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September 2014 Policy Study, Number 14-4


A Citizens Introduction to Federalism: Federalism and the Future of Constitutional Government


Part V: A Brief Historical Review of Federalism



“LBJ and Congress used the federal money to control state policies,” argued Samples.[188] This was done through a variety of Congressional legislation that placed “coercive grant conditions,” which “empowered the national government.”[189] As Samples states:


LBJ had created a centralized federalism that had become bigger (in dollars, programs, and jurisdictions involved), broader (in the range of government functions affected), and deeper (in terms of intrusive grant conditions and of the expanding number of recipient local governments and nonprofit organizations). The number and size of federal grants made ‘the states more dependent on federal financial support.’[190]


President Johnson’s Great Society was successful in expanding the power of the federal government at the expense of federalism, but it failed to solve the progressive goals it was established to achieve. Eugene Hickok argues:


While many, if not most, of Johnson’s initiatives failed to accomplish the noble purposes he sought to promote — to win a ‘war on poverty,’ for example — much of the administrative state, its bureaucratic operators and numerous programs created during his tenure, remains in Washington.[191]


As education declined and welfare rolls increased, the United States entered into an economic “malaise” during the 1970s. The result of the Great Society was not only strengthening the welfare state, but also undermining federalism. The federal government continued to grow in size as the federal budget grew larger. “From 1954 to 1975, federal nondefense spending almost tripled as a share of gross domestic product,” stated John Samples.[192] Entitlements began to take over the federal budget.


Johnson’s Great Society was not embraced by all policymakers. Several conservative policymakers criticized Johnson’s Great Society and its power grab. Two of these policymakers were leaders of the national conservative movement, Arizona Senator Barry M. Goldwater and California’s Governor Ronald Reagan. Goldwater had run against Johnson in the 1964 presidential election and lost in a landslide, and although the conservatism that Goldwater stood for was often ridiculed as “extreme” by both Democrats and liberal Republicans, Goldwater fought to restore traditional federalism.


In his landmark book, The Conscience of a Conservative, Goldwater wrote a strong defense of constitutional limited government. In regard to federalism Goldwater wrote:


The government must begin to withdraw from a whole series of programs that are outside its constitutional mandate — from social welfare programs, education, public power, agriculture, public housing, urban renewal, and all other activities that can be better performed by lower levels of government, or by private institutions or individuals.[193]


Goldwater also criticized his own Republican Party for giving “lip-service” to federalism, and “the Republican Party, like the Democratic Party, summons the coercive power of the federal government whenever national leaders conclude that the States are not performing satisfactorily.”[194] Goldwater also argued that the states under the Tenth Amendment cannot be coerced by the federal government, as Johnson was doing with his numerous categorical grants of the Great Society. As Goldwater stated:


The Constitution, I repeat, draws a sharp and clear line between federal jurisdiction and state jurisdiction. The federal government’s failure to recognize that line has been a crushing blow to the principle of limited government…There is reason for its [the Constitution] reservation of States’ Rights. Not only does it prevent the accumulation of power in a central government that is remote from the people and relatively immune from popular restraints; it also recognizes the principle that essentially local problems are best dealt with by the people most directly concerned.[195]


Goldwater argued that the Tenth Amendment “is not a general assumption, but a prohibitory rule of law”:[196]


The Tenth Amendment recognizes the States’ jurisdiction in certain areas. States’ Rights means that the States have a right to act or not to act, as they see fit, in the areas reserved to them. The States may have duties corresponding to these rights, but the duties are owed to the people of the States, not to the federal government. Therefore, the recourse lies not with the federal government, which is not sovereign, but with the people who are, and who have full power to take disciplinary action.[197]


Goldwater’s voice was as one “calling into the wilderness to repent” for the neglect of the Constitution and to return to the principles of constitutional limited government.


Although Goldwater’s hope for the restoration of constitutional limited government did not come to fruition, the presidential election of 1968 did bring about a change to some extent against the Great Society. Richard M. Nixon, former Vice President under Dwight D. Eisenhower, won a close victory against Johnson’s Vice President Hubert H. Humphrey. Nixon wanted to reform government and move away from the Great Society. The Nixon administration would also support what became known as “New Federalism.” Under “New Federalism,” Nixon pursed devolution, or returning more authority back to the states, and he attempted to accomplish this task through block grants and revenue sharing. Block grants differed from categorical grants because they offered money to states and localities without the specific mandates of categorical grants. Eugene Hickok wrote:


Richard Nixon’s New Federalism rearranged the grant-in-aid process somewhat and sought to provide greater administrative flexibility for states engaged in the exercise of intergovernmental affairs. But he was unable to rewrite national-state relationships.[198]


Although conservatives held out hope that Nixon’s New Federalism would begin the process of restoring traditional federalism, “the nation nonetheless continued on the track laid out by Roosevelt and Johnson toward a more intrusive federal government.”[199] Conservatives grew disappointed in Nixon because his administration turned out to be more progressive than conservative. “Congress passed more regulatory programs from 1969 to 1974 than during any other era in American history, including the first five years of the New Deal,” stated John Samples.[200] The states continued to be transformed into administrative districts of the federal government.


The failure of the Nixon administration to restore traditional federalism, along with the economic recession of the 1970s, resulted in a political change toward conservatism. The political realignment toward conservatism began with Nixon’s victory in 1968, which broke the New Deal coalition, but it was not until Ronald Reagan’s victory in the presidential election of 1980 that America experienced a true conservative victory. Nixon had been supported by conservatives, but his administration was not committed to conservative principles, and Reagan’s victory translated into a victory for conservatives who saw an opportunity to restore limited government.


In his first Inaugural Address, President Ronald Reagan famously stated:


In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else?[201]


“It is time to check and reverse the growth of government, which shows signs of having grown beyond the consent of the governed,” stated Reagan.[202] Reagan pledged to restore traditional federalism in his administration:


It is my intention to curb the size and influence of the Federal establishment and to demand recognition of the distinction between the powers granted to the Federal Government and those reserved to the States or to the people. All of us need to be reminded that the Federal Government did not create the States; the States created the Federal Government.[203]


For the first time since the 1920s, President Reagan made one of the primary goals of his administration the restoration of traditional federalism. Although space does not permit in this essay to discuss Reagan’s economic and fiscal policies, he did face a monumental task. Reagan was the first President since Franklin D. Roosevelt to try and change the role of the federal government in a fundamental way. Reagan even symbolically placed President Calvin Coolidge’s portrait in the Cabinet Room to serve as inspiration for his economic policies and commitment to limited government. The difference between Reagan and Roosevelt was that FDR transformed the federal government away from the Constitution, while Reagan was trying to restore the Constitution. Reagan’s goal of restoring federalism, cutting spending, and lowering tax rates was also a challenge because the American people were, as they are still today, strongly habituated to the welfare state. As President Reagan stated:


I believe that we have started government on a different course, different than anything we’ve done in the last half century since Roosevelt began with the New Deal. And that is the recognition that there must be a limit to government size and power; that there has been a distortion of the relationship between the various echelons of government — federal, state, and local.[204]


President Reagan’s approach to federalism was to continue the New Federalism and block grants that had begun with the Nixon administration, but Reagan would be more forceful in attempting to send more power back to the states. His goal was to cut the size and scope of the federal government. Reagan hoped that “his New Federalism might decrease the size and influence of the federal government.”[205] As John Samples wrote:


Reagan’s first budget proposed consolidation of dozens of federal categorical grant programs into block grants to state and local governments. Block grants serve broad purposes, such as health, education, or law enforcement. The money must be spent on programs for such purposes; state or local officials decide how the money is used…Reagan initially achieved some of his federalism objectives. The 1981 budget act reduced federal grant-in-aid expenditures by $6.6 billion, the first reduction in decades. Reconciliation in 1981 also consolidated 77 categorical grants into 9 block grants and eliminated 60 categorical grants. By 1983, the number of categorical grant programs administered by the federal government had fallen to 313.[206]


Although the Reagan administration had positive policy successes such as lower tax rates and creating a period of economic prosperity after the severe recession of the 1970s, the battle for limiting government was difficult. As John Samples wrote:


The years 1981 and 1982 are the most important in the history of the struggle to limit government in the United States. Reagan won a substantial victory by promising to cut spending and taxes…His first seven months in office raised questions about his optimism about Americans. They would support limiting government to a point. They would not support even mild reform to programs to which they thought themselves entitled. Innovations that might actually undermine the old regime — balanced budgets and a renewed federalism — did better with the public but not well enough to pass into law. The old regime had fostered support for itself among American voters. FDR had remade Americans in some measure. They both wanted liberty and demanded their due as promised for decades by the old regime.[207]


Lee Edwards, a political historian and Reagan biographer, wrote that Reagan “had to proceed prudently with cuts, one billion dollars at a time; he could not just pull the plug on the federal government.”[208]


As an example, President Reagan tried to abolish the Department of Education, but too many policymakers were afraid to abolish such an agency. As Edwards wrote:


Although Reagan promised deep cuts in domestic spending, that did not turn out to be the case. Indeed, overall welfare spending increased during the Reagan presidency, primarily because Reagan could not overcome, even with vetoes and the bully pulpit of the White House, the spending impulses of Congress, which, after all, signed the checks. Throughout his two terms, he was confronted by Democrats still enthralled by the New Deal, as well as Republicans (particularly in the Senate) still mesmerized by its political appeal.[209]


Lee Edwards states that Reagan did reduce welfare spending in some areas “such as regional development, commerce, and housing credit.”[210] President Reagan faced many obstacles in attempting to restore traditional federalism. He faced a severe economic recession as well as opposition to cutting the size of government from both political parties and the American citizenry itself, which had become dependent on so many federal programs. One of the dilemmas of government is that people expect much from government at all levels, but also expect to pay little to no taxes for government services. 


Perhaps one of President Reagan’s most successful contributions to restoring federalism was in the sphere of federal judicial appointments. President Reagan nominated several judges to the federal judiciary and to the Supreme Court. He elevated Justice William Rehnquist to serve as Chief Justice of the Court and he also nominated Justice Antonin Scalia, a conservative jurist committed to the original intent of the Constitution. Reagan also tried to appoint another judicial conservative, Robert Bork, to the Supreme Court, but after being viciously attacked by progressives, Bork’s nomination was replaced by Anthony Kennedy. Both Scalia and Kennedy are still currently serving on the Supreme Court. President Reagan, along with his close adviser and Attorney General, Edwin Meese, also were responsible for resurrecting the constitutional theory of originalism. Conservative and libertarian constitutional philosophy would have a prominent supporter in the White House, and this impacted not only the judiciary, but also academia.


Ronald Reagan had a fundamental commitment to constitutional principles. As Steven Hayward, a Reagan biographer, wrote:


One analysis found that Reagan quoted the American Founders more often than his five predecessors combined. As President, Reagan made reaffirming the founding a central concern not only of his rhetoric, but also of many of his actions, especially in his appointments to the judiciary and in the high-profile public campaign, conducted chiefly by Attorney General Edwin Meese, on behalf of restoring the understanding of the “original intent” of the Constitution.[211]


“Reagan was the first Republican President since Calvin Coolidge to make a constitutional critique of the administrative state,” stated Hayward.[212] One example of this was Reagan’s Executive Order 12612, which concerned federalism:


By the authority vested in me as President by the Constitution and laws of the United States of America, and in order to restore the division of governmental responsibilities between the national government and the States that was intended by the Framers of the Constitution and to ensure that the principles of federalism established by the Framers guide the Executive departments and agencies in the formulation and implementation of policies…[213]


This executive order on federalism by President Reagan instructed the executive branch to follow traditional federalism as much as possible, even with political opposition. President Reagan also outlines his principles of federalism in the executive order:


  • Federalism is rooted in the knowledge that our political liberties are best assured by limiting the size and scope of the national government.
  • The people of the states created the national government when they delegated to it those enumerated governmental powers relating to matters beyond the competence of the individual states. All other sovereign powers, save those expressly prohibited the states by the Constitution, are reserved to the states or to the people.
  • The constitutional relationship among sovereign governments, state and national, is formalized in and protected by the Tenth Amendment to the Constitution.
  • The people of the states are free, subject only to restrictions in the Constitution itself or in constitutionally authorized Acts of Congress, to define the moral, political, and legal character of their lives.
  • In most areas of governmental concern, the states uniquely possess the constitutional authority, the resources, and the competence to discern the sentiments of the people and to govern accordingly. In Thomas Jefferson's words, the states are "the most competent administrations for our domestic concerns and the surest bulwarks against anti-republican tendencies.’
  • The nature of our constitutional system encourages a healthy diversity in the public policies adopted by the people of the several states according to their own conditions, needs, and desires. In the search for enlightened public policy, individual states and communities are free to experiment with a variety of approaches to public issues.
  • Acts of the national government — whether legislative, executive, or judicial in nature — that exceed the enumerated powers of that government under the Constitution violate the principle of federalism established by the Framers.
  • Policies of the national government should recognize the responsibility of — and should encourage opportunities for — individuals, families, neighborhoods, local governments, and private associations to achieve their personal, social, and economic objectives through cooperative effort.
  • In the absence of clear constitutional or statutory authority, the presumption of sovereignty should rest with the individual states. Uncertainties regarding the legitimate authority of the national government should be resolved against regulation at the national level.
  • There should be strict adherence to constitutional principles. Executive departments and agencies should closely examine the constitutional and statutory authority supporting any federal action that would limit the policy-making discretion of the states, and should carefully assess the necessity for such action.[214]


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