STATE ATTORNEYS-GENERAL STRETCH THE BOUNDARIES

The opening story highlights several things about federalism. The nature of federalism is always changing. The particular balance of national and state powers and responsibilities is never set in concrete but is perpetually in flux, responding to changing times, the calculations of political leaders, and wishes of the American people. When the national government has become exceptionally powerful relative to the states, the states remain important players in American politics and government.

Traditionally, state attorneys-general have focused their attention on issues pertaining to their own states. In Colorado in 2003, Attorney General Ken Salazar, among other things, responded to consumer complaints lodged against state agencies or private companies, brought action against firms violating the state's "no call" list, ruled that police records on the Columbine massacre be deposited in the state archives, sponsored a report on youth violence, brought legal action against companies violating Colorado pollutions laws, and warned the public about bank check scams. Each state's attorneys-general are now and have long been engaged in similar sorts of activities. However, in the last decade, state attorneys-general, including Ken Salazar, have greatly expanded the scope of their activities, taking on broad national issues and forcing policy changes well beyond the borders of their own states. Here are a few examples:

In 2002, the Ford Motor Company paid a settlement of $52 million to settle claims about false advertising about the safety of its sport utility vehicles. The settlement was not in response to action by federal authorities but to action brought in unison by the 50 state attorneys-general. State attorneys-general were the major players in the antitrust suit brought against Microsoft. The attorneys-general from California, Massachusetts, Pennsylvania, New Hampshire, New Jersey, and New York jointly filed a suit against the Environmental Protection Agency (EPA) for its decision to ease restrictions on power plant emissions. The landmark tobacco settlement-in which American tobacco companies agreed to pay the states a sum of $246 billion over 25 years-was engineered by coalition of attorneys-general from 46 states.

The most visible and successful of the new, activist attorneys-general is Eliot Spitzer of New York. Spitzer recently reached settlements in cases involving predatory lending practices, unsavory hedge-fund policies, drug pricing, conflicts of interest on Wall Street, and most famously unethical (and possibly illegal) practices in the mutual fund industry. He has also taken on Email spammers, polluting power companies, and gun manufacturers operating outside of his own state.

Observers offer numerous explanations as to why state attorneys-general have become so active in a wide range of activities which were previously considered the business of the national government. Critics of this new activism have suggested that the effort to achieve huge monetary settlements is propelled by states' needs to balance their own budgets in a time of fiscal crisis. Other, more neutral observers see the emergence of a new style of behavior among attorneys-general that is more correctly explained by shifts in federal government policies, particularly the effort to download a number of former federal responsibilities to the state and a decline in the regulatory efforts of federal agencies such as the EPA and the SEC.

FEDERALISM AS A SYSTEM OF GOVERNMENT

Federalism refers to the division of power between the national government and the states. Significant government powers are divided between the central government and smaller governmental units; neither one completely controls the other, and each has some room for independent action. In our federal system, policy is made by the states as well as by the national government. By contrast, a confederation is a political system in which constituent units or states retain ultimate authority and can veto major actions of the central government. In a unitary system, the central government exercises all governmental powers and can change its constituent units. Federalism is not a common way of organizing governments around the world; the most common form of government today is unitary. However, there are no neat boundaries among different forms of government; scholars have suggested that there is a continuum from unitary, to formally federal, quasi-federal, federal, and confederate systems.

Federalism is rooted in history at least as far as the Union of Utrecht in the Netherlands in 1579, but federalism as it exists today is largely an American invention. American federalism emerged from the way in which the states declared independence from Britain. The framers turned to federalism as a middle-ground solution between the failed confederation model based on the United States experience under the Articles of Confederation and a unitary form of government. Federalism was a form of government that was consistent with the eighteenth century republicanism of the framers. Most federal systems around the world are found in countries that are geographically large and have regions that differ in economic activity, religion, ethnicity, and language. The United States, too, is large and diverse. In The Federalists Papers, the Founders argued that this size and diversity made federalism appropriate for the new United States.

FEDERALISM IN THE CONSTITUTION

The Constitution embodies federalism in two main ways: power is expressly given to the states, as well as to the national government; and the states have important roles in shaping the national government and in choosing officials for the national government. The Constitution makes the central government supreme in certain matters, but it also makes clear that state governments have independent powers. The supremacy clause declares that the Constitution, laws, and treaties of the United States shall be the "supreme law of the land" (Article VI); the kinds of laws that Congress has the power to pass are enumerated in the Constitution (Article I, Section 8); and the Tenth Amendment declares 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 reservation clause).

The Constitution's provisions regarding the formation of the national government recognize a special position for the states. Article VII provides that the Constitution would go into effect when the conventions of nine states ratified it. The Constitution can be amended only when conventions in or the legislatures of three-fourths of the states ratify an amendment (Article V). According to Article IV, no states can be combined or divided into new states without the consent of the state legislatures concerned. Special roles for the states in the selection of national government officials is delegated to the states and charges the states with deciding who can vote for member of the U.S. House of Representatives and draw the boundaries for House districts (Article I).

Relations among states are regulated by Article IV of the Constitution. Article IV provides that each state is required to give "full faith and credit" to the public acts, records, and judicial proceedings of every other state; citizens in each state are entitled to all the "privileges and immunities" of citizens in the several states; and fugitives from justice must be delivered up to a state demanding their return. Interstate compacts are agreements among a group of states to solve mutual problems and require the consent of Congress. The framers included this provision in Article I to prevent the emergence of coalitions of states that might threaten federal authority.

THE EVOLUTION OF FEDERALISM

Federalism as we know it emerged slowly. There were variations over time in the relative power of the states and the federal government. The national government gradually gained ground, reflecting factors such as industrialization and economic growth, increasing foreign policy involvement, and bitter conflicts over a series of divisive issues such as race, slavery, and regional economic interests.

Two main schools of thought regarding federalism have existed since the founding and continue to do battle today: the states' rights position and the nationalist position. The former argues states are co-equals with the national government and should strictly limit the size and scope of the federal government and leave many things up to the states as suggested in the concept of dual federalism. The latter argues the Constitution was created as a compact among the people of the United States to form a strong communal bond through the supremacy of the national government over the states, and generally advocates a strong and active federal government to tackle issues and problems facing all of the American people. Nationalists point toward a strong central government with expansive responsibilities in the "necessary and proper clause" in Article I and the "supremacy clause" in Article VI.

One crucial question about federalism in the early years of the United States concerned who, if anyone, would enforce the supremacy clause. The answer turned out to be that the U.S. Supreme Court would do it, but this answer emerged haltingly as the Supreme Court gradually solidified its power within the federal system. Under the leadership of Chief Justice John Marshall, the Court established the doctrine of judicial review (Marbury v. Madison, 1803). In 1810, the Supreme Court for the first time clearly exercised the power to find state laws unconstitutional (Fletcher v. Peck). In 1816, the Court solidified its position in relation to the states by upholding Section 25 of the Judiciary Act of 1789 (Martin v. Hunter's Lessee).

Struggles over federalism in the nineteenth and twentieth centuries resulted in gradual increases of national government power. McCulloch v. Maryland (1819) upheld the constitutionality of the incorporation of the Bank of the United States and its immunity from taxation. Chief Justice John Marshall justified national authority with his declaration that the Constitution emanated from the sovereign people. In 1824, the Court ruled that provisions of the U.S. Constitution may exclude states from acting in certain areas (Gibbons v. Ogden). The doctrine of preemption - which precludes state action when the national government has already acted on a certain subject - is based on the principle that federal laws take precedence over state laws (the supremacy clause).

There were several threats or attempts by states to nullify national laws (a reference to the theory that a state could declare U.S. laws "null and void" within its own borders), and the Civil War was fought over the question of whether southern states had the right to secede from the Union. The shape of federalism was strongly affected by the Supreme Court and by events surrounding the Civil War. The issue of slavery in the northern territories began to dominate disputes about the nature of federalism. As new, nonslave states were settled and sought to join the Union, white Southerners feared that their political power was eroding. In 1860, the northern and southern wings of the Democratic party split apart over the slavery issue, and the newly-formed Republican party nominated Abraham Lincoln (who opposed slavery in the northern territories) as president in 1860. South Carolina seceded from the Union, soon followed by the other six states of the deep South; these states formed the Confederate States of America.

Northern victory established that the Union was indissoluble - that is, states could not withdraw or secede. The war resulted in constitutional changes that subordinated states to new kinds of national standards. Passage of the Civil War amendments resulted in constitutional change that subordinated the states to certain new national standards, enforced by the central government. The Thirteenth Amendment abolished slavery, and the Fifteenth gave former male slaves a constitutional right to vote. The most notable changes came through implementation of the Fourteenth Amendment (1868) that included broad language. The due process clause goes well beyond the slave issue with the declaration that no state shall "deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." Eventually, the equal protection clause became the foundation for protecting the rights of blacks, women, and other categories of people against state and local governments' discrimination. Prior to adoption of the Fourteenth Amendment, protections in the Bill of Rights had been applied only against the national government.

Activities of the national government have expanded greatly since the Civil War. The national government was increasingly active in the late nineteenth century through the Interstate Commerce Act (1887) and the 1890 Sherman Antitrust Act. These activities gave the national government increasing weight in relation to the states. The role of the national government relative to the states was greatly accentuated in the twentieth century. Examples include Woodrow Wilson's New Freedom domestic programs and expenditures during World War I Franklin Roosevelt's New Deal regulatory policies in response to the Great Depression and increase in federal expenditures for World War II, and Lyndon Johnson's Great Society measures designed to alleviate poverty and politically empower the poor and racial minorities. The Supreme Court initially resisted growth in national government power to regulate business, but the Court has been a nationalizing force for more than 50 years. From the time of President Roosevelt's court-packing plan in 1937, the Court has approved almost all pieces of national legislation. For example, the Court upheld the Civil Rights Act of 1964, which rests partially on a broad interpretation of the commerce clause.

There has been a resurgence of the states in the 1990s as indicated by the states accounting for an ever-increasing share of public spending in the United States and in the number of public employees. Behind the new vitality of the states within American federalism was the growing national consensus during the 1980s and 1990s about the virtues of devolution, the idea that more power in the federal system should be in the hands of the states. The Rehnquist court overruled a number of federal actions and laws on the ground that the federal government had exceeded its constitutional powers, reversing more than half a century of decision favoring an increased federal government role. An enthusiastic devotee of devolution, President Clinton freely granted waivers from federal regulations to the states for experimenting with new forms of welfare, boasting of cuts in federal government employment, and touting the benefits of state government.

A more centralized coordination and planning resurged in the national government as a result of the terrorism attacks of September 11, 2001, and the subsequent war on terrorism. Over the course of history, there has been a perpetual shift of power and responsibility to the national government. Though fundamentally federal in its design, the Constitution originally tilted slightly toward central government power. In the 1980s, the United States had shifted further toward centralized government power. The states regained some lost ground during the 1990s. The war on terrorism is likely to rekindle the long-term trend toward national government preeminence.

The metaphors of layer cake and marble cake federalism have often been used to illustrate the changing relationships between the national government and the states. Layer cake federalism is an outdated metaphor that describes a system of federalism in which state and national powers are distinct and separate from each other. It is based on the assumption that states and the national government are equal and separate entities. Marble cake federalism is a more accurate metaphor for today's federalism in which elements of national and state influence swirl around each other, without any clear boundaries. Marble cake federalism (often called cooperative federalism) is based on the theory that states and the national government share power and cooperate to solve problems. It is illustrated by grant-in-aid programs that involve a complicated mixture of national, state, and local government activity and control. State and national government powers and activities continually grow more deeply intertwined.

NATIONAL GRANTS-IN-AID TO THE STATES

The growth and decline of national grants-in-aid to the states define some of the pragmatic complexities of federalism in action. Grants-in-aid are federal funds allocated to states and local governments. Grants involve a complicated mixture of national and local government activity and control. The grant of money from the national government to state and local governments generally increases national government influence over what the states and localities do. National government grants largely shape and regulate at the national level of government. Categorical grants allocate money to states for clearly defined categories of activity, while block grants provide money to states for broad, general purposes. Grants often come with strings attached that involve detailed rules and regulations. Under general revenue sharing - in which federal money was shared with other levels of government - money was granted to states and localities, with virtually no federal controls.

The flow of federal money to the states had begun to slow down by the end of the 1970s. The reasons for the slowdown in federal money to states and localities - which continues today - include certain structural factors (such as the general decline in the growth rate of the U.S. economy and increasing pressure on national tax revenues) together with major political changes (such as increased interest group pressure to cut domestic spending, which contributed to more conservative political leadership in the 1980s and 1990s). Economic problems in the late 1970s and early 1980s contributed to lower-than-expected tax receipts and greater-than-expected government outlays. Business-oriented conservative interest groups and think tanks were successful in building and publicizing the case against big government in Washington. Some state governments - with tax rates already too high - face great difficulty in finding new revenue to match their new responsibilities.

Many contemporary facets of federalism involve questions of control rather than money because the national government exerts control over many state-administered programs, particularly through mandates and conditions on aid. Mandates require the states to carry out certain policies, even when little or no national government aid is involved. Such mandates, especially in regulations involving civil rights and the environment, necessitate enforcement by the federal courts. States often complain bitterly about federal mandates that require state expenditures without providing federal funds. Conditions on aid require states to spend grant money in certain ways if they want to receive federal funding. Conditions are characteristic of categorical grant-in-aid programs and are increasingly included in general block grants. Because states cannot generally afford to give up federal money, they have to accept the conditions.

One of the main promises in the Republicans' 1994 Contract with America was the cutting back on these "unfunded mandates." Early in 1995, the Republicans delivered on their promise with a bill that had bipartisan support in Congress and that President Clinton signed into law. It remains unclear how much effect the legislation has because the legislation does not apply to past mandates and does not ban unfunded mandates, it only regulates them.

U.S. FEDERALISM: PRO AND CON

The authors look at the unique role that the states play in the American form of federalism, and focus on the advantages and disadvantages of federalism. Part of this discussion includes the implications that federalism may have on how democracy works. While federalism promotes diversity of wants and needs in allowing different areas with different values, goals and populations to enact different policies, this diversity can instead lead to a lack of national standards for citizens of the entire country. Likewise, it is claimed federalism allows for government to be closer to the people. On the other hand, while state and local governments may be physically closer than Washington, D.C., due to low visibility and lack of popular control in fact, psychologically they are more distant as the public pays less attention to, and participates less in, state and local politics, so the national government may better reflect the popular will. Federalism also promotes innovation and experimentation in policymaking as "laboratories of democracy" where different policies can be tested before being adopted regionally or nationally. However, diversity and experimentation may also lead to spillover effects and competition, so that bad effects from one state's or city's policy can affect others, or in fact undercut each other's attempts at problem-solving by competing for investment, government grants, and means for dealing with larger issues. Lastly, federalism may help increase diversity and equality in national government by serving as training grounds for women and minorities.

In the end, decisions about federalism often affect who wins and who loses valuable benefits. People's opinions about federalism often depend upon their ideologies, on what kinds of things they want government to do, and upon which political party controls the national government.

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