This document summarizes key aspects of federalism in the United States. It discusses how the relationship between national and state governments has been a persistent source of conflict throughout American history over issues like slavery, business regulation, and social programs. While the national government has increasingly expanded its powers, states still play an important role in administering many federal programs. Federalism creates separate centers of political power at both the national and state levels, which both enables progressive policies in some states and the persistence of harmful policies in others, highlighting its benefits and drawbacks.
This document summarizes key aspects of federalism in the United States. It discusses how the relationship between national and state governments has been a persistent source of conflict throughout American history over issues like slavery, business regulation, and social programs. While the national government has increasingly expanded its powers, states still play an important role in administering many federal programs. Federalism creates separate centers of political power at both the national and state levels, which both enables progressive policies in some states and the persistence of harmful policies in others, highlighting its benefits and drawbacks.
This document summarizes key aspects of federalism in the United States. It discusses how the relationship between national and state governments has been a persistent source of conflict throughout American history over issues like slavery, business regulation, and social programs. While the national government has increasingly expanded its powers, states still play an important role in administering many federal programs. Federalism creates separate centers of political power at both the national and state levels, which both enables progressive policies in some states and the persistence of harmful policies in others, highlighting its benefits and drawbacks.
This document summarizes key aspects of federalism in the United States. It discusses how the relationship between national and state governments has been a persistent source of conflict throughout American history over issues like slavery, business regulation, and social programs. While the national government has increasingly expanded its powers, states still play an important role in administering many federal programs. Federalism creates separate centers of political power at both the national and state levels, which both enables progressive policies in some states and the persistence of harmful policies in others, highlighting its benefits and drawbacks.
Since the adoption of the Constitution in 1787, the single
most persistent source of political conflict has been the relations between the national and state governments. The political conflict over slavery, for example, was intensified because some state governments condoned or supported slavery, while others took action to discourage it. The proponents and opponents of slavery were thus given territorial power centers from which to carry on the dispute. Other issues, such as the regulation of business and the provision of social welfare programs, were in large part fought out, for well over a century, in terms of national interests versus states rights. While other nations, such as Great Britain, were debating the question of whether the national government ought to provide old-age pensions or regulate the railroads, the United States debated a different question- whether the national government had the right to do these things. Even after these debates had ended- almost invariably with a decision favorable to the national government- the administration and financing of the programs that resulted have usually involved a large role for the states. Today and effort is under way to scale back the size and activities of the national government and to shift responsibility for a wide range of domestic programs from Washington to the states. In recent years the effort to devolve onto the states the national governments functions in areas such as welfare, health care, and job training has become known as devolution. IN the 104 th Congress (1994-1996) Republican majorities in the House and Senate made proposals, several of them enacted into law, to accelerate the devolution of national power. Many of these proposals involved giving the states block grants- money from the national government for programs in certain general areas that the states can use at their discretion within broad guidelines set by Congress. In 1908 Woodrow Wilson observed that how we structure the relationship between the national government and the states is the cardinal question of our constitutional system, a question that cannot be settled by one generation, because it is a question of growth, and every successive stage of our political and economic development gives it a new aspect, makes it a new question. As the nation enters the twenty-first century, is the American political system in the early states of a devolution revolution that will make the states, not the national government the dominant force in domestic affairs? Do most American support devolution? Have recent court decision returned power to the states? What, if any, differences will devolution reforms make in who governs and to what ends? Before one can begin to address these questions, it is important to master the basic concepts and understand the political history of federalism.
Governmental Structure
Federalism refers to a political system in which there are local (territorial, regional, provincial, state, or municipal) units of government, as well as a national government, that can make final decisions with respect to at least some governmental activities and whose existence is specially protected. Almost every nation in the world has local units of government of some kind, if for no other reason than to decentralize the administrative burdens of governing. Bust these governments are not federal unless the local units exist independent of the preferences of the national government and can make decisions on at least some matters without regard to those preferences. The United States, Canada, Australia, India, Germany, and Switzerland are federal systems, as are a few other nations. France, Great Britain, Italy, and Sweden are not: they are unitary systems, because such local governments as they possess can be altered or even abolished by the national government and cannot plausibly claim to have final authority over any significant governmental activities. The special protection that sub national governments enjoy in a federal system derives in part from the constitution of the country but also from the habits, preferences, and dispositions of the citizens and the actual distribution of political power in society. The constitution of the former Soviet Union in theory created a federal system, as claimed by that countrys full name- the union of soviet socialist republics- but for most of their history, none of these socialist republics were in the slightest degree independent of the central government. Were the American constitution the only guarantee would of the independence of the American states, they would long since have become mere administrative subunits of the government in Washington. Their independence results in large measure from the commitment of Americans to the idea of local self- government and from the fact that congress consists of people who are selected by and responsive to local constituencies. The basic political fact of federalism, writes David B. Truman is that it creates separate, self sustaining centers of power, prestige, and profit. Political power is locally acquired by people whose careers depend for the most part on satisfying local interests. As a result, though the national government has come to have vast power, it exercises many of those powers through state governments. What many of us forget when we think about the government in Washington is that it spends much of its money and enforces most of its rules not on citizens directly by on other, local units of government. A large part of the welfare system, all of the interstate highway system, virtually every aspect of programs to improve cities, the largest part of the effort to supply jobs to the unemployed, the entire program to clean up our water, and even much of our military manpower (in the form of the National Guard) are enterprises in which the national government does not govern so much as it seeks, by regulation, grant, plan, argument, and category, to get the states to govern in accordance with nationally defined ( though often vaguely defined) goals. In France welfare, highways, education, the police, and the use of land are all matters that are directed nationally. In the United States highways and some welfare programs are largely state functions (though they make use of federal money), while education, policing and land-use controls are primarily local (city, county, or special district) functions.
Federalism: Good or Bad?
A measure of the importance of federalism is the controversy that surrounds it. To some federalism means allowing states to block action, prevent progress, upset national plans, protect powerful local interests, and cater to the self-interest of hack politicians. Harold Laski, a British observer, described American states as parasitic and poisonous, and William H Riker, an American political scientist, argued the main effect of federalism since the civil war has been to perpetuate racism. By contrast, another political scientist, Daniel J. Elazar, believes that the virtue of the federal system lies in its ability to develop and maintain mechanisms vital to the perpetuation the unique combination of governmental strength, political flexibility, and individual liberty, which has been the central concern of American politics. So diametrically opposed are the Riker and Elazar views that one wonders whether they are talking about the same subject. They are, of course, but they are stressing different aspects of the same phenomenon. Whenever the opportunity to exercise political power is widely available, it is obvious that in different places different people will make use of that power for different purposes. There is no question that allowing states and cities to make autonomous, binding political decisions will allow some people in some places to make those decisions in ways that maintain racial segregation, protect vested interests, and facilitate corruption. It is equally true, however, that this arrangement also enables other people in other places to pass laws that attack segregation, regulate harmful economic practices, and purify politics, often long before these ideas gain national support or become national policy. For example, in a unitary political system, such as that of France, a small but intensely motivated group could not have blocked civil rights legislation for as long as some southern senators blocked it in this country. But by the same token it would have been equally difficult for another small but intensely motivated group to block plans to operate a nuclear power plant in their neighborhood, as citizens have done in this country but not in France. The existence of independent state and local governments means that different political groups pursuing different political purposes will come to power in different places. The smaller the political unit, the more likely it is to be dominated by a single political faction. When William Riker condemns federalism, he is thinking of the fact that in some places the ruling factions in cities and states have opposed granting equal rights to African Americans. When Daniel Elazar praises federalism, he is recalling that, in other states and cities, the ruling factions have taken the lead in developing measures to protect the environment, extend civil rights, and improve social conditions. If you live in California, whether you like the federalism depends in part of whether you like the face that California has, independent of the federal govt, cut property taxes, strictly controlled coastal land use, heavily regulated electric utilities, and increased and decreased its welfare rolls.
Increased Political Activity
Federalism has many effects, but its most obvious effect has been to facilitate the mobilization of political activity. Unlike Don Quixote, the average citizen does not tilt at windmills. He or she is more likely to become involved in political activity if he ore she feels there is a reasonable chance of having a practical effect. The chances of having such an effect are greater where there are many elected officials and independent governmental bodies, each with a relatively small constituency, than where there are few elected officials, most of whom have the nation as a whole for a constituency. In short a federal system, by virtue of the decentralization of authority, lowers the cost of organized political activity; a unitary system, because of the centralization of authority, raises the cost. We may disagree about the purposes of organized political activity, but the fact of widespread organized activity can scarcely be doubted- or if it can be doubted, it is only because you have not yet read chapters 6 and 9. It is impossible to say whether the founders, when they wrote the constitution, planned to produce such widespread opportunities for political participation. Unfortunately they were not very clear about how the federal system was supposed to work, and thus most of the interesting questions about the jurisdiction and powers of our national and state governments had to be settled by a century and a half of protracted, often bitter, conflict.
The Founding
The goal of the Founders seems clear: federalism was one device whereby personal liberty was to be protected. (The separation of powers was another.) They feared that placing final political authority in any one set of hands, even the hands of persons popularly elected, would so concentrate power as to risk tyranny. But they had seen what happened when independent states tried to form a compact, as under the Articles of Confederation: what the states put together, they could also take apart. The alliance among the states that existed from 1776 to 1787 was a confederation: that is, a system of government in which the people create state governments, which, in turn, create and operate a national government. Since the national government in a confederation derives its powers from the state, it is dependent on their continued cooperation for its survival. By 1786 that cooperation was barely forthcoming.
A Bold, New Plan
A federation- or a federal republic, as the founders called it- derives its powers directly from the people, as do the state governments. As the founders envisioned it, both levels of government, the national and the state, would have certain powers, but neither would have supreme authority over the other. Madison, writing in federalist no. 46, said that both the state and federal governments are in fact but different agents and trustees of the people, constituted with different powers. In federalist No. 28 Hamilton explained how he thought the system would work: the people could shift their support between state and federal levels of government as needed to keep the two in balance. If their rights are invaded by either, they can make use of the other and the instrument of redress. It was an entirely new plan, for which no historical precedent existed. Nobody came to the Philadelphia convention with a clear idea of what a federal system would look like, and there was not much discussion at Philadelphia of how the system would work in practice. Few delegates then used the word federalism in the sense in which we now employ it. The constitution does not spell out the powers that the states are to have, and until the 10 th amendment was added at the insistence of various states, there was not even a clause in it saying that 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. The founders assumed from the outset that the federal government would have only those powers give to it by the constitution; the 10 th amendment was an afterthought, added to make that assumption explicit and allay fears that something else was intended. The 10 th amendment has rarely had much practical significance, however. From time to time the Supreme Court has tried to interpret that amendment as putting certain state activities beyond the reach of the federal government, but invariably the court has later changed its mind and allowed Washington to regulate such matters as the hours that employees of a city-owned mass-transit system may work. The court did not find that running such a transportation system was one of the powers reserved to the states. But, as we explain later in this chapter, the court has begun to give new life to the 10 th amendment and the doctrine of state sovereignty.
Elastic Language
The need to reconcile the competing interests of large and small states and of northern and southern states, especially as they affected the organization of Congress, was sufficiently difficult without trying to spell out exactly what relationship ought to exist between the national and state systems. For example, Congress was given the power to regulate commerce among the several states. The Philadelphia Convention would have gone on for four years rather than four months if the Founders had decided that it was necessary to describe, in clear language, how one was to tell where commerce among the states ended and commerce wholly within a single state began. The Supreme Court, as we shall see, devoted over a century to that task before giving up. The founders themselves carried away from Philadelphia different views of what federalism meant. One view was championed by Hamilton. Since the people had created the national government, since the laws and treaties made pursuant to the Constitution were the supreme law of the land, and since the most pressing needs were the development of a national economy and the conduct of foreign affairs, Hamilton thought that the national government was the superior and leading force in political affairs and that its powers ought to be broadly defined and liberally construed. The other view, championed by Jefferson, was that the federal government, though important, was the product of an agreement among the state; and though the people were the ultimate sovereigns, the principal threat to their liberties was likely to come from the national government. Thus the powers of the federal government should be narrowly construed and strictly limited. As Madison put it in the Federalist No. 45, in language that probably made Hamilton wince, The powers delegated by the proposed constitution to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite. Hamilton argued for national supremacy, Jefferson for states rights. Though their differences were greater in theory than in practice, the differing interpretations they offered of the Constitution were to shape political debate in this country until well into the 1960s.
The Debate on the Meaning of Federalism
The Civil War was fought, in part, over the issue pf national supremacy versus states rights, but it settled only one part of the argumentnamely, that the national government was supreme, its sovereignty derived directly from the people, and thus the states could not lawfully secede from the Union. Virtually every other aspect of the national-supremacy issue continued to animate political and legal debate for another century.
The Supreme Court Speaks
As arbiter of what the Constitution means, the Supreme Court became the focal pint of that debate. In Chapter 14 we shall see in some detail how the Court made its decisions. For now it is enough to know that during the formative years of the new Republic, the Supreme Court was led by a staunch and brilliant advocate of Hamiltons position, Chief Justice John Marshall. In a series of decisions he and the Court powerfully defended the national- supremacy view of the newly formed federal government. The most important decision was in a case, seemingly trivial in its origins that arose when James McCulloch, the cashier of the Baltimore branch of the Bank of the United States, which had been created by Congress, refused to pay a tax levied on that bank by the state of Maryland. He was hauled into state court and convicted of failing to pay a tax. In 1819 McCulloch appealed all the way to the Supreme Court in a case known as McCulloch v. Maryland. The Court, in a unanimous opinion, answered two questions in ways that expanded the powers of Congress and confirmed the supremacy of the federal government in the exercise of those powers. The first question was whether congress had the right to set up a bank, or any other cooperation, since such a right is nowhere explicitly mentioned in the constitution. Marshall said that, though the federal government possessed only those powers enumerated in the constitution, the extent- that is, the meaning- of those powers required interpretation. Though the word bank is not in that document, one finds there the power to manage money: to lay and collect taxes, issue a currency, and borrow funds. To carry out these powers congress may reasonably decided that chartering a national bank is necessary and proper. Marshalls words were carefully chosen to endow the necessary and proper clause with the wildest possible sweep:
Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consistent with the letter and spirit of the constitution, are constitutional.
The second question was whether a federal bank could lawfully be taxed by a state. To answer it, Marshall went back to first principles. The government of the United States was not established by the states, but by the people, and thus the federal government was supreme in the exercise of those powers conferred upon it. Having already concluded that chartering a bank was within the powers of congress, Marshall then argued that the only way for such powers to be supreme was for their use to be immune from state challenge and for the products of their use to be protected against state destruction. Since the power to tax involves the power to destroy a federal agency would confer upon the states using it supremacy over the federal government, the states may not tax any federal instrument. Hence the Maryland law was unconstitutional. McCulloch won, and so did the federal government. Half a century later the Court decided that what was sauce for the goose was sauce for the gander. It held that just as state governments could not tax federal bonds, the federal government could not tax the interest people on state and municipal bonds. In 1988 the Supreme Court changed its mind and decided that congress was now free, if it wished, to tax the interest on such state and local bonds. Municipal bonds, which for nearly a century were a tax-exempt investment protected, so their holders thought, by the constitution, were now protected only by politics. So far congress hasnt wanted to tax them.
Nullification
The Supreme Court can decide a case without settling the issue. The struggle over states rights versus national supremacy continued to rage in congress, during presidential elections, and ultimately on the battlefield. The issue came to center on the doctrine of nullification. When congress passed laws to punish newspaper editors who published stories critical of the federal government, James Madison and Thomas Jefferson opposed the laws, suggesting that the states had the right to nullify a federal law that, in the states opinion, violated the constitution. The laws expired before the claim of nullification could be settled in the courts. Later the doctrine of nullification was revived by John C. Calhoun of South Carolina, first in opposition to a tariff enacted by the federal government and later in opposition to federal efforts to restrict slavery. Calhoun argued that if Washington attempted to ban slavery, the states had the right to declare such acts unconstitutional and thus null and void. This time the issue was settled- by war. The northern victory in the civil war determined once and for all that the federal union is indissoluble and that states cannot declare acts of congress unconstitutional, a view later confirmed by the Supreme Court.
Dual Federalism
After the civil are the debate about the meaning of federalism focused on the interpretation of the commerce clause of the constitution. Out of this debate there emerged the doctrine of dual federalism, which held that though the national government was supreme in its sphere, the states were equally supreme in theirs, and that these 2 spheres of action should and could be kept separate. Applied to commerce the concept of dual federalism implied that there were such things as interstate commerce, which congress could regulate, and intrastate commerce, which only the states could regulate, and that the court could tell which was which. For a long period the court tried to decide what was interstate commerce based on the kind of business that was being conducted. Transporting things between states was obviously interstate commerce, and so subject to federal regulation. Thus federal laws affecting the interstate shipment of lottery tickets, prostitutes, liquor, and harmful foods and drugs were upheld. On the other hand manufacturing, insurance, and farming, were in the past considered intrastate commerce, and so only the state governments were allowed to regulate them. Such product-based distinctions turned out to be hard to sustain. For example, if you ship a case of whiskey from Kentucky to Kansas, how long is it in interstate commerce, and when does it enter intrastate commerce and become subject only to state law? For a while the courts answer was that the whiskey was in interstate commerce so long as it was in its original package, but that only precipitated long quarrels as to what was the original package and how one is to treat things, like gas and grain, that may not be shipped in packaged at all. And how could one distinguish between manufacturing and transportation when one company did both or when a single manufacturing corporation owned factories in different states? And if an insurance company sold policies to its customers both inside and outside a given state, were there to be different laws regulating identical policies that happened to be purchased from the same company by persons in different states? In time the effort to find some clear principles that distinguished interstate from intrastate commerce was pretty much abandoned. Commerce was like a stream flowing through the country, drawing to itself contributions from thousands of scattered enterprises and depositing its products in millions of individual homes. The court began to permit the federal government to regulate almost anything that affected this stream, so that by the 1940s not only had farming and manufacturing been redefined as part of interstate commerce, but even the janitors and window washers in buildings that housed companies engaged in interstate commerce were now said to be part of that stream. The current court interpretation of various laws pertaining to commerce is immensely complex, difficult to summarize, and impossible to explain. For example, lawyers are said to engage in interstate commerce, but professional baseball players are not, so federal antitrust laws affect the former but not the latter.
State Sovereignty
It would be a mistake to think that the doctrine of dual federalism is entirely dead. Until recently congress, provided that it had a good reason, could pass a law regulating almost any kind of economic activity anywhere in the country, and the Supreme Court would call is constitutional. But in United States v. Lopez (1995) the court held that congress had exceeded its commerce clause power by prohibiting guns in schools. The court reaffirmed the view that the commerce clause does not justify any federal action when, it may 2000, it overturned the Violence against Women act of 1994. This law allowed women who were the victims of a crime of violence motivated by gender to sue the guilty party in federal court. In United States v. Morrison the court, in a 5 to 4 decision, said that attacks against women are not, and do not substantially affect, interstate commerce, and hence congress cannot constitutionally pass such a law. Chief Justice William Rehnquist said, The constitution requires a distinction between what is truly national and what is truly local. The states, of course, can pass such laws, and many have. The court has moved to strengthen states rights on other grounds as well. In Printz v. United States (1997) the court invalidated a federal law that required local police to conduct background checks on all gun purchasers. The court ruled that the law violated the 10 th amendment by commandeering state governments to carry out a federal regulatory program. Writing for the 5 to 4 majority, Justice Antonin Scalia declared, The Federal government may neither issue directives requiring the states to address particular problems, nor command the states officers, or those of their political subdivisions, to administer or enforce a Federal regulatory program. Such commands are fundamentally incompatible with our constitutional system of dual sovereignty. The court has also given new life to the 11 th amendment, which protects states from lawsuits by citizens of other states or foreign nations. In 19999 the court shielded states from suits by copyrights owners who claimed infringement from state agencies and immunized states from lawsuits by people who argued that state regulations create unfair economic competition. In Alden v. Maine (1999) the court held that state employees could not sue to force states compliance with federal fair-labor laws. In the courts 5 to 4 majority opinion, Justice Anthony M. Kennedy states, Although the Constitution grants broad powers to congress, our federalism requires that congress treat the states in a manner consistent with their status as residuary sovereigns and joint participants in the governance of the nation. Not all recent court decisions, however, support greater state sovereignty. In 1999, for example, the court ruled seven to two that state welfare programs might not restrict new residents to the welfare benefits they would have received in the states from which they moved. In addition, each of the courts major pro-state sovereignty decisions has been decided by a tenuous 5 to 4 margin. More generally, to empower states is not to disempower congress, which, as it has done since the late 1930s, can still make federal laws on almost anything as long as it does not go too far in commandeering state resources or gutting states rights. New debates over state sovereignty call forth old truths about the constitutional basis of state and local government. In general a state can do anything that is not prohibited by the constitution or preempted by federal policy and that is consistent with its own constitution. One generally recognized state power is the police power, which refers to those laws and regulations, not otherwise unconstitutional, that promotes health, safety, and morals. Thus the states can enact and enforce criminal codes, require children to attend school and citizens to be vaccinated, and restrict the availability of pornographic materials or the activities of prostitutes and drug dealers. As a practical matter the most important activities of state and local governments involve public education, law enforcement and criminal justice, health and hospitals, roads and highways, public welfare, and control over the use of public land and water supplies. As we saw in chapter 2, the federal constitution is based on a republican, not a democratic, principle: laws are to be made by the representatives of citizens, not by citizens directly. But may state constitutions open one ore more of three doors to direct democracy. About half of the states provide for some form of legislation by initiative. The initiative allows voters to place legislative measures directly on the ballot by getting enough signatures on a petition. About half of the states permit the referendum, a procedure that enables voters to reject a measure adopted by the legislature. Sometimes the state constitution specifies that certain kinds of legislation must be subject to a referendum whether the legislature wishes it or not. The recall is a procedure, in effect in about one third of the states, whereby voters can remove an elected official from office. If enough signatures are gathered on a petition, the official must go before voters, who can vote to leave the person in office, remove the person from office, or remove the person and replace him or her with someone else. The existence of the states is guaranteed by the federal constitution: no state can be divided without its consent, each state must have 2 representatives in the senate, every state is assured of a republican form of government, and the powers not granted to congress are reserved for the states. By contrast, cities, towns, and counties enjoy no such protection: they exist at the pleasure of the states. Indeed, states have frequently abolished certain kinds of local governments, such as independent school districts. Without exception the legal terms of local governance are determined by the states. This explains why there is no debate about the city sovereignty comparable to the debate about state sovereignty. The constitutional division of power between them is settled: the state is supreme. But federal-state relations can be complicated, because the constitution invites elected leaders to struggle over sovereignty. Which level of government has the ultimate power to decide where nuclear waste gets stored, how much welfare beneficiaries are paid, what rights prisoners enjoy, or whether supersonic jest can land at local airports? American federalism answers such questions, but on a care by case basis through intergovernmental politics and court decisions.
Federal-State Relations
Though constitutionally the federal government may be supreme, politically it must take into account the fact that the laws it passes have to be approved by members of congress selected from and responsive to, state and local constituencies. Thus what Washington lawfully may do is not the same thing as what it politically may wish to do. For example, in 1947 the Supreme Court decided that the federal government and not the states had supreme authority over oil beneath the ocean off the nations coasts. Six years later, after an intense debate, congress passed and the president signed a law transferring title to these tideland oil reserves back to the states.
Grants in Aid
The best illustration of how political realities modify legal authority can be found in federal grants-in-aid. The first of these programs began even before the constitution was adopted, in the form of land grants made by the national government to the states in order to finance education. Land grants were also made to support the building wagon roads, canals, railroads, and flood-control projects. These measures were hotly debated in congress, even though the use to which the grants were put was left almost entirely to the states. Cash grants in aid began almost as early. In 1808 congress gave $200,000 to the states to pay for their militias, with the states in charge of the size, deployment, and command of these troops. However, grant in aid programs remained few in number and small in price until the twentieth century, when scores of new ones came into being. In 1915 less than 6 million was spent per year in grants in aid; by 1925 over 114 million was spent; by 1937 the figure was nearly 300 million. The greatest growth began in the 1960s: between 1960 and 1966 federal grants to the states doubled; from 1966 to 1970 they doubled again; between 1970 and 1975 they doubled yet again. By 1985 they amounted to over 100 billion a year and were spent through more than 400 separate programs. The five largest programs accounted for over half the money spent and reflected the new priorities that federal policy had come to serve: housing assistance for low income families, services to the unemployed, and welfare programs for mothers with dependent children for the disabled. The grant in aid system grew rapidly because it helped state and local officials resolve a dilemma. On the one hand they wanted access to the superior taxing power of the federal government. On the other hand prevailing constitutional interpretation, at least until the late 1930s, held that the federal government could not spend money for purposes not authorized by the constitution. They solution was obviously to have federal money put into state hands: Washington would pay the bills; the states would run the programs. There were 4 reasons why federal money seemed so attractive. First, the money was there. During most of the 19 th
century and the early decades of the 20 th , the federal government was taking in more money than it was spending. The high tariff policies of the republicans produced a large budget surplus; in the 1880s Washington literally had more money than it knew what to do with. Some went to pay off a big part of the national debt, some was given to civil war veterans as pensions, and some went to the states or was otherwise used for internal improvements. By the mid 20 th century, when budget surpluses had pretty much become a thing of the past, a 2 nd reason for turning to Washington became evident: the federal income tax. Inaugurated in the 1920s it proved to be a marvelously flexible tool of public finance, for it automatically brought in more money as economic activity grew. Third the federal government, unlike the states, managed the currency and thus could print more money whenever it needed it. The size of the federal public debt stayed more or less constant, or even declined, in the 2 nd half of the 19 th century. By the mid 20 th century people no longer worried about the national debt so much, or at least they worried about it for reasons other than the fear of being in debt. Thus the federal government came to accept, as a matter of policy, the proposition that when it needed money, it would print it. States could not do this: if they borrowed, they had to pay it back, in full. These 3 economic reasons for the attractiveness of federal grants were probably not as important as a 4 th reason: politics. Federal money seemed to a state official to be free money. If Alabama could get Washington to put up the money for improving navigation on the Tombigbee River, the citizens of the entire nation, not just those of Alabama, would pay for it. Of course if Alabama gets money for that purpose, every state will want it. Even so it was still and attractive political proposition: the governor of Alabama did not have to propose, collect, or take responsibility for federal taxes. Indeed, the governor could denounce the federal government for being profligate in its use of the peoples money. Meanwhile he would cut the ribbon opening the new dam on the Tombigbee. That every state had an incentive to ask for federal money to pay for local programs meant, of course, that it would be very difficult for one state to get money for a given program without every states getting it. The senator from Alabama who votes for the project to improve navigation on the Tombigbee will have to vote in favor of projects improving navigation on every other river in the country if the senator expects his or her senate colleagues to support such a request. Federalism as practiced in the United States means that when Washington wants to send money to one state or congressional district, it must send money to many states and districts. In 1966, for example, President Lyndon Johnson proposed a model cities plan, under which federal funds would be spent on experimental programs in a small number of large cities that had especially acute problems. When the bill went to congress, it quickly became clear that no such plan could be passed unless the number of cities to benefit was increased. Senator Edmund Muskie of Maine, whose support was crucial, would not vote for a bill that did not make Augusta, Bangor, and Portland eligible for aid originally intended to help New York, Chicago, and Philadelphia.
Meeting National Needs
Until the 1960s most federal grants in aid were conceived by or in cooperation with the states and were designed to serve essentially state purposes. Large blocs of voters and a variety of organized interests would press for grants to help farmers, build highways, or support vocational education. During the 1960s, an important change occurred: the federal government began devising grant programs based less on what states were demanding and more on what federal officials perceived to be important national needs. Federal officials, not state and local ones, were the principal proponents of grand programs to aid the urban poor, combat crime, reduce pollution, and deal with drug abuse. Some of these programs even attempted to bypass the states, providing money directly to cities or event to local citizen groups. These were worrisome developments for governors, who were accustomed to being the conduit for money on its way from Washington to local communities. The rise in federal activism in setting goals and the efforts, on occasion, to bypass state officials occurred at a time when the total amount of federal aid to sates and localities had become so vast that many jurisdictions were completely dependent on it for the support of vital services. Whereas federal aid amounted to less than 2 percent of state and local spending in 1927, by 1980 it amounted to 26 percent, and total aid to state and local governments was 15.4 percent of the federal budget. Some older, larger cities had become what one writer called federal-aid junkies, so dependent were they on these grants. In 1978 in Detroit 77 percent of the revenue the city raised came from Washington.
The Intergovernmental Lobby
State and local officials, both elected and appointed, began to form an important new lobby- the intergovernmental lobby, made up of mayors, governors, superintendents of schools, state directors of public health, country highway commissioners, local police chiefs, and others who had come to count on federal funds. The 4 th largest of these lobbies employed, in 1998, nearly 400 people and spent about 62 million, about 10 percent of which came from the federal government. Even this has proved insufficient. After all, national organizations of governors or mayors can press for more federal money but not far increased funding for any particular state or city. Thus over 31 individual states, more than 2 dozen counties and over 100 cities have opened their own offices in Washington. Some are small, some share staff with other communities, but a few are quite large. Texas alone employs two dozen people in Washington to look after its interests. The purpose of this intergovernmental lobby was the same as that of any private lobby- to obtain more federal money with fewer strings attached. For a while the cities and states did in fact get more money, but by 1980 federal grants had stopped growing.
Categorical Grants versus Revenue Sharing
The effort to loosen the strings took the form of shifting, as much as possible, the federal aid from categorical grants to block grants or to revenue sharing. A categorical grant is one for a specific purpose defined by federal law: to build an airport or a college dormitory, for example, or to make welfare payments to low- income mothers. Such grants usually require that the state or locality put up the money to match some part of the federal grant, though the amount of matching funds can be quite small. Governors and mayor complained about these categorical grants because their purposes were often so narrow that it was impossible for a state to adapt federal grants to local needs. A mayor seeking federal money to build parks might have discovered that the city could get money only if it launched an urban renewal program that entailed bulldozing several blocks of housing or small businesses. One response to this problem was to consolidate several categorical or project grant programs into a single block grant devoted to some general purpose and with fewer restrictions on its use. Block grants began in the mid 1960s when such a grant was created in the health field. Though many block grants were proposed between 1966 and 1980, only 5 were enacted. Of the 3 largest, one consolidated various categorical grant programs aimed at cities; another created a program to aid local law enforcement, and a third authorized new kinds of locally managed programs for the unemployed. Between 1980 and 1995 the number of block grants in effect rose from 5 to 16. Revenue sharing was even more permissive. Adopted in 1972 with the passage of the state and local fiscal assistance act, GRS provided for the distribution of about 6 billion a year in federal funds to states and localities, with no requirement as to matching funds and freedom to spend the money on almost any governmental purpose. Distribution of the money was determined by a statistical formula that took into account population, local tax effort, and the wealth of the state in a way intended to send more money to poorer, heavily taxed states and less to richer, lightly taxed ones. In 1986 the program was ended after having distributed about 85 billion over a 14-year period In theory block grants and revenue sharing were supposed to give the states and cities considerable freedom in deciding how to spend the money while helping to relieve their tax burdens. To some extent they did. However, neither the goal of no strings nor the one of fiscal relief was really attained. First the amount of money available from block grants and revenue sharing did not grow as fast as the states had hoped or as quickly as did the money available through categorical grants. Second the federal government steadily increased the number of strings attached to the spending of this supposedly unrestricted money. Thus between 1993 and 1995 the number of federal grants to state and local governments increased from 599 to 633. The entire growth was in categorical grants; no new block grants were established. In 1995, as in 1975, roughly 85 to 90 percent of total federal grant dollars were in categorical programs.
The Slowdown in Free Money
Block grants grew more slowly than categorical grants because of the different kinds of political coalitions supporting each. Congress and the federal bureaucracy liked categorical grants for the same reason the states disliked them- the specificity of these programs enhanced federal control over how the money was to be used. Federal officials, joined by liberal interest groups and organized labor, tended to distrust state governments. Whenever congress wanted to address some national problem, its natural inclination was to create a categorical grant program so that it, and not the states, would decide how the money would be spent. Moreover, even though governors and mayors like block grants and revenue sharing, these programs cover such a broad range of activities that no single interest group has a vital stake in pressing for their enlargement. Revenue sharing, for example, provided a little money to many city agencies but rarely provided all or even most of the money for any single agency. Thus no single agency acted as if the expansion of revenue sharing were a life and death matter. Categorical grants, on the other hand, are often a matter of life and death for many agencies- state departments of welfare, of highways, and of health, for example, are utterly dependent on federal aid. Accordingly the administrators in charge of these programs will press strenuously for their expansion. Moreover, special committees of congress supervise categorical programs, and as we shall see in chapter 11, many of these committees have an interest in seeing their programs grow. As a result of the political differences between categorical grants and block grants or revenue sharing, the amount spent on the former tends to increase faster than the amount spent on the latter. Between 1975 and 1978 the amount spent on revenue sharing increased by 11 percent, but that spent on categorical grants increased by 56 percent. One observer explained: you dilute the constituency when you make aid more general. Say you had a program to control a disease. Youd get everyone in the country interested in that disease to focus on that one subject, and a congressman to become the champion of it there just is not that much sympathy to increase revenue sharing. So little support did general revenue sharing have that, in their debate over the 1986 budget, almost the only thing democrats and republicans could agree on was abolishing revenue sharing, which they did. Not only did general revenue sharing lack a constituency, but also it was a wasteful way of trying to help poor communities. The waste resulted from the fact that every community- some thirty-nine thousand in all-got revenue sharing money, whether it was rich or poor. Paw Paw, West Virginia, a town devastated by a loss of jobs, received only $11,874 from revenue sharing, but that amounted to more than one-third of all the tax money it collected and was enough to pay the salary of its lone police officer. Beverly hills, California, a city so affluent and exclusive that, as the joke goes, the police department has an unlisted phone number, also got revenue sharing money.
Rivalry Among the States
The more important that federal money becomes to the states, the more likely they are to compete among themselves for the largest share of it. For a century or better the growth of the united states- in population, business, and income- was concentrated in the industrial northeast. In recent decades, however, that growth- at least in population and employment, if not in income- has shifted to the South, Southwest, and Far West. This change has precipitated an intense debate over whether the federal government, by the way it distributes its funds and awards its contracts, is unfairly helping some regions and states at the expense of others. Journalists and politicians have dubbed the struggle as one between Snowbelt (or Frostbelt) and Sunbelt states. Whether in fact there is anything worth arguing about is far from clear: the federal government has had great difficulty in figuring out where it ultimately spends what funds for what purposes. For example, a $1 billion defense contract may go to a company with headquarters in California, but much of the money may actually be spent in Connecticut or New York, as the prime contractor in California buys from subcontractors in the other states. It is even less clear whether federal funds actually affect the growth rate of the regions. The uncertainty about the facts has not prevented a debate about the issue, however. That debate focuses on the formulas written into federal laws by which block grants are allocated. These formulas take into account such factors as a county or citys population, personal income in the area, and housing quality. A slight change in a formula can shift millions of dollars in grants in ways that favor either the older, declining cities of the northeast or the newer, still-growing cities of the southwest. With the advent of grants based on distributional formulas, the results of the census, taken every 10 years, assume monumental importance. A city or state shown to be losing population may, as a result, forfeit millions of dollars in federal aid. There are over 100 programs that distribute money on the basis of population. When the director of the census in 1960 announced figures showing that many big cities had lost population, he was generally ignored. When he made the same announcement in 1980, after the explosion of federal grants, he was roundly denounced by the mayors of those cities. Senators and representatives now have access to computers that can tell them instantly the effect on their states and districts of even minor changes in a formula by which federal aid is distributed. These formulas rely on objective measures, but the exact measure is selected with an eye to its political consequences. There is nothing wrong with this in principle, since any political system must provide some benefits for everybody if it is to stay together. Given the competition among the states in a federal system, however, the struggle over allocation formulas becomes especially acute. The results are sometimes plausible, as when congress decides to distribute money intended to help disadvantaged local school systems in large part on the basis of the proportion of poor children in each school district. But sometimes the results are a bit strange, as when the formula by which federal aid for mass transit is determined gives New York, a city utterly dependent on mass transit, a federal subsidy of 2 cents per transit passenger but gives Grand Rapids, a city that relies chiefly on automobile, a subsidy of 45 cents per passenger.
Federal Aid and Federal Control
So important has federal aid become for state and local governments that mayors and governors along with others, began to fear that Washington was well on its way to controlling other levels of government. He who pays the piper calls the tune, they muttered. In this view the constitutional protection of state government to be found in the 10 th amendment was in jeopardy as a result of the strings being attached to the grants-in-aid on which the states were increasingly dependent. Block grants and revenue sharing were efforts to reverse this trend by allowing the states and localities freedom to spend money as they wished. But as we have seen, these new devices did not in fact reverse the trend. Until 1978 block grants and revenue sharing increased until they amounted to 27 percent of all federal grants to states and localities but then began to decline, so that by 1986 they accounted for only 18 percent of such aid. Categorical grants-those with strings attached- continued to grow even faster. There are 2 kinds of federal controls on state governmental activities. The traditional control tells the state government what it must do if it wants to get some grant money. These strings are often called conditions of aid. The newer form of control tells the state government what it must do, period. These rules are called mandates. Sometimes the mandates must be observed only if the state stakes any federal grants, but sometimes the mandates have nothing to do with federal aid- they apply to all state governments whether or not they accept grants.
Mandates
Most mandates concern civil rights and environmental protection. States may not discriminate in the operation of their programs, no matter who pays for them. Initially the antidiscrimination rules applied chiefly to distinctions based on race, sex, age, and ethnicity, but of late they have been broadened to include physical and mental disabilities as well. Various pollution control laws require the states to comply with federal standards for clean air, pure drinking water, and sewage treatment. Stated in general terms, these mandates seem reasonable enough. It is hard to imagine anyone arguing that state governments should be free to discriminate against people because of their race or national origin. In practice, however, some mandates create administrative and financial problems, especially when the mandates are written in vague language, thereby giving federal administrative agencies the power to decide for themselves what state and local governments are supposed to do. In 1980 there were 36 mandates affecting state and local governments, 22 of them enacted in the 1970s. Both the Reagan administration and the Bush administration opposed the growth of mandates. Nevertheless, between 1981 and 1986 some 140 regulations, representing nearly 6,000 new requirements on state and local government, were added to 18 existing mandates. And between 1982 and 1991 congress passed 27 additional mandates. All mandates are not created equal. Some mandates take the form of regulatory statutes and amendments that expand on previous legislation; the 1982 voting rights act amendments were based on federal civil rights laws dating back to the 1960s. Other mandates represent new areas of federal involvement. For example, the 1986 handicapped childrens protection act introduced federal regulations intended to improve the life prospects of disabled youngsters. Some mandates are easy to understand, simple to administer, and relatively inexpensive- for example, the 1988 ocean dumping ban act, which prohibits any additional dumping of municipal sewage sludge in ocean waters. However, many mandates are hard to interpret, difficult to administer, and have high or uncertain costs. The 1990 Americans with disabilities act (ADA), which required businesses and sate and local governments to provide the disabled with equal access to services, employment, buildings, and transportation systems, was one of 20 mandates signed into law by president Bush in 1990. Unfortunately the ADA was enacted with no clear-cut definition of equal access, no ambiguous blueprint of how it was to be administered, and no reliable estimates of how much it would cost to implement. Republican leaders in the 104 th congress promised to roll back mandates. They took special aim at requirements from Washington that dictates actions by state and local governments without providing the money to carry them out. For example, in 1993 the U.S. conference of mayors claimed that it cost 314 cities $6.5 billion to comply with just 10 federal laws that contained such unfounded mandates. In 1995 congress passed and President Clinton signed a law that directed the congressional budget office to identify any bill, amendment, or conference report that would impose a new mandate of more than $50 million on state and local governments. But the law neither repealed existing unfounded mandates nor prohibited new ones, and it exempted all antidiscrimination legislation. Mandates are not the only way in which the federal government imposes costs on state and local governments. According to a 1994 study by the U.S. advisory commission on intergovernmental relations, certain federal tax and regulatory policies make it difficult or expensive for state and local governments to raise revenues, borrow funds, or privatize public functions. Other federal laws expose state and local governments to financial liability, and numerous federal court decisions and administrative regulations require state and local governments to do or not do various things, either by statute or through an implied constitutional obligation. Its clear that the federal courts have helped fuel the growth of mandates. As interpreted in this century by the U.S. Supreme Court, the 10 th amendment provides state and local officials no protection against the march of mandates. Indeed, many of the more controversial mandates result not from congressional action but from court decisions. For example, many state prison systems have been, at one time or another, under the control of federal judges who required major changes in prison construction and management in order to meet standards the judges derived from their reading of the constitution. School-desegregation plans are of course the best known example of federal mandates. Those involving busing- an unpopular policy- have typically been the result of court orders rather than of federal law or regulation. Judges-usually, but not always, in federal courts- have ordered Massachusetts to change the way it hires its fire fighters, required Philadelphia to institute new procedures to handle complaints of police brutality, and altered the location in which Chicago was planning to build housing projects. Note that in most of these cases nobody in Washington was placing a mandate on a local government; rather a local citizen was using the federal courts to change a local practice. The Supreme Court has made it much easier of late for citizens to control the behavior of local officials. A federal law, passed in the 1870s to protect newly freed slaves, makes it possible for a citizen to sue any state or local official who deprives that citizen of any rights, privileges, or immunities secured by the constitution and laws of the United States. In 1980 the court decided that this law permitted a citizen to sue a local official if the official deprived the citizen of anything to which the citizen was entitled under federal law. For example, a citizen can now use the federal courts to obtain from a state welfare office a payment to which he or she may be entitled under federal law. No one yet knows how this development will affect the way local government operates.
Conditions of Aid
By far the most important federal restrictions on state action are the conditions attached to the grants the states receive. In theory accepting these conditions is voluntary- if you dont want the strings, dont take the money. But when the typical state depends for a quarter or more of its budget on federal grants, many of which it has received for year and on which many of its citizens depend for their livelihoods, it is not clear exactly how voluntary such acceptance is. During the 1960s some strings were added, the most important of which had to do with civil rights. But beginning in the 1970s the number of conditions proliferated. One study of federal grant programs in 5 large states found that between 1951 and 1978 over a thousand conditions had been added to these programs; nearly 90 percent had been added after 1971. Some conditions are specific to particular programs. For example, if a state does not establish a highway beautification program, it will lose 10 percent of its federal highway aid money. Others are general, covering most or all grants. For instance, if a state builds something with federal money, it must first conduct an environmental impact study, it must pay construction workers the prevailing wage in the area, it often must provide an opportunity for citizen participation in some aspects of the design or location of the project, and it must ensure that the contractors who build the project have nondiscriminatory hiring policies. The sates and the federal government, not surprisingly, disagree about the costs and benefits of such rules. Members of congress and federal officials feel they have an obligation to develop uniform national policies with respect to important matters and to prevent states and cities from misspending federal tax dollars. State officials, on the other hand, feel these national rules fail to take into account diverse local conditions, require the states to do things that the states must then may for, and create serious inefficiencies. What state and local officials discovered, in short, was that free federal money was not quite free after all. In the 1960s federal aid seemed to be entirely beneficial; what mayor or governor would not want such money? But just as local officials found it attractive to do things that another level of government then paid for, in time federal officials learned the same thing. Passing laws to meet the concerns of national constituencies- leaving the cities and states to pay the bills and manage the problems- began to seem attractive to congress. Ones perspective depends on what office one holds, as it revealed by this statement by former New York City mayor Edward I. Koch, who once had been a congressman: As a member of congress I voted for many of the laws imposing grant conditions, and did so with every confidence that we were enacting sensible permanent solutions to critical problems. It took a plunge into the mayors job to drive home how misguided my congressional outlook had been. The bills I voted for came to the floor in a form that compelled approval. After all, who can vote against clean air and water or better access and education for the handicapped? But as I look back it is hard to believe I could have been taken in by the simplicity of what the congress was doing and by the flimsy empirical support offered to persuade the members that the proposed solution would work throughout the country.
As is evident from the mayors remarks, the tensions in the federal system do not arise from one level of government or another being callous or incompetent, but from the kinds of political demands with which each must cope. Because of these competing demand, federal and local officials find themselves in a bargaining situation in which each side is trying to get some benefit while passing on to the other side most of the costs. The bargains struck in this process used to favor the local officials, because members of congress were essentially servants of local interests: they were elected by local political parties, they were part of local political organizations, and they supported local autonomy. Beginning in the 1960s, however, changed in American politics that will be described in later chapters- especially the weakening of political parties, the growth of public-interest lobbies in Washington, and the increased activism of the courts- shifted the orientation of many in congress toward favoring Washingtons needs over local needs. Various presidents have tried to reverse this trend, bit with little success. President Nixon proclaimed the new federalism and helped create revenue sharing and block grants, but as we shall see, federal mandate and conditions of aid grew rather than declined during his administration. In 1981 president Reagan asked congress to consolidate 83 categorical grants into 6 large block grants, one of which would seriously restrict how the states could spend the money. Congress went along in name only- it consolidated 57 programs into 9 small block grants, each of which had may restrictions attached. In general the states did not respond to Reagan-era block grants and budget cuts simply by slashing programs. A state by state study led by Richard P. Nathan found that state and local government responses to the 1981 federal aid cuts- through replacement funding, through a wide variety of financial coping and delaying measures, and through administrative reforms- actually produced higher service levels than otherwise would have been the case. Likewise another study concluded that on balance the Reagan block grants had promoted greater state flexibility in program design, reduced administrative costs, and necessitated little reduction in services despite the fact that states had to operate with about 13 percent fewer federal dollars. In fact it appears that the Reagan-era cutbacks in the amount of federal money, and the threat of more to come, led many governors and mayors to find new ways of delivering old services. Many cities turned over trash collection and other tasks to private firms, often realizing financial savings. Many states experimented with ways of inducing welfare recipients to take jobs, thereby saving on welfare payments. During the prosperous 1980s the cutback in federal aid was made easier to bear because the economy brought in more tax money to the states without their having to raise new taxes. In tough times, such as the early 1990s, the states struggle to make ends meet. By the mid 1990s, however, the economy was back on track, and the effort begun by the Reagan administration to devolve federal power to the states got a powerful new push by the 104 th
congress.
A Devolution Revolution?
With the election of republican majorities in the house and senate in 1994, a renewed effort was led by congress to shift important functions back to the states. The key first issue was welfare- that is, aid to families with dependent children (AFDC). Since 1935 there had been a federal guarantee of cash assistance to states that offered support to low income, unmarried mothers and their children. AFDC had become bitterly controversial as the number of women using it and the proportion of births out of wedlock rose dramatically. President Clinton vetoed the first two bills to cut it back but signed the third. It ended any federal guarantee of support and, subject to certain rules, turned the management of the program entirely over to the states, aided by federal block grants. The rules said that every aided woman should begin working within 2 years and no woman should receive benefits for more than five years. These and other republican initiatives were part of a new effort called devolution, which aimed to pass on to the states many federal functions. It is an old idea by one that acquired new vitality because congress was leading the effort. Traditionally members of congress liked voting for federal programs and categorical grants; that way members could take credit for what they were doing for particular constituencies. Under its new conservative leadership congress, and especially the house, was looking for ways to scale back the size and activities of the national government. Even Clinton seemed to agree when, in his 1996 state of the union address, he said that the ear of big national government was over. But whatever politicians say, no one really knows how best to divide the responsibility between Washington and the states.
Block Grants for Entitlements
Consider what happened with block grants. Basically, there are 3 types of block grants; operational grants, for purposes such as running sate child care programs; capital grants, for purposes such as building local wastewater treatment plants; and entitlement grants, for transferring income to families and individuals. From 1966 to 1994 a total of 23 block grants were enacted, and 15 were still in place when the 104 th congress came to power. But all of these block grants, including all 9 of the Reagan-era block grants, were for operating and capital purposes; none were for major entitlement programs. Thus in 1995, of the $38.4 billion in federal block grant money, 29 percent was for operating programs, 67 percent was for capital programs, and only 4 percent was for entitlement programs. Block grant programs represented about 15 percent of the $ 238.5 billion in federal grants to states, localities, and non-profit organizations. The federal governments 2 biggest grant in aid programs- ADFC, often referred to simply as welfare, which provides cash assistance to the poor, and Medicaid, which finances the majority of medical and long term care services for low income and disabled adults and children- were not created as block grant programs. Together they accounted for half of all federal grants in aid spending. Both were operated as entitlement programs. Each state was entitled to federal dollars for AFDC and Medicaid based on the amount of money it paid to poor families and individuals. In turn each state determined the level and range of the benefits eligible individuals receive, within a framework defined by federal laws and regulations. The Reagan administration once considered making AFDC a block grant program in exchange for centralizing Medicaid, but this was never introduced to congress. By contrast, republicans in the 104 th congress made a flurry of proposals form making both AFDC and Medicaid into block grant programs, as well as federal job training, vocational education, employment, childcare, foster care, school nutrition, and food programs. All told these proposals, had the been enacted, would have increased federal block grants to about 183 billion and catapulted the amount of block grant funds in income transfer programs from only 4 percent to nearly 79 percent. In the end the devolution revolutionaries of the 104 th congress did not succeed in turning Medicaid into a block grant program. But they did succeed with AFDC and a number of related programs. And they did put the devolution of Medicaid and other important federal programs squarely on the national political agenda, possibly to stay. There is also some early evidence that the devolution of federal welfare programs has triggered second order devolution, a flow of power and responsibility from the states to the local governments, and third order devolution, the increased role of nonprofit organizations and private groups in policy implementation. For example, until the 1996 federal welfare reform law took effect, few states administered their welfare systems in close working partnerships with city or county governments. By 2000, 15 states were using so-called county administered systems. Subject to state discretion, scores of local governments are now designing and administering welfare programs through for profit firms and a wide variety of non profit organizations, including local religious congregations. The total number of people on welfare in America fell from 14.1 million in Jan. 1993 to 8.9 million in March 1998. Between 1994 and 1998 the welfare rolls in thirty of the largest cities declined by 35 percent. Observers disagree about how much the devolution of welfare policy had to do with these drops. But one thing is clear: with fewer people on welfare rolls receiving cash assistance, states have amassed billions of dollars in unspent federal welfare funds. It appears that many states are spending at least part of their so called welfare surpluses on other social service programs. So far devolution has been associated with increased spending by all levels of government on such intergovernmental programs as child welfare services. In fact in some states the spending increases have been so large that total welfare spending is up despite steep declines in spending on cash assistance programs.
Whats Driving Devolution?
The drive for devolution has complex roots, but 3 forces stand out. According to R. Kent Weaver, the house republicans who spearheaded the devolution effort harbored a deep seated ideological mistrust of the federal government reinforced by the belief that governments closer to the people were more responsive to popular sentiment, and more likely to constrain the growth of programs that were wasteful and redistributive. At the same time, by 1994 many governors of both parties were convinced that the time had come to let state capitals take the lead in figuring out how best to address social problems and administer public health and welfare programs. But deficit politics also played a role. Congressional republicans sound not only to fund entitlement programs with block grants instead of categorical grants but also to make major cuts in entitlement spending. In the words of Richard P. Nathan, there is probably no way any big federal deficit reduction targets can be met without striking a deal whereby governors get more power in exchange for going along with growth caps on grants in aid. Once you put a growth cap on these programs, you have to give the state added flexibility to meet them. Whether you call this a block grant or not does not matter. The result is programs that look and function like block grants. As figure 3.5 suggests, most Americans favor devolution. But it remains unclear how deep public sentiment in favor of devolution runs when shifting responsibility to the states also means cutting specific program benefits.
Congress and Federalism
Just as it remains to be seen whether the Supreme Court will continue to revive the doctrine of state sovereignty, so it is not yet clear whether the devolutions movement will gain momentum, stall, or be reserved. But whatever the movements fate, the United States will not become wholly centralized nation. There remains more political and policy diversity in American than one is likely to find in any other large industrialized nation. The reason is not only that state and local governments have retained certain constitutional protections but also that members of congress continue to think of themselves as the representatives of localities to Washington and not as the representatives of Washington to the localities. As we shall see in chapter 11, American politics, even at the national level, remains local in its orientation. But if this is true, why do these same members of congress pass laws that create so many problems for mayors and governors? One reason is that members of congress represent different constituencies from the same localities. For example, one member of congress from L.A. may think of the city as a collection of businesspeople, homeowners, and taxpayers, while another may think of it as a group of African Americans, Hispanics, and nature lovers. If Washington wants to simply send money to L. A. these 2 representatives could be expected to vote together. But if Washington wants to impose mandates or restrictions on the city, they might very well vote on opposite sides, each voting as his or her constituents would most likely prefer. Another reason is that the organizations that once linked members of congress to local groups have eroded. As we shall see in chapter 7, the political parties, which once allowed many localities to speak with a single voice in Washington, have decayed to the point where most members of congress now operate as free agents, judging local needs and national moods independently. In the 1960s these needs and moods seemed to require creating new grant programs; in the 1970s they seemed to require voting for new mandates; in the 1980s they seemed to require letting the cities and states alone to experiment with new ways of meeting their needs. There are exceptions. In some states the parties continue to be strong, to dominate decision making in the state legislature, and to significantly affect the way their congressional delegations behave. Democratic members of congress from Chicago, for example, typically have a common background in party politics and share at least some allegiance to important party leaders. But these exceptions are becoming fewer and fewer. As a result, when somebody tries to speak for a city or state in Washington, that person has little claim to any real authority. The mayor of Philadelphia may favor one program, the governor of Pennsylvania may favor another, and individual local and state officials school superintendents, the insurance commissioner, public health administrators may still favor others. In bidding for federal aid, those parts of the state or city that are best-organized often do the best, and increasingly the best-organized groups are not the political parties but rather specialized occupational groups such as doctors or school-teachers. If one is to ask, therefore, why a member of Congress does not listen to his or her state anymore, the answer is, What do you mean by the state? Which official, which occupational group, which party leader speaks for the state? Finally, Americans differ in the extent to which we like federal as opposed to local decisions. When people are asked which level of government gives them the most of their money, relatively poor citizens are likely to mention the federal government first, whereas relatively well-to-do citizens are more likely to mention local government. If we add to income other measures of social diversity race, religion, and region there emerge even sharper differences of opinion about which level of government works best. It is this social diversity, and the fact that it is represented not only by the state and local leaders but also by members of Congress, that keeps federalism alive and makes it so important. Americans simply do not agree on enough things, or even on which level of government ought to decide on those things, to make possible a unitary system.
Unit II Congressional District Questions Q1: How Does The Constitution Limit Government Power To Protect Individual Rights While Promoting The Common Good?