Few aspects of the American governmental system go as unquestioned as federalism — the division of power between federal and state governments. People are constantly worrying about and critically examining Congress, the Presidency, and the Supreme Court. But hardly anyone thinks to cast a critical eye on federalism. Even among political scholars, only a few pay any attention to this arrangement. But we need to ask ourselves this question: If federalism is so great, why have most other developed democracies explicitly rejected it? The answer is that while federalism does have some political advantages, it can also seriously undermine democracy.
What is Federalism?
Our constitution clearly establishes federalism as a central feature of the American political system. Various parts of the constitution enumerate the powers of the federal government, and the tenth amendment then specifies that all other powers are to be exercised by the states: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” This effectively creates a two-tiered system of government, with each tier having its own independent powers. And despite what most people think, most policymaking takes place on the state, not the federal level. For example, almost all criminal law, property law, and contract law is made on the state level. We in effect have 50 different legal systems – and 50 different educational systems, tax systems, and so on.
The More Popular Alternative: The Unitary State
In contrast, most other Western democracies have what is called a “unitary state.” In this system, the central federal government has ultimate power in all policy areas. The result is a much greater uniformity in laws and policies. Typically, for example, all citizens are subject to the same legal system, all schools share the same core curriculum, and everyone is eligible for the same government benefits. The central government may delegate some powers to sub-national governments, like states and cities, but those powers can be revoked at any time.
The Promise and Failures of Federalism
Most Americans are never told about the disadvantages of federalism – only its advantages. We are told, for instance, that federalism actually improves the quality of democracy by placing important government functions closer to the people. Local and state governments are thought to allow for more access for citizens and to encourage greater involvement in the processes of government and thus more public control over policymaking.
Most people have little involvement with local and state government and know little about its workings.
This sounds plausible in theory, but the reality falls far short of this ideal. In fact, most people have little involvement with local and state government and know little about its workings. 80% of Americans do not even know who their local state representative is. And of those 20% who do know, only 15% of them can actually name two issues their representative stands for. To make matters worse, few people have a strong interest in participating actively in local and state government. In off-year elections, only about 25% of potential voters actually go to the polls to elect their state representative. And probably only about 15% of those people actually vote for the winning candidates, so there is nothing really resembling a public mandate for these state legislatures.
Voter turnout on the city level is even more abysmal – averaging about 20% in off-year elections. This kind of very low turnout usually means that local voting is dominated by the groups with a higher tendency to vote: the elderly, whites, and the well-off. The frequent result is that the poor and minorities end up under-represented and underserved by their local governments.
The democratic nature of state elections is also undermined by the fact that huge numbers of voters have no real choice of who will represent them. In 2018, a third of the races for 6,170 state legislative seats were uncompetitive, with only one of the two major parties putting up a candidate. In 2016, that figure was larger, with 42% of the candidates running unopposed by the other party. The main culprit here is rampant gerrymandering that creates state legislative districts that are so dominated by one party that the other just gives up. Lack of voter choice and low turnout clearly undermine the rosy view of state politics as a realm where the citizens rule.
The Real Beneficiaries of Federalism
The people best positioned to take advantage of the increased access to government created by federalism are not average Americans, but those who own and run large corporations. Because of their sizable monetary resources, businesses are in the best position to participate effectively on all the multiple levels of government.
Businesses not only spend large amounts financing candidates on the federal level, but also on the state level as well, where their contributions are even more effective. Big corporations can also afford to fund substantial lobbying operations on both the state and federal level. Most citizens and citizen groups cannot match these political resources and thus are unable to participate effectively across all levels of government.
Corporations can use their critical role in local economies to engage in political extortion.
More disturbing is that corporations can use their critical role in local economies to engage in political extortion. Large businesses can threaten to move out of a city or state unless these governments acquiesce to their political and economic demands. And corporations do not hesitate to take advantage of this unique form of power. For instance, it has been long known that many big corporations have successfully won substantial tax breaks and subsidies by threatening to move if they don’t get them. Boeing received over $8 billion in breaks and subsidies to stay in Washington State. And Alcoa Aluminum received over $5 billion in taxpayers’ funds from New York State.
Less well known is the common practice of using the same threat to get states to abandon efforts to raise corporate taxes, encourage unionization, strengthen workplace safety rules, or tighten environmental requirements. Few state legislators can ignore the economic devastation caused by large employers moving out of state and feel an ethical obligation to protect their constituents from these economic damages. In the end, the result is a “race to the bottom” by some states that compete to cut corporate taxes and weaken protection for workers and the environment in order to attract the sizable businesses they need to provide economic prosperity for their citizens. In most other democracies, which do not have federalism, laws governing corporate tax rates, environment regulations, and workplace requirements are made at the national level and are uniform across the country– so there are no city or regional variations that allow corporations to play them off against one another.
Another powerful political weapon in the corporate lobbying arsenal is ALEC – the American Legislative Exchange Council. This lobbying organization has worked, often under the radar, to pass thousands of business-friendly bills in state legislatures. ALEC boasts having 2,000 state legislators and dozens of the biggest businesses in American as members. They meet to draft model pieces of legislation that are then introduced to state legislatures and promoted by the ALEC network. To sweeten the pot, ALEC corporate backers have also donated hundreds of millions of dollars to state legislative races. ALEC itself estimates that it introduces up to 1,000 corporate-written bills a year, with about 20% of those becoming law.
Those laws represent a most-wanted list of issues on the corporate/conservative political agenda. They include laws to oppose workers paid sick leave, stop raises in minimum wages, fight workers’ right to overtime pay, undermine environmental protections, promote anti-union “right to work” laws, weaken workplace safety rules, and cut taxes for corporations and the wealthy. No wonder Newt Gingrich has called ALEC “the most effective organization” for conservatives. Gordon Lafer, in his book on corporate political power in the states, has pointed that in its own promotional literature, ALEC has explained to potential corporate donors that their “investments” in ALEC would pay off handsomely, saying that “nowhere else can you get a return that high.” All the while, of course, bi-partisan majorities of citizens actually support higher taxes for the rich, higher minimum wages, paid sick leave, etc.
ALEC often works hand in hand with another set of state-level organizations funded by big business and ultraconservative billionaire families like the Kochs, the Waltons, and the Coors: the State Policy Network (SPN). SPN is a web of conservative think tanks located in all fifty states. They distribute research reports and media commentaries that promote the pro-business, anti-union, anti-environmental, pro-private school, and anti-tax positions of the far right.
Another Problem with Federalism: The Unequal Treatment of Citizens
Imagine you lived in a country where the legal system punished women more harshly than men for the same crime, or single people more harshly than married individuals. You would undoubtedly condemn such practices as being unfair, unequal, and unethical. But federalism does much the same thing – except how badly (or how well) people are treated by the government depends entirely on where they live. The average sentence for a drug offense in Arizona is 17 months, while in Iowa it is 111 months – six times longer. Whether you can be put to death by the state for your crime depends on which state you committed it in. In some states, an unarmed person can be shot down by a civilian who claims to feel threaten, but not in other states.
How badly (or how well) people are treated by the government depends entirely on where they live.
Rights can also vary from state to state – like the right to vote. Some states are making it easier for people to vote, while others are making it increasingly harder. The availability of vital services is also tremendously variable between states. The quality of public education differs a lot – denying equal opportunity to poor students in many states. The accessibility of abortion services also greatly depends on the individual states. A good democracy requires equal treatment of citizens, but this is exactly what we are not getting with federalism.
Donald F. Kettl, in his book, The Divided States of America: Why Federalism Doesn’t Work, has documented how federalism has also worsened economic inequality in the United States – which is already at a higher level than any other advanced democracy. He found that there is a great deal of variation in economic prosperity across states: some, like Connecticut, are well off; while others, like Louisiana, are much worse off. This affects the ability to provide vital government services, especially to working class and poor citizens. People in poor states get lower welfare payments, less access to medical care, inadequate schools, crumbling infrastructure, and less protection from pollution. All of this contributes to more suffering and less economic mobility for citizens of these states.
Sometimes government services are inferior by design. Some Republican-dominated legislatures make a priority of cutting taxes and slashing spending on schools, medical care, roads, social welfare programs, etc. However, much of the unequal government services made worse by federalism is not always this intentional, but simply due to the poorest states not having the public resources necessary to provide adequate government services. Nevertheless, the disturbing result, as Kettl concludes, is that “The quality of government services – and the quality of life – increasingly depends on where Americans live.”
The level of unequal treatment is rare in countries with unitary states that have laws, funding, and government programs that are largely centralized on the federal level. This ensures that all citizens, no matter where they live, are treated more equally, subject to the same laws and same punishments, and receive the same essential government services. These centralized governments can move funds from richer to poorer areas to ensure that everyone has the same quality schools, medical treatment, and economic opportunity. It’s a shame we can’t say the same thing about this country – and it is a high price to pay for federalism.
Laboratories of Democracy or Loopholes of Democracy?
One argument for federalism is that it allows states to experiment with different policy approaches that, if successful, can then be adopted in other states. State governments are seen as “laboratories of democracy” and a force for progress. For example, the state government of California has led the way in more stringent environmental regulations. And some state governments have been pioneers in other areas, such as the legalization of marijuana and gay marriage. It is clear that sometimes when citizens become frustrated by the constant gridlock in Washington and the impossibility of policy reform on that level, they turn to state government for the solution. And it is true that at times state level reforms can become “contagious” and spread to other states and even eventually provoke action on the federal level – as it did with women’s right to vote. Some states and cities also allow citizens to pass reforms directly through initiatives and referendums – without the support of reigning political officials. This had led some on the left to argue that federalism may be used to facilitate progressive political change.
However, federalism can also serve to impede reform across the nation. In fact, in overall practice, federalism most often works to preserve the status quo and impede nationwide change – compared to unitary government. Decentralized power in the states gives opponents more opportunities to obstruct or ignore national mandates for reform. Decades of delay in giving civil rights to minorities is a classic example of this problem. The states’ rights movement was able to preserve discrimination and the oppression of African Americans in large parts of the country for a hundred years after the Civil War.
Polls now show that a majority (60%) of Americans prefer life imprisonment over the death penalty. And yet we remain the only advanced Western democracy to still practice this arcane punishment – with 30 states having the death penalty still on the books. In these other countries, abolishing the death penalty usually took a vote in just one national legislative body. In the U.S., to get rid of it nationwide, we need the approval of 99 state houses and senates (Nebraska is unicameral) and 50 governors. Such are the obstacles to change posed by federalism.
Universal healthcare is another example of how state power can serve to impede policy reforms. We are alone among major western democracies in not providing affordable health care for all citizens. The Affordable Care Act (Obamacare) took a major step forward in extending coverage to millions of previously uninsured Americans. An important part of this plan was the extension of Medicaid coverage in the states, with the federal government paying for 90% of the costs. But 24 Republican controlled states have refused to do so, leaving millions of people in these states without affordable health care. It has been found that between 2014 and 2017, 15,000 people died prematurely because of these states’ decision not to expand Medicaid coverage.
For many political scientists, these issues illustrate how federalism is another example of the ways in which American government often allows the minority to rule over the majority. William H. Riker, one of the foremost authorities on federalism, argues it is a mistake to believe that it promotes freedom by reining in the power of the federal government. Federalism “may actually promote tyranny by its constant frustration of majorities,” and “is an impediment to freedom.”
Federalism: Stifling Constitutional Reform
Another way that federalism slows political reform and frustrates majorities is its effects on the constitutional amendment process. To pass, an amendment must get the support of two-thirds of the House and Senate and then three-quarters of the states. This extra step of state approval has been the graveyard of many good amendments, including a child-labor amendment in 1924, an amendment to make Washington, D.C. a state in 1978, and an equal rights amendment in 1982. Disturbingly, a small minority of the states control the amendment process. It only takes 13 states, constituting as little as 4% of the population to block an amendment. As discussed elsewhere on this site, the need for state approval and the fact that it requires a uniquely difficult three-quarters supermajority is part of what makes our constitution the hardest one to change of all major democracies. Most of these other countries are unitary nations that don’t have sub-national units like states that are part of the amendment process, and if they do, the supermajority needed for passage is lower.
Abandoning the Poor: The Human Costs of Devolution
“Devolution” – the transfer of federal programs to the states – can be as bad as the term itself sounds: a step backwards in the evolution of effective policies. That has certainly been the case with U.S. poverty policy. Political scientists and economists have long known what works best in reducing poverty – it can be learned by looking at other democracies that do a much better job at this than we do. They rely primarily on well-funded, centralized anti-poverty programs that are universal – that apply equally to everyone. We have a few successful programs like that, especially Social Security and Medicare. If we wanted to help the poor, we would be passing programs like universal daycare and low-cost college education. But instead we are using devolution to create more fragmented and less well-funded programs in the states.
A disturbing example of this is our only cash assistance program for the poor – Temporary Assistance to Needy Families (TANF – often still called “welfare”). Since the 1990s, TANF has been devolved to the states. They now get a federal cash grant of TANF funds and they have a great deal of flexibility on how to spend them and on who – all in the spirit of increasing experimentalism in poverty policy on the state level.
But the results have been particularly discouraging – especially for poor people. The federal government does not require the states to spend all the TANF grants on cash assistance. State budgets are notoriously precarious, especially in economic downturns, so it is not surprising that many states routinely divert TANF funds intended for needy families and use them to fill holes in their general budgets, or even to fund tax cuts. Louisiana, for instance, only spends about a third of its allocated state and federal TANF funds on cash assistance for poor families.
Federalism has contributed to the United States’ dubious distinction of being the advanced democratic country with the highest levels of adult and child poverty.
States also now have a wide discretion on what requirements they can put on TANF assistance. The result has been the predictable federalist mishmash of helpful and draconian policies. Some states have made it easier to get assistance, but many have made it much harder – instituting stricter work requirements than required by federal law, shortening the time people can get benefits, imposing harsher penalties – like termination from the program — for violations of any rules, and imposing family caps that restrict the amount of assistance to larger families. Some states also have made it a policy for employees in their welfare offices to actively discourage people from applying.
The human impacts of this devolution of welfare policy are striking. At the start of TANF in the 1990s, out of 100 people in poverty, 68 received TANF cash assistance. Today that figure has plummeted to only 22 out of a hundred – the lowest in the program’s history. In 16 states the ratio is down to 10 or less out of a hundred poor. And studies show that these families left off of assistance are worse off. Also, not surprisingly, the states where the poor receive the least assistance are highly correlated with two factors: Republican control of state government, and a higher percentage of African Americans needing assistance.
So in the case of poverty policy, the Republican’s goals of reducing the role of the federal government, cutting welfare spending, and kicking people off the rolls were aided considerably by federalism and devolution. As a Center on Budget and Policy Priorities study concluded:
State and federal governments have a critical role in ensuring that low-income families have access to a minimum level of support to meet their basic needs. Instead, states — with no national standards to hold them accountable for assisting families in need — have acted in their own self-interest, not in the best interest of families in poverty and particularly of families of color.
In this way, federalism has contributed to the United States’ dubious distinction of being the advanced democratic country with the highest levels of adult and child poverty.
The Rise of Radical Federalism in the Courts
Republicans have also been trying to re-define federalism and further hobble the federal government through the courts. In recent years, libertarian legal scholars and powerful conservative legal groups like the Federalist Society have been pushing a plan to undermine the power of Congress vis a vis the states and radically rewrite the rules and practice of federalism in the United States. This legal offensive focuses on reinterpreting the Commerce Clause in the Constitution. This clause gives Congress the power to ““to regulate commerce . . . among the several states.” Before the 1930s, the Court interpreted this clause extremely narrowly and in fact used it to shut down some early New Deal programs. But the Court eventually adopted a broader interpretation of what constituted “commerce” and this made possible the many large federal efforts we know today, like Social Security, civil rights laws, Medicare and Medicaid, environmental protection, business and banking regulations, and so on. It has become routine for Congress to use this clause to justify exercising legislative power over the activities of states and their citizens.
But in recent years the Supreme Court has begun to discard this long-standing legal interpretation of the Commerce Clause and start to narrow it in a way that could severely restrict the activities of the federal government. As Brian Beutler explained in The New Republic: “a small band of determined legal academics has set out to persuade the Supreme Court to undo the New Deal—and have almost won.” In fact, this new narrow interpretation has already been used in several key federal cases. The Court has overturned Congressional laws seeking to clean up hazardous waste, restrict firearms in school zones, and discourage violence against women. The Commerce Clause was also the basis for invalidating an important part of Obama’s Affordable Care Act. The Court ruled that Congress exceeded its powers under the Commerce Clause with its “individual mandate” that would have required uninsured individuals to secure health insurance in an attempt to stabilize the health insurance market.
As Adam Cohen, author of Supreme Inequality, has warned, this radical right-wing legal movement “says that, basically, all of the large social programs that were created during the New Deal, the social safety net, is unconstitutional, that it exceeds the power of Congress. We could see a radical conservative Supreme Court in a few years actually striking down things like the federal minimum wage.” In short, this new vision of federalism is a threat to the centralized regulatory powers and social welfare programs that are an essential part of modern government and a well-functioning society. These strong and popular federal programs form the backbone of all modern democratic states and nowhere else are they under attack in the courts the way they are in the United States. Only here.
Our States Do It Better
Many Americans would undoubtedly think that a unitary model of government, with most power centralized on the federal level, would be unacceptable here. Isn’t it un-American? Well no, it is actually very American – at the state level. Internally, all states are effectively unitary governments. There are local governmental entities, like counties and cities, but they only exercise the powers given to them by state governments. They do not share powers with the state government in the same way states share power with the federal government. They each don’t have their own separate criminal and civil law systems, social welfare programs, or environmental regulations. It would be a recipe for chaos and inefficiency. So in the U.S., we actually have fifty unitary governments and just one federalist one.
Unitary government is actually very American — at the state level.
Of course, in practice, states allow many cities, especially large ones, to develop their own laws to govern such things as the form of local government, provision of city services, maintenance of local parks, etc. – but this purely at the discretion of the state governments and the state can usually take back those powers anytime they want. Interestingly, few Americans are strenuously objecting to this use of the unitary model on the state level. It seems to work well on this level, so why is it so unthinkable on the federal level?
Other Democracies Do It Better
Most other advanced Western democracies have explicitly chosen to not follow the American federalism model and are unitary states, with most power vested in the nations’ central governments. Some of these countries have delegated some power in regional governments, but the central government retains overall control and can revoke that power at any point – similar to our state governments.
These unitary governments are not plagued with democratic problems we’ve seen with our federalist system. Corporations don’t have the opportunity to play regions off of one another. All citizens have the same rights, are subject to the same laws and penalties, and receive the same government benefits. And regional minorities are not able to frustrate the national majority when it comes to important social and economic reforms. It’s a major reason why these countries are way ahead of us in providing universal and reasonably priced health care, more effective safety net programs, and more consistent and extensive environmental and global warming regulations.
It’s worth noting that a few European countries do have federalism, but it takes a much less radical form that it does in the United States. In Germany, for example, some policymaking power is relegated to the “lands” or states. But the constitution states that “Federal law shall take precedence over Land Law.” The constitution also requires a “uniformity of living conditions in the federal territory,” which limits the ability of lands to go their own way in important policy areas. So while there are some regional inequalities between these lands, they are not as large or pernicious as what we have in the U.S.
There is clear and robust evidence that people lead more satisfying lives in democracies with a unitary government structure.
So when compared to most other advanced democracies, the United States is on the far end of the political spectrum when it comes to federalism and the decentralization of policymaking power. These other countries obviously believe that a unitary approach to government is more efficient, equitable, and good for their citizens. The findings of many studies bear this out. For example, it has been found that centralized governments are better able to utilize “economies of scale” in the administration of programs. Also, federal administrators are better trained and more highly paid and tend to a better job of providing services than local administrators. One particularly comprehensive study found that “unitary systems hold distinct advantages over federal ones across a wide range of indicators of political, economic, and human development.” For example, countries with unitary governments enjoy higher levels of economic growth and longer life expectancy. Another study of 21 advanced democracies found a strong correlation between the structure of government and the happiness of its citizens, citing “clear and robust evidence in support of the contention that people lead more satisfying lives in democracies with a unitary government structure.”
Solutions for the U.S.
One obvious solution to avoid the drawbacks of federalism for democracy would be to move to a more unitary form of government – the European model. But such a radical structural change is extremely unlikely. But some things can be done. The most important is to halt the devolution process – the transfer of more and more federal power to the states. As we’ve seen, this has been a disaster in areas like social welfare policy. Congress needs to insist on the primacy of federal programs in order to insure effective and equitable policies for all Americans.
Among other things, Congress and the President have to be more thoughtful and judicious about granting waivers that free state administrators from the statutory requirements of federal policy in areas like the environment, welfare, and health care. The legal scholar Edward H. Stiglitz has pointed out the many downsides of these waivers. States often hide their real political reasons for requesting waivers; the waivers often serve to worsen inequality and propel a “race to the bottom” among states; and once granted, waivers are hard to rescind. A less permissive federal approach to waivers is clearly needed.
Prospects for Change: Snowball in Hell
Many Americans do not seem particularly aware of or concerned about the political problems posed by federalism. In fact, surveys show that increasing numbers of Americans would rather see the states in control of important policy areas, like environmental protection, healthcare, education, and welfare. It is not clear whether this is because of a principled commitment to federalism or simply a deep frustration with a federal government prone to gridlock, dominated by monied interests, and often controlled by political minorities. With a federal government unable or unwilling to act, some may think there is a better chance that state governments will respond to their concerns. As we’ve seen however, state governments are as likely to impede change as to promote it. In any case, it is clear that there is unlikely to be any grassroots demand for increased centralization of government anytime soon.
In fact the tendency in recent years has been to increase devolution and worsen the problems caused by federalism – largely due to Republican control of Congress and/or the Presidency. And the Supreme Court’s attack on the Commerce Clause is likely to continue. Now that the Democrats are in control of Congress and the Presidency, they are in a position to slow this tendency. But this issue is not as high a priority for many Democratic policymakers as it should be. Hopefully, there might be some action in reining in state waivers as discussed above. But all in all, the chances for significant changes that mitigate the many problems posed to our democracy by federalism do not seem good.
read the next issue: 17. Our Frozen Constitution