Federalism in the United States: division of powers

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- The United States was the first country to adopt a federal system of government

- This system of government, where the national government & state governments derive all authority from the people, was designed to

remedy many of the problems experienced under the Articles of

Confederation

- Under the Articles, the United States was governed as a confederation where

the national government derived all of its powers from the states. This

led to a weak national government that was often unable to respond to even small crises, such as Shays’s Rebellion.

- The new system of government also had to be different from the unitary system found

in Great Britain, where the local and regional governments derived all

their power from a strong national government.

- The Framers feared

centralizing power in one government or institution

- They

made both the state and the federal government accountable to the people at large

- While the govs shared some powers, such as the

ability to tax, each government was supreme in some spheres, as

described in the following section

- The

federal system as conceived by the Framers has proven tremendously

effective. Since the creation of the U.S. system, many other nations,

including Canada (1867), Mexico (1917), and Russia (1993), have adopted federal systems in their constitutions.

National Powers Under the Constitution

Chief

among the exclusive powers of the national government are the

authorities to coin money, conduct foreign relations, provide for an

army and navy, declare war, and establish a national court system. All

of these powers set out in Article I, section 8, of the Constitution are

called enumerated powers. Article I, section 8, also contains the necessary and proper clause (also

called the elastic clause), which gives Congress the authority to enact

any laws “necessary and proper” for carrying out any of its enumer-

ated powers. These powers derived from enumerated powers and the

necessary and proper clause are known as implied powers.

The

federal government’s right to tax was also clearly set out in the

Constitution. The Framers wanted to avoid the financial problems that

the national government experienced under the Articles of Confederation.

If the new national government was to be strong, its power to raise

revenue had to be unquestionable. Although the new national government

had no power under the Constitution to levy a national income tax, that

was changed by the passage of the Sixteenth Amendment in 1913. Eventu-

ally, as discussed later in this chapter, this new taxing power became a

powerful cata- lyst for further expansion of the national government.

Article

VI of the federal Constitution underscores the notion that the national

government is to be supreme in situations of conflict between state and

national law. It declares that the U.S. Constitution, the laws of the

United States, and its treaties, are to be “the supreme Law of the Land;

and the Judges in every State shall be bound thereby.”

In spite of this explicit language, the meaning of what is called the supremacy clause has

been subject to continuous judicial interpretation. In 1920, for

example, Missouri sought to prevent a U.S. game warden from enforcing

the Migratory Bird Treaty Act of 1918, which prohibited the killing or

capturing of many species of birds as they made their annual migration

across the international border from Canada to parts of the United

States.4 Missouri

argued that the Tenth Amendment, which reserved a state’s powers to

legislate for the general welfare of its citizens, allowed Missouri to

regulate hunting. But, the Court ruled that since the treaty was legal,

it must be considered the supreme law of the land.

State Powers Under the Constitution

Because

states had all the power at the time the Constitution was written, the

Framers felt no need, as they did for the new national government, to

list and restate the powers of the states. Article I, however, allows

states to set the “Times, Places, and Manner, for holding elections for

senators and representatives.” Article II requires that each state

appoint electors to vote for president. And, Article IV pro- vides each

state a “Republican Form of Government,” meaning one that represents the

citizens of the state.

It was not until the Tenth Amendment, the

final part of the Bill of Rights, that the states’ powers were

described in greater detail: “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.” These powers,

often called the states’ reserve or police powers, include

the ability to legislate for the public health, safety, and morals of

their cit- izens. Today, the states’ rights to legislate under their

police powers are used as the ratio- nale for many states’ restrictions

on abortion. Similarly, some states now fund stem-cell research, in

sharp contrast to the federal government. Police powers are also the

basis for

state criminal laws, including varied laws concerning the death

penalty. As long as the U.S. Supreme Court continues to find that the

death penalty does not violate the Constitution, the states may impose

it, be it by lethal injection, gas chamber, or the electric chair.

Concurrent Powers Under the Constitution

National and state powers overlap. The area where the systems overlap represents concurrent powers—powers

shared by the national and state gov- ernments. States already had the

power to tax; the Constitution extended this power to the national

government as well. Other important concurrent powers include the right

to borrow money, establish courts, and make and enforce laws necessary

to carry out these powers.

Powers Denied Under the Constitution

Some

powers are explicitly denied to the national government or the states

under Article I of the Constitution. In keeping with the Framers’ desire

to forge a national economy, for example, states are prohibited from

entering treaties, coining money, or impairing obligation of contracts.

States also are prohibited from entering into compacts with other states

without express con- gressional approval. In a similar vein, Congress

is barred from favoring one state over another in regulating commerce,

and it cannot lay duties on items exported from any state.

State

governments (as well as the national government) are denied the

authority to take arbitrary actions affect- ing constitutional rights

and liberties. Neither national nor state governments may pass a bill of attainder, a law declaring an act illegal without a judicial trial. The Constitution also bars the national and state governments from passing ex post facto laws, laws that make an act punishable as a crime even if the action was legal at the time it was committed.

Relations Among the States

In

addition to delineating the relationship of the states with the

national government, the Constitution provides a mechanism for resolving

interstate disputes and facilitating relations among states. To avoid

any sense of favoritism, it provides that disputes between states be set

tled directly by the U.S. Supreme Court under its original jurisdiction

as mandated by Article III of the Constitution. Moreover, Article IV

requires that each state give “Full Faith and Credit . . . to the public

Acts, Records and judicial Proceedings of every other State.” The full faith and credit clause ensures

that judicial decrees and contracts made in one state will be binding

and enforceable in another, thereby facilitating trade and other

commercial relationships. Full faith and credit cases continue to make

their way through the judicial system. For example, a state’s refusal to

honor same-sex marriage contracts poses interesting constitutional

questions. States can vary considerably on social issues.

Article IV also contains the privileges and immunities clause,

guaranteeing that the citizens of each state are afforded the same

rights as citizens of all other states. In addition, Article IV contains

the extradition clause, which requires states to extradite, or return, criminals to states where they have been convicted or are to stand trial.

To

facilitate relations among states, Article 1, section 10, clause 3, of

the U.S. Constitution sets the legal foundation for interstate

cooperation in the form of interstate compacts,

contracts between states that carry the force of law. It reads, “No

State shall, without the consent of Congress . . . enter into any

Agreement or Compact with another state.” Before 1920, interstate

compacts were largely bistate compacts that addressed boundary disputes

or acted to help two states accomplish some objective.

More

than 200 interstate compacts exist today. While some deal with rudimen-

tary items such as state boundaries, others help states carry out their

policy objectives, and administrative functions. Although several

bistate compacts still exist, other com- pacts have as many as fifty

signatories.5 The

Drivers License Compact, for example, was signed by all fifty states to

facilitate nationwide recognition of licenses issued in the respective

states.

States

today find that interstate compacts help them maintain con- trol

because compacts with other states allow for sharing resources,

expertise, and responses that often are available more quickly than

those from the federal government. The Emergency Management Assistance

Compact, for example, allows states to cooperate and to share resources

in the event of natural and man-made disasters. After the terrorist

attacks on September 11, 2001, assistance to New York and Virginia came

from a host of states surrounding the areas of the attacks.

Federalism and the Marshall Court

The

nature of federalism, including its allocation of power between the

national government and the states, has changed dramatically over the

past two hundred years. Much of this change is due to the rulings of the

U.S. Supreme Court, which has played a major role in defining the

nature of the federal system because the distribu- tion of power between

the national and state governments is not clearly delineated in the

Constitution. Few Supreme Courts have had a greater impact on the

federal–state relationship than the one headed by Chief Justice John

Marshall (1801–1835). In a series of decisions, he and his associates

carved out an important role for the Court in defining the balance of

power between the national government and the states. Two rulings in the

early 1800s, McCulloch v. Maryland (1819) and Gibbons v. Ogden (1824), were particularly important.

McCulloch v. Maryland (1819)

McCulloch v. Maryland (1819)

was the first major Supreme Court decision to define the relationship

between the national and state governments. In 1816, Congress chartered

the Second Bank of the United States. (The charter of the First Bank had

been allowed to expire.) In 1818, the Maryland state legislature levied

a tax requiring all banks not chartered by Maryland (that is, the

Second Bank of the United States) to: (1) buy stamped paper from the

state on which the Second Bank’s notes were to be issued; (2) pay the

state $15,000 a year, or, (3) go out of business. James McCulloch, the

head cashier of the Baltimore branch of the Bank of the United States,

refused to pay the tax, and Maryland brought suit against him. After

losing in a Maryland state court, McCulloch appealed the decision to the

U.S. Supreme Court by order of the U.S. secretary of the treasury. In a

unanimous opinion, the Court answered the two central questions that

had been presented to it: Did Congress have the authority to charter a

bank? If it did, could a state tax it?

Chief

Justice John Marshall’s answer to the first question—whether Congress

had the right to establish a bank or another type of

corporation—continues to stand as the classic exposition of the doctrine

of implied powers and as a reaffirmation of the authority of a strong

national government. Although the word “bank” cannot be found in the

Constitution, the Constitution enumerates powers that give Congress the

authority to levy and collect taxes, issue a currency, and borrow funds.

From these enumerated powers, Marshall found, it was reasonable to

imply that Congress had the power to charter a bank, which could be

considered “necessary and proper” to the exercise of its aforementioned

enumerated powers.

Marshall

next addressed the question of whether a federal bank could be taxed by

any state government. To Marshall, this was not a difficult question.

The national government was dependent on the people, not the states, for

its powers. In addition, Marshall noted, the Constitution specifically

calls for the national law to be supreme. “The power to tax involves the

power to destroy,” wrote Marshall.6 Thus,

the state tax violated the supremacy clause, because individual states

cannot interfere with the operations of the national government, whose

laws are supreme.

The Court’s decision in McCulloch has

far-reaching consequences even today. The necessary and proper clause

is used to justify federal action in many areas, including social

welfare problems. Furthermore, had Marshall allowed the state of

Maryland to tax the federal bank, it is possible that states could have

attempted to tax all federal agencies located within their boundaries, a

costly proposition that could have driven the federal government into

insurmountable debt.

Gibbons v. Ogden (1824)

Shortly after McCulloch, the Marshall Court had another opportunity to rule in favor of a broad interpretation of the scope of national power. Gibbons v. Ogden (1824)

involved a dispute that arose after the New York State legislature

granted to Robert Fulton the exclusive right to operate steamboats on

the Hudson River. Simulataneously, Congress licensed a ship to sail on

the same waters. By the time the case reached the Supreme Court, it was

complicated both factually and procedurally. Suffice it to say that both

New York and New Jersey wanted to control shipping on the lower Hudson

River. But, Gibbons actually

addressed one simple, very important question: what was the scope of

Congress’s authority under the commerce clause? The states argued that

“commerce,” as mentioned in Article I, should be interpreted narrowly to

include only direct dealings in products. In Gibbons,

however, the Supreme Court ruled that Congress’s power to regu- late

interstate commerce included the power to regulate commercial activity

as well, and that the commerce power had no limits except those

specifically found in the Constitu- tion. Thus, New York had no

constitutional authority to grant a monopoly to a single steamboat

operator, an act that interfered with interstate commerce.7 Like

the necessary and proper clause, today the commerce clause has been

used by Congress—with varying degrees of success—to justify federal

legislation concerning regulation of highways, the stock market, and

violence against women.

Dual Federalism: The Taney Court,

Slavery, and the Civil War

In spite of nationalist Marshall Court decisions such as McCulloch and Gibbons,

strong debate continued in the United States over national versus state

power. It was under the leadership of Chief Justice Marshall’s

successor, Roger B. Taney (1835–1863), that the Supreme Court

articulated the notions of concurrent power and dual federalism. Dual

federalism posits that having separate and equally power- ful state and

national governments is the best arrangement. Adherents of this theory

typically believe that the national government should not exceed its

constitutionally enumerated powers, and as stated in the Tenth

Amendment, all other powers are, and should be, reserved to the states

or to the people.

Dred Scott and the Advent of the Civil War

During

the Taney Court era, the role of the Supreme Court as the arbiter of

competing national and state interests became troublesome when the

justices were called upon to deal with the controversial issue of

slavery. In cases such as Dred Scott v. Sandford (1857), the Court tried to manage the slavery issue by resolving questions of ownership, the status of fugitive slaves, and slavery in the new territories.8 These cases gener- ally were settled in favor of slavery and states’ rights within the framework of dual federalism. In Dred Scott,

for example, the Taney Court, in declaring the Missouri Compromise

unconstitutional, ruled that Congress lacked the authority to ban slav-

ery in the territories. This decision seemed to rule out any nationally

legislated solu- tion to the slavery question, leaving the problem in

the hands of the state legisla- tures and the people, who did not have

the power to impose their will on other states.

The Civil War, Its Aftermath, and the Continuation of Dual Federalism

The

Civil War (1861–1865) forever changed the nature of federalism. In the

after- math of the war, the national government grew in size and power.

It also attempted to impose its will on the state governments through

the Thirteenth, Fourteenth, and Fifteenth Amendments. These three

amendments, known collectively as the Civil War Amendments, prohibited

slavery and granted civil and political rights, including voting rights,

to African Americans.

The

U.S. Supreme Court, however, continued to adhere to its belief in the

concept of dual federalism. Therefore, in spite of the growth of the

national government’s powers, the importance of the state governments’

powers was not diminished until 1933, when the next major change in the

federal system occurred. Generally, the Court upheld any laws passed

under the states’ police powers, which allow states to pass laws to

protect the general welfare of their citizens. These laws affected

commerce, labor relations, and manufacturing. After the Court’s decision

in Plessy v. Ferguson (1896),

in which the Court ruled that state maintenance of “separate but equal”

facilities for blacks and whites was constitutional, most civil rights

and voting cases also became state matters, in spite of the Civil War

Amendments.9

The

Court also developed legal doctrine in a series of cases that

reinforced the national government’s ability to regulate commerce. By

the 1930s, these two some- what contradictory approaches led to

confusion: states, for example, could not tax gasoline used by federal

vehicles,10 and the national government could not tax the sale of motorcycles to city police departments.11 In

this period, the Court, however, did recognize the need for national

control over new technological developments, such as the telegraph.12 And,

beginning in the 1880s, the Court allowed Congress to regulate many

aspects of economic relationships, such as monopolies, an area of reg-

ulation formerly thought to be in the exclusive realm of the states.

Passage of laws such as the Interstate Commerce Act in 1887 and the

Sherman Anti-Trust Act in 1890 allowed Congress to establish itself as

an important player in the growing national economy.

Despite

finding that most of these federal laws were constitutional, the

Supreme Court did not enlarge the scope of national power consistently.

In 1895, for example, the United States filed suit against four sugar

refiners, alleging that their sale would give their buyer control of 98

percent of the U.S. sugar-refining business. The Supreme Court ruled

that congressional efforts to control monopolies (through passage of the

Sherman Anti- Trust Act) did not give Congress the authority to prevent

the sale of these sugar-refining businesses, because manufacturing was

not commerce. Therefore, the companies and their actions were beyond the

scope of Congress’s authority to regulate.13

Setting the Stage for a Stronger National Government

In

1895, the U.S. Supreme Court found a congressional effort to tax

personal incomes unconstitutional, although an earlier Court had found a

similar tax levied during the Civil War constitutional.14 Thus, Congress and the state legislatures were moved to ratify the Sixteenth Amendment. The Sixteenth Amendment gave Congress the power to levy and collect taxes on incomes without apportioning them among the

states. The revenues taken in by the federal government through

taxation of personal income “removed a major constraint on the federal

government by giving it access to almost unlimited revenues.”15 If

money is power, the income tax and the revenues it generated greatly

enhanced the power of the federal government and its ability to enter

policy areas where it formerly had few funds to spend.

The Seventeenth Amendment, ratified

in 1913, similarly enhanced the power of the national government at the

expense of the states. This amendment terminated the state

legislatures’ election of senators and put their election in the hands

of the people. With senators no longer directly accountable to the state

legislators who elected them, states lost their principal protectors in

Congress. Coupled with the Sixteenth Amendment, this amendment paved

the way for more drastic changes in the relationship between national

and state governments in the United States.

Cooperative Federalism: The New Deal and the Growth of National Government

The

era of dual federalism came to an abrupt end in the 1930s. While the

ratification of the Sixteenth and Seventeenth Amendments set the stage

for expanded national government, the catalyst for dual federalism’s

demise was a series of economic events that ended in the cataclysm of

the Great Depression:

Throughout the 1920s, bank failures were common.

In 1921, the nation experienced a severe slump in agricultural prices.

In 1926, the construction industry went into decline.

In the summer of 1929, inventories of consumer goods and automobiles were at an all-time high.

On October 29, 1929, stock prices, which had risen steadily since 1926, crashed, taking with them the entire national economy.

Despite

the severity of these indicators, Presidents Calvin Coolidge and

Herbert Hoover took little action, believing that the national

depression was an amalgamation of state economic crises that should be

dealt with by state and local governments. However, by 1933, the

situation could no longer be ignored.

The New Deal

Rampant

unemployment (historians estimate it was as high as 40 to 50 percent)

was the hallmark of the Great Depression. In 1933, to combat severe

problems facing the nation, newly elected President Franklin D.

Roosevelt (FDR) proposed a variety of innovative programs, collectively

called the “New Deal,” and ushered in a new era in American politics.

FDR used the full power of the office of the president as well as his

highly effective communication skills to sell the American public and

Congress on a new level of government intervention intended to stabilize

the economy and reduce suffering. Most politicians during the New Deal

period (1933–1939) agreed that to find national solutions to the

Depression, which was affecting the citi- zens of every state in the

union, the national government would have to exercise tremendous

authority.

In

the first few weeks of the legislative session after FDR’s

inauguration, Congress passed a series of acts creating new federal

agencies and programs proposed by the president. These new agencies,

often known by their initials, created what many termed an

alphabetocracy. Among the more significant programs were the Federal

Housing

Administration (FHA), which provided federal financing for new home

con- struction; the Civilian Conservation Corps (CCC), a work relief

program for farmers and homeowners; the Agricultural Adjustment

Administration (AAA) and the National Recovery Administration (NRA),

which imposed restrictions on production in agriculture and many

industries while also providing subsidies to farmers.

New

Deal programs forced all levels of government to work cooperatively

with one another. Indeed, local governments—mainly in big cities—became a

third partner in the federal system as FDR relied on big-city

Democratic political machines to turn out voters to support his

programs. Cities were embraced as equal partners in an intergov-

ernmental system for the first time and became players in the national

political arena because many members of Congress wanted to bypass state

legislatures, where urban interests usually were underrepresented.

New

Deal programs also enlarged the scope of the national government. Those

who feared this unprecedented use of national power quickly challenged

the constitutionality of the programs in court. And, at least initially,

the U.S. Supreme Court often agreed with them.

Through

the mid-1930s, the Supreme Court continued to rule that certain aspects

of New Deal programs went beyond the authority of Congress to regulate

commerce. The Court’s laissez-faire,

or hands-off, attitude toward the economy was reflected in a series of

decisions ruling various aspects of New Deal programs unconstitutional.

FDR

and the Congress were livid. FDR’s frustration with the Court prompted

him to suggest what ultimately was nicknamed his “Court-packing plan.”

Knowing that he could do little to change the minds of those already on

the Court, FDR sug- gested enlarging its size from nine to thirteen

justices. This would have given him the opportunity to pack the Court

with a majority of justices predisposed toward the con- stitutional

validity of the New Deal.

Even

though Roosevelt was popular, the Court-packing plan was not. Congress

and the public were outraged that he even suggested tampering with an

institution of

government. Nevertheless, the Court appeared to respond to this threat.

In 1937, it reversed its series of anti–New Deal decisions, concluding

that Congress (and there- fore the national government) had the

authority to legislate in any area so long as what was regulated

affected commerce in any way. The Court also upheld the constitution-

ality of the bulk of the massive New Deal relief programs, including the

National Labor Relations Act of 1935, which authorized collective

bargaining between unions and employees;16 the

Fair Labor Standards Act of 1938, which prohibited the inter- state

shipment of goods made by employees earning less than the federally

mandated minimum wage;17 and the Agricultural Adjustment Act of 1938, which provided crop subsidies to farmers.18 Congress

then used this newly recognized power to legislate in a wide array of

areas, including maximum hour and minimum wage laws and regulation of

child labor.

The Changing Nature of Federalism: From Layer Cake to Marble Cake

Before

the Depression and the New Deal, most political scientists likened the

federal system to a layer cake: each level or layer of

government—national, state, and local— had clearly defined powers and

responsibilities. After the New Deal, however, the nature of the federal

system changed. Government now looked something like a marble cake:

Wherever

you slice through it you reveal an inseparable mixture of differently

colored ingredients. . . . Vertical and diagonal lines almost obliterate

the horizontal ones, and

in some places there are unexpected whirls and an imperceptible merging

of colors, so that it is difficult to tell where one ends and the other

begins.19

The metaphor of marble cake federalism refers to what political scientists call cooperative federalism, a

term that describes the intertwined relationship among the national,

state, and local governments that began with the New Deal.

States

began to take a secondary, albeit important, cooperative role in the

scheme of governance, as did many cities. Nowhere is this shift in power

from the states to the national government clearer than in the growth

of federal grant programs that began in earnest during the New Deal.

Between the New Deal and the 1990s, the tremendous growth in these

programs, and in federal govern- ment spending in general, changed the

nature and discussion of federalism from “How much power should the

national govern- ment have?” to “How much say in the policies of the

states can the national government buy?” During the 1970s energy crisis,

for example the national government initially imposed a national 55 mph

speed limit on the states. Subsequent national efforts forced states to

adopt minimum-age drinking restrictions in order to obtain federal

transportation funds.

Federal Grants and National Efforts to Influence the States

As

early as 1790, Congress appropriated funds for the states to pay debts

incurred during the Revolutionary War. But, it wasn’t until the Civil

War that Congress enacted its first true federal grant program, which

allocated federal funds to the states for a specific purpose. Most

commentators believe the start of this redistribution of funds began

with the Mor- rill Land Grant Act of 1862, which gave each state 30,000

acres of public land for each representative in Congress. Income from

the sale of these lands was to be ear- marked for the establishment and

support of agricultural and mechanical arts col- leges. Sixty-nine

land-grant colleges—including Texas A&M University, the Uni- versity

of Georgia, and Michigan State University—were founded or significantly

assisted, making this grant program the single most important piece of

education legislation passed in the United States up to that time.

As

we have seen, Franklin D. Roosevelt’s New Deal program increased the

flow of federal dollars to the states with the infusion of massive

federal dollars for a variety of public works programs, including

building and road construction. In the boom times of World War II, even

more new federal programs were introduced. By the 1950s and 1960s,

federal grant-in-aid programs were well entrenched. They often defined

federal/state relationships and made the national government a major

player in domestic policy. Until the 1960s, however, most federal grant

programs were con- structed in cooperation with the states and were

designed to assist the states in the furtherance of their traditional

responsibilities to protect the health, welfare, and safety of their

citizens.

Most of these programs were categorical grants, ones

for which Congress appropri- ates funds for specific purposes.

Categorical grants allocate federal dollars by a precise formula and are

subject to detailed conditions imposed by the national government,

often on a matching basis; that is, states must contribute money to

match federal funds, although the national government may pay as much as

90 percent of the total.

By

the early 1960s, as concern about the poor and minorities rose, and as

states (especially in the South) were blamed for perpetuating

discrimination, those in power in the national government saw grants as a

way to force states to behave in ways desired by the national

government.20 If the states would not cooperate with the national government to further its goals, it would withhold funds.

In

1964, the Democratic administration of President Lyndon B. Johnson

(LBJ) launched its “Great Society” program, which included what LBJ

called a “War on Poverty.” The Great Society program was a broad attempt

to combat poverty and discrimination. In a frenzy of activity in

Washington not seen since the New Deal, federal funds were channeled to

states, to local governments, and even directly to citi- zen action

groups in an effort to alleviate social ills that the states had been

unable or unwilling to remedy. Money was allocated for urban renewal,

education, and poverty programs, including Head Start and job training.

The move to fund local groups directly was made by the most liberal

members of Congress to bypass not only conservative state legislatures,

but also conservative mayors and councils in cities such as Chicago, who

were perceived as disinclined to help their poor, often African Amer-

ican, constituencies. Thus, these programs often pitted governors and

mayors against community activists, who became key players in the

distribution of federal dollars.

These

new grants altered the fragile federal/state balance of power that had

been at the core of many older federal grant programs. During the

Johnson administration, the national government began to use federal

grants as a way to further what federal (and not state) officials

perceived to be national needs. Grants based on what states wanted or

believed they needed began to decline, while grants based on what the

national government wanted states to do to foster national goals

increased dramati- cally. From pollution to economic development and law

enforcement, creating a federal grant seemed like the perfect solution

to every problem.

Not

all federal programs mandating state or local action came with federal

money, however. And, while presidents during the 1970s voiced their

opposition to big government, their efforts to rein it in were largely

unsuccessful.

New Federalism: Returning Power to the States

In 1980, former California Governor Ronald Reagan was elected president, pledging to advance what he called New Federalism and

a return of power to the states. This policy set the tone for the

federal–state relationship that was maintained from the 1980s until

2001. Presidents and Congresses took steps to shrink the size of the

federal government in favor of programs administered by state

governments. Presi- dent Bill Clinton, a Democrat, lauded the demise of

big government. And, on the campaign trail in 2000, Republican candidate

George W. Bush also seemed commit- ted to this devolution. The

September 11, 2001, terrorist attacks, however, led to sub- stantial

growth in the power and scope of the federal government.

The Reagan Revolution

The

Reagan Revolution had at its heart strong views about the role of

states in the federal system. While many Democrats and liberal interest

groups argued that fed- eral grants were an effective way to raise the

level of services provided to the poor; many Republicans, including

Reagan, attacked them as imposing national priori- ties on the states.

In part to curtail federal spending, Reagan almost immediately proposed

massive cuts in federal domestic programs and drastic income tax cuts.

Declining federal revenues dramatically altered the relationships among

federal, state, and local governments. For the first time in thirty

years, federal aid to state and local governments declined.22 Reagan persuaded Congress to consolidate many categorical grants into far fewer, less restrictive block grants—broad

grants to states for specific activities such as secondary education or

health services, with few strings attached. He also ended general

revenue sharing, which had provided sig- nificant restricted funds to

the states.

By

the end of the presidencies of Ronald Reagan and George Bush in 1993,

most block grants fell into one of four categories: health, income

security, education, or transportation. Yet, many politicians, including

most state governors, urged the con- solidation of even more programs

into block grants. Calls to reform the welfare sys- tem, particularly to

allow the states more latitude in an effort to get back to the

Hamiltonian notion of states as laboratories of democracy, seemed

popular with cit- izens and governments alike. New Federalism had taken

hold.

The Devolution Revolution

In

1992, Bill Clinton was elected president—the first Democrat in twelve

years. Although Clinton was a former governor, he was more predisposed

to federal programs than his Republican predecessors. His ability to

make changes in the federal system, however, was limited.

In

1994, Republican candidates for the House of Representa- tives joined

together in their support for the Contract with America, a campaign

document proposed by then House Minority Whip Newt Gingrich (R–GA). In

it, Republican candidates pledged to force a national debate on the role

of the national government in regard to the states.

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