Federalism: Why & How, Part 4 of 4

Part 4: Some Pros and Cons of Federalism

Key Points: Each of the forms of federalism reviewed in this short course exist alongside the others. Each has pros and cons.[i]  In its favor, dual federalism creates many opportunities for different political factions to compete for power without fear of being locked out. It is easier for citizens to be heard. It can encourage policy innovations that may spread to other states and sometimes to the federal government.  Dual federalism makes accountability easier, while cooperative and coercive federalism makes accountability more complicated. Dual federalism creates opportunities to trust local leaders.  Some aspects of federalism can reduce the risk of tyranny.  Even so, federalism has been used to repress some minorities.  Finally, and importantly, the coercive element of federalism may also be contributing to our political polarization.

Many Opportunities for Citizens to be Heard

The many layers of government provide citizens with many venues to make themselves heard. For example, in 2017, there were 50 state governments, 3,031 county governments, 19,495 municipalities, 16,253 townships, 38,542 special districts, and 12,754 school districts for a total of 90,126 governments and approximately 520,000 elected officials.[ii] 

Many Opportunities for Political Competition

Multiple arenas of government mean multiple opportunities to compete for elected offices.  This feature of federalism is deeply important. One of the essential elements of a self-sustaining republic is the assurance that political parties and candidates will have many future opportunities to compete, even if they lose an election here or there.  Both political parties tend to compete more strongly in the state arenas when they cannot control the federal government.[iii]

Federalism also opens up the possibilities of intergovernmental (federal versus states) competition and interjurisdictional competition (between states or between municipalities).[iv]

  • Within the realm of concurrent powers, intergovernmental competition by vote seekers can motivate both arenas of government to become more responsive to more of their citizens.[v] The federal government sometimes responds to public pressure only after seeing the majority of states doing so. The evolution of women’s right to vote,[vi] discussed in Part 3 (The State’s Role in National Policies), is an example.  Conversely, there are times when the federal government has been more responsive, eventually forcing any lagging states to fall in line.  Several states, for example, were unresponsive to demands from people of color for voting rights until compelled under the 1965 Voting Rights Act.[vii]
  • Competition between states (or between cities) can encourage greater fiscal discipline, more efficiency, more innovation (see below), and races to the top as governments seek to attract and retain residents and businesses that might otherwise vote with their feet by moving elsewhere.  States and cities might also offer wasteful tax incentives, spend tax money on needless projects, and reduce important regulations – in an effort to attract more businesses and voters.  These efforts will produce both winners and losers.  Those on the losing side may be harmed by reduced spending on services, welfare, and environmental protections.

Innovation

Many experts on federalism note the role of the states as “laboratories of democracy.” Many policies enacted by the federal government were first pioneered by some states after having spread across many other states. The Juneteenth state holidays celebrating the end of slavery are examples. Texas was the first state to declare Juneteenth an official state holiday in 1979. By the time Congress acted on a Juneteenth federal-holiday bill in mid-2021, 49 states and Washington, DC, had already recognized Juneteenth as an official or ceremonial holiday.[viii]  Other examples include the use of citizen’s initiatives,[ix] securities regulation, bankruptcy law, and unemployment insurance.

It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory, and try novel social and economic experiments without risk to the rest of the country.” – Justice Louis Brandeis, 1932

Accountability

Some forms of federalism can make some aspects of accountability easier.  Under dual federalism, voters, bloggers, and reporters can see the actions of state and local officials more easily than they can for leaders in a national government.  They also feel the consequences of those actions more directly.  Conversely, candidates for state and local offices must reside in their state and local voting districts and must answer to the voters there – in contrast to officials in unitary systems who could come from anywhere and answer only to the higher officials who appoint them.

Federalism can also make accountability more difficult when citizens are confused about who to hold accountable for policy failures.  This difficulty happens when citizens do not have good knowledge of which government is responsible for specific services and whether other government arenas are involved.  Many citizens incorrectly think that the federal government does it all, or at least directs it all.  That sort of outcome is more likely under cooperative and coercive aspects of federalism than dual federalism.

Application: It can sometimes be confusing to figure out which government we should contact for better services. Suppose, for example, that you drive on a rough stretch of highway that needs a lot of repair work. It is clearly marked as a federal highway.  Who should you hold accountable for the lack of repairs? Is there a distinction between which government directs the work and which government or governments finance the work?  Hint 1: Your elected state and federal officials and their staff are easy to reach and can help you with such questions.  Hint 2: See this summary of the Interstate Highway System.

Trust

Dual federalism provides a way for diverse people to be governed by leaders they can trust.  Trust is more likely because, under federalism, local leaders know local needs better than someone in a distant national capital. Importantly, local leaders face the same problems their voters face, so they have more incentive to solve those problems. 

“It is a known fact in human nature, that its affections are commonly weak in proportion to the distance or diffusiveness of the object. Upon the same principle that a man is more attached to his family than to his neighborhood, to his neighborhood than to the community at large, the people of each State would be apt to feel a stronger bias towards their local governments than towards the government of the Union; unless the force of that principle should be destroyed by a much better administration of the latter.”
— Alexander Hamilton, Federalist 17

In the U.S., since at least 1997, citizens have placed more trust in their local government followed by their state government. They express the least trust in the federal government. See Figure 1.

Inequality

Each state has its own capacity to raise revenues, depending on the number of citizens, the kinds of jobs that are available, its chosen tax rates, and other features.  For this reason, per-capita spending on services that are state responsibilities will not be equal across the states.  For example, according to one source, 2015 spending on kindergarten through high school in the highest spending state, Vermont, was almost three times as much per student as the lowest spending state, Utah.[x] 

One way to even things out would be for the federal government to transfer money from the wealthiest states to the poorest. In fact, the United States is the only country among the wealthy federal systems that does not have a comprehensive fiscal resource equalization scheme.[xi]  Such a change would be feasible only if donor state citizens were comfortable in seeing some of their resources shifted to other states in the name of equity.

There is some precedent for establishing a fiscal equalization program: the revenue sharing program established under the Nixon administration that ran from 1972 through 1986. This program did not clearly establish equalization as a goal, but the distribution formula did include an equalization element.[xii]

Tyranny

Some of the framers argued that federalism combined with republicanism could help reduce the risks of tyranny by a majority or by a national government.

James Madison expected that tyranny by a majority within the federal government should be difficult in a federal republic.  He argued the inclusion of many states and people into a large federal republic would translate into so many different opinions that it would be very difficult for a majority faction to form. He also thought the longer distances between people in a large republic would add to the challenge of organizing a majority faction.  Madison makes these arguments in Federalist 10

Application:  Do you believe Madison’s logic holds in today’s era of instant communication and rapid transportation?  Why or why not?

Tyranny can also be reduced by the many ways power is divided by the Constitution.  In Federalist 38, Madison argued that the interests of any national majority that might form in the House would be balanced against the interests of the individual states in the Senate. George Washington is said to have told Thomas Jefferson that the framers had created the Senate to “cool” House legislation in the same way that a saucer can be used to cool hot tea.[xiii]

Madison explained in Federalist 51 that the division of powers between the federal government and the states, under the Constitution’s model of dual federalism, should make tyranny less unlikely: 

“… the power surrendered by the people, is first divided between two distinct governments,” and “[h]ence a double security arises to the rights of the people. The different governments will control each other …”
— James Madison, Federalist 51

Many years later, Thomas Jefferson explained,

“The way to have good and safe government, is not to trust it all to one; but to divide it among the many, distributing to every one exactly the functions he is competent to. Let the National government be entrusted with the defense of the nation, and its foreign and federal relations; the State governments with the civil rights, laws, police and administration of what concerns the states generally; the Counties with the local concerns of the counties, and each Ward direct the interests within itself. It is by dividing and subdividing these republics from the great National one down thro’ all its subordinates, until it ends in the administration of every man’s farm and affairs by himself; by placing under every one what his own eye may superintend, that all will be done for the best.”
— Thomas Jefferson to Joseph C. Cabell, February 2, 1816

The division of powers between the Office of the President and Congress should reduce the possibility of presidential tyranny in the case of cooperative federalism. The risk is reduced because the goals, funding, and conditions attached to federal grants-in-aid to the states are controlled only by Congress. 

The anti-commandeering doctrine established by the Supreme Court offers some protection against congressional tyranny. Under this doctrine, the federal government may not impose duties upon state legislators or executive officials.[xiv]  In Prigg v. Pennsylvania (1842), the court said states were not obligated to enforce the 1793 Fugitive Slave ActPrintz v. United States (1997) found that the Brady (Gun Control) Act violated the Tenth Amendment to the Constitution because it attempted to commandeer state sheriffs to perform background checks.

History shows, however, that federalism is no guarantee against tyranny.  The states’ control over elections, education, and land-use zoning played a significant role in the tyranny against people of color in many states during the Jim Crow era. The federal government contributed to racialized discrimination as well.  Examples include the Sanford v. Dred Scott (1857) and Plessy v. Ferguson (1896) decisions by the Supreme Court and the racialized segregation mandated by the Federal Housing Administration, which refused to insure mortgages in and near Black American neighborhoods. The continued impact of federal and state laws on racial equity and justice remains contentious today.

Application:  Federal systems can be harnessed for authoritarian purposes.  For example, in the Russian Federation, the president can and has directed the selection of regional governors.[xv] In Venezuela, the ruling party made the national legislature almost powerless – except for its control over elections administration – which they then used to take over most state and local offices.[xvi],[xvii]  Are there any aspects of American federalism that you believe could be used by authoritarians?

Polarization

The growing use of federal grants-in-aid to the states can contribute to our political polarization by affecting the stakes of winning and losing control of the federal government.[xviii]  The states are gradually accepting a greater share of revenues from federal grants-in-aid. According to calculations from the Pew Charitable Trusts, federal grants as a share of state government revenues increased from 26 percent in 1967 to 32 percent in 2017.[xix]  Thirty-six states had shares of 30 percent or more in 2017.[xx] 

Such high shares raise the stakes of winning and losing party control over Congress and the Office of the President.  Some federalism experts argue that those stakes contribute to our political polarization because the coercive elements of federalism often require all states to implement national policies such as abortion, gun rights, or education in the same way, regardless of local preferences.[xxi]

The bottom line is that federalism by itself cannot guarantee political freedom, fairness, or a good quality of life.  Much depends upon the mix of dualism, cooperative, coercive, and competitive elements of federalism in everyday use.  The outcome strongly depends on the quality of people we elect to our state and federal offices and what we ask from them. This concludes Federalism: Why & How.  You now have an understanding of federalism and its alternatives, why the framers invented American federalism, how they set it up, how it changed over time, and some of federalism’s pros and cons.

© Center for Free, Fair, and Accountable Democracy

July 2021

This booklet is to be used only for civic education.

It may be copied and distributed only for non-profit, non-partisan, educational purposes and only with proper credit to the Center for Free, Fair, and Accountable Democracy.

Written by Peter Alexander and Douglas Addison
for the Center for Free, Fair, and Accountable Democracy.

Principle Reviewers:

John Kincaid, Robert B. and Helen S. Meyner Professor of Government and Public Service,
Director of the Meyner Center for the Study of State and Local Government,
President of the Center for the Study of Federalism
Lafayette College

Mark J. Rozell, Dean and Ruth D. and John T. Hazel Chair in Public Policy,
Schar School of Policy and Government,
George Mason University

Internal Reviewers:

Cheryl Cook-Kallio, Review Board

Mark Molli, Advisory Board

The reviewers are not responsible for any errors of omission or commission.

CFFAD is a non-profit organization providing non-partisan civic education. Cover image: U.S. Department of Commerce, Economics & Statistics Admin., U.S. Census Bureau


END NOTES

[i] Portions of this section are drawn from Rozell, M. & Wilcox, C. (2019). Federalism: A very short introduction, Oxford University Press.

[ii] From the U.S. Census Bureau, Census of Governments, and Table 3.1 in Lawless, J. (2012). Becoming a candidate: Political ambition and the decision to run for office, Cambridge University Press.

[iii] Kincaid, 1990, p. 152.  Kincaid, 2017, pp. 1078-1088. Rozell & Wilcox, 2019, p. 1. 

[iv] This sub-section draws from https://encyclopedia.federalism.org/index.php?title=Competitive_Federalism

[v] Responsiveness is generally thought of as a good thing, but it can be bad when the majority want something that might ultimately be harmful even if rewarding in the short-run.  Note: responsiveness is also dependent upon the administrative capacity of government.

[vi] From https://constitutioncenter.org/timeline/html/cw08_12159.html

[vii] See https://www.justice.gov/crt/history-federal-voting-rights-laws

[viii] See https://en.wikipedia.org/wiki/Juneteenth#State_and_local

[ix] National Conference of State Legislatures. https://www.ncsl.org/research/elections-and-campaigns/chart-of-the-initiative-states.aspx

[x] See pages 45-46 in Schapiro, R. (2019). Unequal States, Unequal People: Fiscal Inequity and the Values of Federalism. https://ssrn.com/abstract=3348054

[xi] See page 8 of Schapiro (2019).  Some federal programs do use formulas meant to reduce the degree of inequality but their net effect is weak. See page 49 for an example from the education sector.

[xii] See pages 3-6 in Congressional Research Service (2009).

[xiii] See https://www.monticello.org/site/research-and-collections/senatorial-saucer

[xiv] Congressional Research Service (2018). The Supreme Court Bets Against Commandeering: Murphy v. NCAA, Sports Gambling, and Federalism. LSB10133.

[xv]Landau, D., Wiseman, H. J., & Wiseman, S. R. (2019). Federalism for the Worst Case. Iowa L. Rev., 105, 1187.

 See also https://www.reuters.com/article/us-russia-elections/putin-signs-law-to-allow-him-to-pick-russian-governors-idUSBRE9310GR20130402 and https://www.reuters.com/article/us-russia-politics-governor/putin-names-new-governor-of-restive-russian-region-hit-by-protests-idUSKCN24L1F7

[xvi] Brewer-Carías, A. (2010). Dismantling democracy in Venezuela: The Chávez authoritarian experiment. Cambridge University Press.

[xvii] Landau et al (2019).

[xviii] Kincaid, 2017, p. 1089.

[xix] See https://www.pewtrusts.org/en/research-and-analysis/articles/2018/07/24/federal-share-of-state-revenue-rises-for-third-year  and  https://www.pewtrusts.org/en/research-and-analysis/data-visualizations/2014/fiscal-50#ind1

[xx] The smallest share was 20.7 percent (Hawai’i).  The largest share was 46.1 percent (Montana).

[xxi] Kincaid, 2017, p. 1089.