Chapter 3

1. Chapter 3 Dual Federalism Cooperative Federalism New Federalism

2. Restraining National Power with Dual Federalism In 1815, President James Madison called for a federally funded program of “internal improvements,” which was one of the few policy roles for the national government during the first half of the nineteenth century. By improving transportation through the construction of roads and canals, the government fostered the growth of the market economy and boosted federal power.

3. Dual Federalism, 1789–1937 • Dual Federalism: a constitutional interpretation that gave the federal government exclusive control over some issues, and states exclusive control over others. • The federal government was small and dealt primarily with foreign affairs and commerce. • Internal improvements, like roads and canals • Tariffs (taxes on imports), patents, currency • the role of the Supreme Court in this era was to determine where the line was drawn over which level of government had authority over what.

4. Dual Federalism, 1789–1937 TABLE 3.2 The Federal System: Specialization of Governmental Functions in the Traditional System (1800–1933)

5. Dual Federalism, 1789–1937 • States performed the majority of governing over citizens’day-to-day lives. • Property law • Civil law (marriage, divorce, adoption) • Criminal law • Dual federalism allowed states to experiment with policies. • Very different sets of rights from state to state • This approach to government allowed slavery (and all associated regulations, commerce, criminal, and otherwise) to exist in some states but not others.

6. Dual Federalism, 1789–1937 • It took more than 150 years for the federal government to extend its power over the domestic sphere. • A series of Supreme Court decisions produced these fundamental shifts. • McCulloch v. Maryland (1819) allowed Congress to use its implied powers expansively, especially as they related to commerce • Gibbons v. Ogden (1824) established the supremacy of Congress over all matters affecting interstate commerce. But this left open the definition of “interstate commerce.”

7. Federalism and the Slow Growth ofthe National Government’s Power In 1916, the national government passed the Keating-Owen Child Labor Act, which excluded from interstate commerce all goods manufactured by children under age 14. The act was ruled unconstitutional by the Supreme Court, and the regulation of child labor remained in the hands of state governments until the 1930s.

8. Dual Federalism, 1789–1937 • Since the New Deal, the federal government has been able to use the Commerce Clause to regulate large swaths of domestic activities. Since the New Deal, not one single law or rule created by Congress under the Commerce Clause power was rejected by the courts until United States v. Lopez in 1995, and then again in 1997 with Printz v. United States. • Congress can also influence the states to enact laws by promising them federal funds to do so, or to threat to withdraw funds if they do not.

9. Federal Grants The vast new programs created as part of the New Deal expanded the federal government’s power. Programs like the Works Progress Administration (WPA), which provided jobs for the unemployed, were established to address the Great Depression, but the overall expansion of the national government lasted even after the Depression ended.

10. Historical Trend of Federal Grants-in-Aid,* 1950–2012 FIGURE 3.1 Historical Trend of Federal Grants-in-Aid,*1950–2012 Spending on federal grants-in-aid to the states has grown dramatically since 1990. These increases reflect the growing public expectations about what government should do. What has been the most important cause of the steady increase in these grants? • Excludes outlays for national defense, international affairs, and net interest. SOURCE: U.S. Budget for Fiscal Year 2013, Historical Tables, Table 12.2

11. The New Deal • Grants-in-aid (categorical grants) • Funds provided by federal government to state or local government for a specific purpose • New Deal expanded to include social programs • Includes competitive project grants • State and local governments compete for funds based on merit of their proposals

12. Cooperative Federalism • Cooperative federalism: model in which the various levels of government work together to solve policy problems, often with the federal government providing some portion of the funding, which is spent by the states or localities • typically the funding formula is some sort of matching grant in which the federal government will provide funds to the states sometimes on a dollar-per-dollar basis, but at other times it will give poorer states more funds per dollar of their own spending than it does for wealthier states

13. Cooperative Federalism • Expansion of national power diminishes the old paradigm of dual federalism. • Cooperation between state and national governments replaces dual federalism. • Morton Grodzins cake analogy: • Dual federalism as layer cake • Cooperative federalism as marble cake

14. Dual versus Cooperative Federalism

15. Regulated Federalism and National Standards In 2005, the Supreme Court ruled that the federal government had the right to prosecute individuals for using medical marijuana, even in states that had made such use legal. Despite the Court’s ruling, some states have continued to permit the dispensing and use of medical marijuana.

16. Cooperative Federalism • Regulated federalism • With increased funding, the federal government demanded higher standards and stricter uses for funds. • Preemption • The principal that allows national government to override state/local actions in certain policy areas • Occurs when state/local actions do not agree with national requirements

17. Cooperative Federalism • Congress dramatically increased unfunded mandates: rules forcing states to spend their own money to comply with federal law. • The CBO estimated that between 1983 and 1990, unfunded mandates cost the states and localities somewhere between $8.9–$12.7 billion. • Backlash to federal preemption and unfunded mandates led to calls for devolution: transferring responsibility from federal government to state/local governments • Popular since the 1970s • Idea led to New Federalism

18. Devolution: For Whose Benefit? The debate over national versus state control of speed limits arose in 1973, when gas prices skyrocketed and supplies became scarce. Drivers nationwide were forced to wait in long lines at gas stations. The federal government responded to the gas crisis by instituting a national 55 miles per hour speed limit. $.36 per gallon

19. New Federalism • New Federalism: Nixon and Reagan efforts to devolve many policies back to the states. • Block grants • General revenue sharing • Smaller federal spending and interference • Reagan cut federal aid to states by 12 percent. • The idea was to remove federal government, as much as possible, from local matters governed by the states.

20. New Federalism • Under President Reagan, Congress created 12 sweeping block grants that replaced hundreds of previous categorical grants. • Block grants provide federal funds for a certain purpose, but with few rules as to how that purpose is to be achieved. • General revenue sharing provided federal funds to the states to spend as they wished, allowing for experimentation with different policies.

21. The Rise, Decline, and Recovery of Federal Aid FIGURE 3.3 The Rise, Decline, and Recovery of Federal Aid, 1960–2012* The level of federal aid has varied over the past several decades as program costs and politics have affected the role the national government plays in funding state and local services. The data in this figure show a rise, decline, and recovery of federal aid. What factors contributed to each of these trends? *Estimate

22. Regulated versus New Federalism

23. Federalism Since 2000 • The balance between the federal government and the states is constantly evolving. • National and state concerns since 2000 • Real ID Act • No Child Left Behind (NCLB) • American Recovery and Reinvestment Act (ARRA; commonly “The Stimulus”) • Patient Protection Affordable Health Care Act (commonly “Affordable Health Care,” “Obamacare”)

24. Debates about the costs required to comply with health care, stimulus grants, education standards, and identification policies have raised the point about unfunded mandates and the relationship between the federal and state government.