WHO DOES WHAT? FEDERALISM AND INSTITUTIONAL JURISDICTIONS

Why Keep the States? The Importance of History

Many of the Constitution’s framers, particularly Alexander Hamilton, had hoped to create something close to a unitary national government that severely circumscribed the power of the individual states. The fact that the framers established a federal system in which the states retained significant powers illustrates the importance of history. Each state had well-established governmental institutions staffed by legislators, judges, and executive officials who had no desire to see their power and autonomy submerged in a new national government. At the same time, citizens identified with their own states. The people of the former colonies were not “Americans”; rather, they had already been identifying, for several generations, as Virginians, New Yorkers, Pennsylvanians, and so on. For this reason, even the most nationalistic framers had to accept that the states would continue as important entities. In a sense, the framers faced the same historical realities faced today by advocates of a stronger European Union (EU). The nations of Europe have historically distinct identities, well-entrenched governments, and loyal citizens. Given the force of history, uniting these nations is no easy matter and is never guaranteed to be successful, as the world saw when the United Kingdom voted to leave the EU in 2016. Britain’s formal departure from the EU, known as Brexit, took place in 2020. Like America’s founders, the architects of the EU, bowing to history, built the regime on federal foundations. A federal system also allows geographically concentrated groups to wield more power than they would be able to wield in a central system.

Federalism in the Constitution: Who Decides What

The Constitution reifies the principle of federalism by recognizing two sovereign powers: it grants a few expressed powers to the national government and reserves the rest to the states. Thus, the Constitution defines the jurisdiction of each level of government.

The Powers of the National Government. As we saw in Chapter 2, the expressed powers granted to the national government are found in Article I, Section 8, of the Constitution. These 17 powers include the powers to collect taxes, coin money, declare war, and regulate commerce (which became a very important power for the national government). Article I, Section 8, also contains an important additional source of federal power: the implied powers that enable Congress “to make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers.” Not until several decades after the Founding did the Supreme Court allow Congress to exercise these powers, but ultimately the necessary and proper clause allowed the national government to expand the scope of its authority. In addition to expressed and implied powers, the Constitution affirms the national government’s power in the supremacy clause (Article VI), which declares all national laws and treaties to be “the supreme Law of the Land.”

The Powers of State Governments. One way in which the framers preserved a strong role for the states was through the Tenth Amendment. This amendment presents a decision rule, or a general principle that governs decision making, stating that the powers the Constitution does not delegate to the national government or deny to the states are “reserved to the States respectively, or to the people.” The Antifederalists, who feared that a strong central government would encroach on individual liberty, pressed for such an amendment as a way of limiting national power. Federalists agreed to the amendment because they did not think it would do much harm, given the powers the Constitution already granted to the national government. The Tenth Amendment is also called the reserved powers amendment because it aims to reserve powers to the states.

In some policy areas, the states share concurrent powers with the national government. For example, they share some power to regulate commerce and affect the currency by chartering banks, granting or denying corporate charters, and regulating product quality or labor conditions.

The issue of concurrent versus exclusive power has come up at times in our history. Whenever federal and state laws directly conflict, the issue is generally resolved in favor of national supremacy. However, when the federal government does not set a strong policy in an area of concurrent powers, states can each decide their own policies. Analyzing the Evidence on pp. 86–87 discusses another issue regarding federalism in action: states’ different voter identification laws and whether or not these differences suppress the votes of historically marginalized people.

All told, America’s federal system leaves a great deal of power in the hands of the individual states. Each year, the states collectively adopt nearly 20,000 new laws, an average of 400 per state, while the U.S. Congress in recent years has on average enacted slightly more than 150 new statutes. The states are especially important in the realms of education, health care, environmental policy, and transportation. In all these areas, to be sure, the states share power with the federal government but still possess considerable discretionary authority.

The most fundamental power exercised by the states, however, is that of coercion: the power to develop and enforce criminal codes, administer health and safety rules, and regulate the family via marriage and divorce laws. The states also have the power to regulate individuals livelihoods: physicians, attorneys, plumbers, hairdressers, and those wishing to practice a host of other occupations must obtain licenses from their state. Even more fundamentally, the states have the power to define private property: private property exists because state laws against trespass and theft define who is and who is not entitled to use a piece of property. Ownership of a car, for example, is not worth much unless the state is willing to enforce the owner’s right to possession by making it a crime for anyone else to drive the car without the owner’s permission. Similarly, ownership of a house or piece of land means that the state will enforce the owner’s possession by prohibiting others from occupying the property without the consent of its owner. At the same time, under its power of eminent domain, the state may seize private property for anything it deems to be a public purpose. If the state, however, does seize such property, it is required by its own constitution and the federal Constitution to compensate the owners for their loss. The decision to take the property, though, is well within the states recognized powers.

A state’s authority to regulate these fundamental matters, commonly referred to as the police power, encompasses its power to regulate the health, safety, welfare, and morals of its citizens. Policing is what states do—they coerce individuals in the name of the community in order to maintain public order. When an individual is issued a traffic ticket, or taken into custody for most other crimes, the state is exercising its police power, often through the agency of a county or city police officer. Counties and cities are effectively agencies of their states. State legislatures created local governments, and state constitutions and laws define the powers of these governments. The status of counties and cities relative to their states should not be confused with the status of the states relative to the federal government. The 50 states, for their part, are much more than agencies of the federal government. Their existence is recognized and their powers implied under the U.S. Constitution. While a state can abolish any of its counties, the federal government cannot abolish a state.

analyzing the evidence

Do Voter ID Laws Affect Turnout?

Contributed by Nazita Lajevardi, Michigan State University

Voter identification laws have proliferated across the United States. Voter ID laws require voters to present some form of identification before they cast a ballot. No state required voter ID prior to 2006, but as of 2022, 35 states have laws in force requesting or requiring voters to show some form of identification at the polls.¹ Despite no two voter ID laws being the same, and state laws regulating identification at times changing from year-to-year, the National Conference of State Legislatures groups them into five categories: (1) strict, photo identification; (2) strict, non-photo identification; (3) non-strict, photo identification; (4) non-strict, non-photo identification; and (5) no voter identification law. See Figure A to find the type of voter ID law in your state.²

figure A VOTER IDENTIFICATION LAWS, 2022

SOURCE: National Conference of State Legislatures, “Voter ID Laws,” January 7, 2022, https://www.ncsl.org/research/elections-and-campaigns/voter-id.aspx (accessed 5/18/22).(accessed 4/21/22).

Today, these statutes are at the center of the nation’s debate on voting rights. Advocates insist these laws reduce voter fraud, do not reduce the voter participation of citizens, and impose few—if any—costs on legitimate voters. Opponents, meanwhile, argue that these laws are unnecessary and intrusive voter restrictions that effectively limit the legitimate participation of disadvantaged groups and skew the partisan makeup of legislative bodies across the nation.

Nonetheless, not all registrants have this type of government-issued photo identification document. In fact, historically marginalized communities are less likely to possess the valid forms of identification necessary to comply with these voter ID statutes.³ As such, the material burdens of casting a ballot in states with these mandates fall harder on historically marginalized voters than on White Americans.⁴ Notable differences in identification possession rates exist by race and ethnicity;⁵ for example, a 2013 study found that while 7 percent of White Americans and 10 percent of Hispanics reported not having a driver’s license, 21 percent of Black Americans reported not having one (Figure B).⁶

If White Americans are more likely to report possessing a valid form of ID to comply with voter ID mandates than other racial groups, one important question is whether the voter turnout of members of historically marginalized groups in states with these laws is lower than that of White Americans.⁷ Research shows that voter identification laws do in fact suppress the vote of these groups. For example, my own research with collaborators assessed whether strict photo identification laws reduced turnout among registered survey respondents in the Cooperative Congressional Election Study (CCES) from 2006 to 2014, and found that strict voter ID laws depressed Latino turnout by 9.3 percentage points, Black turnout by 8.6 points, and Asian American turnout by 12.5 points in primary elections.⁸ In general elections, this one study found that Latinos in that survey were 10 percent less likely to turn out in states with strict identification laws than in states without these regulations, other things being equal.

figure B Who Possesses Driver’s Licenses and Passports?

Other scholarship confirms these findings. Using panel data on 10 million individual voter registrants, political scientist Bernard Fraga found some evidence that the implementation of strict voter identification laws was related to lower Latino and Asian turnout from 2008 to 2012.⁹ My work with a team of political scientists addressed the issues in question by using official turnout data rather than surveys to examine turnout changes in each U.S. county across the 2012 and 2016 presidential elections when Alabama, Mississippi, Virginia, and Wisconsin all implemented strict photo ID laws; we found that turnout declined significantly more in racially diverse counties relative to less diverse counties in states that enacted strict identification laws over this period than it did in other states.¹⁰ And finally, Bernard Fraga and Michael Miller conducted a clever case study in Texas, which had implemented a strict voter identification law in the 2014 election, though a last-minute federal court decision allowed Texans without qualifying identification to vote in the 2016 election. They found that more than 16,000 Texans would have been disenfranchised for lack of compliant identification in 2016, and that these registrants were significantly more likely to be Black and Latino than the population voting with identification.¹¹

While researchers continue to study this question, scholarship largely suggests that voter ID laws—especially the strictest types—represent a major burden that disproportionately affects historically marginalized voters. Given the already low turnout of historically marginalized groups across the country, declines as a result of voter ID laws are all the more noteworthy.

Notes for this feature appear on page N1

Thus, America’s state governments are important. They provide the essential health, public safety, education, and transportation services upon which Americans depend every day. In times of crisis, Americans tend to look to the federal government for help. But the states, and especially their governors and executive departments, are the actual “first responders” when Americans are threatened by natural or man-made disasters. Every year, the states deal with floods, hurricanes, fires, shootings, and public health problems. In the realm of public health, for example, the states have been fighting a little-noticed war against the spread of such diseases as drug-resistant tuberculosis.

The 2020 novel coronavirus crisis underscored the importance of the states. In March 2020, cases of COVID-19, which had already caused thousands of deaths in Asia and Europe, began to appear in the United States as well. In the first weeks, the federal government was slow to craft a response. Several state governors, however, moved quickly to deal with what they knew would be a public health emergency soon facing their states, instituting social-distancing rules and closing businesses, schools, and other venues where the disease might be spread. As COVID-19 struck, former governor George Pataki of New York observed, “Right now the governors are in the forefront and appropriately so.”⁵

The governments of the 50 states are structurally similar to the federal government. Each state possesses a written constitution and three branches of government. In every state but Nebraska (whose legislature is unicameral), the legislative branch is divided into two houses. Yet beneath this familiar appearance are a number of realities that can undermine the quality of many American state governments, weakening the ties or connections that should exist between a government’s actions and its citizens’ interests and desires. Some, albeit not all, states could be characterized as “disconnected democracies.”⁶ Their institutions are democratic in form but lack firm connections with the citizens they should serve. In particular, many state governments face three basic political problems: (1) weak constitutional and institutional foundations; (2) a lack of civic engagement; and (3) long histories of public corruption and interest group domination unchecked by adequate ethics and conflict-of-interest rules.

The States’ Constitutional and Institutional Structures. The Constitution of the United States is a brief document setting forward a number of basic legal and institutional principles to guide future lawmakers. While the U.S. Constitution can be amended, most of its basic principles have remained intact since its adoption in 1789. State constitutions, on the other hand, are lengthy and malleable documents. They are frequently amended and are filled with minute details. New York’s constitution, for example, specifies the widths of the state’s ski trails.⁷ These constitutions do not offer adequate guidance for state legislators on large questions but serve as straitjackets on small matters that could better be decided through the legislative process. For one thing, well-intentioned but poorly designed fiscal restraints have led most states to engage in fiscal deception and risky off-budget borrowing.

The institutional structures established by many state constitutions are also problematic. One difficulty is the office of state governor. Like the president of the United States, the governor is a chief executive. The president, however, is a unitary executive. At the federal convention, some of the delegates favored the creation of a two- or three-person executive or even an executive council to direct the affairs of the nation’s executive branch. Most delegates, however, thought that a plural executive would be too unwieldy to properly manage the government or energetically and effectively pursue the nation’s interests. Among the states, however, all but a handful elect plural executives. In many states, governors share power with an independently elected attorney general, state treasurer, secretary of state, state auditor, secretary of agriculture, and several other executive officials. This plural executive model means that executive power is fragmented in most states and the ability of the governor to manage the executive branch and use its power to pursue public interests is constrained.

Another problematic state institution is the justice system. The constitutions of many states allow, or sometimes stipulate, the election of major trial court and appellate judges. At the federal level, of course, judges are nominated by the president, confirmed by the Senate, and appointed for life. The framers of the national Constitution were strongly opposed to the popular election of judges, believing that elected judges would allow popularity to interfere with the impartial administration of justice. A number of studies seem to indicate that the federal Constitution’s framers were correct to be concerned. Elected state judges seem to be responsive to “get tough” demands from voters and mete out harsher sentences than appointed judges do.⁸ In recent years, heavy campaign spending in judicial elections by interest groups with a stake in the outcome has raised concerns that justice is for sale in some states. State and county prosecutors are also subject to election (federal prosecutors are appointed) and may too easily be swayed by electoral considerations when making prosecutorial decisions.

Civic Engagement. Some citizens take great pride in their states. According to one survey, 77 percent of Alaska’s residents, 70 percent of Utah’s citizens, and 68 percent of all Texans viewed their state as the best possible place to live. Alas, in the same survey, large majorities of the residents of Rhode Island, Illinois, Louisiana, New Jersey, and several other states said they would prefer to live elsewhere.⁹ Indeed, according to data compiled by a national moving company, United Van Lines, tens of thousands of people followed their inclinations and voted with their feet, fleeing Illinois and New Jersey, in particular.¹⁰

Whether or not they take pride in their states, most citizens know very little about their states’ governments and political processes. One national survey tested citizens’ level of basic knowledge about their own state’s government, history, and political processes. The survey found that citizens know little about the politics and governance of their states. Most, albeit not all, know the name of their governor, but few can name their state legislators or identify the major issues and policies considered by their legislatures.¹¹

Low levels of citizen knowledge about state politics have a number of repercussions. Among the most important of these is a weakening of state legislatures and an increase in their permeability to interest groups. Legislative assemblies depend for their power on the support of significant groups in society. The power of the U.S. Congress, for example, was greatest in the nineteenth century, when it was closely tied to emergent political and social forces. Later, as the presidency became the institution to which new groups looked to achieve their political aspirations, Congress’s power waned.¹² By the same token, if important social forces and interests believe that a state legislature actively represents their views and aspirations, they are likely to give it their support. In the 1850s, both northerners and southerners looked to their state legislatures, more than to the U.S. government, to protect what they saw as sectional interests, and the power of those legislatures grew accordingly. If, on the other hand, a legislature lacks a strong constituency, it becomes vulnerable to encroachments by other institutions. The fact that Americans have little knowledge of or interest in their state legislatures means, for example, that hardly anyone is concerned or even aware when Congress expands its power over traditionally state matters such as education and law enforcement, as it has done in recent years.

At the same time, the absence of popular interest in or knowledge of state legislative affairs, coupled with only spotty media coverage, means that the way is open for special interests to dominate legislative politics. Without popular interest or media coverage, many states are a perfect environment—veritable petri dishes—for interest group politics. In recent years, lobby groups have flocked to the state capitals, seeing a permissive environment in which to promote their clients’ interests.¹³

Taken together, these core problems of state government—weak constitutional and institutional foundations and lack of civic engagement—reduce the ability of the states to play a leading role in the federal system. The states possess important powers but do not always use them effectively.

States’ Obligations to One Another. The Constitution also creates obligations among the states. These obligations, spelled out in Article IV, were intended to promote national unity. By requiring the states to recognize actions taken in other states as legal and proper, the framers aimed to make the states less like independent countries and more like parts of a single nation. Article IV, Section 1, calls for “Full Faith and Credit” among states, meaning that each state is expected to honor the “public Acts, Records, and Proceedings” that take place in any other state. So, for example, if two people are married in Texas—marriage being regulated by state law—Missouri must recognize that marriage even though the couple was not married under Missouri state law.

This full faith and credit clause recently became an important factor in a case involving adoption. The 2016 case of V.L. v. E.L. involved a same-sex couple and their children, who were the biological children of one parent and legally adopted by the other parent in the state of Georgia. When the couple moved to Alabama and separated, the parent who had adopted the children was denied joint custody and visitation rights because the state of Alabama refused to recognize the legal validity of the adoption. However, the Supreme Court held that the full faith and credit clause required Alabama courts to recognize the Georgia adoption.¹⁴

Article IV, Section 2, known as the comity clause, also promotes national unity; it provides that citizens enjoying the “privileges and immunities” of one state should be entitled to similar treatment in other states. Essentially, a state cannot discriminate against someone from another state or give special privileges to its own residents. For example, in the 1970s, the Supreme Court struck down as unconstitutional an Alaska law that gave residents preference over nonresidents in obtaining work on the state’s oil and gas pipelines.¹⁵ There are many exceptions to the comity clause. For example, states may charge out-of-state students a higher tuition rate at state colleges and universities.

The comity clause also regulates criminal justice among the states by requiring states to return fugitives to other states from which they have fled. For example, in 1952, when an Alabama inmate escaped and sought to avoid being returned on the grounds that he was being subjected to “cruel and unusual punishment” there, the Supreme Court ruled that he must be returned, according to Article IV, Section 2.¹⁶ This case highlights the difference between the obligations among states and those among different countries. For example, despite the recent restoration of diplomatic relations between Cuba and the United States, Cuba refused in 2017 to return several American fugitives who had claimed asylum in the country, including convicted murderer Joanne Chesimard. The Constitution clearly forbids states from doing something similar.

Limitations on the States. Although most of the truly coercive powers are reserved to the states, the Constitution does impose some significant limitations, including those placed on states by the full faith and credit and comity clauses. Another potential limit on states is in a clause in Article I, Section 10, which provides that “no State shall, without the Consent of Congress, . . . enter into any Agreement or Compact with another State.” Compacts are legally binding agreements that allow two or more states to solve a problem that crosses state lines. In the early years of the Republic, states turned to compacts primarily to settle border disputes. Today, subject to the approval of the federal government, compacts cover a wide range of issues but are especially important in regulating the distribution of river water, addressing environmental concerns, and operating transportation systems that cross state lines.¹⁷ A well-known example is the Port of New York Authority (now the Port Authority of New York and New Jersey), an organization formed by a compact between New York and New Jersey in 1921. Without it, such public works as the enormous Verrazzano-Narrows Bridge connecting Brooklyn and Staten Island, the bridges connecting New Jersey and Staten Island, the Lincoln Tunnel, the George Washington Bridge, and the expansion and integration of the three major airports that serve New York City could not have been financed or completed.¹⁸

The federal government has occasionally blocked a proposed interstate compact, thus limiting state action in certain spheres.

Local Government and the Constitution. Local government, including the structures that govern counties, cities, and towns, occupies a peculiar but very important place in the American system. In fact, the status of American local government is probably unique among governments around the world. First, it must be pointed out that local government has no status in the American Constitution. State legislatures create (and can eliminate or redraw the boundaries of) local governments, and state constitutions and laws permit local governments to take on some of the state-level responsibilities. Most states amended their own constitutions to give their larger cities home rule—a guarantee of state noninterference in various areas of local affairs.¹⁹

Local governments became important early in the Republic because the states possessed little administrative capability; states relied on cities and counties to implement their laws. Local government thus provided an alternative to a statewide bureaucracy. Today, local governments and state bureaucracies both compete and cooperate with one another. Take, for example, the relationship between state and county police forces, which usually involve a mix of collegiality and rivalry.

The Slow Growth of the National Government’s Power

Before the 1930s, America’s federal system was essentially one of dual federalism: a two-layered system—national and state—in which the states and their local principalities did most of the governing. That is, the jurisdiction of the states was broader than that of the federal government. We call this the “traditional” system because it remained relatively stable during two-thirds of America’s history (with the exception of the Civil War years).

Under dual federalism, the state and federal tiers were functionally quite different from each other, and every generation since the Founding debated how to divide responsibilities between the two. As we have seen, the Constitution delegates specific powers to the national government and reserves the rest to the states. The final, “elastic” clause of Article I, Section 8, however, leaves room for interpretation; the three words necessary and proper have invited struggle over the distribution of powers between national and state governments throughout the nation’s history. In the period of dual federalism, however, the national government remained steadfastly within the strict limits established by Article I, Section 8.

In the early years, the Supreme Court delivered several decisive rulings on the distribution of powers between national and state governments. At issue in the first such case, McCulloch v. Maryland (1819), was whether Congress could charter a bank—in particular, the Bank of the United States, which Congress had created in 1791 over Thomas Jefferson’s opposition.²⁰ Although no express power to create banks exists in Article I, Section 8, Chief Justice John Marshall stated that such a power could be “implied” from the commerce clause by applying the necessary and proper clause. Essentially, Marshall ruled that if the Constitution permitted Congress to exercise a certain power, and it did not specifically prohibit the means by which Congress chose to exercise that power, then Congress’s action would be permissible. Because the Constitution expressly granted Congress the power to regulate commerce, and chartering a bank was both reasonably related to commerce and not prohibited by the Constitution, Congress’s action was constitutionally permissible.

With this decision, the Court significantly increased the potential scope of the national government’s power: Congress could now exercise powers implied by the powers specifically mentioned in Article I, Section 8. The power to regulate commerce, in particular, has become the foundation of a vast array of governmental actions not mentioned in the Constitution. A network of communications satellites, for example, would have been beyond the wildest dreams of the framers, but Congress had no difficulty finding authority in the commerce clause for regulating this industry.

A second question of national versus state power arose in McCulloch: Could the state of Maryland tax the bank that Congress had created? Again, Marshall and the Supreme Court sided with the national government, arguing that a bank created by a legislature representing all the people (Congress) could not be taxed by a state legislature (Maryland) representing only a fraction of the American people. Here, the Supreme Court relied on the supremacy clause of Article VI: whenever a state law conflicts with a federal law, the state law is invalid because “the Laws of the United States . . . shall be the supreme Law of the Land.” (For more on federal supremacy, see Chapters 2 and 9.)

The Court reinforced its nationalistic interpretation of the Constitution with its 1824 decision in Gibbons v. Ogden. At issue was whether the state of New York could grant a monopoly to a steamboat company to operate between New York and New Jersey. Aaron Ogden had secured his license from the state, whereas Thomas Gibbons, a former partner of Ogden’s, had secured a competing license from the U.S. government. Chief Justice Marshall argued that Gibbons could not be kept from competing because the state of New York did not have the power to grant the monopoly in the first place, since it affected the commercial interests of other states. Marshall based his decision on the commerce clause, which delegates to Congress the power “to regulate Commerce with foreign nations, and among the several States and with Indian tribes” (emphasis added). Marshall insisted that the definition of “commerce” in this clause was “comprehensive” but added that the comprehensiveness was limited “to that commerce which concerns more states than one.” This opinion gave rise to the legal concept that later came to be called interstate commerce.²¹

Despite the Court’s expansive reading of national power in the Republic’s early years, between the 1820s and the 1930s federal power grew slowly. However, efforts to expand the national government’s power were bitterly contested. During the presidency of Andrew Jackson, a states’ rights coalition developed in Congress. Among the most important members were state party leaders who often directed their state legislatures to appoint them to the Senate, where they jealously guarded the powers of the states they ruled. Of course, the representatives from the South had a particular reason to support states’ rights: so long as the states were powerful and the federal government was weak, the institution of slavery could not be threatened.

Aside from the interruption of the Civil War, the states’ rights coalition dominated the federal government until the 1930s: it controlled Congress, affected presidential nominations—a matter also controlled by state party leaders—and influenced judicial appointments. Indeed, the Supreme Court turned away from Chief Justice Marshall’s nationalistic jurisprudence in favor of a states’ rights interpretation of the Constitution, especially in cases concerning the commerce clause.

Despite the establishment of important federal agencies, such as the Interstate Commerce Commission (1887) and the Federal Trade Commission (1914), which were built to lay the groundwork for federal economic management, the Supreme Court generally ruled against federal intervention in commercial issues of fraud, the production of impure goods, the use of child labor, or the existence of dangerous working conditions or long hours. Regulation in these areas would mean that the federal government was entering the factory and the workplace—areas that the Court considered inherently local because the goods produced there had not yet been bought or sold across state lines. Rather, the Court held that regulation of these spaces fell under the realm of police power, a power reserved to the states. No one questioned the power of the national government to regulate certain kinds of businesses, such as railroads, gas pipelines, and waterway transportation, because they intrinsically involved interstate commerce.²² But well into the twentieth century, most other efforts by Congress to regulate commerce were blocked by the Supreme Court’s restrictive understanding of federalism.

After his election in 1932, President Franklin Delano Roosevelt was eager to expand the power of the national government; the success of his New Deal agenda depended on governmental power to regulate the economy and to intervene in every facet of American society. Roosevelt’s efforts provoked sharp conflicts between the executive branch and the federal judiciary. After appointing a host of new judges and threatening to expand the size of the Supreme Court, Roosevelt managed to bend the judiciary to his will. Beginning in the late 1930s, the Court issued a series of decisions that would solidify the commerce clause as a great engine of national power.

One key case was National Labor Relations Board v. Jones & Laughlin Steel Corporation (1937).²³ At issue was the National Labor Relations Act, which prohibited corporations from interfering with employees’ efforts to unionize, to bargain collectively over wages and working conditions, and to go on strike and engage in picketing. When the newly formed National Labor Relations Board (NLRB) ordered Jones & Laughlin to reinstate workers whom the company had fired because of their union activities, the steel company refused on the grounds that its manufacturing activities, being local, were constitutionally beyond the federal government’s reach. The Court ruled in favor of the NLRB, however, arguing that a large corporation with subsidiaries and suppliers in many states was inherently involved in interstate commerce and hence subject to congressional regulation. In other important decisions that strengthened the power of the commerce clause, the Court upheld minimum wage laws, the Social Security Act, and federal rules controlling how much of any given commodity local farmers might grow.²⁴

After 1937, the Court threw out the old distinction between interstate and intrastate commerce. The Court would not even review appeals that challenged congressional acts contributing to the “regulatory state” and the “welfare state,” such as those that protected employees’ rights to organize and engage in collective bargaining, regulated the amount of farmland in cultivation, extended low-interest credit to small businesses and farmers, and restricted corporate activities dealing in the stock market. These decisions and other New Deal programs signaled the beginning of a significant shift toward national government power. As the Timeplot on pp. 98–99 shows, spending on federal programs surpassed spending by state and local governments after the 1940s and has increased over the past 80 years.

Cooperative Federalism and Grants-in-Aid: Institutions Shape Policies

Roosevelt was able to overcome judicial resistance to his expansive New Deal programs, but Congress forced him to recognize the continuing importance of the states. It carried out Roosevelt’s policy agenda in a way that encouraged the states to pursue nationally set goals while leaving them some leeway to administer programs according to local needs.

If the traditional system of two sovereigns performing highly different functions can be called dual federalism, then the system that prevailed after the 1930s could be called cooperative federalism: a system of supportive relations, sometimes partnerships, between the national government and the state and local governments. Under this brand of federalism, the federal government subsidizes strategic state and local activities through grants-in-aid. Because many of these state and local programs would not exist without the grants-in-aid, the grants are an important form of federal influence. (We discuss another form of federal influence, the mandate, in the next section.)

Thus, the shift from dual federalism to cooperative federalism was a subtle but important institutional change. Whereas dual federalism left decision, agenda, and veto powers with respect to domestic policy firmly in the hands of the states, cooperative federalism gave the federal government far greater control over the domestic political agenda. Under dual federalism, for example, corporations mainly concerned themselves with state-level regulation of their business. Most firms hardly even lobbied in Washington. With the emergence of cooperative federalism and a more prominent role for the federal government in the nation’s economy, hardly any firm could afford not to lobby in Washington.

A grant-in-aid is a kind of incentive whereby Congress appropriates money for state and local governments with the condition that it be spent for a particular purpose. Congress uses grants-in-aid because it does not have the political or constitutional power to command state and local governments to do its bidding. When you can’t command, a monetary inducement sometimes works. For instance, Congress was able to institute a nationwide speed limit of 55 miles per hour by threatening to withdraw federal highway grants-in-aid if the state legislatures did not set that speed limit. In the early 1990s, Congress began to allow the states, under certain conditions, to go back to the 65-mile-per-hour (or higher) limit without losing their highway grants. The grant-in-aid is one more example of the fact that institutions shape policies: because the United States’ constitutional system gives the states de facto veto power over many potential federal programs, the national government has learned to craft policies likely to elicit the states’ cooperation.

When applying this approach to cities, Congress set national goals in specific policy categories, such as public housing and assistance to the unemployed, and provided grants-in-aid that would help local governments meet them. World War II temporarily stopped the distribution of these grants. But after the war, Congress resumed making grants for urban development and school lunches. The range of categories has expanded greatly over the decades, and the value of such categorical grants-in-aid increased from $2.3 billion in 1950 to nearly $830 billion in 2020 (Figure 3.1). Sometimes the state or local government must match the national contribution, but for some programs the congressional grant-in-aid covers much of the cost. During his administration, President Trump threatened to withdraw aid from states and cities that refused to enforce immigration laws. Several states, including California, have declared themselves to be “sanctuary states” for undocumented immigrants. Within these states, some cities have defied the state government’s resistance to federal policy. Bakersfield, California, for example, declared that it was a “law and order” city, not a sanctuary.²⁵ For its part, the Biden administration’s effort to relax immigration restrictions were opposed by states like Texas that imposed their own, more stringent programs to block migrants.

FIGURE 3.1

THE HISTORICAL TREND OF CATEGORICAL GRANTS-IN-AID, 1950–2020

For the most part, the categorical grants created before the 1960s simply helped the states perform their traditional functions, such as educating and policing.²⁶ In the 1960s, however, the role of categorical grants expanded. For example, during the 89th Congress (1965–66) alone, the number of categorical grant-in-aid programs grew from 221 to 379.²⁷ The grants authorized during this decade announced national purposes much more strongly than earlier grants did. Central to that national purpose was the need to provide opportunities to the poor.

Many of the categorical grants enacted during the 1960s were project grants, which require state and local governments to submit proposals to federal agencies. In contrast to the older formula grants, which used a formula (composed of such elements as need and state and local capacities) to distribute federal funds, the new project grants made funding available on a competitive basis—that is, federal agencies would award grants to the proposals they judged to be the best. Through these project grants, the national government acquired substantial control over which state and local governments got money, how much they got, and how they spent it. A well-known project grant program is the Department of Education’s “Race to the Top,” which was implemented during the Obama administration. Under this program, the federal government awarded grants to states able to show the highest levels of improvement in teacher quality and student achievement. In a similar vein, the Department of Transportation has made nearly $1 billion available to states that propose the most innovative ideas to repair and improve the nation’s infrastructure.

FIGURE 3.2

TWO HISTORIC VIEWS OF FEDERALISM

Political scientist Morton Grodzins characterized the shift to post–New Deal cooperative federalism as a move from “layer cake federalism” to “marble cake federalism,”²⁸ in which it is difficult to say where the national government ends and the state and local governments begin. Figure 3.2 depicts the basis of the marble cake idea. In the late 1970s, federal aid constituted 25 to 30 percent of the operating budgets of all the nation’s state and local governments (Figure 3.3). In 2010, federal aid accounted for more than 35 percent of these budgets. This increase was temporary, resulting from the Obama administration’s $787 billion stimulus package designed to help state and local governments weather the 2007–09 recession. Briefly, however, federal aid became the single largest source of state revenue, exceeding sales and property tax revenues for the first time in U.S. history. Today, federal aid accounts for 31 percent of state and local budgets.

FIGURE 3.3

THE RISE, DECLINE, AND RECOVERY OF FEDERAL AID, 1960–2020

Regulated Federalism and National Standards

Developments from the 1960s to the present have pushed the U.S. federal system well beyond cooperative federalism to what might be called regulated federalism.²⁹ Regulated federalism is an important decision rule that has enhanced the national government’s power. In some areas—especially civil rights, poverty programs, and environmental protection—the national government actually regulates state and local governments by threatening to withhold grant money unless they conform to national standards. These standards are called federal mandates. This focus reflects a shift away from federal oversight of economic activities toward “social regulation,” or intervention on behalf of individual rights and liberties, environmental protection, workplace safety, and so on. Here the national government provides grant-in-aid financing, but it sets conditions in the form of standards that the states must meet in order to keep the grants. Examples include the Asbestos Hazard Emergency Act of 1986, which requires school districts to inspect for asbestos hazards and remove them from school buildings when necessary, and the Americans with Disabilities Act of 1990, which requires all state and local governments to promote access for the disabled to all public and private places open to the general public. The net effect of these national standards is that state and local policies are more uniform from coast to coast. National regulations and standards provide coordination across states and localities and solve collective action problems.

A number of judicially developed rules govern federal mandates. In South Dakota v. Dole (1987), the Supreme Court held that mandates must be unambiguous, must not be “coercive,” and must not force states to violate the U.S. Constitution.³⁰ In still another group of programs, the government imposes national standards on the states without providing any funding at all. These are called unfunded mandates. These burdens became a major part of the rallying cry that produced the Republican Congress elected in 1994 and its Contract with America. One of its first measures was the Unfunded Mandates Reform Act (UMRA). Considered a triumph of lobbying efforts by state and local governments, UMRA was “hailed as both symbol and substance of a renewed congressional commitment to federalism.”³¹ Under this law, any mandate with an uncompensated cost estimated to be above a certain amount can be stopped by a point of order raised on the House or Senate floor. This “stop, look, and listen” requirement forces Congress to own up to a mandate’s potential costs.

UMRA does not prevent members of Congress from passing unfunded mandates; it only makes them think twice before they do. Moreover, the act exempts several areas from coverage; states must still enforce antidiscrimination laws and meet other requirements in order to receive federal assistance. Nonetheless, UMRA is a serious effort to move the balance of power between the national government and state governments a bit further toward the state side.³²

New Federalism and the National-State Tug-of-War

Federalism in the United States is partly a tug-of-war between those seeking more uniform national standards and those seeking more variability from state to state. Even before UMRA, Presidents Richard Nixon and Ronald Reagan called their efforts to reverse the trend toward national standards “new federalism.” They helped craft national policies that would return more discretion to the states. Examples include Nixon’s revenue sharing and Reagan’s block grants, which consolidated a number of categorical grants into one larger category, leaving the state (or local) governments that received them more discretion to decide how to use the money.

President Barack Obama, in contrast, believed firmly in regulated federalism, with the national government using the states as administrative arms rather than independent laboratories. For example, under the Affordable Care Act, every state was encouraged to establish an insurance exchange where individuals in need of health insurance could shop for the best rate. Citizens purchasing insurance through these exchanges would receive federal tax subsidies. Some states did not establish exchanges, but the Supreme Court ruled that their citizens could receive tax benefits for the policies they purchased through the federal government’s exchange.³³ The law also required states to expand their Medicaid programs, adding as many as 15 million Americans to the Medicaid rolls. Several states were concerned that the costs of the new program would fall on their strained budgets, and 12 state attorneys general brought suit, charging that the program’s mandates violated the Tenth Amendment. Ultimately, the Supreme Court upheld major provisions of the legislation, although the Court ruled that the federal government could not require that Medicaid rolls be expanded.³⁴

President Donald Trump, for his part, seemed committed neither to new federalism nor to regulated federalism. Instead, Trump chose whichever approach best served his political goals. For example, in 2017 Trump issued an executive order reducing federal control over K-12 education, declaring, “For too long the government has imposed its will on state and local governments. . . . My administration has been working to reverse this power grab.”³⁵ Trump also gave the states more flexibility in implementing the Affordable Care Act in an effort to water down provisions he was unable to convince Congress to repeal. At the same time, however, in the realm of immigration, Trump seemed to be a champion of regulated federalism; he endeavored to force states to comply with his policies by threatening to withhold funds from those that opposed them. Some states responded by resisting federal directives, an action that pundits dubbed “uncooperative federalism.” Several state attorneys general filed suit against Trump’s immigration and energy directives, among other policies. After President Biden took office in 2021, a number of states also opposed his policies. But, while Democratic “blue” states had fought Trump, it was now the turn of Republican “red” states to contest Biden’s programs. Texas, in particular, challenged the validity of federal vaccine mandates and decried the president’s immigration policies as being too lax.

The Supreme Court as Federalism’s Referee

The courts establish the decision rules that determine the relationship between federal and state power. For much of the nineteenth century, federal power remained limited. The Tenth Amendment was used to bolster arguments for states’ rights, which in their extreme version claimed that the states did not have to submit to national laws when they believed the national government had exceeded its authority. States’ rights arguments were voiced less often after the Civil War, but the Court continued to use the Tenth Amendment to strike down laws it thought exceeded national power, including the 1875 Civil Rights Act.

In the early twentieth century, however, the Tenth Amendment appeared to lose its force. Reformers began to press for national regulations to limit the power of large corporations and to preserve the health and welfare of citizens. The Supreme Court approved some of these laws but struck down others, including a law combating child labor. The Court stated that the law violated the Tenth Amendment because only states should have the power to regulate conditions of employment. By the late 1930s, however, as we discussed earlier in this chapter, the Court had approved such an expansion of federal power that the Tenth Amendment appeared irrelevant.

The 1990s saw a revival of interest in the Tenth Amendment, and during this decade the Supreme Court issued important decisions limiting federal power. Much of the interest stemmed from conservatives who believed that a strong federal government encroaches on individual liberties, so power should be returned to the states. One of the most important Court rulings in this realm came in United States v. Lopez (1995); the Court struck down a federal law that barred handguns near schools on the grounds that the law exceeded Congress’s authority under the commerce clause. Another significant Tenth Amendment decision came in Printz v. United States (1997), in which the Court struck down a key provision of the Brady Handgun Violence Prevention Act (commonly known as the Brady Bill). Under the act, which was enacted in 1993 to regulate gun sales, state and local law enforcement officers were required to conduct background checks on prospective gun purchasers. The Court held that the federal government cannot require states to administer or enforce federal regulatory programs such as background checks.³⁶ Overall, rulings such as these signaled a move toward a somewhat more restricted federal government.

This trend continued with Gonzales v. Oregon (2006). Gonzales involved Oregon’s assisted-suicide law, which permits doctors to prescribe lethal doses of medication to terminally ill patients who request help ending their lives. In 2001, the U.S. attorney general issued an order declaring that any physician involved in such a procedure would be prosecuted for violating the federal Controlled Substances Act. The state of Oregon joined several physicians and patients in a suit against the order. Eventually, the Supreme Court ruled that the federal government could not overrule state laws determining how drugs should be used so long as the drugs themselves were not prohibited by federal law.³⁷

In 2012, the Court seemed to shift in favor of national power in the national-state tug-of-war. In addition to the decision cited earlier that largely upheld the federal Affordable Care Act (though declared state expansion of the Medicaid rolls optional), the Court struck down portions of an Arizona immigration law, declaring that immigration was a federal, not a state, matter.³⁸ In a 2013 decision, it struck down an Arizona law that required individuals to show documentation of citizenship when registering to vote; the Court ruled that this state-level voting restriction was preempted by the federal National Voter Registration Act, which requires states to use the official federal voter registration form.³⁹ In two other cases, the Court ruled against state legislatures on questions involving congressional-district boundaries.⁴⁰

The Court, however, shifted back toward support of state power in 2018. In the case of Murphy v. NCAA, the Court held that a federal law prohibiting the states from authorizing sports gambling violated previous Supreme Court edicts prohibiting the federal government from “commandeering” state executive or legislative authority.⁴¹ And, in a widely discussed 2019 decision, the Supreme Court ruled that the federal courts cannot impose their own judgments on the states when it comes to the drawing of legislative district boundaries.⁴² Thus, even if state legislatures appear to draw district boundaries to unfairly advantage one political party or the other, the federal courts do not have the constitutional authority to intervene.

Of course, shifting interpretations of the Constitution often reflect underlying struggles for political power, and the political forces controlling the national government generally advocate a jurisprudence that favors the federal government. Those uncertain of their ability to control Capitol Hill and the White House, but more sure of their hold on some states, support respect for state power.

Until recently, Republicans, who control a majority of the states, have expressed respect for states’ rights, while Democrats have sought to increase the power of the federal government. During Donald Trump’s presidency, however, Democrats manifested a newfound respect for the states, supporting, for example, the idea that states and even localities can refuse to enforce federal immigration policies and declare themselves to be “sanctuaries” for undocumented immigrants. Democrats also supported the right of states like California to continue to abide by the Paris Agreement on climate change, even though President Trump pulled the federal government out of the agreement in 2017. This idea, in effect, supports the right of states to conduct their own foreign policies. After President Biden’s election, Democrats seemed to lose interest in states’ rights and demanded more federal action in such realms as health care and immigration.

Similar debates continue over Medicaid (see the Policy Principle box on p. 108), immigration, and the legalization of marijuana. How state and federal institutions will influence decision, agenda, and veto powers is a matter of political principle—and political interest.

the policy principle

THE PATCHWORK OF STATE MEDICAID PROGRAMS

Medicaid is one of the largest government programs in the country and is a distinct product of American federalism. It is administered through the joint authority of the federal and state governments. Medicaid provides health insurance to around 86 million low-income individuals and their families, including millions of children, pregnant women, people with disabilities, and the elderly. Today, spending on Medicaid makes up between 7 and 9 percent of federal outlays and is one of the largest budget items in all of the 50 state governments. Because of its sheer size and importance, Medicaid is a prime example of how federalism shapes public policy—and of the strengths and weaknesses of policy authority divided between state and federal government.

When Congress first enacted Medicaid in 1965, state participation in the program was optional. In the years that followed, all 50 states eventually got on board. The federal and state governments share responsibility for both the program design and financing. While the federal government established certain minimum standards that all states must meet, beyond those requirements, the states have considerable flexibility in determining who is eligible for coverage, what services are included, and specific policies on matters such as provider reimbursements, how much money doctors receive for visits and treatments, and copayments. As a result, citizens’ experiences with Medicaid can vary dramatically depending on where they live.

For example, coverage for dental, vision, and hearing varies significantly from state to state. In Virginia and Texas, Medicaid does not cover dental care at all. In other states, dental care is covered but is limited to emergency services or specific treatments. Some states put a limit on the amount providers can be reimbursed for dental services. The same differences can be seen in vision coverage. Medicaid in states such as California and North Carolina does not cover eyeglasses or other visual aids. Other states limit vision benefits in various ways. Oregon, for example, covers routine eye exams only for pregnant women. States also differ in whether and how their Medicaid programs cover other medical conditions, from hearing aids to end-of-life care. These cross-state differences have only deepened since the passage of the Affordable Care Act (ACA) in 2010, when most states expanded eligibility for Medicaid (with the federal government paying for most of the cost of expansion), but several did not.

One positive aspect of federalism is that for major national programs like Medicaid, state policy makers have flexibility to tailor the program to the particular needs and preferences of their own constituents. Medicaid claims a large share of the revenue states generate—about 17 percent on average—so seemingly technical changes to Medicaid benefits, eligibility, and reimbursement rates can significantly affect states’ ability to finance their other priorities. It makes sense, then, that states have some control over the program’s design.

On the other hand, the disadvantage of federalism can be seen in Medicaid’s patchwork of different state programs—beneficiaries have very different experiences with the program and the health care system depending on where they live. Moreover, the needs and preferences of constituents are but one consideration among many that state policy makers might weigh in making decisions about Medicaid. As the debates over the ACA’s Medicaid expansion have shown, national political party strategy and the advocacy of interest groups also play an important role.