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1 Introduction
Few Americans grasp how federalism has shaped each one of their lives and futures. Federalism has helped make America because it has affected the safety, prosperity, and many everyday choices of each person who has lived in the United States. The American states always have done most of the routine governing in the United States. State laws regulate birth and death, marriage and divorce, crime and punishment, property and commerce. States manage education, prisons, highways, welfare, environmental protection, corporate law, and the professions. States wield the most powerful tool of any government: the power to legally execute individuals. Some Americans live in states that use this power frequently, others live in states that use it rarely or not at all.
All this power attracts conflictâand all these conflicts make federalism a dynamic battlefield for every major political fight over rights, opportunity, and advantage in American history. Because federalismâs impact is so broad and so deep, political rivals have fought about federalism since the nationâs founding. Federalism has shaped American life most powerfully by converting many political conflicts over whether government should act into conflicts over which level of governmentâstates or the U.S. national government (in the rest of this book, the Federal government)âshould have the power to settle the conflict. The most bitter and spectacular political conflicts in American history have been fought on the battlefield of federalism, including statesâ rights to leave the union, to regulate business, to institute political reform, and to deal with race, poverty, pollution, abortion, and many more. The consequences of these choices played out over time and cumulatively have altered American political development. Federalism helped fragment American politics, encourage policy innovation and diversity, foster the American market economy, and place hurdles in the way of efforts to mitigate the consequences of economic change. The United States, its government, and its public policy are an evolving legacy of choices steered by federalism over time.
Federalism
Federalism is a long-lasting institutional arrangement of political power in which both a national government and regional governments within a nation each have separate authority to maintain order, make laws, tax citizensâ incomes, purchases and property, and provide public services. Ronald L. Watts, a foremost expert on federalism, estimated that, at the start of the twenty-first century, forty percent of the worldâs population lived in nations organized around federalism. These federal nations include the United States, Argentina, Australia, Austria, Belgium, Brazil, Canada, Ethiopia, Germany, India, Mexico, Nigeria, Spain, and Switzerland. Many believe that the European Union has been evolving toward a kind of federal system.1
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Federalism emerged and endures because it offers an expedient way to harmonize separate smaller governments to achieve larger goals, especially to foster commerce and improve military security. In ancient Greece, Athens and other Greek city states created confederations to forge a stronger common defense against external threats. Swiss cantons organized a confederation in 1291. A Hanseatic League of cities in northern Europe, originally formed in the 1300s to foster trade, also developed overarching governing institutions and military power. A Dutch confederacy consisting of seven provinces formed in the 1500s.2 Such federations were recognized as a distinct form of government by the 1600s.3 The American federation that emerged during the Revolutionary War changed ideas about federalism by creating a much stronger union than any of these earlier confederations. The U.S. Constitution of 1787 left the American states with substantial authority, promised each a republican government, gave them equal representation in the U.S. Senate, guaranteed them a role in selecting the U.S. president, and required that any amendment to the Constitution would require ratification by three-quarters of the states. This more modern federalism created in the United States, in turn, strongly influenced many of the federal systems that have developed in the last two centuries.
American federalism differs from most of the other federal systems in the world. First, as political scientist Alfred Stepan has pointed out, while American federalism aimed to bring smaller units of government together, federalism in India, Belgium, Spain, and many other nations was instituted to help hold together polities with deep ethnic or cultural divisions in different geographical areas. In these countries, some regional governments represent ethnic or religious minorities and exercise unique prerogatives of self-governance. In the United States, all of the states have equal legal standing and authority.4 Second, in all other federal systems, the national government deliberately equalizes regional resources by redistributing more financial aid to the poorest regions. The United States is the only federal system that does not equalize state resources in this way.5 Third, American federalism has proven extraordinarily elastic in comparison to federalism in other nations. The American federal system has adapted to vast changes in physical size, population, race and ethnicity, the economy, and culture since 1787.6
Federalism is now deeply rooted in everyday American life. State and local governments each employ far more civilians than the Federal government.7 About 2.7 million Americans worked in full-time Federal government employment in 2014, while 4.3 million worked for state governments and 14 million worked for local governments.8 In 2013, the Federal government spent $3.5 trillion. In the same year, state and local government spending was about the same, totaling more than $3.4 trillion (including money received from Federal grants).9
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States have the power to enhance or retard American prosperity because they can foster job growth, regulate business, and supervise the public goods that nurture economic growth, such as public education and highways. States regulate nearly twenty percent of the American economy, through insurance industry rules, occupational licensing, and health services laws. States operate nearly all Federal environmental programs.10 States (like the Federal government) usually use their power opportunistically, to advance their interests.11 One of the smallest American states, Delaware, maintains laws that are exceptionally favorable to private corporations, such as minimal regulation, no corporate taxes, and a separate court dedicated to business. As a result, many Fortune 500 companies that are physically headquartered in other statesâincluding Wal-Mart, Google, McDonaldâs, Coca-Cola, United Parcel Service, the Walt Disney Company, Bank of America, and Verizonâlegally exist as Delaware corporations.12 State and local governments are major sources of investment capital in their own right; their employee retirement systems held $3.3 trillion in assets in 2016.13
States overwhelmingly control education, criminal justice, and other aspects of everyday life. About fifty million students were enrolled in the public elementary and secondary education systems overseen by American states in 2014â15.14 About three-quarters of students enrolled in higher educationâeighteen million students in allâwere enrolled in public institutions, either regulated or directly run by the states. State courts hold most of the criminal trials in the nation and produce most of the convictions. Today, thirty-five states maintain the death penalty. States executed 1,455 individuals between 1976 and the summer of 2017; Texas alone had executed 542 people. In the same period, the U.S. government executed three individuals.15 State and local laws regulate behavior from marriage and divorce to abortion, driving, gambling, drinking, smoking, and drug use. States are the chief managers of welfare and health services for the needy. The states even play an important role in responding to global threats. A quarter of a million troops from state National Guard units served in Iraq and Afghanistan from 2001 to 2017.16 States also shape political ambition and achievement in the United States. Candidates for U.S. Senate seats (as well as House seats in the seven smallest states) contest their elections statewide. All the candidates for the U.S. House of Representatives contest their elections entirely within a single state. Presidents have to win a majority of votes in the state-based Electoral College. Most U.S. presidents have been state office-holders before becoming president.17
Why is Federalism Controversial?
People battle over federalism because the stakes are so high, and it makes so much of a difference for so many people. Federalism affects who enjoys freedoms and rights, democracy, efficient and innovative government, and prosperity. It affects who gets what, where, when and how.18
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Freedoms and Rights
First, many believe that American federalism provides a strong safeguard for freedom and individual rights because it limits the power of the national government. National governments may become tyrannical, but in a federal system, states would resist undesirable encroachments on their power.19 Thomas Jefferson wrote that âthe true barriers of our liberty in this country are our State governments.â20 In the Federalist, James Madison argued that:
