16 Federalism: How should power be structurally divided?

The US republic divides governmental power in two general ways–vertically and horizontally. Horizontally, we share power among three branches of government—the legislature, the executive, and the judiciary. Vertically, power is shared between levels of government: national and subnational (state, parish, county, local, special district). In the United States, the term federal government refers to government at the national level.

Federalism is an institutional arrangement creating relatively autonomous levels of government, each able to act directly on behalf of the people with the authority granted to it.^[1] What does this mean? People agree (consent) to cooperate, to write some rules (a constitution) defining how they will work together and hold each other accountable, and to set up a framework (branches and levels of governmental power) keeping people in control of the government by providing numerous points of access. Federalism increases access opportunities.

The second characteristic common to all federal systems is a written contract/constitution that cannot be changed without the substantial consent of subnational governments. In the American federal system, the twenty-seven amendments added to the Constitution since its adoption resulted from an arduous process requiring approval by two-thirds of both houses of Congress and three-fourths of the states. This supermajority requirement ensures no changes to the Constitution may occur without broad support within Congress (the people’s representatives) and among states.

Third, the constitutions of federal systems formally allocate legislative, judicial, and executive authority to the various levels of government to ensure each has some degree of autonomy from the other. Under the U.S. Constitution, the president assumes executive power, Congress exercises legislative powers, and the federal courts (e.g., U.S. district courts, appellate courts, and the Supreme Court) assume judicial powers. In each of the fifty states, a governor assumes executive authority, a state legislature makes laws, and state-level courts (e.g., trial courts, intermediate appellate courts, and supreme courts) possess judicial authority.

According to political scientist Richard Neustadt, the system of separation of powers and checks and balances encourages cooperation rather than control.  Neustadt notes the Constitutional Convention “created a government of separated institutions sharing powers.”^[2]

While each level of government is somewhat independent of the others (dual federalism), a great deal of interaction occurs (cooperative federalism). The ability of the federal and state governments to achieve their objectives often depends on cooperation.  Law enforcement agents at the local and state levels work to bolster the national government’s efforts to ensure homeland security.

Struggle Between National Power & State Power: How did US federalism evolve?

Historical Struggle for Power–Conflicts with a Federal Structure of Governing

As George Washington’s secretary of the treasury from 1789 to 1795, Alexander Hamilton championed legislative efforts to create a publicly chartered bank. For Hamilton, the establishment of the Bank of the United States was fully within Congress’s authority, and he hoped the bank would foster economic development, print and circulate paper money, and provide loans to the government. Although Thomas Jefferson, Washington’s secretary of state, staunchly opposed Hamilton’s plan on the constitutional grounds that the national government had no authority to create such an instrument, Hamilton managed to convince the reluctant president to sign the legislation.^[3]

When the bank’s charter expired in 1811, Jeffersonian Democratic-Republicans prevailed in blocking its renewal. However, the fiscal hardships that plagued the government during the War of 1812, coupled with the fragility of the country’s financial system, convinced Congress and then-president James Madison to create the Second Bank of the United States in 1816. Many states rejected the Second Bank, arguing that the national government was infringing upon the states’ constitutional jurisdiction.

A political showdown between Maryland and the national government emerged when James McCulloch, an agent for the Baltimore branch of the Second Bank, refused to pay a tax that Maryland had imposed on all out-of-state chartered banks. The standoff raised two constitutional questions: Did Congress have the authority to charter a national bank? Were states allowed to tax federal property? In McCulloch v. Maryland, Chief Justice John Marshall argued that Congress could create a national bank even though the Constitution did not expressly authorize it.^[4]

Under the necessary and proper clause of Article I, Section 8, the Supreme Court asserted that Congress could establish “all means which are appropriate” to fulfill “the legitimate ends” of the Constitution. In other words, the bank was an appropriate instrument that enabled the national government to carry out several of its enumerated powers, such as regulating interstate commerce, collecting taxes, and borrowing money.

This ruling established the doctrine of implied powers, granting Congress a vast source of discretionary power to achieve its constitutional responsibilities. The Supreme Court also sided with the federal government on the issue of state authority to tax federal property. Under the supremacy clause of Article VI, legitimate national laws trump conflicting state laws. As the court observed, “the government of the Union, though limited in its powers, is supreme within its sphere of action and its laws, when made in pursuance of the constitution, form the supreme law of the land.” Maryland’s action violated national supremacy because “the power to tax is the power to destroy.” This second ruling established the principle of national supremacy, which prohibits states from meddling in the lawful activities of the national government.

In Gibbons v. Ogden, the scope of national power was subjected to court interpretation of the commerce clause of Article I, Section 8; specifically, it had to determine whether the federal government had the sole authority to regulate the licensing of steamboats operating between New York and New Jersey.^[5]

Aaron Ogden, who had obtained an exclusive license from New York State to operate steamboat ferries between New York City and New Jersey, sued Thomas Gibbons, who was operating ferries along the same route under a coasting license issued by the federal government. Gibbons lost in New York state courts and appealed. Chief Justice Marshall delivered a two-part ruling in favor of Gibbons that strengthened the power of the national government. First, interstate commerce was interpreted broadly to mean “commercial intercourse” among states, thus allowing Congress to regulate navigation. Second, because the federal Licensing Act of 1793, regulating coastal commerce was a constitutional exercise of Congress’s authority under the commerce clause, federal law trumped the New York State license-monopoly law granting Ogden an exclusive steamboat operating license. Marshall pointed out, “the acts of New York must yield to the law of Congress.”^[6]

Various states railed against the nationalization of power that had been going on since the late 1700s. When President John Adams signed the Sedition Act in 1798, which made it a crime to speak openly against the government, the Kentucky and Virginia legislatures passed resolutions declaring the act null on the grounds that they retained the discretion to follow national laws. In effect, these resolutions articulated the legal reasoning underpinning the doctrine of nullification—that states had the right to reject national laws they deemed unconstitutional.^[7]

A nullification crisis emerged over the tariff acts of 1828 and 1832. Nullifiers argued that high tariffs on imported goods benefited northern manufacturing interests while disadvantaging economies in the South. South Carolina passed an Ordinance of Nullification declaring both tariff acts null and void and threatened to leave the Union. The federal government responded by enacting the Force Bill in 1833, authorizing the president’s use of military force against states challenging federal tariff laws. 

In the ultimate showdown between national and state authority, Dred Scott v. Sandford, the Supreme Court ruled the national government lacked the authority to ban slavery in the territories.^[8]

The election of President Abraham Lincoln in 1860 influenced eleven southern states to secede from the Union believing the new president would challenge the institution of slavery. What was initially a conflict to preserve the Union became a conflict to end slavery when Lincoln issued the Emancipation Proclamation in 1863, freeing all slaves in the rebellious states. The defeat of the South impacted the balance of power between the states and the national government in two important ways. First, the Union victory put an end to the right of states to secede and to challenge legitimate national laws. Second, Congress imposed several conditions for readmitting former Confederate states into the Union; among them was ratification of the Fourteenth and Fifteenth Amendments. After the Civil War the power balance shifted toward the national government, a movement that had begun several decades before with McCulloch v. Maryland (1819) and Gibbons v. Odgen (1824).

In the late 1800s, some states attempted to regulate working conditions. For example, New York State passed the Bakeshop Act in 1897, which prohibited bakery employees from working more than sixty hours in a week. In Lochner v. New York, the Supreme Court ruled this state regulation that capped work hours unconstitutional, on the grounds that it violated the due process clause of the Fourteenth Amendment.^[9] In other words, the right to sell and buy labor is a “liberty of the individual” safeguarded by the Constitution, the court asserted. The federal government also took up the issue of working conditions, with the same result.^[10]

Puck, a humor magazine published from 1871 to 1918, satirized political issues of the day such as federal attempts to regulate commerce and prevent monopolies. “‘Will you walk into my parlor?’ said the spider to the fly” (a) by Udo Keppler depicts a spider labeled “Interstate Commerce Commission” capturing a large fly in a web labeled “The Law” while “Plague take it! Why doesn’t it stay down when I hit it?” (b), also drawn by Keppler, shows President William Howard Taft and his attorney general, George W. Wickersham, trying to beat a “Monopoly” into submission with a stick labeled “Sherman Law.”

The Great Depression of the 1930s brought new economic hardships. Between 1929 and 1933, the national unemployment rate reached 25 percent, industrial output dropped by half, stock market assets lost more than half their value, thousands of banks went out of business, and the gross domestic product shrunk by one-quarter.^[11] Given the magnitude of the economic depression, the national government was pressured to coordinate a robust national level response along with the states.

Cooperative federalism, in contrast to dual federalism, erodes the jurisdictional boundaries between the states and national government, leading to a blending of layers as in the marble cake analogy. The era of cooperative federalism contributed to the gradual incursion of national authority into the jurisdictional domain of the states, as well as the expansion of the national government’s power in concurrent policy areas.^[12]

In the 1960s, President Lyndon Johnson’s administration expanded the national government’s role in society. The created Medicaid (which provides medical assistance to the indigent), Medicare (which provides health insurance to the elderly and disabled), and school nutrition programs. While the era of cooperative federalism witnessed a broadening of federal powers in concurrent and state policy domains, it is also the era of a deepening coordination between the states and the federal government in Washington. Nowhere is this clearer than with respect to the social welfare and social insurance programs created during the New Deal and Great Society eras, most of which are administered by both state and federal authorities and are jointly funded. 

Although today’s federal systems vary in design, five characteristics are common to the United States and other federal systems around the world, including Germany and Mexico.

All federal systems establish multiple levels of government. The national government is responsible for handling matters that affect the country as a whole–national defense, domestic peace, general welfare of the people, and a stable economy. Subnational, or state governments, are responsible for matters that lie within their regions, which include ensuring the well-being of their people by administering education, health care, public safety, and other public services. A system like this requires different levels of government to cooperate, the institutions at each level form an interacting network. In the U.S. federal system, all national matters are handled by the federal/national government, which is led by the president and members of Congress, all of whom are elected. All matters at the subnational level are the responsibility of the fifty states, each headed by an elected governor and legislature. Thus, there is a separation of functions between the federal and state governments (dual federalism), and voters choose leaders at each level.^[13]

Dual Federalism v. Cooperative Federalism

The late 1870s ushered in a new phase in the evolution of U.S. federalism. Under dual federalism, the states and national government exercise exclusive authority in distinctly delineated spheres of jurisdiction. Like the layers of a cake, the levels of government do not blend with one another but rather are clearly defined. Two factors contributed to this conception of federalism. Supreme Court rulings blocked attempts by state and federal governments to step outside their jurisdictional boundaries. Further, the prevailing economic philosophy at the time loathed government interference in the process of industrial development.

Morton Grodzins coined the cake analogy of federalism in the 1950s while conducting research on the evolution of American federalism. Until then most scholars had thought of federalism as a layer cake, but according to Grodzins the 1930s ushered in “marble-cake federalism”: “The American form of government is often, but erroneously, symbolized by a three-layer cake. A far more accurate image is the rainbow or marble cake, characterized by an inseparable mingling of differently colored ingredients, the colors appearing in vertical and diagonal strands and unexpected whirls. As colors are mixed in the marble cake, so functions are mixed in the American federal system.”^[14]

What are the various types of power in a federal structure?

The Constitution contains several provisions that direct the functioning of the U.S. federal structure. The power of the national government is restricted and the states retain a degree of sovereignty as part of the framers’ creation of this federal system.  Although states retain some sovereignty, the supremacy clause in Article VI proclaims the U.S. Constitution, national laws, and treaties are “the supreme Law of the Land.” In the event of a conflict between the states and the national government, the national government takes precedence. Some delineate the scope of national and state power while others expressly restrict it. The remaining provisions shape relationships among the states and between states and the national government.

Before ratifying the Constitution, a number of states requested an amendment explicitly identifying the reserved powers of the states. These anti-federalists sought further assurance that the national government’s capacity to act directly on behalf of the people would be restricted, which the first ten amendments (Bill of Rights) provided. The Tenth Amendment affirms the states’ reserved powers: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Some of the states’ reserved powers are no longer exclusively within state domain, however. For example, since the 1940s, the federal government has also engaged in administering health, safety, income security, education, and welfare to state residents. The boundary has completely blurred between intrastate and interstate commerce becoming indefinable as a result of broad interpretation of the commerce clause. Shared (overlapping or concurrent) powers have become an integral part of contemporary U.S. federalism. These concurrent powers range from taxing, borrowing, and making and enforcing laws to establishing court systems.^[15]

Article I, Sections 9 and 10, and constitutional amendments, lay out the restrictions (prohibited powers/powers denied) on national and state authority. The most important restriction Section 9 places on the national government prevents measures that deprive personal liberty. Specifically, the government cannot suspend the writ of habeas corpus, which enables someone in custody to petition a judge to determine whether that person’s detention is legal (unless the executive declares a state of emergency); pass a bill of attainder, a legislative action declaring guilt without a trial; or enact an ex post facto law, which criminalizes an act retroactively. The Bill of Rights affirms and expands these constitutional restrictions, attempting to ensure that the government will not encroach on personal freedoms.

Again, if a state law clashes with a federal law found to be within the national government’s constitutional authority, the federal law is supposed to prevail. The supremacy clause does not intend to subordinate the states to the federal government; rather, it affirms that one body of laws binds the country. In fact, all national and state government officials are bound by oath to uphold the Constitution regardless of the offices they hold. Yet enforcement is not always that simple. In the case of marijuana use, which the federal government defines to be illegal, twenty-three states and the District of Columbia have nevertheless established medical marijuana laws, others have decriminalized its recreational use, and four states have completely legalized it. The federal government could act in this area if it wanted to. Recent and current administrations have actively chosen to ignore the supremacy clause–using prosecutorial discretion–not holding states or individuals accountable for violating federal/national laws. For example, in addition to the legalization issue, there is the question of how to treat the money from marijuana sales, which the national government designates as drug money and regulates under laws regarding its deposit in banks.

Various constitutional provisions govern state-to-state relations. Article IV, Section 1, referred to as the full faith and credit clause or the Comity Clause (U.S. Constitution, Article IV, Section 2, Clause 1) requires the states to accept court decisions, public acts, and contracts of other states. Thus, an adoption certificate or driver’s license issued in one state is valid in any other state.

The privileges and immunities clause of Article IV asserts that states are prohibited from discriminating against out-of-staters by denying them such guarantees as access to courts, legal protection, property rights, and travel rights. The clause has not been interpreted to mean there cannot be any difference in the way a state treats residents and non-residents. For example, individuals cannot vote in a state in which they do not reside, tuition at state universities is higher for out-of-state residents, and in some cases individuals who have recently become residents of a state must wait a certain amount of time to be eligible for social welfare benefits. Another constitutional provision prohibits states from establishing trade restrictions on goods produced in other states. However, a state can tax out-of-state goods sold within its borders as long as state-made goods are taxed at the same level.

Federalism as a structural system of government creates relatively autonomous levels of governing, each possessing authority granted to them by the national constitution. The U.S. Constitution allocates powers to the states and federal government, structures the relationship between these two levels of government, and guides state-to-state relationships, and federal, state, and local governments rely on different sources of revenue to enable them to fulfill their public responsibilities.