3.3: Debating Who Should Be in Charge- Three Types of Federalism

Conceptualizing Changes in Federal-State Relations

The Constitutional parameters that established the relations between the states and the national government and among the states gradually evolved. For analytical purposes, political scientists categorize them into three kinds of federalism. The first is dual federalism; the states and the national government have separate responsibilities based on a clearly delineated view of the federal government's expressed powers and the states' reserved powers. This type dominated from the Constitutional founding to the Great Depression of the 1930s. For example, the federal government managed interstate commerce, and states managed elementary and high school education. The second is cooperative federalism, marked by the dramatic increase in federal control over state and local affairs as our country fought the Great Depression and the Cold War and tried to achieve various national goals such as civil rights and civil liberties. An example of the daily impact of cooperative federalism is the Supplemental Nutrition Assistance Program (SNAP), which provides money for food to tens of millions of Americans.

As the federal government increased in power, conservatives became alarmed by the growth of the central government and advocated greater state power. Beginning in the late 1960s, with the election of Republican President Richard Nixon, states started to share in decision-making regarding federal programs. The result was "new federalism," the third type of federalism that blends dual and cooperative varieties. One example is welfare reform. In the 1990s, states were allowed to develop some of their own welfare programs using federal funding. Another example discussed later in this chapter is the Affordable Care Act (often informally called Obamacare), which allows states quite a bit of latitude regarding health care programs and coverage.

All three kinds of federalism are very much present today (see Table 3.3.1). States still control many policies, the federal government controls others, and then there are many areas of policy that are explicitly shared between the two levels of government.

Table \(\PageIndex{1}\):Types of Federalism

Type of Federalism	Definitions	Examples	Origins
Dual	State and the federal government have distinct responsibilities with separate programs, financed independently.	Federal level: foreign policy State-level: state licensing for occupations, barbers, teachers, attorneys, etc.	1789 (implementation of the US Constitution)
Cooperative	The federal government directs policy, paying for programs for states.	Federal Level: SNAP (food assistance)	1933 (Roosevelt Administration)
New	The federal government pays for programs; states can design programs for their residents.	Welfare Reform: Temporary Assistance For Needy Families (CalWORKs in California)	1969 (Nixon Administration)

Analyzing the State of Federalism Today

Do you ever people-watch? For example, sit on a park bench and watch couples walk by, and study their body language, wondering about what each partner thinks about the other, just by their posture, smile, or perhaps a sparkle in their eyes. Transfer this same sort of curiosity to observing the relationship between the states and the national government. See how each is reacting to the other, the policy changes, the posturing, and the rhetoric. We observe many dynamics in the mid-2020s, with the advent of the second Trump Administration. Just as it is difficult to generalize about a relationship from watching only a few interactions between people in a park, conclusions that we can make about current federal-state relations will also be tentative. Many of these changes discussed below would be best described as ongoing efforts, subject to changes by the president or rejection by courts. Four strands of federalism are evident so far. 

First is the Trump Administration’s skepticism about the efficacy of big government and the effort to reduce its size by trying to slim down or even eradicate whole departments and return some government responsibilities to the states. Mr. Trump invited financier and entrepreneur Elon Musk to head the effort of a newly created Department of Government Efficiency (DOGE) to cut regulations and spending and reduce the number of federal employees. As of June 2025, according to the Bureau of Labor Statistics, 59,000 federal jobs will have been lost (Hsu). Mr. Trump issued an executive order declaring that the “Department of Education’s main functions can and should be returned to the states.” (“Improving Education Outcomes”). Those that could not, such as the administration of student loans, would be assumed by other departments. The President has also argued for returning disaster management and mitigation entirely to the states by abolishing the Federal Emergency Management Agency. Yet after devastating floods killed over one hundred people in central Texas in July 2025, the President changed his mind (Allison). 

The second strand is the exact opposite: the Trump administration is making great efforts to centralize control of policy and remove or reduce existing state authority or responsibility. This is especially evident in policy areas that are a high priority for the Administration. For example, the Trump Administration doubts the wisdom of rapidly changing to electric vehicles and is more sympathetic to the use of traditional gasoline fuels. Hence, Trump signed a joint resolution by Congress to end California’s ability under the Clean Air Act of 1970 to define its own pollution standards (Friedman). If this section of the Clean Air Act were to be revoked, California would be unable to reach its goal to end the sale of gasoline-powered cars by 2035.

A third strand continues with the effort of centralizing policy at the federal level and is distinct because of the use of the tool of conditioning grants-in-aid to state policy changes. The Trump Administration threatens to withhold grant money for health, education, welfare, transportation, and many other programs unless the state changes policies in policy areas that have been prioritized by the Trump Administration. These include banning Diversity, Equity, and Inclusion (DEI) initiatives to promote civil rights and affirmative action policies in schools, colleges, and universities, reducing civil rights for transgender individuals, and ending state and local policies that provide benefits to undocumented immigrants. For example, after the fires that destroyed two Southern California neighborhoods (Altadena and Pacific Palisades), Mr. Trump threatened to condition disaster aid on California requiring voters to show identification cards at polling places (Trump’s Threats). 

After a transgender athlete won medals at a California state and field championship, Trump posted on Truth Social (Echelman): 

 “A Biological male competed in California Girls State Finals, WINNING BIG, despite the fact that they were warned by me not do so.  As Governor Gavin Newscum fully understands, large scale fines will be imposed!!!” 

The Trump Administration withheld more than five billion dollars in education grants in an effort to ensure that school districts complied with the Trump Administration’s anti-DEI and anti-transgender policies. Aid was released following the filing of another lawsuit by states and pressure from Congress (Mervosh).

All of these efforts by the Trump Administration have yielded a fourth strand of federalism: a cycle of action and reaction between the federal government and the states, with federalism becoming a very active arena for policy conflict between Democrats and Republicans. As of July 2025, California, either on its own or in concert with other states, has filed thirty-six lawsuits against the Trump Administration. These lawsuits uniformly argue that the Trump Administration is threatening the reserved powers as set out by the Tenth Amendment of the US Constitution. For example, California objects to Mr. Trump tying transportation dollars to requiring state law enforcement authorities to participate in immigration raids. It also objects to the end of federal government health insurance coverage under the Affordable Care Act for gender-affirming care. (Zinshteyn).

Given our observations of federal-state dynamics, how do we generalize about the general character of contemporary federalism and its underlying causes? In some ways, there is continuity with the past. The federal government’s use of its financial resources to change society is the hallmark of cooperative federalism. In the past, its purpose was for liberal causes—welfare, health care, civil rights, etc.—now federal activism is being used to promote the priorities of the Trump Administration. The Trump Administration uses all available tools—grants, mandates, preemptions, etc.—to change American society in specific ways. Political scientists are generalizing about Trump’s policies as creating a new type of federalism: “transactional federalism,” defined as simply using the tools of federalism to further a partisan agenda rather than adhering to general principles regarding how states should interact with the federal government (Dichio).

One might argue that politicians have always used federalism to promote their interests and that today’s federalism is simply a reflection of the party polarization that is gripping our nation. Nonetheless, the fundamental principle for the creation of federalism at the 1787 Convention was to find a just balance between state and national power—for each state to have a degree of autonomy within a common American home. We can return to the metaphor of watching couples walk by at the park and wonder if they have successfully negotiated the right balance between “I” and “thou,” between individual autonomy and the unity of love or marriage. In the coming years, we shall gain a better understanding of the consequences of ‘transactional federalism.”