Federalism

I.                   Structure of Government

A.    Government Structure

1.      Federalism—a political structure in which local units of government, as well as a national government, make final decisions on at least some governmental activities, and whose existence in specifically protected.

a.       Federalism is protected usually by a constitution; but it is also protected by the habits, preferences, and disposition of its citizens.

b.      Federalism is also protected by the actual distribution of political power in the society.

2.      Distribution of Power in the United States—although the distribution of political power in now heavily slanted toward the national government in the United States, that power is largely exercised in a relatively benign fashion. The national government largely acts upon local governments, and largely through its powers of taxation and the distribution of those proceeds.

B.     Federalism—Good or Bad?—A measure of the importance of federalism is the controversy that surrounds it. To some critics, federalism means allowing states to block actions, prevent progress, upset national plans, protect powerful local interests, and cater to the self-interests of hack politicians. Its defenders insist that the “virtue of the federal system lies in its ability to develop and maintain mechanisms vital to the perpetuation of the unique combination of governmental strength, political flexibility, and individual liberty, which has been the central concern of American politics.”

1.      Increased Political Activity—a federal system, by virtue of the decentralization of authority, lowers the cost of organized political activity; a unitary system (such as in Great Britain and France), because of the centralization of authority, raises the cost of organizing protests and discourages local groups from challenging governmental decisions

2.      Decreased Chance of Political Change—despite the decentralization of authority, real political change is difficult to implement, which was also one of the purposes of the Constitution, in the eyes of the Framers.

C.     The Founding—the Framers, it is clear, saw federalism as a decision to protect personal liberty, while at the same time tamping down on what they saw as the excesses of democracy.

1.      A Bold New Plan—the federal republic (as the Framers called it) derived its powers directly from the people (“We the People”), as do the states. As the Framers envisioned it, both levels of government—the national and the states—would have certain powers, but neither would have supreme power over the other.

2.      Elastic Language—The need to reconcile the competing interests of large and small states, and of northern and southern states, especially as they affected the organization of Congress, was sufficiently difficult without trying to spell out exactly what relationship ought to exist between the national and state levels of government. Though some clauses bearing on national-state relations were reasonably clear, other clauses were quite vague. The Framers knew that they could not make an exact and exhaustive list of everything the federal government was empowered to do; circumstances would change, and new exigencies would arise. This permitted people who held opposing views on what exactly federalism meant (like Thomas Jefferson and Alexander Hamilton) could still support the concept.

D.    History of Federalism—the Civil War settled on part of the argument over national supremacy versus states rights. The war’s outcome made it clear that the national government was supreme; this was determined not only by force of arms, but also by the theory that sovereignty was derived directly from the people of the country, and states could not lawfully secede from the Union. But virtually every other aspect of the national supremacy issue was debated until the mid-twentieth century.

1.      The Supreme Court Speaks—the Court was led in its early formative phase by a staunch Hamiltonian Federalist, John Marshall. In a series of decisions, Marshall strengthened the powers of the central government (and the Supreme Court).

a.       McCulloch v. Maryland (1819)—the state of Maryland attempted to levy a state tax on a branch of the Bank of the United States. The decision hinged on two elements: whether Congress had the authority to establish the Bank; and whether a federal bank could be taxed by a state. Marshall’s decision in both instances strengthened the powers of the central government over the states.

2.      Nullification and War—the issue of states’ rights came to center on the doctrine of nullification, which was first put forth during the Hartford Convention, whose participants threatened secession over the War of 1812. By the end of the next decade, John C. Calhoun was arguing that the states, because they had agreed to join the Union, could also chose to leave. This issue was finally solved by the American Civil War, of course, but the conclusion was affirmed by the Supreme Court in Texas v. White (1869).

3.      Dual Federalism—after the Civil War, the debate about the meaning of Federalism focused upon the interpretation of the commerce clause. This interpretation focused upon the idea that there was interstate commerce, which Congress was authorized by the Constitution to regulate, and intrastate commerce, which it was not, and would therefore by strictly within the domain of the states. With increased industrialism and the growth of capitalist enterprises, however, this became a less viable distinction, and by 1940 or so the Court was allowing the central government to regulate large parts of all commerce.

4.      The States Get Some Authority Back (?)—In recent years the Supreme Court, in a series of 5-4 decisions, has begun to breathe life back into the idea that states have Constitutional authority that Congress cannot set aside; in 1995 the Court decided that the power of Congress to regulate interstate commerce did not give it the right to ban the carrying of handguns within 1000 feet of a school, and in 1997 the Court refused to require local enforcement officers to do background checks on people purchasing handguns. Of course, in 2010 the Court also decided in McDonald v. Chicago that the city of Chicago could not ban the possession of handguns within the city, either.

II.                The Division of Powers: Federal and State

A.    Fiscal Federalism

1.      Land Grants—predate the Constitution. The federal government granted states federally-owned land so the states could finance road and canal building, colleges and universities, etc.

2.      Grants-in-aid—cash sent from the central government to the states. Grants-in-aid remained a small program until the 1960s. Between 1960 and 1966, the amount of money sent to the states in grants-in-aid doubled; between 1966 and 1970, the amount doubled again; and from 1970 to 1975, the amount of money sent doubled a third time.

3.      Grants-in-aid System—grew rapidly because it helped states and local officials to resolve a dilemma. On the one hand, they wanted access to the superior taxing power of the federal government. On the other hand, prevailing constitutional interpretation, at least until the late 1930s, held that the federal government could not spend money for purposes not authorized by the Constitution. The solution, obviously, was to have federal money put in the states’ hands: Washington would pay the bills; the states would run the programs.

4.      Rise of Federal Activism—until the 1960s, federal grants-in-aid were conceived by, or in cooperation with, the states, and were designed to serve essentially state purposed. During the 1960s, however, the federal government began devising grant programs based upon what national officials perceived to be important national needs.

5.      The Intergovernmental Lobby—state and local governmental officials began to organize themselves to lobby federal officials for money for local projects—including spending public money for these lobbying efforts.

6.      Categorical Grants Versus Block Grants—categorical grants must be spent on specific programs or for specific projects. Block grants give local governments much greater leeway in determining where to spend the money, and therefore are the more desirable of the two types of grants. Local governments looked to block grants to provide local tax relief. This has not happened as plan, because the amounts of the block grants have not grown at the rate local governments anticipated—and because the “no strings” money also came with strings attached.

B.     Federal Aid and Federal Control—Federal aid became so important for state and local governments that many governors and mayors, along with others, began to fear that Washington was well on its way to controlling state and local governments.

1.      Mandates and Conditions of Aid—Members of Congress and federal officials feel an obligation to develop uniform national policies with respect to important matters, and to prevent states from misspending the money the federal government sends them. State and local governments argue that these restrictions (mandates and conditions of aid) prevent them from best applying the funds to local conditions.

2.      Rivalry Among the States—As federal money became more important to state and local governments, the competition among the states of course has intensified. This debate has intensified even more with the postwar population shift to the sunbelt, and the deindustrialization of the snowbelt

III.             Conclusion—Evaluating Federalism

The tensions in the federal system do not arise from one level of government or another being callous or incompetent, but from the kinds of political demands with which each must cope. Because of these competing demands, federal and state officials find themselves in a bargaining situation in which each side is trying to get some benefit while passing on to the other side most of the costs.

      The bargains struck in this process used to favor local officials because members of Congress were essentially servants to local interests—they were part of local political organizations and supported local autonomy. Beginning in the 1960s, however, changes in American politics shifted the orientation of many members of Congress toward favoring Washington’s policy needs over local needs.