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2.6: Federalism's Historical Development

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    134534
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    After a third of a century of power flowing from the people and the states to Washington, it is time for a New Federalism in which power, funds, and responsibility will flow from Washington to the states and to the people.”

    —President Richard Nixon (1)

    The Definitional Period of American Federalism

    Around the world, political power is never equally balanced between the central government and the states. The central government ends up being stronger than the states, which is generally true in the United States. However, as the first modern federal governing system, the United States has experimented and gone through several historical developmental stages of federalism.

    Although not officially named, the first instance was marked by states challenging federal authority, which ultimately gave way to officially recognizing federal supremacy. In this Definitional Period of American Federalism (1789 to 1865), the country went through wrenching—and ultimately deadly—struggles over federal versus state power. Another way to think about it: states went from sovereign powers under the Articles of Confederation to subordinate units under the Constitution practically overnight. The key struggles were resolved in favor of central government power.

    McCulloch v. Maryland (1819)—States objected to establishing the second Bank of the United States. The Supreme Court ruled that states could not tax federal operations and that Congress had broad implied powers when its enumerated powers were combined with the Necessary and Proper Clause.

    Gibbons v. Ogden (1824)—This case centered on interpreting Congress’ power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes,” which is also known as the commerce clause. In the early nineteenth century, New York state gave Robert Fulton and Robert Livingston a monopoly on steam navigation. In turn, they licensed Aaron Ogden to operate steam powered ferries between New York and New Jersey. At the same time, the federal government gave Thomas Gibbons a license to operate ferries in interstate waters. Gibbons’ route competed with Ogden’s route. Ogden sued Gibbons. Ogden won the suit in the New York state courts. Gibbons appealed up to the Supreme Court and won. The Court made several important decisions.

    • Defined “commerce” broadly to include the literal shipment of goods and “commercial intercourse” between states.
    • Congress could not regulate business activity that solely took place within a state’s boundaries, it could regulate commerce if part transcended state boundaries.
    • Federal law granting Gibbons a commercial license trumped New York’s attempt to give Ogden exclusive right to carry goods and people between New York and New Jersey.

    The Nullification Crises—During this period, the perilous and unsettled nature of federal and state relations was exemplified by state attempts to nullify federal laws. States effectively said, “We do not recognize this federal law as operable on us.” In 1798, Congress passed, and President John Adams signed the Alien and Sedition Acts. Kentucky and Virginia both passed resolutions nullifying the law in their states and asserted the right to disregard the federal laws with which they disagreed. The Kentucky Resolution, secretly written by Thomas Jefferson, said that since the Constitution was created by the states, each state has “the unquestionable right to judge of its infraction". In other words, Kentuckians get to determine whether a law is unconstitutional. (2) The Democratic-Republican/Jeffersonian victory in the 1800 election resulted in states repealing the offending federal legislation.

    In the 1830s, a more serious nullification crisis happened. Southern states, which exported agricultural products like cotton, objected to a federal tariff law that they felt unduly punished the South and favored protecting northern manufacturers. John C. Calhoun resigned the Vice Presidency in 1832 so he could run for Senate from his native South Carolina and better lead the fight against the tariffs on the South’s manufactured goods. South Carolina passed a resolution nullifying the federal tariff in the state and prepared to militarily resist the federal government should it insist on enforcing the tariff. Congress passed a Force Bill authorizing the president to use the military against South Carolina. The United States was on the verge of civil war. Finally, Congress passed a new tariff bill in 1833 that gave concessions to Southern interests, and South Carolina repealed its nullification resolution. (3)

    The Civil War—There were multiple reasons that contributed to the Civil War. One was slavery and the political question of whether additional states would be admitted to the United States as slave or free—thereby determining the political balance in Congress. Republican Abraham Lincoln’s presidential election was the final straw for white southerners who benefited economically, culturally, and psychologically from slavery. Even though Lincoln asserted on many occasions that he did not believe in the inherent equality of blacks and whites, he did say things like, “There is no reason in the world why the negro is not entitled to all the natural rights enumerated in the Declaration of Independence, the right to life, liberty, and the pursuit of happiness.” (4) South Carolina repealed its ratification of the Constitution on December 20, 1860. On February 4, 1861, six states formed the Confederate States of America. Ultimately, eleven states joined the Confederacy. The Civil War killed at least 670,000 soldiers and civilians, freed 3.5 million people from slavery, and crushed federal authority’s most serious challenge in U.S. history.

    The Civil War was also a decisive victory for those who held that the states are merely administrative units of the people. The Constitution begins with “We the People,” not “We the states.” During the Civil War, Abraham Lincoln gave the Gettysburg Address to dedicate a cemetery on the site of a great battle between North and South in Pennsylvania. Many people might remember this line... “that government of the people, by the people, and for the people, shall not perish from the earth.”

    Dual Federalism

    Next, the United States entered a period that political scientists call Dual Federalism (1865-1932), commonly called Layer Cake Federalism. Despite the outcome of the Civil War, states continued to assert their prerogatives to govern exclusively in important public policy areas, and they were aided by Supreme Court rulings to that effect. Dual federalism indicated that there are public policies over which the federal government predominates, such as foreign policy, tariffs, monetary policy, national defense, interstate commerce, and the mail. Meanwhile, states took the lead in other areas of governmental responsibility like public safety, education, elections, business licensing, family and morals policy, inheritance and property laws, and commerce within state boundaries, including wages and working conditions. Note that state responsibilities more directly impinged on how people lived their day-to-day lives.

    The legacy of the dual federalism era was profound. The notion that vast swaths of public policy directly affecting people’s lives were off-limits to federal intervention. As a result, during the U.S industrial explosion, state legislatures could empower corporations at the expense of people and embolden white supremacists and nativists when former slave and immigrant populations were struggling to establish themselves as equals within the country. This action led to the era of state Jim Crow legislation, limiting political and economic freedom for African Americans, unregulated child labor, unchecked corporate malfeasance, and morals legislation used to keep women in their place.

    Two young girls working in a textile factory in 1909.
    Two Girls Working in a Textile Factory in 1909.

    One example is the issue of child labor. Congress passed the Keating-Owen Act in 1916, regulating commerce involving goods produced by children. It banned interstate sale of goods made by children under the age of fourteen and by children under sixteen if they were working more than sixty hours a week. However, in the case of Hammer v. Dagenhart (1918), the Supreme Court struck down the federal law as unconstitutional. Writing for the Court, Justice William Day said that manufacturing itself was not interstate commerce. Since the children were only involved in manufacturing—in this case, cotton—but not involved in transporting the goods once they were manufactured, the federal government had no power to legislate. According to Day, the Tenth Amendment reserved states’ powers, including the right to regulate manufacturing, even if the goods were intended to be shipped across state lines. (5) Thus, the federal government was powerless to ban or regulate child labor.

    Cooperative Federalism

    Cooperative Federalism ran between the 1930s and 1960s. The twin disruptions of the Great Depression and World War II—and the response led by Democratic presidents—created an era that was marked by increased federal power. Congress passed economic regulations and instituted social welfare policies that had never been seen at the U.S. national level. Under the New Deal, the national government regulated the banking industry, supported agricultural prices, set the first federal minimum wage, created unemployment insurance, established social security for the elderly, supported the right of workers to unionize and collectively bargain, and put people to work building schools, hospitals, and roads.

    This period was marked by two important developments. First, the federal government and the states became partners as they solved problems associated with the Great Depression, World War II, and then the Cold War. Many programs were entirely or predominantly financed by the federal government and administered jointly by the federal and state governments or solely by the latter. For example, unemployment insurance (part of the Social Security Act of 1935) continues to be administered by states. The National Interstate and Defense Highways Act of 1956 provided federal funding predominantly for interstate highways, while states had significant roles in planning and construction. Some people call mixing federal and state powers “marble cake” federalism.

    Second, the Supreme Court finally acceded to government regulating the economy and protecting civil rights and liberties. Initially, the Court struck down Roosevelt’s initiatives such as the National Industrial Recovery Act and the Agricultural Adjustment Act. Roosevelt grew so frustrated that he proposed a court-packing plan that would allow him to nominate new justices and expand the total number of justices on the Court. (6) Beginning in 1937, the Court abandoned the interstate commerce ruling found in Hammer v Dagenhart (1918) and began to treat America’s economic system as a truly national one. Now, all interstate commerce is national. A person digging coal in Kentucky is engaged in interstate commerce, even if they have never left the state, because the coal is likely headed to power plants in other states.

    New Federalism

    Republican presidents Nixon, Reagan, and the two Bushes joined Democratic presidents Clinton and Obama in devolving federal powers to states where they could. Under former President Nixon, the federal government began offering block grants supporting housing and community development while allowing states to figure out how best to spend the money. President Reagan unsuccessfully proposed to eliminate the Departments of Education and Energy and transfer most of their functions to the states. He was more successful in shifting federal support from categorical to block grants in areas beyond housing, thereby giving states more freedom. In the 1996 welfare reform law, President Clinton presided over the federal government transferring welfare power to the states. The Obama administration allowed California to set its own air pollution regulations. There are, of course, exceptions to this pattern. For example, under President George W. Bush, the No Child Left Behind Act of 2001 consolidated federal power over education.

    Conclusion

    The United States has a conflicted history of political power in part because of the federal structure built into the Constitution. Struggles over the overall balance of power will continue, as will fights about specific legislation and whether it vests decision-making power with the federal government or the states. The public’s need for good governance, regardless of level, is ever-present.

    References and Notes

    1. Quoted in Bruce Katz, “Nixon’s New Federalism 45 Years Later,” Brookings. August 11, 2014.
    2. The Kentucky Resolution. Approved December 3, 1798. Archive in the Library of Congress as part of the Thomas Jefferson Papers, Series 1: General Correspondence.
    3. Interestingly, nullification was not an exclusively Southern phenomenon. In 1854, the state of Wisconsin nullified the Fugitive Slave Act that Congress passed in 1850, which required free states to return slaves who fled to free states back to their owners. The Supreme Court struck down Wisconsin’s action as unconstitutional, an action which Wisconsin officially refused to recognize.
    4. Abraham Lincoln in a debate with Stephen Douglas in Ottawa, Illinois on August 21, 1858. Quoted in Jill Lepore, These Truths. A History of the United States. New York: W. W. Norton and Company. Pages 277-278.
    5. Hugh D. Hindman, Child Labor: An American History. Armonk, NY: M. E. Sharpe, 2002. Pages 64-70.
    6. Officially, the court packing plan took the form of the Judicial Procedures Reform Bill of 1937, which would allow the president to appoint a new justice for every existing justice who was over the age of 70 and who had 10 years of federal judicial service.
    7. National Federation of Independent Business v. Sebelius (2012).
    8. United States v. Lopez (1995).

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