What Happened to Federalism?
TODAY THE FEDERAL GOVERNMENT is expanding at an unprecedented pace. The current administration has launched what many Americans see as an inevitable federal takeover of health care. It has undertaken environmental regulatory actions of historic sweep, seeking to regulate manifold areas of traditional state jurisdiction, and smothering less-favored industries in regulatory uncertainty. It has unleashed the greatest explosion in federal spending and borrowing in our history.
These policies not only endanger our economic future; they also erode the constitutional constraints that were meant to shield local self-government and individual liberty from the dangerous accumulation of power in Washington.
But these policies are just the latest encroachment on self-government. For more than a hundred years, the federal government has been expanding its power and reach. The steady concentration of power in Washington has been accompanied by a steady intrusion into areas of state authority that the Framers assumed the federal government would never be involved in. In the Framers’ conception of democracy, state-based self-government and individual liberty went hand in hand. It was for this reason that they insisted on a federal government of strictly limited powers. They enshrined this ideal in the Tenth Amendment of the Constitution: “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’ Vision
After the Constitutional Convention in Philadelphia in 1787, the Framers returned to their homes to engage in debates centered on the state ratification conventions that would now decide the fate of the proposed Constitution. Three prominent Federalists—John Jay, Alexander Hamilton, and James Madison—published a series of essays in defense of the proposed union that came to be known as the Federalist Papers. Motivated by a deep concern for internal order and public safety, the Federalists argued that the proposed Constitution would pose no danger to individual liberty or to self-government in the states.
As James Madison wrote in Federalist No. 45, “the States will retain, under the proposed Constitution, a very extensive portion of active sovereignty,” chiefly through the specific enumeration of limited powers for the federal government:
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. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.
For this reason, and a host of others that Federalist No. 45 was meant to catalogue, “[t]he State government will have the advantage [over] the Federal government.” Hence the Federalists—advocates of a strong national government—expected that the states would retain more than enough power and scope to enforce the constitutional limitations on the federal government.
This conception lasted well into the 19th century. In 1824, the Supreme Court held in the famous case of Gibbons v. Ogden that navigation and commerce across state lines fall within the federal government’s power to regulate commerce “among the several States, with foreign nations, and with the Indian tribes.” Gibbons stands for the principle that “the sovereignty of Congress, though limited to specific objects, is plenary as to those objects.” But Chief Justice John Marshall shared James Madison’s vision of the federal system: Their view of a federal government of plenary authority within its enumerated powers was predicated entirely on their foundational assumption that those powers would be few and limited, and that states would remain the major agents of regulation and self-government. “It is not intended to say,” wrote Marshall for the Court, “that [the Commerce Clause] comprehended that commerce, which is completely internal, which is carried on between man and man in a State, or between different parts of the same State, and which does not extend to or affect other States. Such a power would be inconvenient and is certainly unnecessary.”
Focusing on the word “among,” the Court explained, “[t]he phrase is not one which would probably have been selected to indicate the completely interior traffic of a State.” In other words, if Congress was supposed to be able to regulate all commerce, there was no reason for the Constitution’s drafters to qualify the word “commerce” with the phrase “among the several States.” The Court continued:
The genius and character of the whole government seem to be that its action is to be applied to all the external concerns of the Nation and to those internal concerns which affect the States generally; but not to those which are completely within a particular state, which do not affect other States, and with which it is not necessary to interfere for the purpose of executing some of the general powers of the government. The completely internal commerce of a state, then, may be considered as reserved for the state itself.
In Gibbons the Supreme Court observed that “inspection laws, quarantine laws, health laws of every description, as well as law for regulating the internal commerce of a State” were but a few examples “of that immense mass of legislation” not surrendered to the federal government. “No direct power over these objects is granted to Congress,” Marshall observed, “and, consequently, they remain subject to State legislation.” It was only because they were so sure of the stringent limitations on the scope of federal power, and the preeminence of states with respect to most areas of legislation, that Marshall, and the Federalists generally, felt so confident asserting the supremacy of federal law within its domain.
The Modern Expansion of the Federal Government
In Virginia’s ratification debates, Patrick Henry, a leader of the anti-Federalist movement, railed against the proposed Constitution: “To all common purposes of Legislation it is a great consolidation of Government.” The Federalists agreed that a general consolidation of power would be dangerous and potentially tyrannical. But they saw little risk that it would happen, given the power of the states and the many “advantages” Madison thought they would have over the federal government.
For most of the early history of the republic, the Federalists proved right—the states were able to frustrate the concentration of power in federal hands. But the cataclysm of the Civil War, the dawn of the industrial age, and America’s rise to great power status by the start of the 20th century greatly increased the scope and power of the federal government. The reconstruction amendments (amendments 13, 14, and 15, ratified between 1865 and 1870); along with Progressive Movement amendments to permit a federal income tax and direct election of U.S. senators (amendments 16 and 17, respectively, both ratified in 1913) all set the stage for a dramatic expansion of federal power in the 20th century.
The Commerce Clause. Perhaps the most important power granted to Congress (though the Framers did not intend this to be the case) has turned out to be the power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” In the 19th century, the commerce power was relied on not to justify the exercise of federal power, but rather to strike down state laws that discriminated against interstate commerce. The idea was that states were preempted from regulating within areas of exclusive federal regulatory power, such as interstate commerce.
Starting in 1914, the Supreme Court began to embrace an ever-widening interpretation of the Commerce Clause. In the Shreveport Rate cases, the Court articulated a novel basis for intruding on purely intrastate commerce: Where interstate and intrastate commerce were so mingled that regulation of interstate commerce required incidental regulation of intrastate commerce, the activity fell within the commerce power, because of their “close and substantial relation.” The victim of this first expansion of federal commerce power was Texas: The Court ruled that the federal government could regulate the fees charged by a railway between Dallas and Marshall, Texas. The law protected those purely intrastate carriers who faced penalties for disobeying the regulations of the Texas Railroad Commission in order to comply with federal mandates.
In the 1935 case of Schechter Poultry v. U.S., the Court once again asserted its role as a powerful guardian of constitutional constraints, striking down federal regulation of labor conditions in a purely intrastate business because the activity in question bore only an “indirect” relation to interstate commerce. The Court reasoned that otherwise “there would be virtually no limit to the federal power and for all practical purposes we should have a completely centralized government.”
The Court was no doubt correct about the looming danger of unlimited federal power and “a completely centralized government,” but the political winds were blowing the other way. President Roosevelt won a landslide reelection in 1936, and, in an address to Congress in early 1937, he threatened to pack the Supreme Court with additional justices, implicitly warning that if the Court did not acquiesce in his New Deal legislation, he and the Congress would break its power. The Supreme Court reacted that very year, in the case of NLRB v. Jones & Laughlin Steel Corp., by casting aside the categories of direct and indirect effects, and holding instead that Congress could regulate activities that “have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions” in state law.
With that, the Court opened the door to all but eliminating the Constitution’s constraints on federal power exercised under the Commerce Clause. In the 1942 case of Wickard v. Filburn, the Supreme Court held that a farmer’s private cultivation of wheat for purely personal use on his own farm could nevertheless be regulated pursuant to the Commerce Clause, because any activity which, in the aggregate across the Nation, could have a substantial effect on interstate commerce, was properly within the power to regulate commerce “among the several States.” If this purely personal activity affected interstate commerce, then every activity falls within the power of the federal government.
Not until nearly 60 years later did the Supreme Court again strike down a law of Congress as an impermissible exercise of the commerce power. In U.S. v. Lopez (1995) the Court took up the Gun-Free School Zones Act, which made it a federal offense to carry a firearm in a school zone. The majority opinion, by Chief Justice William Rehnquist, rests on previous Commerce Clause cases to demonstrate that there were indeed some limits to what the federal government could regulate pursuant to the commerce power. The impact of the opinion was limited, however, by the majority’s desire to stay within existing precedents, which after Wickard left very little room for defining meaningful limits to the commerce power. Some commentators have noted that the opinion stands for the simple proposition that there must be something Congress cannot regulate under the commerce power, and that the possession of handguns in a school zone must be in that category.
The concurring opinion by Justice Clarence Thomas has received considerable attention because it urges returning to the original understanding of the Framers, and of the Gibbons Court in 1824. Justice Thomas relied on contemporary texts such as the Federalist Papers to show that “agriculture, commerce, manufactures,” etc., were considered to be separate endeavors. He pointed out that “if Congress had been given authority over matters that substantially affect interstate commerce” (as the controlling precedents have ruled) then most of the other enumerated powers in the Constitution were superfluous, because almost everything “substantially affects” interstate commerce, especially in the aggregate. “An interpretation of [the Commerce Clause] that makes the rest of [the Constitution’s enumerated federal powers] superfluous simply cannot be correct.” Under Wickard, wrote Justice Thomas, “Congress can regulate whole categories of activities that are not themselves either ‘interstate’ or ‘commerce’ … . The aggregation principle is clever, but it has no stopping point.”
Some commentators have gone even further. Michael Greve of the American Enterprise Institute writes:
[T]here is no way to squeeze Wickard or any Commerce Clause case after it into the intellectual framework of enumerated powers. If Congress may aggregate trivial activities into ‘substantial effects,’ it may regulate virtually anything; if it may not do so, it is prohibited from regulating most of the things it now regulates.
In U.S. v. Morrison (2000) the Supreme Court again struck down a federal law, this time a provision of the Violence Against Women Act. Chief Justice Rehnquist, writing for the same majority that had decided Lopez, wrote: “[Gender]-motivated crimes of violence are not [economic] activity. While we need not adopt a categorical rule against aggregating the effects of any noneconomic activity in order to decide these cases, thus far in our Nation’s history our cases have upheld Commerce Clause regulation of intrastate activity only where that activity is economic in nature.” He went on to say that the “concern we expressed in Lopez that Congress might use the Commerce Clause to completely obliterate the Constitution’s distinction between national and local authority seems well-founded.” He concluded: “[T]he Constitution requires a distinction between what is truly national and what is truly local. In recognizing this fact we preserve one of the few principles that have been consistent since the Clause was adopted.”
Five years later, however, in Gonzalez v. Raich (2005), the Supreme Court decided that federal criminal law could reach the wholly intrastate production and consumption of drugs, despite the absence of any commercial transaction. It thus seemed to retreat from its reinvigoration of the Commerce Clause, and has not revisited the issue since then.
As the crisis of 1937 shows, it is difficult for the Supreme Court to uphold constitutional constraints against federal power when the president, Congress, and popular opinion are all against it. The Supreme Court is not supposed to be a political branch, but its perceived legitimacy is vital to the rule of law, and that legitimacy depends on political consensus. In other words, in our democratic republic, even the Supreme Court ultimately derives its power from the people. The other side of the coin is that the better Americans understand the vital importance of a federalist framework in the Constitution, the more strongly they yearn for a return to the Constitution’s founding principles, and the easier it will be for the Supreme Court to reassert its role as guardian of enumerated powers constraints.
Disentangling nearly 100 years of Commerce Clause precedent is a tall order, but Gibbons v. Ogden might offer a way forward. Chief Justice Marshall’s opinion in Gibbons has been quoted often for the proposition that the federal government’s power is supreme and complete within its enumerated powers. This observation was entirely predicated on Marshall’s basic understanding of federalism, in particular the stringent constraints on federal power, which restricted its scope to just a few areas of regulation, and left the “great mass” of legislation to the states. A more complete reading of Gibbons could help guide the Supreme Court back to the original understanding of the Commerce Clause power. Defining the Commerce Clause should not be just a matter of defining the scope of “interstate commerce” from the point of view of federal power; equally important is the other side, the great mass of regulation that is not interstate commerce and was meant to be left to the states. The Supreme Court has had trouble devising a precise definition of what interstate commerce is partly because it stopped focusing on what it isn’t—namely those things that were meant to be left to the states. As Michael Greve argues, the Court must reclaim its role as guardian of constitutional constraints on federal power. It can take its cue from the people and their desire to return to a more decentralized and responsive system. This desire underpins the promise of a constitutional renaissance now sweeping the nation.
Federal Funds for States and the Spending Clause. In the years following the Great Depression, agricultural production boomed worldwide, leading to a crash in agricultural commodities prices. Congress passed the Agricultural Adjustment Act of 1933—another unfortunate pillar of New Deal legislation—to “stabilize” agricultural production through price controls. The Act imposed a tax on the production of certain agricultural commodities, the proceeds of which were to subsidize farmers who agreed to restrict their production. In the 1936 case of U.S. v. Butler, the Supreme Court struck down the law, noting: “At best it is a scheme for purchasing with federal funds submission to federal regulation of a subject reserved to the States.”
But, signaled the Court, “the power of Congress to authorize expenditure of public moneys for public purposes is not limited to the direct grants of legislative power found in the Constitution.” Thus was laid to a rest a dispute that had existed since Alexander Hamilton and James Madison clashed over the issue during ratification. The first clause of Article I, Section 8 of the Constitution provides that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts, and Excises shall be uniform throughout the United States.” Madison thought that this taxing power could only be used for a purpose that fell within one of the other enumerated powers of the federal government, but Hamilton disagreed. Hamilton thought that the taxing clause was an independent grant of power, and that it could be used for any public purpose. In Butler, the Supreme Court adopted Hamilton’s view. The power to appropriate for the “general Welfare” was thus given the widest possible interpretation.
The practice of providing federal funds to the States with conditions and mandates attached has been challenged because of the potential for subverting state government and policies to federal ends—an obvious danger to state and local authority. Two years after Butler, the Supreme Court ruled in Steward Machine Co. v. Davis that the Social Security Act could impose a tax on certain employers and provide a 90 percent credit if they contributed to their state’s unemployment fund. The Court reasoned that while economic coercion was impermissible, “encouraging” state compliance with federal policy goals did not run afoul of the Constitution.
In South Dakota v. Dole (1987) the state of South Dakota challenged a federal law that empowered the Secretary of Transportation to withhold 5 percent of federal highway funds allocated to a state that refused to raise its drinking age to 21. South Dakota argued that the statute violated both 21st Amendment (repeal of prohibition) and the Spending Clause.
Chief Justice Rehnquist’s majority opinion upheld the statute but did set out several markers for proper uses of the spending power. The funds must be appropriated for the “general Welfare”; conditions must be unambiguously stated in the law; conditions must be related to the federal interest sought to be advanced in the appropriation; the purpose must not be barred by the Constitution; and the condition must not rise to the level of economic coercion such that refusing to comply with the congressional mandate would result in a prohibitive fiscal penalty. This last marker appears to offer the most promise of an effective protection of state authority and citizen sovereignty, and suggests that if the funds to be withheld had been significantly higher than 5 percent of the state’s allocation of federal highway funds, the condition may have been impermissible.
Justice Sandra Day O’Connor’s dissent argued that the law was an unconstitutional attempt to regulate the sale of liquor and that there was not a “reasonable relation” to a permissible federal interest. She warned that if Congress can regulate activity within states with such an attenuated relation to a federal interest, it can regulate in almost any area of a state’s social, political, and economic policies.
Subsequent lower-court rulings have shed further light on the import of South Dakota v. Dole. For example, the Fourth Circuit ruled against West Virginia in a challenge to a provision of the federal Medicaid program that requires States to recoup Medicaid expenditures from the estates of deceased beneficiaries. But the court nevertheless warned that a coercive law could theoretically violate the Tenth Amendment if it deprived States of any reasonable ability to regulate an area of traditional state authority that falls outside the federal government’s enumerated powers.
Two situations are generally thought to constitute violations of the Tenth Amendment through conditions attached to federal spending: First, where the federal government forces states to impose substantial burdens on citizens, and second, where it specifically requires some specific form of political or institutional structure for state or local government. Thus, conditions and mandates attached to federal funds could run afoul of the anti-commandeering doctrine of the Supreme Court’s federalism jurisprudence.
Commandeering. Perhaps the purest Tenth Amendment cases in constitutional law have to do with congressional enactments that commandeer instrumentalities of state government. The anti-commandeering doctrine offers additional grounds for hoping that the Supreme Court will vindicate local authority and roll back federal overreach. In New York v. U.S. (1992) the Court struck down a federal law that required states to take title to nuclear waste. In Printz v. U.S. five years later, the Court struck down a part of the Brady Act that required states to conduct background checks on prospective gun purchasers.
These decisions did not rest on enumerated powers grounds. Thus, unlike the Commerce Clause cases, New York and Printz did not address the scope of federal authority to regulate nuclear waste or gun purchases. Instead, New York and Printz stand for the proposition that the federal government cannot order instrumentalities of state and local government to serve as instrumentalities of the federal government.
As Michael Greve notes in Real Federalism: Why It Matters, How It Could Happen (1999), “what the Supreme Court has done is to elevate the Tenth Amendment into an extratextual, judge-made principle of intergovernmental immunity.” Greve argues that the “genius” of Justice Scalia’s majority opinion in Printz is to locate that intergovernmental immunity in the “structure” of the Constitution:
First Justice Scalia explains that the Constitution establishes a system of “dual sovereignty,” wherein the States and the national government occupy separate “spheres.” The Tenth Amendment is only one of the indicia of federalism so understood. Second, Justice Scalia maintains that the congressional commandeering of state and local officers would undermine the federal executive: by dragooning state and local officers into federal law enforcement, Congress could subvert and circumvent the President’s constitutional authority to ensure the faithful execution of the law. Third, Justice Scalia argues that Congress lacked the constitutional authority to enact the background check requirements under, of all things, the Necessary and Proper Clause of the Constitution, which empowers Congress to “make all laws which be necessary and proper” to the enforcement of its delegated powers. A law that presses state and local officers into federal service, Justice Scalia maintains, cannot be “proper.” Each of these three claims points beyond the seemingly limited holding in Printz. Each implies a notion of federalism, not as a mere protection of state immunity but as a direct constraint on the federal government.
Justice Scalia’s opinion takes aim at the danger of requiring states to enforce federal laws, particularly the danger of diminishing political accountability:
By forcing state government to absorb the financial burden of implementing a federal regulatory program, Members of Congress can take credit for “solving” problems without having to ask their constituents to pay for the solutions with higher federal taxes. And even when the States are not forced to absorb the costs of implementing a federal program, they are still put in the position of taking the blame for its burdensomeness and for its defects.
One promising area of Tenth Amendment jurisprudence is, therefore, what meaning can be attached to the word “proper” within the final clause of Article I, Section 8 of the Constitution, which grants Congress the power “To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers.” To follow Justice Scalia’s opinion in Printz, a law that upsets the federalist structure of the Constitution by infringing on the “quasi-sovereign” status of States might not be “proper.”
The Tenth Amendment is more than a legal construct. It is an expression of the American tradition of self-governance. The propensity to self-organize spontaneously at the local level to solve problems that had been observed by Alexis de Toqueville—and felt so painfully by the British Army—was essential to American democracy. The Constitution had been designed to protect it, not supplant it. And while a respect and deference to state authority both predated and was implied in the Constitution itself, in the end the Tenth Amendment was deemed necessary to ensure that self-governance would never give way to tyranny.
In this sense, the Tenth Amendment, coming at the end of the Bill of Rights, was something of a summation of the Framers’ whole notion of American democracy—and a salutary warning that those powers granted to the federal government needed to be kept strictly limited within the Constitution’s constraints, or else the States and individuals who formed the Union, and the Union itself, would be imperiled. That is why the Tenth Amendment matters.
The steady expansion of the federal government since the early 20th century has arrived at a crisis point. The federal government is pushing further and further into areas of traditional state governance—and intruding deeper into our lives. The threat to liberty that Madison thought states would be strong enough to resist has now become apparent to millions of Americans.
The federal courts are a necessary instrument of the solution, but the vital solution lies in self-governance itself, what John Locke might have called a “government properly so-called.” We the People have a responsibility to engage and understand the issues that affect the fate of our democracy. By elevating our understanding of the need to preserve the authority of the states, and ultimately the sovereignty of the people—the most contentious and important agreement reached at the Constitutional Convention in Philadelphia more than two centuries ago—we can continue to forge a more perfect Union.
Mr. Cruz is Senior Fellow at the Texas Public Policy Foundation, where he leads the Center for Tenth Amendment Studies. He served as Solicitor General for the State of Texas—the chief appellate lawyer for the State—from 2003 to 2008. Mr. Loyola is Director of the Center for Tenth Amendment Studies at the Texas Public Policy Foundation. This article is adapted from their longer monograph, “Reclaiming the Constitution: Towards an Agenda for State Action,” published by the Texas Public Policy Foundation, November 2010.