposed amendment: “Equality of rights under law shall not be denied or abridged by the United States or by any State on account of sex.”

The ERA won quick ratification in about half of the states. By 1978, 35 state legislatures had ratified the ERA. (See Figure 3-4.) (However, five states voted to rescind their earlier ratification. Most constitutional scholars do not believe a state can rescind its earlier ratification of a constitutional amendment; there is no language in the Constitution referring to rescissions.) Leaders of the ERA movement called upon Congress to grant an unprecedented extension of time beyond the traditional seven years to continue the battle for ratification. (The Constitution, Article V, does not specify how long states can consider a constitutional amendment.) In 1978, Congress (by simple majority vote) granted the ERA an unprecedented additional 3 years for state ratification; the new limit was 1982, a full 10 years after Congress proposed the original ERA.

The “Stop ERA” movement gained strength in the states over time. Under the leadership of conservative spokeswoman Phyllis Schlafly, an active group of women successfully lobbied against the ERA in state legislatures. In spite of overwhelming support for the ERA from Democratic and Republican presidents and congresses, leading celebrities from television and film, and even a majority of Americans surveyed by national polling organizations, these “ladies in pink” were influential in the defeat of the ERA. (The phrase “ladies in pink” refers to a common practice of anti-ERA women lobbyists wearing pink, dressing well, baking apple pies for legislators, and otherwise adopting the traditional symbols of femininity.) Most of the lobbying against the ERA in state legislatures was done by women’s groups. While not as well organized as the leading feminist groups (the National Organization for Women, the League of Women Voters, the Women’s Political Caucus), the “ladies in pink” were very much in evidence when state legislatures considered ratification.⁷

Three-quarters of the states must concur in a constitutional amendment. This is a powerful tool of the states in our federal system. The wording of the Constitution cannot be altered without the approval of the states, regardless of how much support such a change in wording may have in Washington. The amendment fell three states short of ratification by the necessary 38 states. Last-ditch attempts to pass the ERA in states where the battle was close (Florida, Illinois, and North Carolina) failed in 1982. But there is a renewed effort in a number of states to ratify the amendment. “All we need is three,” is the rallying cry of current-day supporters of the ERA. The biggest problem they face is the belief by many citizens that there already is an equal rights amendment

in the U.S. Constitution. It is less likely that state legislators will put a high priority on its passage without pressure from grassroots organizations.

The Constitution grants Congress the power to govern the District of Columbia, but over time Congress has delegated considerable home rule to the District. Washington elects its own mayor and council, levies city taxes, and provides municipal services to its residents. The Twenty-third Amendment, ratified by the states in 1961, gives Washingtonians three presidential electors, but residents of the city have never had voting members of Congress. (The District’s only congressional representation is its nonvoting delegates to the House and Senate, who may serve on committees and participate in debates on the floor.) In 1978 Congress passed and sent to the states a constitutional amendment to grant the District of Columbia two U.S. senators and as many representatives as their population would warrant if it were a state (currently one). Congress placed a seven-year time limit on ratification by the states in the amendment itself, thus preventing a time extension by simple majority vote of the House and Senate.

The DC amendment passed both houses of Congress with well over the necessary two-thirds majority and the support of both Democrats and Republicans. But opposition in the states arose quickly. Much of the opposition was political: The District was seen as predominantly black, liberal, and Democratic. Less than 8 percent of the District’s voters are registered as Republicans. The District itself has a less-than-reassuring record of self-government. By the 1985 deadline only 16 states, well short of the necessary 38, had ratified the amendment.

As part of the Bill of Rights, Congress in 1789 sent to the states an amendment that would prohibit a pay raise for members of Congress until after the intervention of an election for House members. The amendment had no time limit for ratification attached to it. But only 6 of the original 13 states ratified James Madison’s pay raise amendment, and it was largely forgotten. However, as congressional scandals mounted in the 1980s and public confidence in Congress plummeted, the old amendment was rediscovered. (By one account, a University of Texas student ran across the amendment in 1982 and realized it had no time limit. Using his own money he undertook a national campaign that resulted in 26 states ratifying the amendment. Surprisingly, he received only a “C” on his research paper.)⁸ As more states ratified the 200-year-old amendment, Congress should have realized that their behavior was under scrutiny. But Congress proceeded in 1989 to vote itself a 50 percent pay raise, touching off a storm of protest. (Nationwide polls indicated that 82 percent of Americans opposed the pay increase.) Angry voters looked for ways to rein in an arrogant Congress. Fifteen additional states rushed to ratify Madison’s amendment.

Some scholars, as well as leaders in Congress, argued that ratification of the amendment after 203 years did not meet “the standard of timeliness.” They argued that even though the Constitution placed no time limits on ratification, Article V “implied” that ratification should occur within a “reasonable” time. But when the archivist of the United States, Don Wilson, officially certified the adoption of the Twenty-seventh Amendment in 1992 as he was authorized to do by law, congressional leaders were stymied. Although they were irate over the archivist’s action, they were unable to reverse it. Individual members of Congress raced to join in the popular sentiment, fearing that any effort to undo the amendment would be dealt with severely by the voters in the next election. Both houses voted nearly unanimously to endorse the amendment. The states had succeeded in administering an unexpected reprimand to Congress.

It is possible to argue that even in the earliest days of the Republic, the national government was involved in public activities that were not specifically delegated to it in the Constitution.¹⁰ The first Congress of the United States in the famous Northwest Ordinance, providing for the government of the territories to the west of the Appalachian Mountains, authorized grants of federal land for the establishment of public schools, and by so doing, showed a concern for education, an area “reserved” to the states by the Constitution. Again in 1863, in the Morrill Land Grant Act, Congress provided grants of land to the states to promote higher education.

The date 1913, when the Sixteenth Amendment gave the federal government the power to tax income directly, marked the beginning of a new era in American federalism. Congress had been given the power to tax and spend for the general welfare in Article I of the Constitution. However, the Sixteenth Amendment helped to shift the balance of financial power from the states to Washington, when it gave Congress the power to tax the incomes of corporations and individuals on a progressive basis. The income tax gave the federal government the power to raise large sums of money, which it proceeded to spend for the general welfare as well as for defense. It is no coincidence that the first major grant-in-aid programs (agricultural extension in 1914, highways in 1916, vocational education in 1917, and public health in 1918) all came shortly after the inauguration of the federal income tax.

The federal “grant-in-aid” has been the principal instrument in the expansion of national power.¹¹ Today, the federal government spends over $500 billion annually on grants-in-aid to state and local governments, making it the third largest item in the federal budget after Social Security and national defense.¹² More than one-third of all state and local government expenditures are currently from monies derived from federal grants. This money is paid out through a staggering number and variety of programs. Federal grants may be obtained to assist in everything from the preservation of historic buildings, the development of minority-owned businesses, the education of the disabled, the construction of airports, to the funding of disaster relief and tree preservation.

The largest portion of federal grant-in-aid money (47%) is devoted to health, including Medicaid (health care for the poor), the state children’s health insurance program, and funds for substance abuse and mental health services. Only about 10 percent is used for highways and transit, and only about 16 percent for education, training, employment, and social services. (See Figure 3-5.) Typically, Congress appropriates funds to a federal agency that is charged with administering the grant program, such as health grant funds to the

Department of Health and Human Services. The agency, in turn, distributes the grant funds to the states. States may award subcontracts or subgrants at the local level, depending on how the grant is structured.

Today, grant-in-aid programs are the single most important source of federal influence over state and local activity. A grant-in-aid is defined as payment of funds by one level of government (national or state) to be expended by another level (state or local) for a specified purpose, usually on a matching-funds basis (the federal government puts up only part of the funding, the state or locality the rest) and “in accordance with prescribed standards of requirements.” No state or local government is required to accept grants-in-aid. Participation is voluntary. So in theory, if conditions attached to the grant money are too oppressive, state and local governments can simply decline to participate. Yet it is often asserted that states are “bribed” by the temptation of much-needed federal money and “blackmailed” by the thought that other states will get the money, which was raised in part by federal taxes on the state’s own citizens.

Currently, federal grants-in-aid can be described as either “categorical grants” or “block grants ,” depending on the extent of federal oversight of how the money is spent.

• Categorical Grants: Most federal aid money is distributed as categorical grants for specific, narrow projects. Grants are offered by federal administrative agencies to state or local governments that compete for project funds in their applications. Federal agencies have a great deal of discretion in selecting specific projects for support, and they can exercise direct control over the projects. Most categorical grants are distributed to state or local governments according to a fixed formula set by Congress. Federal administrative agencies may require reports and adherence to rules and guidelines, but they do not choose which specific projects to fund.

• Block Grants: These grants are for a general governmental function, such as health, social services, law enforcement, education, or community development. State and local governments have fairly wide discretion in deciding how to spend federal block grant money within a functional area. For example, cities receiving “community development” block grants can decide for themselves about specific neighborhood development projects, housing projects, and community facilities. All block grants are distributed on a formula basis set by Congress.

Federal money flows unevenly among the states and some states rely on it more than others (see “Rankings of the States: Reliance on Federal Aid”). The federal grant system is not neutral in its impact on the states, nor is it intended to be. Many grant programs are based on formulas that incorporate various indications of need and financial ability. Federal aid is supposed to be “targeted” on national problems.¹³ The effect of differential grant allocations among the states, combined with differences among state populations in federal tax collections, is to redistribute federal money throughout the nation. The big winners in the federal grant game are generally the poorer rural states like West Virginia and Mississippi; the losers are the urban states. But not always—a prime exception being funding for homeland security. Funding battles are always a principal source of conflict between governments—“the time-honored bone of intergovernmental contention.”¹⁴

The rush to Washington to ensure that states and cities receive their “fair share” of federal grant money, together with concerns over federal interference in the conduct of state and local government, has produced a great deal of intergovernmental lobbying at the nation’s capital. Most individual states now maintain offices in Washington with staff committed to looking after their interests. Cities have also hired Washington-based lobbyists to look after their interests in the federal grants game, particularly since during the Bush administration, more federal aid was directed at local governments than in the past.¹⁵

From the earliest days of the Republic, American statesmen have argued over federalism. In recent years, political conflict over federalism—over the decision between national versus state and local responsibilities and finances—has tended to follow traditional “liberal” and “conservative” political cleavages. Generally, liberals seek to enhance the power of the national government because they believe that people’s lives can be changed—and bettered—by the exercise of national governmental power. The government in Washington has more power and resources than do state and local governments, which many liberals regard as too slow, cumbersome, weak, and unresponsive. Thus liberalism and centralization are closely related in American politics.

The liberal argument for national authority can be summarized as follows:

• State and local governments are not sufficiently aware of social problems. The federal government must take the lead in civil rights, equal employment opportunities, care for the poor and aged, the provision of adequate medical care for all Americans, and the elimination of urban poverty and blight. Grants-in-aid permit the government to set national goals and priorities in all levels of government.

• Grants-in-aid provide the necessary impetus for social change. It is difficult to achieve change when reform-minded citizens must deal with 50 state governments and over 89,000 local governments. Change is more likely to be accomplished by a strong central government.

• Grants-in-aid provide an opportunity for the national government to ensure a uniform level of public service throughout the nation—for example, federal grants-in-aid help ensure a minimum level of existence for the poverty-stricken regardless of where they live. This aspect of federal policy assumes that in some parts of the nation, state and local governments are unable, or perhaps unwilling, to devote their resources to raising public service levels to minimum national standards.

Conservatives, in contrast, are skeptical about the “good” that government can do and believe that adding to the power of the national government is not an effective way of resolving society’s problems. On the contrary, they often argue that “government is the problem, not the solution.” Excessive federal government regulation, burdensome taxation, and big spending combine to restrict individual freedom, penalize work and savings, and destroy incentives for economic growth. Government should be kept small, controllable, and close to the people.

Conservative objections to federal grant-in-aid programs can be summarized as follows:

• Grassroots government promotes a sense of self-responsibility and self-reliance. State and local government can better adapt public programs to local needs and conditions. Federal grants-in-aid are invariably accompanied by federal standards or “guidelines,” which must be adhered to if states and communities are to receive their federal money. While no state is required to accept a federal grant and its restrictions, it is difficult for states and communities to resist the pressure to accept federal money.

• Federal grants cause state and local officials to overspend what looks to them like “free” money. Overspending on programs or services that local residents would not be willing to pay for out of their own tax revenues creates waste and inefficiency and contributes to the overall growth of government. Federal money is not “free”: It comes from the nation’s taxpayers. Local governments are sometimes pressured to apply for funds for projects they do not really need, simply because federal funds are available.

• The grant-in-aid system assumes that federal officials are better judges of goals and priorities at all levels of government than are state or local officials. In many grant programs federal officials must approve each funded project—a housing project in Des Moines, a sewage disposal system in Baton Rouge, an urban renewal project in Alabama. Block grants, which allocate federal funds on a formula basis to states and communities for general purposes like “community development” or “mental health,” provide more flexibility than project grants. But Congress cannot resist attaching directions for the use of these grants.

Americans are divided over the merits of these arguments. Most national opinion surveys reveal greater trust and confidence in state and local government than in the federal government. But many Americans believe that the federal government can do a better job handling specific issues such as protecting civil rights. There is no way to settle these arguments about federalism; they have been heard for over 200 years in American politics.

For the nation’s first 100 years, the pattern of federal–state relations has been described as dual federalism. Under this pattern, the states and the nation divided most governmental functions. The national government concentrated its attention on the “delegated” powers—national defense, foreign affairs, tariffs, commerce crossing state lines, coining money, establishing standard weights and measures, maintaining a post office and building post roads, and admitting new states. State governments decided the important domestic policy issues—slavery (until the Civil War), education, welfare, health, and criminal justice. This separation of policy responsibilities was once compared to a “layer cake,”¹⁶ with local governments at the base, state governments in the middle, and the national government at the top.

The Industrial Revolution and the development of a national economy, an income tax that shifted financial resources to the national government, and the challenges of two world wars and the Great Depression all combined to end the distinction between national and state concerns. The new pattern of federal–state relations was labeled cooperative federalism. Both the nation and the states exercised responsibilities for welfare, health, highways, education, and criminal justice. This merging of policy responsibilities was compared to a “marble cake.” “As the colors are mixed in a marble cake, so functions are mixed in the American federal system.”¹⁷

The Great Depression of the 1930s forced states to ask for federal financial assistance in dealing with poverty, unemployment, and old age. Governors welcomed massive federal public works projects. In addition, the federal government intervened directly in economic affairs, labor relations, business practices, and agriculture. Through the grant-in-aid device, the national government cooperated with the states in public assistance, employment services, child welfare, public housing, urban renewal, highway building, and vocational education.

Yet even in this period of shared national–state responsibility, the national government emphasized cooperation in achieving common national and state goals. Congress generally acknowledged that it had no direct constitutional authority to regulate public health, safety, or welfare.

Over the years it became increasingly difficult to maintain the fiction that the national government was merely assisting the states in performing their domestic responsibility. By the time President Lyndon B. Johnson launched the “Great Society” in 1964, the federal government clearly set forth its own “national” goals. Virtually all problems confronting American society—from solid waste disposal and water and air pollution to consumer safety, home insulation, noise abatement, and even metric conversion—were declared to be national problems. Congress legislated directly on any matter it chose, without regard to its “enumerated powers” and without pretense to financial assistance. The Supreme Court no longer concerned itself with the “reserved” powers of the states; the Tenth Amendment lost most of its meaning. The pattern of national–state relations became centralized. As for the cake analogies, one commentator observed: “The frosting had moved up to the top, something like a pineapple upside-down cake.”¹⁸

From time to time efforts have been made to reverse the flow of power to Washington and return responsibilities to state and local government. The phrase “New Federalism” originated in the administration of President Richard M. Nixon, who used it to describe general revenue sharing—federal sharing of tax revenues with state and local governments with few strings attached. Later, “New Federalism” was used by President Ronald Reagan to describe a series of proposals designed to reduce federal involvement in domestic programs and encourage states and cities to undertake greater policy responsibilities.

General Revenue Sharing began in 1972 as a conservative alternative to categorical grants by federal agencies for specific projects. It was argued that unrestricted federal money grants to state and local government were preferable to centralized bureaucratic decision making in Washington. Revenue sharing promised to reverse the flow of power, end excessive red tape, and revitalize state and local governments. Revenue sharing was strongly supported by state and local government officials, who were happy to have the federal government collect tax money and then turn it over to them to spend. But the Reagan administration, confronting high federal deficits and wanting to reduce Washington’s role in domestic policy, undertook a long and eventually successful effort in 1986 to end General Revenue Sharing.

Another Reagan approach was greater reliance on the block grant. Congress endorsed many block grants in the early 1980s, but the struggle between categorical grant advocates (liberals and Democrats) and the consolidationists (Reagan and the Republicans) was really a draw. Many categorical grant programs were merged (notably in health services; alcohol, drug abuse, and mental health; social services; maternal and child health; community services; community development; and education), but many others remained independent.

The New Federalism also temporarily lessened the dependence of state and local governments on federal money. In the years prior to 1980, state and local governments had become increasingly dependent on federal grants as sources of revenue. Federal grants rose to over one-quarter of all state–local expenditures in 1980 (see Table 3-1). Total federal aid dollars continued to rise during the Reagan years, but not at the same rate as in previous years. The result was a decline in state–local dependence on federal money to less than 20 percent.

By the 1990s, under Republican President George H. W. Bush as well as Democratic President Bill Clinton, however, the flow of federal aid dollars to the states rose.

Despite centralizing tendencies, it was still widely assumed prior to 1985 that the Congress could not directly legislate how state and local governments should go about performing their traditional functions. However, in its 1985 Garcia v. San Antonio Metropolitan Transit Authority decision,¹⁹ the U.S. Supreme Court appeared to remove all barriers to direct congressional legislation in matters traditionally reserved to the states. The case arose after Congress directly ordered state and local governments to pay minimum wages to their employees. The Court dismissed arguments that the nature of American federalism and the Reserved Powers Clause of the Tenth Amendment prevented Congress from directly legislating in state affairs. The Court declared that there were no “a priori definitions of state sovereignty,” no “discrete limitations on the objects of federal authority,” and no protection of state powers in the U.S. Constitution. According to the Court: “State sovereign interests . . . are more properly protected by procedural safeguards inherent in the structure of the federal system than by judicially created limitations on federal power.” It said that the only protection for state powers was to be found in the states’ role in electing U.S. senators, members of the U.S. House of Representatives, and the president.

The Supreme Court’s Garcia case ruling became known as “representational federalism .” The United States is said to retain a federal system because national officials are selected from subunits of government—the president through the allocation of Electoral College votes to the states, and the Congress through the allocation of 2 Senate seats per state and the apportionment of representatives to states based on population. Whatever protection exists for state power and independence must be found in the national political process—in the influence of state and district voters on their senators and congress members. Representational federalism does not recognize any constitutionally protected powers of the states.

However, the Supreme Court may be unwilling to jettison altogether the notion of federalism as the division of power between nation and states. Justice Sandra Day O’Connor, a former Arizona legislator and appellate court judge, staunchly defended federalism on the Supreme Court. Quoting from the Federalist and citing the Tenth Amendment, Justice O’Connor wrote the majority opinion in a case considering whether Congress’s Age Discrimination Employment Act invalidated a provision of the Missouri Constitution requiring judges to retire at age 70.²⁰ She cited the “constitutional balance of federal and state powers” as a reason for upholding the Missouri Constitution. Only a “clear statement” by Congress of its intent to override a traditional state power would justify doing so. This “clear statement” rule presumably governs federal laws that may be in conflict with state laws or constitutions. The rule does not prevent Congress from directly regulating state government activity, but it requires Congress to say unambiguously that this is its intent.

Can Congress directly regulate the traditional functions of state and local governments? We know that Congress can influence the actions of state and local governments by offering them grants of money and then threatening to withdraw it if they do not meet federal rules, regulations, or “guidelines.” But can Congress, in the exercise of its broad constitutional powers, legislate directly about traditional functions of state and local governments—schools, streets, police and fire protection, water and sewers, refuse disposal? Can the national government by law treat the states as administrative units required to carry out the mandates of Congress?

Certainly the historical answer to this question was “No.” A typical nineteenth-century description of federalism by the U.S. Supreme Court asserted that the federal government could not intrude or interfere with the independent powers of state governments and vice versa:

Perhaps this separation and independence never really characterized relations between the national government and the state governments. But at least state governments were viewed as independent authorities that could not be directly coerced by the national government in their traditional functions. Today, many state officials believe their independence is slowly being whittled away by actions of Congress and the federal courts. Federalism scholars agree with this assessment. The federal government has continued centralizing and nationalizing policy in major areas formerly controlled by states and localities (education testing, sales tax collection, emergency management, infrastructure, and election administration) through use of mandates and preemptions. Some have labeled this “opportunistic federalism” on the part of the federal government.²²

• Congressional regulation of state taxes. More than a century ago, the U.S. Supreme Court held that Congress could not levy taxes on the states or on their bonds or notes.²³ Intergovernmental tax immunity was believed to be an integral part of the Tenth Amendment’s guarantee of the reserved powers of the states. The states could not tax federal bonds and the nation could not tax state bonds. But in 1987, the U.S. Supreme Court shocked state and local officials and the municipal bond market by holding that Congress could if it wished levy taxes on the interest received from state and local bonds. In a dissent, Justice Sandra Day O’Connor observed that “the Court has failed to enforce the constitutional safeguards of state autonomy and self-sufficiency that may be found in the Tenth Amendment and the Guarantee Clause, as well as in the principles of federalism implicit in the Constitution.”²⁴

• Federal preemptions. The supremacy of federal laws over those of the states, spelled out in the Supremacy Clause of the Constitution, permits Congress to decide whether or not state laws in a particular field are preempted by federal law. To date, Congress has passed over 500 preemption statutes and the number is on the rise.²⁵ Total preemption refers to the federal government’s assumption of all regulatory powers in a particular field—for example, copyrights, bankruptcy, railroads, and airlines. No state regulations in a totally preempted field are permitted. Partial preemption stipulates that a state law on the same subject is valid as long as it does not conflict with the federal law in the same area. For example, the Occupational Safety and Health Act of 1970 specifically permits state regulation of any occupational safety or health issue on which the federal Occupational Safety and Health Administration (OSHA) has not developed a standard; but once OSHA enacts a standard, all state standards are nullified.

• Federal mandates. Federal mandates are orders to state and local governments to comply with federal laws. Federal mandates occur in a wide variety of areas—from civil rights and voter rights laws to conditions of jails and juvenile detention centers, minimum wage and worker safety regulations, air and water pollution controls, and requirements for access for disabled people. (See Table 3-2.)

• “Unfunded” mandates. When no federal monies are provided to cover these costs, the mandates are said to be “unfunded mandates.” Governors, mayors, and other state and local officials (including Bill Clinton, when he served as governor of Arkansas) have often urged Congress to stop imposing unfunded mandates on states and communities. Private industries have long voiced the same complaint. Regulations and mandates allow Congress to address

  problems while pushing the costs onto others. In 1995, Congress finally responded to these complaints by requiring that any bill imposing unfunded costs of $58 million on state and local governments (as determined by the Congressional Budget Office) would be subject to an additional procedural vote; a majority must vote to waive a prohibition against unfunded mandates before such a bill can come to the House or Senate floor.

Federal officials often define “unfunded mandates” differently than state officials. A Congressional Budget Office report in the early 2000s concluded that only two unfunded mandates exceeding the Unfunded Mandates Reform Act of 1995 have been passed by Congress (an increase in the federal wage in 1996, a reduction in federal reimbursement of state Food Stamp administrative costs in 1998). But the National Governors Association disagrees. It regards as “unfunded” any underfunded grant-in-aid program that state and local governments cannot realistically reject or opt out of once they are passed by Congress.²⁶ The Homeland Security, No Child Left Behind, the Help America Vote, and Real ID Acts (requiring states to provide uniform, tamperproof driver’s licenses) are seen by many state officials as examples of underfunded, de facto mandates.

The newest phase of federalism, labeled by some as “bottom-up federalism ,” is “characterized by states having to address pressing fiscal and social issues without federal assistance as well as state and local pushback against federal policy.”²⁷ In the midst of the Great Recession some states refused to participate in federal programs ranging from health insurance exchanges to high-speed rail initiatives, fearing federal funds would be insufficient to cover the high costs over time.²⁸ Others filed lawsuits challenging federal policy mandates on a wide range of issues such as ObamaCare, immigration, guns, education, and the environment), fearing the economic consequences they would impose on states which, unlike the federal government, have to balance their budgets. Economics also drove some states to pass laws conflicting with federal laws on social issues like marijuana legalization and same-sex marriage, often justifying their “defiance” on economic grounds (more tax dollars to fund state and local programs and projects). Like states, local governments have stepped up their challenges of, and resistance to, politics imposed on them from the federal government.²⁹

This new phase of federalism reflects a strong reaction by states and localities to a long period of top-down preemption and coercion on the part of the federal government. (The backlash against the perceived expansion of federal power even resulted in a citizen-generated petition to the White House asking for the right to secede from the United States.³⁰) State reactions to coercive federalism have not always been in the same direction, reflecting sharp demographic, socioeconomic, and political differences across the 50 states. For example, the more liberal states have led the way on same-sex marriage and marijuana legalization, while the more conservative states successfully challenged the federal government’s authority to impose coercive penalties on states that refused to enact ObamaCare’s Medicaid expansions.

Differences across the states on key issues have forced the U.S. Congress and the U.S. Supreme Court to react to actions taken by state and local governments rather than the other way around. In the process, “states have been reaffirmed as laboratories of democracy and laboratories for social change.” Some have predicted that this “bottom-up” phase of federalism will be riddled with intergovernmental conflict: “The states are going to be in different places, and in different places than the national government. There are going to be huge wedges driving differences between states and the federal government. And states themselves.”³¹ Others see the period ahead as one of greater cooperation and collaboration between states, localities, and the private sector—by necessity in light of a dysfunctional federal government unable to respond to profound economic changes facing the nation.³²

Welfare reform turned out to be the key to devolution. President Bill Clinton once promised “to end welfare as we know it,” but it was a Republican Congress in 1996 that did so. After President Clinton had twice vetoed welfare reform bills, he and Congress finally agreed to merge welfare reform with devolution by:

• Ending a 60-year-old federal entitlement program for cash welfare aid (Aid to Families with Dependent Children), and substituting block grants with lump-sum allocations to the states for welfare payments (now known as Temporary Assistance to Needy Families).

• Granting the states broad flexibility in determining eligibility and benefit levels for persons receiving such aid.

• Allowing states to increase welfare spending if they choose but penalizing states that reduce their spending for cash aid below 75 percent of their 1996 levels.

• Allowing states to deny additional cash payments for children born to women already receiving welfare assistance and allowing states to deny cash payments to parents under age 18 who do not live with an adult and attend school.

Devolution resulted in a dramatic reduction of welfare caseloads—an average of more than 50 percent throughout the states, although part of this reduction may have been due to the healthy national economy because caseloads rose sharply during the Great Recession. (For more information on welfare policy, see Chapter 17.)

It is not likely that presidents or members of Congress will ever be motivated to restrain their own power. Even when they recognize that they may be overstepping the enumerated powers of the national government, political pressures to “DO SOMETHING!” about virtually every problem that confronts individuals, families, or communities inspire them to propose federal interventions. Politicians gain very little by telling their constituents that a particular problem—violence in the schools, domestic abuse, physician-assisted suicide—is not a federal responsibility and should be dealt with at the state or local level of government.

When a student, Alfonso Lopez, was apprehended at his high school carrying a .38 handgun, federal agents charged him with violating the federal Gun-Free School Zones Act of 1990. He was convicted and sentenced to six months in prison. His attorney appealed on the ground that it was beyond the constitutionally delegated powers of Congress to police local school zones. In U.S. v. Lopez (1995) the U.S. Supreme Court issued its first opinion in more than 60 years that recognized a limit to Congress’s power over interstate commerce and reaffirmed the Founders’ notion that the federal government has only the powers enumerated in the U.S. Constitution. Attorneys for the federal government argued that the Gun-Free School Zones Act was a constitutional exercise of its interstate commerce power because “possession of a firearm in a school zone may result in violent crime and that violent crime can be expected to affect the functioning of the national economy.” But the Court rejected this argument, holding that such reasoning would remove virtually all limits to federal power: “To uphold the Government’s contentions here, we would have to pile inference upon inference in a manner that would bid fair to convert congressional activity under the Commerce Clause to a general police power of the sort retained by the states.”³⁴

The U.S. Supreme Court again invalidated a provision of a law of Congress—the Brady Handgun Violence Prevention Act—by deciding that its command to local law enforcement officers to conduct background checks on gun purchasers violated “the very principle of separate state sovereignty.” The Court affirmed that the “federal government may neither issue directives requiring the states to address particular problems, nor command the state’s officers, or those of their political subdivisions, to administer or enforce a federal regulatory program.”³⁵

The Supreme Court ruled in 1996 in Seminole Tribe v. Florida that the Eleventh Amendment shields states from lawsuits by private parties that seek to force states to comply with federal laws enacted under the commerce power.³⁶ And by the same division of votes (Majority: Rehnquist, O’Connor, Scalia, Kennedy, Thomas; Minority: Stevens, Souter, Ginsburg, Breyer), the Court held in 1999 in Aldin v. Maine that states were also shielded in their own courts from lawsuits in which private parties seek to enforce federal mandates. In an opinion that surveyed over 200 years of American federalism, Justice Kennedy wrote, “Congress has vast power but not all power. . . . When Congress legislates in matters affecting the states, it may not treat these sovereign entities as mere prefectures or corporations.”³⁷ But in 2003, the Court took a slightly different direction. In a 6–3 ruling, it held that state employees could sue their state in federal court to enforce rights granted by the federal Family and Medical Leave Act of 1993 (Nevada Department of Human Resources v. Hibbs).³⁸

In 2000, to the surprise of many observers, the Supreme Court held that Congress’s Violence Against Women Act was an unconstitutional extension of federal power into the reserved police powers of states. Citing its earlier Lopez decision, the Court held that noneconomic crimes are beyond the power of the national government under the Interstate Commerce Clause. “Gender-motivated crimes of violence are not, in any sense, economic activity.” The Court rejected Congress’s argument that the aggregate impact of crime nationwide has a substantial effect on interstate commerce. “The Constitution requires a distinction between what is truly national and what is truly local, and there is no better example of the police power, which the Founders undeniably left reposed in the States and denied the central government, than the suppression of violent crime and vindication of its victims.”³⁹ A similar argument was made by the states challenging a provision in the Affordable Health Care Reform Act of 2010 that requires everyone to buy health insurance. However, the U.S. Supreme Court rejected it. (See Did You Know?: “The States Lose Their Fight against “ObamaCare”.”)

It may be too early to judge the impact of these decisions on federalism—whether they represent the return to the traditional notions of enumerated powers of Congress and reserved powers of the states. The decisions invalidated some popular laws of Congress—laws with broad political support across the country—but validated some unpopular ones. And these decisions were made by a 5–4 vote of the Justices, suggesting that the replacement of a single Justice might greatly alter the federal system.

The U.S. Constitution provides that “full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state.” As more Americans move from state to state, it becomes increasingly important that the states recognize each other’s legal instruments. This constitutional clause is intended to protect the rights of individuals who move from one state to another, and it is also intended to prevent individuals from evading their legal responsibilities by crossing state lines. Courts in Illinois must recognize decisions made by courts in Michigan. Contracts entered into in New York may be enforced in Florida. Corporations chartered in Delaware should be permitted to do business in North Dakota.

One of the more serious problems in interstate relations today is the failure of the states to meet their obligations under the Full Faith and Credit Clause in the area of domestic relations, including same-sex marriage, divorce, alimony, child support, and

custody of children. The result is now a complex and confused situation in domestic relations law. Full faith and credit–based battles in courtrooms across the United States are destined to intensify, as states pass sharply different laws defining marriage, life, privacy, and guardianship rights. Legal scholars are already arguing about whether same-sex marriages in some states will be recognized in other states where marriage is defined as solely between a man and a woman. Even though the two same-sex marriage cases decided by the U.S. Supreme Court in 2013 (United States v. Windsor and Hollingsworth v. Perry) were viewed as major victories for gay rights proponents, the rulings did not make same-sex marriage legal across all 50 states. But the rulings have prompted many jurisdictions across the United States to move in that direction, believing that the “full faith and credit” provision will ultimately prevail in future court rulings.

The Constitution also states: “The citizens of each state shall be entitled to all privileges and immunities of citizens in the several states.” Apparently the Founding Fathers thought that no state should discriminate against citizens from another state in favor of its own citizens. To do so would seriously jeopardize national unity. This clause also implies that citizens of any state may move freely about the country and settle where they like, with the assurance that as newcomers they will not be subjected to unreasonable discrimination. The newcomer should not be subject to discriminatory taxation; nor barred from lawful occupations under the same conditions as other citizens of the state; nor prevented from acquiring and using property; nor denied equal protection of the laws; nor refused access to the courts. However, states have managed to compromise this constitutional guarantee in several important ways. States establish residence requirements for voting and holding office, which prevent newcomers from exercising the same rights as older residents. States often require periods of residence as a prerequisite for holding a state job or for admission into professional practice such as law or medicine. States discriminate against out-of-state students in the tuition charged in public schools and colleges. Finally, some states are now seeking ways to keep “outsiders” from moving in and presumably altering the “natural” environment.

The Constitution also provides that “A person in any state with treason, felony, or other crime who shall flee from justice and be found in another state, shall on the demand of the executive authority from the state from which he/she fled, be delivered up, to be removed

to the state having jurisdiction of the crime.” In other words, the Constitution requires governors to extradite fugitives from another state’s justice system.

Governors have not always honored requests for extradition, but since no state wants to harbor criminals of another state, extradition is seldom refused. Historically, some of the reasons advanced for the occasional refusals have been (1) the individual has become a law-abiding citizen in his or her new state; (2) a northern governor did not approve of the conditions in Georgia chain gangs; (3) a black returned to a southern state would not receive a fair trial; (4) the governor did not believe that there was sufficient evidence against the fugitive to warrant her or his conviction in the first place; and (5) the governor opposes the death penalty which is the punishment in the state to which the accused is to be returned.

The Constitution provides that “No state shall without the consent of Congress . . . enter into any agreement or compact with another state.” The National Center for Interstate Compacts defines an interstate compact as “a contract between two or more states creating an agreement on a particular policy issue, adopting a certain standard or cooperating on regional or national matters.” They help build consensus among the states. Over 215 interstate compacts now serve a wide variety of interests, such as interstate water resources; conservation of natural resources, including oil, wildlife, and fisheries; the control of floods; the development of interstate toll highways; the coordination of civil defense measures; the reciprocal supervision of parolees; the coordination of welfare and institutional care programs; the administration of interstate metropolitan areas; and the resolution of interstate tax conflicts. The average number of compacts a state is involved in is 25.⁴⁰ Two compacts involve all 50 states: the Interstate Compact on the Placement of Children and the Uniform Interstate Compact on Juveniles. In practice, Congress has little to do with these compacts; the Supreme Court has held that congressional consent is required only if the compact encroaches upon some federal power. Otherwise, the negotiation and ratification of interstate compacts lies with the legislatures of the states involved. Their decisions are often guided by whether they believe a proposed compact will help or hinder their state’s “well-being” (see “Did You Know? Which States Rank Highest on the Gallup-Healthways “Well-Being” Index?”).

States are not supposed to make war on each other, although they did so from 1861 to 1865. They are supposed to take their conflicts to the U.S. Supreme Court. The U.S. Constitution gives the Supreme Court the power to settle all cases involving two or more states. In recent years the Supreme Court has heard disputes between states over boundaries, the diversion of water, fishing rights, and the disposal of sewage and garbage.