The following is from UShistory.Org

3. Federalism

Before the Constitution was written, each state had its own currency. This four pound note from Philadelphia reads, "To Counterfeit is Death."

Did you ever wonder why you don't need a passport to go from New York to California, but if you were to move from one state to another, you would need a new driver's license? Or why you can use the same currency in all states, but not be subject to the same speed limits? Or why you have to pay both federal and state taxes?

The maze of national and state regulations results from federalism — the decision made by the Founders to split power between state and national governments. As James Madison explained in the "Federalist Papers," our government is "neither wholly national nor wholly federal."

Federalism as a System of Government

In creating a federalist system the founders were reacting to both the British government and the Articles of Confederation. The British government was — and remains — a UNITARY SYSTEM, or one in which power is concentrated in a central government. In England, government has traditionally been centralized in London, and even though local governments exist, they generally have only those powers granted them by Parliament. The national government is supreme, and grants or retains powers to and from local governments at its whim.

The country we think of as Russia is part of the Russian Federation, a federal government with a variety of partially self-governing autonomous regions, oroblasts. Most of these, such as the Jewish Autonomous Oblast, are concentrations of non-Russian ethnic groups.

The Articles of Confederation represented an opposite form of government, aCONFEDERATION, which has a weak central government and strong state governments. In a confederation, the state or local government is supreme. The national government only wields powers granted by the states. Most confederations have allowed the local government to nullify a federal law within its own borders.

Federalism is a compromise meant to eliminate the disadvantages of both systems. In a federal system, power is shared by the national and state governments. The Constitution designates certain powers to be the domain of a central government, and others are specifically reserved to the state governments.

Advantages and Disadvantages of Unitary and Confederal Governments

Courtesy of Europäisches Parlament

The European Union has a multinational parliament which has regular sessions just as a national parliament would. A major issue in Europe today is what this body gets to decide and what remains under the jurisdiction of national governments.

	Unitary	Confederal
Advantages	Laws may be applied uniformly to all	Laws may be made to suit individual needs of the states
Government	Efforts seldom duplicate or contradict themselves	Tyranny can be avoided more easily
Decision-making	Fast and efficient	Government is closer to the people
Disadvantages	Concentration of power can lead to tyranny If the country is large, a distant central government can lose control Central officials may not always understand the needs of their citizens	State governments are susceptible to quarrels The country has a tendency to split apart Sub-governments may lack resources that a central government has

Although the federal system seems to strike a perfect balance of power between national and local needs, federations still have internal power struggles. Conflicts between national and state governments are common. In the case of the United States, the argument of state vs. federal power was a major underlying factor that led to the CIVIL WAR.

Fewer than thirty modern countries have federal systems today, including Australia, Canada, Germany, Mexico, and the United States. But even though few other countries practice it today, federalism has provided the balance that the United States has needed since 1787.

3a. The Founders and Federalism

Alexander Hamilton, James Madison, and George Washington were advocates of the federal system.

In their attempt to balance order with liberty, the Founders identified several reasons for creating a federalist government:

to avoid tyranny
to allow more participation in politics
to use the states as "laboratories" for new ideas and programs.

As James Madison pointed out in The Federalist, No. 10, If "factious leaders kindle a flame within their particular states," national leaders can check the spread of the "conflagration through the other states." So federalism prevents a person that takes control of a state from easily taking control of the federal governments as well.

Electing both state and national OFFICIALS also increases the input of citizens into their government. And if a state adopts a disastrous new policy, at least it would not be a catastrophe for everyone. On the other hand, if a state's new programs work well, other states can adopt their ideas and adjust them to their own needs.

The Constitution gives three types of power to the national government:

DELEGATED(sometimes called enumerated or expressed) powers are specifically granted to the federal government in Article I, Section 8 of the Constitution. This includes the power to coin money, to regulate commerce, to declare war, to raise and maintain armed forces, and to establish a Post Office. In all, the Constitution delegates 27 powers specifically to the federal government.
IMPLIED POWERSare not specifically stated in the Constitution, but may be inferred from the elastic (or "necessary and proper") clause (Article I, Section 8). This provision gives Congress the right "to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and other powers vested in the government of the United States." Since these powers are not explicit, the courts are often left to decide what constitutes an implied power.
INHERENT POWERSare not specifically listed in the Constitution, but they grow out of the very existence of the national government. For example, the United States has the power to acquire territory by exploration and/or occupancy, primarily because most governments in general claim that right.

Article I, Section 8 of the U.S. Constitution authorizes the federal government to issue a central currency for all states. The form of this currency has changed many times through the years.

The Constitution also identifies RESERVED POWERS, which are set aside for the states. Unlike delegated powers, they are not listed specifically, but are guaranteed by the TENTH AMENDMENT: "The powers not delegated to the United States by the Constitution, not prohibited by it to the States, are reserved to the States respectively, or to the people." Some traditional reserved powers include regulating trade within a state, establishing local government, and conducting elections.

Some powers of federal and state governments overlap. For example, both may — and do — levy taxes, make and enforce laws, and borrow money. These concurrent powers are not granted exclusively to the national government, nor are they denied the states.

Trademarks such as the Morton Salt umbrella girl are protected by the U.S. Patent and Trademark Office, established to "promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries," as stated in Article I, Section 8 of the Constitution.

Prohibited powers are denied either to the national government, state governments, or both (Article I, Section 9.) For example, the national government cannot exercise its powers in such a way as to interfere with the states' abilities to perform their responsibilities. States cannot tax imports or exports, nor can they coin money or issue bills of credit.

States also have responsibilities to one another, as explained in Article IV of the Constitution. One provision is that each state must give "FULL FAITH AND CREDIT" to the public acts, records, and civil judicial proceedings of every other state. Business contracts, then, are recognized by all states, as are marriages. Extradition, the legal process in which an accused criminal is returned to the state were the crime was committed, is also required by Article IV.

The founders very carefully divided powers between federal and state governments. They were responding to both the colonial aversion to the tyranny of King George III as well as the failure of the Articles of Confederation. Their careful separating and blending of state and national powers guarded against tyranny, allowed for more citizen participation in government, and provided a mechanism for incorporating new policies and programs.

3b. Tipping the Scales Toward National Power

Some issues have endured throughout American history. What is meant byCIVIL LIBERTY? Does (or should) Congress truly represent the people? Do the courts ensure that justice prevails? How much power should lie with the President?

Daniel Webster, standing to address the Senate in the lower right, became the Senator most associated with Federalism. His counterparts and sparring partners in the Senate were Calhoun and Clay.

All of these issues have been answered in different ways at different times, but they have endured and remain central to American politics. One of the most long-standing issues is the "proper" definition of federalism. The effective balance of power between state and federal governments is perhaps the most elusive question of all, and "STATES' RIGHTS" remain on the political agenda.

In the mid-19th century the argument erupted into a great Civil War. In the 20th century, national power was strengthened by each President from the 1930s through the 1970s. And in recent years, the states have reasserted their rights.

McCulloch v. Maryland (1819)

John Marshall's decisions inMcCullogh v. Maryland and other cases strengthened the federal government.

The Supreme Court often has defined the nature of federalism. MCCULLOCH V. MARYLAND (1819) began to establish the"SUPREMACY" OF THE FEDERAL GOVERNMENTwith John Marshall's famous decision that a state government could not tax theFIRST BANK OF THE UNITED STATES. The case centered on the state of Maryland's decision to tax the Baltimore branch of the national bank. The bank's cashier, JAMES MCCULLOCH, refused to pay, and Maryland sued, claiming that the bank was unconstitutional because the Constitution did not enumerate the creation of banks as a federal power.

Two questions were at the heart of the case. Was the bank constitutional? If it was, could a state tax it? Citing the elastic clause (ARTICLE I, SECTION 8) as the basis of the Court's decision, Marshall explained that even though the word "bank" cannot be found in the Constitution, the enumerated powers to tax, issue currency, and borrow money "implied" the power to create a bank. And no, the bank could not be taxed by a state because "the power to tax involves the power to destroy." States' rights supporters believed Marshall wrongly ignored the 10th Amendment, which reserved all powers not granted to the Congress to the states and the people.

Nullification and the Civil War

South Carolina Senator John C. Calhoun was a vocal opponent of federalism, especially when it interfered with slavery.

By the mid-19th century, when slavery and tariffs became controversial issues between North and South, states' rights were again a central focus. JOHN C. CALHOUN, senator from South Carolina and eventually Vice-President from 1825 to 1832, claimed that states had the right toNULLIFY, or reject, a federal law. For example, when a tariff act negatively affected South Carolina, Calhoun declared that the state could declare the tariff"NULL AND VOID" within its own borders.

Many feared that if a state rejected a new provision passed by Congress, then it also had the right to SECEDE from the union. Decades later, South Carolina tested this notion by declaring independence from the United States. When other southern states followed suit, PRESIDENT ABRAHAM LINCOLN objected, and the Civil War began. With the South's defeat in 1865, national supremacy was once again affirmed, and states have never again claimed the right to secede.

The New Deal

The Agricultural Adjustment Administration was one of a number of "alphabet soup" agencies created by the Roosevelt Administration to combat the Great Depression. Critics of the programs said these programs gave the federal government too much power.

Although the Civil War forever changed the nature of federalism, it did not destroy states' rights. Instead, the power of the central government remained quite limited until the economic crisis of the 1930s. The devastating effects of the Great Depression led many people to demand that the federal government take drastic action. The innovative programs of Franklin Roosevelt's "New Deal" ushered in a new era in American politics.

The New Deal period was characterized by intense government action on the national level. The "ALPHABET AGENCIES," such as the CCC (Civilian Conservation Corps), the AAA (Agricultural Adjustment Administration), and the NRA (NATIONAL RECOVERY ADMINISTRATION), aimed to relieve poverty and economic distress of farmers, homeowners, businesses, laborers, and banks. These programs dramatically enlarged the power of the federal government, and though the states administered many of the programs, the tilt toward national power was clearly reinforced by the New Deal.

The 1960s saw another era of expansion for the national government underJOHN KENNEDY's NEW FRONTIER and Lyndon Johnson's Great Society. Many programs were initiated to declare a "war on poverty" across the United States. The federal government was growing ever larger, and taxes were growing ever higher to fund the new programs. Many Americans supported this trend and applauded the efforts of the national government to ease American social problems. But by the 1970s, others had decided that enough was enough.

3c. Federal-State Relations Today: Back to States' Rights?

Ronald Reagan and George Bush are considered architects of New Federalism, a program that allowed states to make many decisions regarding local issues. However, states were also expected to pay the bill for their own decisions, and Reagan is criticized for getting states into debt.

For almost 200 years, the federal-state relationship has shifted more and more toward national supremacy. But some observers today believe that over the past twenty years, the balance of power is beginning to tilt back toward the states. Presidents Richard Nixon, Ronald Reagan, and George Bush tried to slow down the growth of the national government under the banner of "NEW FEDERALISM."

RICHARD NIXON declared an open attempt to reverse the flow of power to the federal government back to the states. In his winning campaign of 1980, RONALD REAGAN claimed that the federal government, in its attempts to improve society, was actually eroding individual freedoms. Then in 1994, when Republicans took control of both houses of Congress, the leaders of the "DEVOLUTION REVOLUTION" attempted to return many functions to the states. But the controversial task has not been easy, since so many national responsibilities are now shared with the states.

Before the Great Depression and New Deal, experts often compared federalism to a layer cake. Each layer of government — national, state, and local — had responsibilities separated clearly by a distinct covering of "icing." This interpretation is known as DUAL FEDERALISM, which each level of government dominating its own sphere. The Supreme Court served as an umpire between the national government and the states in case of a dispute. But FRANKLIN ROOSEVELT changed all that.

The federal New Deal programs cast the states in supporting, cooperative roles with a clearly dominant national government. However, since both levels participated in the programs, the layers began to blur.

New Federalism

One sign of the growth of the national government was the large number of categorical grants that existed by the 1960s. Congress appropriates these grants to states for a specific purpose. Funds are allocated by a precise formula with detailed conditions imposed by the national government. Often states must contribute money to match federal funds, but categorical grants almost always come with a great many "strings" that demonstrate the "supremacy" of the national government.

Richard Nixon was a major mind behind New Federalism. Nixon eased the restrictions on money that was sent to the states, believing that they were in a better position to know how to spend the money than the federal government.

For example, there is no national drinking age. In the past, some states allowed people 18 years of age or older to drink alcohol, while others set the legal DRINKING AGE at 21. Passing a national drinking age might be unconstitutional, unless Congress could prove that such legislation was"NECESSARY AND PROPER" to carry out their expressed powers. Congress avoided the controversy by requiring all states that receive federal highway funds to set a legal drinking age of 21. No state could afford to lose these funds, so they had no choice but to comply.

When Richard Nixon became president in 1969, he backed a revenue sharing plan that channeled federal dollars back to the states, but without the strings of categorical grants. President Reagan (1981-89) coined the movement "NEW FEDERALISM" — an attempt to return power to the states.

The REAGAN ADMINISTRATION'S budget and policies radically altered the relationship between the federal government and the states. For the first time in many years federal aid to states declined, and Reagan pushed to consolidate categorical grants into BLOCK GRANTS, which had few strings and much broader categories, such as "education" or "highways." Because New Federalism meant that states often had to pay the tab for their new responsibilities, Reagan was criticized for weakening the states with debt — an opposite effect from his stated intention

Today the issue of the proper balance between national and state powers is as viable as it was in 1789. States' rights have remained a controversial topic for more than 200 years. Americans are divided about which laws should be federal, and which should be reserved to the states.

Should the right to an abortion be regulated by individual states, or should the federal government set a uniform policy? Should individual states permit the use of marijuana for medical purposes, or is drug policy a large enough problem to be decided on the federal level? Should individual states have the power to allow doctor-assisted suicide? These questions and many others shape the modern debate over state and federal power.