Instructional Objectives

1. Explain the difference between federal and centralized systems of government, and give examples of each.

2. Show how competing political interests at the Constitutional Convention led to the adoption of a federal system, but one that was not clearly defined.

3. Outline the ways in which national and state powers were interpreted by the courts.

4. State the reasons why federal grants-in-aid to the states have been politically popular, and cite what have proved to be the pitfalls of such grants. Distinguish between categorical grants and block grants or general revenue sharing.

5. Distinguish between mandates and conditions of aid with respect to federal grant programs to states and localities. Discuss whether or to what extent federal grants to the states have created uniform national policies comparable to those of centralized governments.

Text Notes

I. Governmental structure - Federalism

A. Introduction
1. Definition: political system with local government units, besides national one that can make final decisions regarding some governmental activities and whose existence is protected

2. National government largely does not govern individuals directly, but gets states to do so in keeping with national policy

B Federalism: Good or Bad?

1. Negative views: blocks progress and protects powerful local interests
a. Laski: states "parasitic and poisonous"

b. Riker: perpetuation of racism

c. Federalist No. 10: small political units dominated by single political faction

2. Positive view

a. Elazar: strength, flexibility fosters individual liberty

b. Different political groups with different political purposes come to power in different places

c. Increased political activity

d. Most obvious effect of federalism facilitates mobilization of political activity

e. Federalism lowers the cost of political organization at the local level

II. The Founding

A. A bold, new plan to protect personal liberty
1 . Founders believed that neither national nor state government would have authority over the other since power comes from people who shift support.

2. New plan had no historical precedent

3. Tenth Amendment was added as an afterthought to clarify limits of national government's power

B. Elastic language in Article 1: necessary and proper clause

1. Precise definitions of powers politically impossible due to competing interests, e.g., commerce

2. Hamilton's view: national supremacy since Constitution supreme law

3. Jefferson's view: states' rights with the people as ultimate sovereign

III. The debate on the meaning of federalism

A. The Supreme Court speaks
1 . Hamiltonian position espoused by Chief justice John Marshall

2. McCulloch v. Maryland (1819) settled two questions

a. Could Congress charter a national bank? yes, because "necessary and proper"

b. Could states tax such a bank? no, because national powers supreme

3. Later battles

a. Gibbons v. Ogden - reaffirmed the concept of federal supremacy over interstate trade and state supremacy over intrastate trade. This created what was known as a "dual federalism." Today with constant intrusions by the national government, this is extinct.

b. Federal taxes on state, local bond interest

c. "Nullification" doctrine decided by Civil War: states cannot declare acts of Congress unconstitutional

IV. Federal-state relations

A. Grants-in-aid - Monies passed from the federal to state governments.
1. Grants show how political realities modify legal authority

2. Began before Constitution with land and cash grants to states

3. Dramatically increased in scope in twentieth century

4. Were attractive to state officials for various reasons

a. Federal budget surpluses (nineteenth century)

b. Federal income tax increased revenues

c. Federal control of money supply

d. Appeared as free money for state officials

5. Required broad congressional coalitions with wide dispersion of funds

B . Meeting national needs

1. 1960s shift in grants-in-aid from what states demanded to what federal officials found important as national needs.
  • State, local governments became dependent on federal funds

C. The intergovernmental lobby

1. Hundreds of state, local officials lobby in Washington

2. Purpose: to get more federal money with fewer strings

3. By 1980, however, federal funds had stopped growing

D. Categorical grants versus revenue sharing

1. Categorical grants for specific purposes; often require local matching funds

2. Block grants devoted to general purpose with few restrictions

3. Revenue sharing requires no matching funds and freedom on how to spend

a. Distributed by statistical formula

b. Ended in 1986

4. Neither block grants nor revenue sharing achieved goal of giving states more freedom in spending

a. Did not grow as fast as categorical grants

b. Number of strings increased

V. The slowdown in "free" money

A. Block grants grow more slowly than categorical grants
1. No single interest group has a vital stake in multipurpose block grants, revenue sharing so there is no one "pushing."

2. Categorical grants are matters of life or death for various state agencies

3. Supervising committees in Congress favored growth of categorical grants

4. Revenue sharing was wasteful and lacked a "constituency"

B. Rivalry among the states

1. Increased competition a result of increased dependency

2. Snowbelt (Frostbelt) versus Sunbelt states due to population changes

3. Actual difficulty telling where funds spent

4. Census takes on monumental importance

VI. Federal aid and federal control

A. Mandates
1. Federal rules states or localities must obey, not necessarily linked to funding
a. Civil rights

b. Environmental protection

2. Many difficult to implement and are costly

3. Unfunded mandates with more attention since 1995

4. Controversial mandates result from court decisions

a. Local citizens use federal courts to change local practices

B. Conditions of aid

1. Attached to grants

2. Conditions range from specific to general

3. Divergent views of states and federal government on costs, benefits

a. Example: Rehabilitation Act of 1973

4. Failed presidential attempts to reverse trend and consider local needs

a. Example: Nixon's 'New Federalism" creating revenue sharing

b. Example: Reagan's attempt to consolidate categorical grants; Congress's cooperation in name only Categorical grants constitute by far the largest proportion of federal grants-in-aid. In 1991, there were 478 separate "categories," which amounted to nearly 90 percent of all federal aid to state and local authorities.

C. A devolution revolution? The 104th Congress (1995-1996)

1 . Block-grant entitlements
a. AFDC (Aid to Families with Dependent Children)and Medicaid had operated as entitlements-federal funds a fixed proportion of state spending on these programs

b. Republicans in 104th Congress proposed making these and other programs block grants

c. AFDC did become a block grant

d. Devolution became part of the national political agenda

D . What's driving devolution?

1. House Republican did not trust federal government, believed states were more responsive and less wasteful; governors agreed

2. Devolution undertaken to make major cuts in entitlement spending

3. Supported by public opinion-though strength of support uncertain


Questions for Discussion:

1. How has the system of federalism as we know lived up to the expectations of the framers? (Federal vs Confederal)

2. Is Federalism good or bad?

3. How has the elastic clause effect the balance of power between the states and the national government? Is it good or bad for this type of federal systems? What does it tell us about the framers?

4. What has been the impact of the Court's decision in McCulloch v Maryland and Gibbons v Ogden?

5. What does the 10th amendment say about Federalism? What has happened to the application of the tenth amendment in recent years?

5. Since the 1960's how has the national government used Grants in Aid to assert its political dominance?

6. How do states attempt to gain a greater proportion of the budgetary pie?

7. Why do states prefer block grants rather than categorical grants?

8. How does the government use mandates to assert control over the states? Discuss examples like 55mph and DWI laws.

9. To what extent was Nixon's "New Federalism" successful in limiting conditions on federal aid? (It wasn't!)

10. How has devolution impacted the federal - state relationship? (Shift in entitlement programs to state responsibility)

Important Terms

Article VI A provision of the Constitution that makes the laws and treaties of the federal government the "supreme law of the land."

block grants Grants given by the federal government to state and local authorities for general purpose.

categorical grants Grants given by the federal government to state and local authorities for a specific purpose defined in a federal law.

confederation (or confederal system) A form of government in which sovereignty is wholly in the hands of the states and local governments, so the national government is dependent on their will.

conditions of aid A condition which a state government must fulfill for taking federal funds.

evolution The effort on the part of the national government to pass responsibility for functions and responsibilities previously held by the national government on to the state governments.

dual federalism An interpretation of the Constitution which holds that states are as supreme within their sphere of power as is the federal government within its sphere of power. The Supreme Court no longer supports this interpretation.

federal system A form of government in which sovereignty is shared, so that on some matters the national government is supreme and on others the states are supreme.

federalism The division of power between a national government and regional (state) governments.

grants-in-aid Federal funds provided to states and localities.

intergovernmental lobby Lobbying activities by state and local officials who establish offices in Washington, D.C., to compete for federal funds.

mandates Requirements imposed against state and local governments to perform. The requirements may have nothing to do with the receipt of federal funds and may originate from court orders.

McCulloch v. Maryland (1819) A Supreme Court decision that settled two issues. First, Congress can exercise powers not specifically mentioned in the Constitution if the power can be implied from an enumerated one. This authority is conferred by the "necessary and proper" clause. Second, the federal government is immune from taxation by the states.

necessary-and-proper clause The final paragraph of Article 1, section 8, of the Constitution, which authorizes Congress to pass all laws "necessary and proper" to carry out the enumerated powers.

nullification A doctrine espoused on behalf of the states' rights position which holds that states are empowered to void federal laws considered in violation of the Constitution.

revenue sharing A grant-in-aid program that allowed states maximum discretion in the spending of federal funds. States were not required to supply matching funds, and they received money according to a statistical formula. The program was terminated in 1986.

sovereignty The supreme or ultimate political authority. A sovereign government is one that is legally and politically independent of any other government.

Tenth Amendment An amendment to the Constitution which defines the powers of the states, stipulating that the states (or the people) retain all powers not specifically delegated to the national government by the Constitution.

unitary system A system in which sovereignty is wholly in the hands of the national government, so that subnational units are dependent on its will.


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