The Phases of Federalism

Dual Federalism

When the Constitution was written, it was widely understood that the federal government and the states would exercise different separate powers. The federal government would be responsible for all foreign affair, national defence and all interstate matters (such as trade that crossed state boundaries); the states would be responsible for everything else, including any powers not specifically mentioned in the Constitution (known as ‘reserved powers’). For most Americans, this meant that the majority of decisions affecting would be made by their state government which, in principle, best understood them and had their interests at heart. This relationship between the states and the federal government is known as ‘dual federalism’.

In practice, the balance between the two tiers of government was never as neat as dual federalism suggests. During the First World War, for example, the government took direct control of industries that were essential to the war effort and states did not always look after the best interests of all their citizens, for example in the South where African-Americans looked to the federal courts to protect their interests from state governments that practised racial segregation.

Cooperative Federalism

When the Great Depression struck, in the 1930s, the balance between the states and the federal government was decisively altered. The states did not have the resources to help citizens who had lost their jobs and, often, their homes. The federal government did have the resources and it used them, in the New Deal, to help those who were suffering and to stimulate the economy. However, this meant federal government involvement in welfare matters that had previously been considered the exclusive responsibility of the states. This changed, overlapping relationship between the states and federal government is known as ‘cooperative federalism’.

Notwithstanding the clear need to help those who were in no position to help themselves, the New Deal was fiercely resisted by the conservatives in the 1930s as undermining the principle of federalism ad weakening the most important constitutional protection of liberty. Even in the 21^st century, some conservatives regard the New Deal as the start of a slippery slope leading to ever greater government and, consequently, reduced freedom. Liberals, in contrast, greatly admire the way in which the Constitution allowed the federal government to step in at a time of crisis and make productive use of people who would otherwise have been idle as a result of mass unemployment. Cooperative federalism continued after the Great Depression had ended, as the federal government continued to play a major role through the Second World War and the Cold War.

Creative Federalism

In the 1960s, the relationship between the states and federal government changed again. President Lyndon B Johnson launched his Great Society programme, designed to end poverty in the USA. In his view, the states had never made a serious effort to tackle the concentrated pockets of poverty, often in the cities (such as Los Angeles South Central district), and could not be relied upon to do so. Therefore his programme often bypassed state governments and worked directly with city or local authorities to implement anti-poverty projects. This further advance of the federal government into matters traditionally seen as the responsibility of the states is known as ‘creative federalism’.

The Great Society Programme provoked a backlash, however. Americans of almost all political persuasions agreed that federalism was in danger of becoming meaningless, as policies concerning communities up to 3,000 miles away were being made up in Washington DC.

New Federalism

Since President Johnson left office in 1969, almost every president, both Republican and Democrat, has introduced programmes to re-empower the states and restore a balance closer to the original model of dual federalism. These programmes, although they vary quite significantly, are collectively known as ‘new federalism’. In brief, they have worked as follows;

• President Nixon (Republican 1969-74)

Nixon’s programme, called General Revenue Sharing, allowed the states to spend a greater proportion of their federal grants as they chose.

• President Carter (Democrat 1977-81)

Carter continued the General Revenue Sharing programme of his predecessor, but also cut the amount of federal grants available to the states so that they would have to become self-dependent.

• President Reagan (Republican 1981-89)

Reagan made sharp cuts to funds available to the states, especially for welfare payments, as soon as he took office. He offered the states a new arrangement, reminiscent of dual federalism (called ‘swaps’), in which they would take full responsibility for some welfare programmes while the federal government would take over others in their entirety . The increased cost to the states of such an arrangement led them to reject the proposal.

• President Clinton (Democrat 1993-2001)

Clinton oversaw an economic boom that led to the states building up surplus funds, in many cases, for the first time since the 1920s. These funds were then used to pioneer new policy ideas that suited the states’ needs and priorities, for example Wisconsin started a programme to extend school choice by issuing families with education vouchers that could be used in any school, whether state-run or private.

• President George W Bush (Republican 2001-2009)

Although committed to new federalism in principle, President George W Bush responded to the attacks of 11 September 2001 by increasing government control over any policy that related to national security. Then, when the economy deteriorated sharply in 2008, he introduced an economic stimulus plan that included substantial payments to struggling state governments.

• President Obama (Democrat 2009-)

The first action of President Obama, taking office in the midst of an economic crisis was an economic stimulus plan on an even greater scale than that of his predecessor.

Overall, new federalism has illustrated the difficulty of achieving a relationship between the states and federal government that resembles the balance expected by the Founding Fathers.

The reason that federalism has taken so many forms is that none has worked effectively. The only time that the states have enjoyed a resurgence has been during an economic boom. Whenever there has been a national crisis, the federal government has either chosen to assert dominance over the states or has been required to do so, often with the full backing of states that have been powerless to cope with events.