Lecture Notes – Federalism

Instructional
Objectives

1. Explain the difference between federal and
centralized systems of government, and give examples of
each.

2. Show how competing political interests at
the Constitutional Convention led to the adoption of a federal
system, but one that was not clearly defined.

3. Outline the ways in which national and state
powers were interpreted by the courts.

4. State the reasons why federal grants-in-aid
to the states have been politically popular, and cite what have
proved to be the pitfalls of such grants. Distinguish between
categorical grants and block grants or general revenue
sharing.

5. Distinguish between mandates and conditions
of aid with respect to federal grant programs to states and
localities. Discuss whether or to what extent federal grants to the
states have created uniform national policies comparable to those of
centralized governments.

Text Notes

I. Governmental structure –
Federalism

A. Introduction

1. Definition: political system
with local government units, besides national one that can make
final decisions regarding some governmental activities and
whose existence is protected

2. National government largely does not
govern individuals directly, but gets states to do so in
keeping with national policy

B Federalism: Good or Bad?

1. Negative views: blocks progress
and protects powerful local interests

a. Laski: states “parasitic and
poisonous”

b. Riker: perpetuation of
racism

c. Federalist No. 10: small
political units dominated by single political
faction

2. Positive view

a. Elazar: strength, flexibility
fosters individual liberty

b. Different political groups with
different political purposes come to power in different
places

c. Increased political
activity

d. Most obvious effect of federalism
facilitates mobilization of political activity

e. Federalism lowers the cost of
political organization at the local level

II. The Founding

A. A bold, new plan to protect
personal liberty

1 . Founders believed that neither
national nor state government would have authority over the
other since power comes from people who shift support.

2. New plan had no historical
precedent

3. Tenth Amendment was added as an
afterthought to clarify limits of national government’s
power

B. Elastic language in Article 1: necessary
and proper clause

1. Precise definitions of powers
politically impossible due to competing interests, e.g.,
commerce

2. Hamilton’s view: national supremacy
since Constitution supreme law

3. Jefferson’s view: states’ rights with
the people as ultimate sovereign

III. The debate on the meaning of federalism

A. The Supreme Court speaks

1 . Hamiltonian position espoused
by Chief justice John Marshall

2. McCulloch v. Maryland (1819)
settled two questions

a. Could Congress charter a
national bank? yes, because “necessary and proper”

b. Could states tax such a bank? no,
because national powers supreme

3. Later battles

a. Gibbons v. Ogden –
reaffirmed the concept of federal supremacy over interstate
trade and state supremacy over intrastate trade. This
created what was known as a “dual federalism.” Today with
constant intrusions by the national government, this is
extinct.

b. Federal taxes on state, local bond
interest

c. “Nullification” doctrine decided by
Civil War: states cannot declare acts of Congress
unconstitutional

IV. Federal-state relations

A. Grants-in-aid – Monies passed from
the federal to state governments.

1. Grants show how political
realities modify legal authority

2. Began before Constitution with land
and cash grants to states

3. Dramatically increased in scope in
twentieth century

4. Were attractive to state officials for
various reasons

a. Federal budget surpluses
(nineteenth century)

b. Federal income tax increased
revenues

c. Federal control of money
supply

d. Appeared as free money for state
officials

5. Required broad congressional
coalitions with wide dispersion of funds

B . Meeting national needs

1. 1960s shift in grants-in-aid
from what states demanded to what federal officials found
important as national needs.

• State, local governments became
  dependent on federal funds

C. The intergovernmental lobby

1. Hundreds of state, local
officials lobby in Washington

2. Purpose: to get more federal money
with fewer strings

3. By 1980, however, federal funds had
stopped growing

D. Categorical grants versus revenue
sharing

1. Categorical grants for specific
purposes; often require local matching funds

2. Block grants devoted to general
purpose with few restrictions

3. Revenue sharing requires no matching
funds and freedom on how to spend

a. Distributed by statistical
formula

b. Ended in 1986

4. Neither block grants nor revenue
sharing achieved goal of giving states more freedom in
spending

a. Did not grow as fast as
categorical grants

b. Number of strings
increased

V. The slowdown in “free” money

A. Block grants grow more slowly than
categorical grants

1. No single interest group has a
vital stake in multipurpose block grants, revenue sharing so
there is no one “pushing.”

2. Categorical grants are matters of life
or death for various state agencies

3. Supervising committees in Congress
favored growth of categorical grants

4. Revenue sharing was wasteful and
lacked a “constituency”

B. Rivalry among the states

1. Increased competition a result
of increased dependency

2. Snowbelt (Frostbelt) versus Sunbelt
states due to population changes

3. Actual difficulty telling where funds
spent

4. Census takes on monumental importance

VI. Federal aid and federal control

A. Mandates

1. Federal rules states or
localities must obey, not necessarily linked to funding

a. Civil rights

b. Environmental protection

2. Many difficult to implement and are
costly

3. Unfunded mandates with more attention
since 1995

4. Controversial mandates result from
court decisions

a. Local citizens use federal
courts to change local practices

B. Conditions of aid

1. Attached to grants

2. Conditions range from specific to
general

3. Divergent views of states and federal
government on costs, benefits

a. Example: Rehabilitation Act
of 1973

4. Failed presidential attempts to
reverse trend and consider local needs

a. Example: Nixon’s ‘New
Federalism” creating revenue sharing

b. Example: Reagan’s attempt to
consolidate categorical grants; Congress’s cooperation in
name only Categorical grants constitute by far the largest
proportion of federal grants-in-aid. In 1991, there were 478
separate “categories,” which amounted to nearly 90 percent
of all federal aid to state and local
authorities.

C. A devolution revolution? The 104th
Congress (1995-1996)

1 . Block-grant entitlements

a. AFDC (Aid to Families with
Dependent Children)and Medicaid had operated as
entitlements-federal funds a fixed proportion of state

spending on these programs

b. Republicans in 104th Congress
proposed making these and other programs block
grants

c. AFDC did become a block
grant

d. Devolution became part of the
national political agenda

D . What’s driving devolution?

1. House Republican did not trust
federal government, believed states were more responsive and
less wasteful; governors agreed

2. Devolution undertaken to make major
cuts in entitlement spending

3. Supported by public opinion-though
strength of support uncertain

Questions for
Discussion:

1. How has the system of federalism as we know
lived up to the expectations of the framers? (Federal vs
Confederal)

2. Is Federalism good or bad?

3. How has the elastic clause effect the
balance of power between the states and the national government? Is
it good or bad for this type of federal systems? What does it tell us
about the framers?

4. What has been the impact of the Court’s
decision in McCulloch v Maryland and Gibbons v Ogden?

5. What does the 10^th amendment say
about Federalism? What has happened to the application of the tenth
amendment in recent years?

5. Since the 1960’s how has the national
government used Grants in Aid to assert its political
dominance?

6. How do states attempt to gain a greater
proportion of the budgetary pie?

7. Why do states prefer block grants rather
than categorical grants?

8. How does the government use mandates to
assert control over the states? Discuss examples like 55mph and DWI
laws.

9. To what extent was Nixon’s “New Federalism”
successful in limiting conditions on federal aid? (It
wasn’t!)

10. How has devolution impacted the federal –
state relationship? (Shift in entitlement programs to state
responsibility)

Important
Terms

Article VI A
provision of the Constitution that makes the laws and treaties of the
federal government the “supreme law of the land.”

block grants Grants
given by the federal government to state and local authorities for
general purpose.

categorical grants
Grants given by the federal government to state and local
authorities for a specific purpose defined in a federal

law.

confederation (or confederal
system) A form of government in which sovereignty is wholly
in the hands of the states and local governments, so the national
government is dependent on their will.

conditions of aid A
condition which a state government must fulfill for taking federal
funds.

evolution The effort
on the part of the national government to pass responsibility for
functions and responsibilities previously held by the national
government on to the state governments.

dual federalism An
interpretation of the Constitution which holds that states are as
supreme within their sphere of power as is the federal government
within its sphere of power. The Supreme Court no longer supports this
interpretation.

federal system A
form of government in which sovereignty is shared, so that on some
matters the national government is supreme and on others the states
are supreme.

federalism The
division of power between a national government and regional (state)
governments.

grants-in-aid
Federal funds provided to states and localities.

intergovernmental
lobby Lobbying activities by state and local officials who
establish offices in Washington, D.C., to compete for federal
funds.

mandates
Requirements imposed against state and local governments to perform.
The requirements may have nothing to do with the receipt of federal
funds and may originate from court orders.

McCulloch v. Maryland (1819)
A Supreme Court decision that settled two issues. First,
Congress can exercise powers not specifically mentioned in the
Constitution if the power can be implied from an enumerated one. This
authority is conferred by the “necessary and proper” clause. Second,
the federal government is immune from taxation by the
states.

necessary-and-proper
clause The final paragraph of Article 1, section 8, of the
Constitution, which authorizes Congress to pass all laws “necessary
and proper” to carry out the enumerated powers.

nullification A
doctrine espoused on behalf of the states’ rights position which
holds that states are empowered to void federal laws considered in
violation of the Constitution.

revenue sharing A
grant-in-aid program that allowed states maximum discretion in the
spending of federal funds. States were not required to supply
matching funds, and they received money according to a statistical
formula. The program was terminated in 1986.

sovereignty The
supreme or ultimate political authority. A sovereign government is
one that is legally and politically independent of any other
government.

Tenth Amendment An
amendment to the Constitution which defines the powers of the states,
stipulating that the states (or the people) retain all powers not
specifically delegated to the national government by the
Constitution.

unitary system A
system in which sovereignty is wholly in the hands of the national
government, so that subnational units are dependent on its will.

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