5: Chapter 5- Unity and Diversity- The Federal System in Action

From Confederation to Constitution

As noted in Chapter One, the Articles of Confederation, drafted in 1777 and ratified in 1781, were designed to unite the newly independent states while avoiding the kind of centralized power the colonists had resisted under British rule. The result was a confederate system, where most power remained with the states, and the national government was deliberately kept weak.

Under the Articles:

· Congress could not tax citizens directly or regulate interstate commerce.

· States could coin their own money and ignore national laws.

· There was no national judiciary to resolve disputes among states or enforce federal law.

This arrangement soon proved unworkable. The country faced mounting economic troubles, international threats, and domestic unrest. The breaking point came in 1786 with Shays’ Rebellion, a tax revolt in Massachusetts that required military intervention. Even supporters of limited government began to recognize the need for a stronger national authority.

In 1787, delegates were called to a convention in Philadelphia “for the sole and express purpose of revising the Articles of Confederation.” Instead, they drafted an entirely new Constitution that created a much stronger national government, yet one that still respected the autonomy of the states.

The solution they devised was federalism, a system in which power is shared between national and state governments. In a federal system:

· Both levels of government can act directly on individuals.

· Some powers are exclusive, others are shared, and some are reserved to the states per the Tenth Amendment.

· Amending the Constitution requires participation from both levels.

· The Supremacy Clause (Article VI) ensures that when federal and state laws conflict, federal law prevails. Without such a provision, legal consistency across the nation would be impossible.

Federalism as a Political and Structural Compromise

Federalism represented a deliberate middle ground between two extremes:

· In a unitary system, power is concentrated in a central government, which may delegate authority to local governments, but can also take it back.

· In a confederal system, like that created by the Articles, the central government is dependent on the states and lacks the authority to act directly on individuals.

Roughly 75% of the world’s governments today are unitary. Confederal systems, by contrast, tend to be unstable and short-lived. Even during the Civil War, some southern states withheld funds from the Confederate government at critical times, highlighting the same problems that plagued the Articles.

Figure \(\PageIndex{1}\): There are three general systems of government—unitary systems, federations, and confederations—each of which allocates power differently. (Image Credit: Texas Higher Education Coordinating Board, CC BY-SA 4.0)

Federalism was not just a political compromise; it was also a practical solution for a country as geographically large and culturally diverse as the early United States. Even with only thirteen states, the new nation was bigger than most European countries. The framers anticipated expansion and recognized the value of allowing regional governments to respond to local needs, conditions, and values.

Federalism allows for unity without uniformity, a national framework that can hold together diverse political cultures while giving states the flexibility to innovate and address issues in ways that reflect local priorities.

As we will see throughout this chapter, federalism is dynamic. Although the system started closer to the decentralized side of the spectrum, the balance of power shifted significantly toward the national government in the 20th century, and continues to evolve today.

Dividing Power: National, State, and Shared Authority

The Constitution establishes a framework for dividing power between the national and state governments. Article I spells out many of these divisions, particularly by:

· Listing the powers granted to Congress (enumerated or express powers),

· Specifying the powers denied to Congress, and

· Identifying certain powers denied to the states.

Figure \(\PageIndex{1}\): The Tenth Amendment reads, "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." (Image Credit: Public Domain)

All other powers—those not expressly delegated to the national government or prohibited to the states—are reserved to the states, as affirmed in the Tenth Amendment.

Some powers are clearly exclusive to the national government. These include areas such as:

· Conducting foreign relations,

· Regulating interstate and international commerce,

· Declaring war, and

· Coining money.

In contrast, certain powers are reserved to the states, such as:

· Regulating property and land use,

· Administering local governments,

· Conducting elections, and

· Overseeing public education (though the federal government increasingly plays a role here).

Figure \(\PageIndex{1}\): Under federalism governmental powers are divided and shared between national and state governments. (Image credit: Tylerlucero84, via Wikimedia Commons, CC BY-SA 4.0)

In many areas of public policy—including health care, education, transportation, and welfare—power is shared between the national and state governments. These are known as concurrent powers and may include:

· The ability to tax and borrow money,

· The operation of court systems,

· The enforcement of laws, and

· The provision of public services.

This overlap requires cooperation between levels of government, and often results in complex intergovernmental relationships.

Categories of National Power: Express, Implied, and Inherent

The powers of the national government fall into three broad categories: express (or enumerated), implied, and inherent.

· Inherent powers are not mentioned in the Constitution at all, but are considered fundamental to national sovereignty, especially in foreign affairs. These powers are typically asserted by the executive branch, often in times of crisis or when national interests are at stake. For example, although the Constitution does not explicitly grant the power to acquire territory, President Thomas Jefferson justified the Louisiana Purchase as an inherent executive power. Similarly, during the Civil War, President Abraham Lincoln imposed a blockade of Southern ports and took other extraordinary actions without prior congressional approval. After the war, the Supreme Court upheld many of Lincoln’s actions, further legitimizing the concept of inherent powers.

· Express powers are those explicitly written in the Constitution, primarily in Article I, Section 8. These include powers such as declaring war, coining money, and establishing post offices. While these powers are clearly stated, they are relatively limited and often require interpretation.

· Implied powers are not directly stated but are logically derived from express powers through the Necessary and Proper Clause (also called the “Elastic Clause”). For example, while the Constitution doesn’t mention establishing a national bank, the Supreme Court in McCulloch v. Maryland (1819) upheld Congress’s authority to create one as a means of carrying out its enumerated fiscal powers. This decision solidified the legitimacy of implied powers and expanded congressional authority.

Figure \(\PageIndex{1}\): Inherent, Expressed, and Implied federal powers. (Image Credit: Joseph Braunwarth via OpenAI, CC BY-NC-SA 4.0)

Evolving Interpretations and the Roots of Controversy

This historical evolution shows that the Constitution does not precisely define the limits or extent of national power. Over time, Congress and especially the presidency have expanded their authority through broad interpretations of implied and inherent powers, often in response to national emergencies such as war, economic crisis, or social unrest.

These expansions have frequently provoked controversy, especially among those who fear unchecked federal power. Critics argue that an expansive national government could undermine federalism and violate the Constitution’s principles of separation of powers and limited government.

This debate dates back to the very founding of the republic. During the battle over ratification of the Constitution, the Federalists supported a strong national government and strategically labeled their opponents the Antifederalists, a term that cast them as resistant to unity and progress.

The Antifederalists feared that the Constitution gave too much power to Congress and the President, at the expense of the states and individual liberty. Though they lost the ratification battle, their concerns had a lasting impact: in order to secure ratification, the Federalists promised to add a Bill of Rights, a set of constitutional amendments that would explicitly protect individual freedoms from federal overreach. The first ten amendments were adopted in 1791 by the First Congress, addressing many of the Antifederalists' core concerns.

Maintaining the Balance of Power

Despite the fears of the Antifederalists, the states remain vibrant and influential in the 21st century. However, much of the 20th century witnessed a significant shift in power toward the national government, especially in areas related to economic regulation and civil rights.

Ironically, many of the early threats to individual liberty in the 20th century came not from the national government, but from the states themselves, through discriminatory laws, suppression of workers’ rights, and resistance to civil rights. In response, Congress and the President took active steps to expand federal authority to protect individual liberties, including:

• The Wagner Act (1935), which protected workers from unfair labor practices;
• The Fair Labor Standards Act (1938), which banned child labor in interstate commerce;
• The Equal Pay Act (1963), aimed at gender-based wage discrimination;
• The Civil Rights Acts of 1964 and 1965, which prohibited discrimination in employment and voting.

Presidents such as Franklin D. Roosevelt, Harry Truman, John F. Kennedy, and Lyndon B. Johnson played key roles in pushing these reforms. Many of their efforts were reinforced, or even preceded, by Supreme Court decisions that expanded civil liberties, particularly in the areas of free speech, criminal justice, and equal protection.

Interestingly, this expansion of national authority to protect rights relied heavily on new interpretations of the Bill of Rights, originally adopted in 1791 to limit the powers of the federal government. Through the Fourteenth Amendment (ratified in 1868), the Supreme Court gradually applied most provisions of the Bill of Rights to the states, a process known as incorporation.

The Tension in Federal Systems

A core challenge in federalism is finding the right balance: the central government must be strong enough to ensure national unity, but not so strong that it overwhelms state autonomy. This dynamic tension is shaped by two opposing forces:

• Centrifugal forces pull authority away from the center. These include calls for states' rights, interstate conflicts, and resistance to federal mandates. Left unchecked, they risk fragmenting national cohesion.
• Centripetal forces pull power toward the center. These often take the form of federal regulation, centralized policymaking, and efforts to standardize laws across states. Excessive centralization can undermine state experimentation and threaten individual liberty.

Figure \(\PageIndex{1}\): A core challenge in federalism is finding the right balance: the central government must be strong enough to ensure national unity, but not so strong that it overwhelms state autonomy. (Image Credit: Joseph Braunwarth via OpenAI, CC BY-NC-SA 4.0)

In the U.S., this tension often plays out geographically. States in the West and rural regions have historically resisted what they see as remote, overreaching mandates from Washington, D.C., arguing that national officials lack understanding of local needs.

This balancing act, sometimes called the “Goldilocks dilemma”, is central to American political development. How much federal power is "just right" has always been a matter of debate.

As James Madison wrote in The Federalist No. 10, the Constitution "forms a happy combination... the great and aggregate interests being referred to the national, the local and particular to the state legislatures." Yet, disagreements over what constitutes a “great and aggregate” interest remain.

The Constitution’s vagueness about the precise division of powers between national and state governments is both a strength and a weakness. It provides flexibility for the system to evolve, but also opens the door to confusion, conflict, and state-level resistance to national authority. This ongoing negotiation between unity and autonomy is what makes American federalism both dynamic and, at times, contentious.

A Contemporary Example: Immigration and Federalism

Contemporary debates over immigration policy highlight the complexities of American federalism. While the federal government holds primary authority over immigration and border control, state and local governments increasingly play a role—sometimes in cooperation with, and sometimes in opposition to, federal policies. For example, some states have passed laws requiring local police to assist with federal immigration enforcement, while others have declared themselves "sanctuary jurisdictions," limiting their cooperation with federal authorities. These conflicts illustrate how federalism can both empower and frustrate public policy, depending on which level of government is seen as more responsive or legitimate.

Comparing the Systems: Advantages and Trade-offs

Each form of government has strengths and weaknesses. Unitary systems offer uniform laws, more efficient decision-making, and fewer jurisdictional conflicts, but they risk becoming too remote from local needs or concentrating power excessively in the central authority. In contrast, federal systems provide flexibility, protect regional diversity, and encourage policy innovation by allowing states to experiment with different approaches. However, they can also create inefficiencies, legal inconsistencies, and difficulties in coordinating national responses to complex issues.

For instance, in the United States, environmental policy is complicated by federalism. While the federal government can sign international climate agreements or set national goals, individual states retain significant autonomy. This leads to a patchwork of environmental regulations across the country, making it harder to respond uniformly to climate change. Likewise, education systems and tax structures vary from state to state, which can complicate interstate mobility and economic planning.

Federalism in Perspective

Understanding how power is divided between levels of government—whether in federal, unitary, or confederal systems—helps us better assess the strengths and limitations of American federalism. While no system is perfect, examining other countries’ approaches offers valuable insight into the enduring challenges of balancing national unity with regional autonomy.

The Early Republic and the Marshall Court

Although the Constitution gave the national government more authority than it had under the Articles of Confederation, states remained dominant in most areas during the early years of the republic. However, the Supreme Court under Chief Justice John Marshall (1801–1835) helped expand national power through landmark decisions.

In McCulloch v. Maryland (1819), the Court upheld the national government’s authority to create a bank under the Necessary and Proper Clause and ruled that states could not tax federal institutions, famously stating, “the power to tax is the power to destroy.”

In Gibbons v. Ogden (1824), the Court broadly interpreted the Commerce Clause, allowing the federal government to regulate interstate navigation. This laid the foundation for future national regulation of the economy.

Dual Federalism and Limited National Power

Despite these rulings, the 19th century was largely dominated by dual federalism, in which state and national governments operated in separate spheres. States oversaw most domestic policy areas—education, infrastructure, and elections—and federal power remained limited, even after the Civil War and the passage of the 13th, 14th, and 15th Amendments.

The Supreme Court reinforced this separation by striking down efforts to expand federal authority, particularly in economic regulation. Political scientist Morton Grodzins likened this period to a “layer cake” model, with clear divisions between national and state powers.

The New Deal and Cooperative Federalism

The Great Depression marked a turning point. In response to national economic collapse, President Franklin D. Roosevelt launched the New Deal, expanding the federal role in economic and social policy. Although initially resisted by the Supreme Court, the Court eventually upheld many New Deal programs, enabling the growth of a strong federal bureaucracy.

These programs were often jointly administered by federal and state governments, ushering in the era of cooperative federalism, described by Grodzins as a “marble cake” where responsibilities are mixed rather than separated.

Creative and Coercive Federalism

In the 1960s, President Lyndon B. Johnson’s Great Society further expanded federal aid, especially to local governments, often bypassing state legislatures. This approach, sometimes called creative federalism, involved hundreds of targeted grants aimed at addressing poverty and civil rights.

While presidents since Richard Nixon have promoted “new federalism”, seeking to return more discretion to the states, federal influences over states remains strong. Some scholars, like John Kincaid, argue that since the 1970s the U.S. has entered an era of “coercive federalism,” in which the federal government compels state compliance through conditions attached to funding.

Despite political rhetoric favoring state autonomy, the federal government continues to play a dominant role in shaping public policy—especially in areas like education, healthcare, and the environment.

The Supreme Court and Federalism Under President Trump

Since President Trump’s return to office in 2025, the Supreme Court has largely reinforced national authority over state and local governments, reflecting an ongoing pattern of “coercive federalism.” In several decisions, the Court has limited the ability of states to challenge or block federal policies—particularly when those challenges come in the form of nationwide injunctions issued by lower courts. For example, in Trump v. CASA (2025), the Court ruled that federal courts cannot issue universal injunctions unless they are necessary to provide relief to the actual plaintiffs. This restricts states' and cities' ability to stop controversial federal policies nationwide, even when they argue those policies harm their residents.

At the same time, the Court has upheld broad executive discretion over federal spending and administrative appointments, narrowing the space for state governments to influence or resist national policy implementation. These rulings are especially significant in areas like immigration enforcement, education funding, and agency rulemaking, where states have traditionally acted either as implementers or challengers of federal programs.

While the Court has not dismantled the framework of cooperative federalism, its recent decisions suggest a continued drift toward centralized policymaking authority, with the national government setting terms and states expected to comply. Critics argue this trend undermines the Constitution’s balance between state autonomy and national unity, while supporters claim it promotes clarity and consistency in national governance.

These shifts underscore how the Court’s interpretation of federalism can change over time, often in response to political, economic, or social pressures.

Open to Debate:
Federalism and Marijuana Laws

One of the most visible modern examples of federalism in action—and tension—is the regulation of marijuana. While federal law continues to prohibit marijuana, a growing number of states have moved to legalize it for medical and recreational use, creating a conflict between federal and state authority.

Under the Controlled Substances Act of 1970, marijuana remains classified as a Schedule I substance, meaning it is considered to have a high potential for abuse and no accepted medical use. This makes possession, cultivation, or sale of marijuana illegal under federal law, regardless of state policies.

However, since the late 1990s, many states have legalized marijuana for medical use, and as of 2023, 23 states and the District of Columbia have legalized it for recreational use. These laws reflect shifting public opinion and state-level efforts to exercise autonomy over drug policy.

This divergence has created a legal gray area. Marijuana businesses that operate legally under state law remain technically illegal under federal law, creating challenges in areas like banking, taxation, and law enforcement. While the Supremacy Clause gives federal law priority over conflicting state law, enforcement has varied by administration. For example, the Cole Memorandum (2013) under President Obama directed federal prosecutors to deprioritize enforcement in states with robust regulatory systems—but this guidance was rescinded in 2018 under Attorney General Jeff Sessions, returning discretion to individual U.S. Attorneys.

As marijuana legalization continues to expand, the conflict between federal and state law remains unresolved, serving as a modern test case for how power is shared—and sometimes contested—between levels of government in the U.S. federal system. This underscores the dynamic relationship between federal and state powers in the United States, highlighting the complexities and tensions inherent in a system of government that values both centralized authority and the autonomy of states.

This evolving situation raises important questions:

· Should states have the authority to set their own drug laws without interference from the federal government?

· Or should the federal government maintain uniform national standards, particularly on issues with public health and interstate commerce implications?

The answers to these questions remain open to debate.

Grants-in-Aid

In the 19th century, federal aid often came in the form of land grants, such as the Morrill Act of 1862, which funded land-grant universities like Ohio State and the University of Minnesota. In the 20th century, aid shifted to financial transfers, particularly during the New Deal (1930s) and Great Society (1960s). These grants-in-aid have become central to American federalism.

Most grants are categorical grants, funds designated for specific purposes like highway safety or job training. These grants often come with federal rules governing how the money is used. Categorical grants can be either formula-based (automatic, based on population or need) or project-based (competitive, requiring applications).

Grants are part of a broader system of fiscal federalism, which allows Congress to influence state policies by tying money to specific conditions. For example, in 1984 Congress passed the National Minimum Drinking Age Act, threatening to cut highway funding for any state that didn’t raise its legal drinking age to 21. States resisted initially but eventually complied. A similar tactic was used in the 1970s to push states to lower speed limits.

Categorical vs. Block Grants

Debates over the reach of federal authority increased as federal grants grew rapidly in the 1960s. Presidents Nixon and Ford endorsed a shift toward New Federalism, which emphasized greater state flexibility. In 1972, General Revenue Sharing provided states money with minimal federal strings attached. Block grants, broader in scope than categorical grants and with less federal oversight, were also introduced, giving states more flexibility discretion over how to spend federal funds in a general area like public health.

President Reagan ended revenue sharing in 1986, arguing that federal aid led to overspending and increased deficits. He also sought to reduce categorical grants, hoping states would end programs rather than raise taxes. However, many programs survived, with states finding ways to fund them. Despite initial reductions, federal grant spending resumed growth by the 1990s, and today, grant-based aid remains a major component of federal-state relations.

The Politics of Grants

Grants are politically popular. Nearly every congressional district benefits from them, and lawmakers often campaign on their ability to “bring home the bacon.” Programs that may seem like pork barrel spending to outsiders, spending for local gain rather than national need, are defended by lawmakers as essential investments. Former Senator Robert Byrd once referred to himself as “West Virginia’s billion-dollar industry,” and Representative Mendel Rivers boasted, “Rivers delivers,” for his district.

While critics argue that some grants distort local priorities or create bureaucratic bloat, grants-in-aid can also redistribute wealth, encourage policy innovation, and promote national standards, such as anti-discrimination rules, across all states. They represent the national government’s unique capacity to raise large amounts of revenue and support programs that states may not be able to fund alone.

However, the system has drawbacks. Navigating the complex web of over 670 categorical grants requires large state bureaucracies. Compliance rules can diminish state autonomy and make locally elected officials beholden to national priorities rather than local needs.

Mandates

While state and local officials often complain about the conditions attached to federal grants, they typically welcome the funding, which helps them complete projects they couldn’t otherwise afford. In contrast, they often strongly oppose federal mandates—requirements that force them to carry out certain policies or provide services, often without accompanying funding. Unlike grants, which states can choose to accept or reject, mandates are compulsory and enforceable by law.

Federal mandates began to appear in the 1960s, increasing significantly in the 1980s as Congress looked for ways to retain control over state and local governments while reducing federal spending. Mandates can be especially burdensome for small communities with limited tax bases. For example, environmental mandates requiring new sewer systems can overwhelm the budgets of small towns that lack basic infrastructure.

Mandates have raised legal and constitutional concerns, especially when they are seen as “commandeering” state and local governments. In United States v. Printz (1997), the Supreme Court struck down a provision of the Brady Handgun Violence Prevention Act that required county sheriffs to conduct background checks, ruling it violated principles of federalism. However, other mandates have been upheld, such as the Family and Medical Leave Act (1993), which requires unpaid medical leave for eligible employees, including those working for state governments.

By 1990, nearly 170 pieces of federal legislation included mandates. Responding to pressure from state leaders, President Bill Clinton, a former governor, issued an executive order to limit the scope of unfunded mandates. In 1995, a Republican-led Congress passed the Unfunded Mandates Reform Act (UMRA), which Clinton signed into law. The act does not prohibit mandates but requires Congress to provide cost estimates and hold a separate vote if any proposed law would impose unfunded costs exceeding $50 million on state or local governments. However, the law does not apply to existing mandates and does not prevent Congress from passing new ones.

At the same time, some state legislatures began limiting unfunded mandates imposed on their own local governments, recognizing that cities often face the same budget pressures states do.

Open to Debate:
Mandates and the Balance of Power

Federal mandates are often criticized as overreaches—requirements imposed by the national government that strain state budgets and limit local control. Similarly, state mandates can place significant burdens on cities and counties. These top-down directives frequently come without sufficient funding, leading to accusations of government overreach and unfunded obligations.

What remains open to debate is the degree to which higher levels of government—federal or state—have not just the authority, but the responsibility, to require lower levels of government to provide certain services. For instance, major environmental protection laws have often been enacted by the federal government because of perceived failures by the states to adequately safeguard natural resources. But tensions arise when the goals of one level of government clash with the fiscal or policy priorities of another.

Supporters of mandates argue that they promote national standards, reduce disparities across regions, and improve policy coordination. But do these benefits justify limiting local discretion and imposing financial burdens on subnational governments? And to what extent should governments that impose mandates be required to fund them?

These questions strike at the heart of American federalism—and the answers remain open to debate.

Preemptions

Another powerful tool used by Congress to shape national policy is preemption, the process by which federal law overrides or limits the authority of state and local governments. Preemptions can be either total, where states are entirely barred from legislating in a specific area, or partial, where states may legislate only within limits set by federal law.

For example, the Americans with Disabilities Act (ADA) prohibits states and localities from setting less stringent standards for accessibility than those established under federal law. In doing so, the ADA completely removes state discretion in this area to ensure a uniform national standard for protecting the rights of individuals with disabilities.

Preemption is especially common in areas such as environmental regulation, consumer protection, and public health and safety, where federal lawmakers seek consistency across all states. However, it can also be controversial, particularly when states wish to adopt stronger or more tailored regulations than those mandated by Congress.

Preemption is not limited to the federal-state relationship. State legislatures frequently preempt local governments by passing laws that prevent cities or counties from enacting policies on issues such as gun control, minimum wage increases, or environmental protections. For example, some states have prohibited municipalities from suing gun manufacturers to recover the costs associated with gun violence or from adopting stricter local firearm regulations.

While preemption can promote national uniformity and prevent regulatory confusion, it also raises concerns about undermining local autonomy and innovation—core values in a federal system of government.

Full Faith and Credit Clause

States must recognize the public acts, records, and judicial proceedings of other states. This means, for example, that a legally executed contract, marriage license, or divorce decree in one state must be recognized by other states. This clause promotes legal consistency and prevents people from evading legal responsibilities by crossing state lines. However, it does not apply to criminal judgments.

Interstate Extradition

Article IV also requires states to return fugitives charged with serious crimes (like treason or felony) who flee across state lines. When a request is made, the governor of the state where the fugitive is found typically signs extradition papers to return the individual to the requesting state. While governors occasionally refused extradition in the past, such refusals have become rare, and no federal court has ever compelled compliance.

Privileges and Immunities Clause

Citizens of one state are entitled to many of the legal rights and protections offered in other states, such as access to courts and the ability to enter into contracts. However, states may charge nonresidents higher fees for certain public services, such as out-of-state tuition at public universities, without violating the Constitution.

Interstate Compacts

Although Article I prohibits states from entering into agreements or compacts with other states without congressional approval, this clause also provides a mechanism for cooperation. Interstate compacts are formal agreements between states to address shared concerns such as river pollution, taxation, or transportation. Congress has approved nearly all such agreements, more than 120 to date. One of the most prominent examples is the Port Authority of New York and New Jersey, established in 1920 to oversee infrastructure like bridges, tunnels, and airports in the greater New York City region.

Informal Cooperation

Beyond these constitutional tools, states frequently collaborate through professional organizations such as the National Governors Association, and through law enforcement data-sharing and joint initiatives. Still, interstate relations are not always harmonious. States sometimes compete to attract businesses by lowering taxes or loosening environmental regulations, a phenomenon known as a “race to the bottom.”

Finally, even minor issues can highlight challenges to uniformity. For instance, while most of North America observes daylight saving time, states such as Arizona and Hawaii, and some areas of Indiana, do not, creating minor disruptions in interstate coordination, reminding us that full alignment among subnational governments remains elusive even in cooperative federal systems.