Federalism

1. Federalism Unit I Module 4 AP Gov Miller

2. Objectives • By the end of this module, SWBAT • Identify and explain the strengths and weaknesses of federalism • Explain the importance of John Marshall and the Supreme Court in the development of federal power • Describe the evolution of the federal/state power dynamic throughout American history • List the different types of grants-in-aid and mandates and connect them to either liberal or conservative political ideology • Explain the current trend of devolution in the American political landscape

3. Recap • Remember that federalism is gov style in which there is a roughly equal split between national and state power • In this module the words “federal” and “national” will be used interchangeably

4. Positives of Federalism • More access to gov for citizens due to the multiple layers (federal, state, county, local, regional authorities, etc.) • Embraces diversity by granting some autonomy to different regions of the nation (i.e. gay marriage, legal marijuana) • Serves as training ground for future American leaders (state governor  president, for example) • Political “test tube” – smaller governments can serve as experiments in new policies without affecting nation at large too much

5. Negatives of Federalism • More costly for citizens – pay more types of taxes to more types of govs for more of the same types of gov agencies • More time consuming – more officials to vote for (especially in federal republic) which can cause “voter fatigue” • More corrupt – the more financial interactions different levels of gov have, greater the chance for corruption • More rebellious – localities and states often refuses to comply with laws and decisions made by higher level governments

6. Example 1 – Too Costly • The 9/11 After-effects • Federal gov creates Dept of Homeland Security – but DHS essentially already does what the FBI does • DHS also begins to arm state and local gov law enforcement agencies to fight terror • Consistently across the nation the two budget categories for states that have decreased the least since 9/11 have been law enforcement and corrections

7. Example 2 – Too Much Voting • Europeans love to point out that the US’ voter turnout rates lag far behind their respective nations • But a federal republic as large as the US needs FAR more elections than any European nation • As a result some Americans only vote every four years in presidential elections and don’t vote for other important offices such as • State governor • City mayor • County supervisor • Midterm Congressional elections

8. Example 3 – Too Corrupt • Some notable examples • Spiro Agnew – VP of Nixon had to resign after being caught for bribery during his time as governor of Maryland • Rod Blagojevich – Got caught trying to sell Obama’s old seat in the US Senate to the highest bidder – probably not even the most corrupt governor in Illinois history • Marion Barry – former mayor of DC who was videotaped by the FBI smoking crack in a motel – somehow re-elected 4 years after that incident

9. Example 4 - Too Rebellious • Jim Crow laws • Southern state policies that directly contradicted the federal law of the Civil War amendments that were not ultimately struck down until the passage of the Civil Rights Act of 1967 one hundred years later • Infrastructure projects • Not all the freeways in LA that were proposed were built • There was supposed to be a “Reseda Freeway” that went from the 118 to Santa Monica –wealthy homeowners on both sides of the hills blocked the plan due to pollution concerns • As a result the 405 is one of the most congested freeways on Earth being the only highway that connects the Valley to West Los Angeles

10. But How Could This Happen??? • The answer is simple – our current federal/state relationship is nothing like is has been in the past • Times have changed but remember the phrase “the more things change, the more things stay the same” • Federalism has come around full circle, so to speak

11. In the beginning … • The first phase of federalism featured a very clear delineation between federal power and state power • This was called “dual federalism” aka dual sovereignty • The constitutional artifices that created this scheme were the • Delegated powers • Reserved powers • Prohibited powers

12. “Layer Cake Federalism” • A popular nickname for this style is “layer cake federalism” • On your own, draw a slice of layer cake and examine the innards • You’ll see clean separation between parts namely cake, icing, more cake, more icing, and so on • Which of the two do you think is the “icing” in this scenario? State or federal government?

13. Federal Power Expands • At this critical time in American legal history, enter John Marshall • Chief Justice of the Supreme Court • Staunch Federalist (even though his party is effectively dead in national politics as of the ‘Revolution of 1800’ he lives on due to his appointment – for life) • Rules on a series of cases during the early 19th Century that favor the “icing” over the “cake” so to speak

14. Marshall Cases • The three most prominent are • McCulloch v. Maryland • Gibbons v. Ogden • Barron v. Baltimore • Know this • McCulloch case – all about Elastic AND Supremacy clauses • Gibbons case – all about Commerce Clause • Barron case – Marshall finally stops extending federal power and “resets” the boundaries of dual federalism

15. McCulloch v. Maryland • Gov’t of Maryland tries to tax the branch of the Bank of the US in their state • Bank manager, McCulloch sues Maryland, thinking the Bank of US is exempt from state taxes • Marshall uses this chance to bolster TWO clauses in one case • Can states tax federal agencies? • Should the Bank of the US even exist?

16. McCulloch v. Maryland • NO, states cannot tax a federal establishment by the reasoning that “the power to tax is to power to destroy” so the federal gov’t can invoke the Supremacy Clause to avoid taxation • YES, the Bank of the US can exist as an application of the Elastic Clause so that the federal government can carry out its financial powers as outlined in Article I, Section 8 of the Constitution

17. Gibbons v. Ogden • State of New York granted one of these businessmen an exclusive contract to provide steamboat services to customers up and down the Hudson River • The other applied for and received a similar contract from the federal gov’t to operate an identical steamboat service • Who’s contract is stronger?

18. Gibbons v. Ogden • The federal gov’t contract of course • Marshall’s reasoning is twofold – the Hudson River abuts more than one state – thus making it an interstate waterway and the exclusive jurisdiction of the federal government via the Commerce Clause • Second, New York harbor and its ports and shipping concerns are of a national and even international importance and therefore a national concern

19. More Marshall • After these two landmark cases, Marshall continues to toss his national weight around, rebuffing the states in cases such as • Fletcher v. Peck • Dartmouth v. Woodward • Worcester v. Georgia • Just when it seems he’s about to give ultimate power to the national government, he stops

20. Barron v. Baltimore • The central issue of the case is “eminent domain” – the lawful seizure of personal property by a government body in order to construct infrastructure for the public good • The particulars don’t matter here – only the outcome • Marshall refuses to apply the Bill of Rights (5th Amendment in particular) to a purely state & local matter • State governments in 1833 breathe a collective sigh of relief – Marshall has finally stopped his reign on national terror

21. Storm on the Horizon • By the 1830s federal/state rivalry is already intense • Nullification Crisis • Jackson and the Force Act • Worsens in the 1840s and 1850s during the buildup to the Civil War – the ultimate battle (literally) between the federal government and the states

22. End of the Layer Cake … sort of • Civil War causes a massive shift toward federal power (any crisis especially war has this effect) • Confederacy is defeated and military law declared during the South’s Occupation (Reconstruction) • For a brief moment in America’s history (roughly equivalent to the twelve years of the Johnson and Grant administrations) a new phase of federalism is revealed

23. Behold the Marble Cake • “Cooperative federalism” is the intentional mixing of federal power structures into state and local matters • Aka “Marble Cake Federalism” – think of the swirls in marble cake or marble fudge ice cream and imagine them as local, state, and federal programs all mixed up together • It is the diametric opposite of the layer cake model

24. Adios Marble Cake • Obviously the Southern states didn’t find the national government agents to be so cooperative – called them the pejorative name “carpetbaggers” and those Southern Republicans who helped them were “scalawags” and they did everything they could to resist their efforts • Eventually a deal was reached that became the Compromise of 1877 • Republicans get to have Hayes as president (even though Tilden won) if Reconstruction ends and states get their sovereignty back

25. Layer Cake Round Two • As soon as federal troops leave, Southern states revert back to layer cake with a vengeance – the aforementioned Jim Crow laws • Federal gov’t hesitant to even apply Commerce Clause to trusts and rampant corporate abuses • This situation lasts until the beginning of the 20th Century

26. A Game Changer • The seeds for the next phase of federalism history (Marble Cake Strikes Back) are sown during the Progressive Era • Most important here is the 16th Amendment – the federal income tax • Before this time, the federal government’s earnings were generally more than any one state’s but after the income tax begins, the federal government will earn MUCH more money than any state

27. Money Words • Quick note on money terms • Money flowing INTO government = revenue • Money flowing OUT OF government = expenditure • Expenditures go through two phases • Authorization – deciding to spend the money • Appropriation – deciding how much money to spend • From now on, no one is allowed to say “money” in this class anymore except as a case of last resort

28. Marble Cake Strikes Back • As of the early 20th Century, federal revenues soar compared to state revenues • States are still ok though as long as there is no major financial crisis – then the market crashes and the Great Depression begins • Federal government is the sort of “last person standing” with any real funds to appropriate • In concert with Keynesian economic policy, the Democratic Party under FDR begins the New Deal and this is the last nail in the coffin for layer cake aka dual federalism aka dual sovereignty

29. A New Deal • The New Deal is the poster child for cooperative federalism because of its extensive injection of federal funds into states and cities • TVA • PWA • CCC • WPA • NLRB • States tried to resist by attacking the federal government in court but in reality they needed the funds desperately

30. A One-Two Punch • World War II caused another huge increase in federal power (boost in numbers of bureaucrats, nationalization and coordination of private industry, rationing, etc.) • After this roughly 15 year long expansionist period of federal power, there will be no going back … for a while

31. Dollars and Sense • Think about yourself for a moment • If you were accustomed to receiving a large allowance from your parents every week because of some “crisis” you were in for so long, that you came to depend on it wouldn’t it utterly horrify you if all of the sudden you stopped receiving the allowance?

32. Dollars and Sense • What about this scenario? • Same scenario as before except that let’s say that you receive the allowances for yourself and all of your siblings. You receive a little more than the others for your “distribution services” and all of you have come to depend on the allowance system as it is. Suddenly, it vanishes because the “crisis” is over. • How would you react?

33. Dollars and Sense • The siblings in the previous example were the states and you in the previous example would be the bureaucrats working for the various governmental agencies at every level disbursing the federal funds • Yes, the crises of the Depression and WWII were over but luckily an economic boom occurred as a result  this boom led to surging tax revenues  this led states and bureaucrats to lobby for more expenditures  this led to …

34. Fiscal Federalism • … the next phase of American federalism – fiscal federalism • Fiscal refers to financial matters and in this stage federal expenditures will be the preferred means of federal intervention in state and local matters • These expenditures are called “grants-in-aid” and they come in four flavors

35. Grants-in-aid • Categorical grants – extremely specific grants with details prescribed by Congress • Formula grants – specific grants with disbursement amounts tied to census data • Project grants – generic grants that allow states to craft their own proposals and compete with each other • Block grants – extremely generic grants that allow states to spend the funds on a general policy objective

36. Prom Example 1 - Categorical • If your parents gave you a categorical grant for prom it would look like this • Exact instructions on which dress to buy at which store on a particular day • Instructions to keep your receipt so you can then come home and prove that you followed instructions • No extra funds left over to buy anything else • Massive penalties for you if you disobeyed the instructions, including the forfeiture of possible funds for future formal engagements

37. Prom Example 2 - Formula • If your parents gave you a formula grant for prom, it would look like this: • Your parents would do research into the socioeconomic data of your family • Then they would compare the average amount of funding for prom made by a statistically significant amount of families like yours • An average amount of funds would be identified as being “reasonable” in your effort to have a good time and then disbursed to you

38. Prom Example 3 - Project • If your parents gave you a project grant for prom, it would look like this: • A certain amount of time before the dance, your parents would announce the future award of the prom grant • The winning grant proposal would include items such transportation, dress or tux, corsage or boutonniere, dinner, etc. • You would then create an array of different proposals each with their own pricing and your parents would pick one, fund it, and disburse the funds to you

39. Prom Example 4 - Block • If your parents gave you a block grant for prom, it would look like this: • You’d ask your parents for some prom money • They’d then haggle a bit with you over the final amount but then agree with you on a number • They would disburse the funds and tell you the have a good time

40. Grants-in-aid Reflections • What do you think is the best grant option for you, the child? • What about for your parents?

41. Grants-in-aid Reflections • What do you think is the best grant option for you, the child? • What about for your parents? • The name of the game here is all about autonomy vs. accountability • States favor project or block grants (more autonomy and more license to pursue their own agendas) • Federal government favors categorical or formula (more accountability by taking away state autonomy)

42. Real Examples of Grants • Categorical grant – Head Start, Medicaid • Formula grant – Model Cities, IDEA • Project grant – Stem Cell Research grant won by Massachusetts (and lost by California), Race to the Top • Block grant – Temporary Aid to Needy Families

43. Grants-in-aid Ideology • Political ideology focuses on “why” certain policy objectives are pursued by stakeholders in a system • The “why” in the case of fiscal federalism is clear – perpetuation of national dominance in state affairs • Even the block grant is still an expression of national power because the federal government still dominates the states financially

44. Grants-in-aid Ideology • The party at the time in control of the White House and Congress was the Democrats (Truman through Johnson – look at Eisenhower’s policy again and you’ll see he was no Republican in a classical sense) • This is the essence of the liberal Democrat of the mid-20th Century – attempting to address social problems with aggressive spending programs

45. A recurring theme • The belief that spending could mend America’s social wounds was idealistic • But America was also still spending money on war – the Cold War that is • Marshall Plan • Korea • Vietnam • Nuclear stockpiling for M.A.D. • Eisenhower’s dreaded “military industrial complex” • The federal government by the 1960s is already running a massive federal deficit and accruing debt (too many expenditures and not enough revenue sources)

46. Setting the Stage • As of the late 1960s, the American public is ready for a regime change • The Liberal Era is over as of Nixon’s election in 1968 • He begins a new phase of federalism and it takes the ingenious name of “New Federalism” • It will also be known as “creative federalism”

47. Party’s Over • The underlying assumption of New Federalism is that there must be a severe decrease in the overall amount of grants of ANY kind that can be given to states • The fed gov’t can’t spend anymore as it tries to pay its debts • Republican presidents (usually states’ rights advocates) push for more project, block grants but Democrats in Congress resist, much of liberal spending platform already locked in budgets in form of “entitlements”

48. Animal Planet • Whatever funds are left are called “discretionary funds” • As these funds shrink over time, states or bureaucratic agencies battle over rights to the smaller expenditures • Just think of every Animal Planet show you’ve seen about watering holes in the Serengeti • A lot of water, all types of predators and prey drink together no problem • Almost out of water, even prey will attack predators more access to the mud

49. Creative Control • In this new landscape of decreasing federal intervention due to lack of federal funds, states find themselves in the driver’s seat again • Remember, taxation is a concurrent power so if states can boost their own revenue streams they can reclaim control over their own programs they might have ceded in the past to the federal government • This is where the moniker “creative federalism” comes from

50. Creative Control • The federal government begrudgingly must give powers back to the states in a process called “devolution” OR • The federal government must attempt to control state actions with little or no fiscal connection giving birth to the “unfunded mandate”