The framers created federalism as a compromise. They wanted a national government strong enough to defend the country, regulate trade, and pay its debts, which the Articles of Confederation had failed to do, but they also wanted to preserve the states as centers of government close to the people. The result was a system in which neither level is subordinate in its own sphere, and the line between the spheres is constantly contested.
This guide explains the constitutional building blocks, traces how the balance has changed, and looks at the money, courts, and conflicts that define federalism today.
Federal grants to states and localities now exceed a trillion dollars a year, funding Medicaid, highways, schools, and much more. Presidents from Richard Nixon to Ronald Reagan promoted a new federalism of block grants with fewer strings. Conditions attached to grants let Washington shape state policy, and laws that impose duties without funding are criticized as unfunded mandates. Where federal and state laws conflict, federal preemption usually decides the outcome.
In a federal system, sovereignty is shared. The national government holds the powers delegated to it, states hold the rest, and some powers, such as taxing, are held by both. James Madison described it in Federalist No. 45: the powers delegated to the federal government are few and defined, while those remaining in the states are numerous and indefinite. Federalism differs from a unitary system, where local governments exist only at the national government's pleasure, which is how states themselves treat their cities and counties.
Federalism now cuts across party lines depending on who holds power in Washington. States led by both parties sue the federal government, coordinate through interstate compacts, and adopt their own policies on issues from abortion and marijuana to climate and immigration enforcement. Tribal nations and U.S. territories add further layers. Supporters echo Justice Louis Brandeis's description of states as laboratories of democracy, while critics say a patchwork of state rules can leave basic rights and services dependent on geography.
In McCulloch v. Maryland in 1819 the Supreme Court upheld a national bank and barred states from taxing it, reading federal power broadly, and Gibbons v. Ogden in 1824 did the same for commerce. Southern leaders responded with theories of states' rights and nullification, rejected in 1832 and settled by the Civil War and the Fourteenth Amendment, which applied federal guarantees against the states. The New Deal and the Court's acceptance of it after 1937 ushered in cooperative federalism, and the Seventeenth Amendment in 1913 had already ended the election of senators by state legislatures.
After decades of deferring to Congress, the Supreme Court in the 1990s began enforcing limits again. It struck down a federal gun-free school zones law in 1995 as beyond the commerce power, held in Printz v. United States in 1997 that Congress cannot commandeer state officers, and ruled in 2012 that threatening states' existing Medicaid funds was unconstitutionally coercive. In Cooper v. Aaron in 1958, the Court made clear that states must obey its interpretations of the Constitution.
The key provisions are the list of congressional powers in Article I, the necessary and proper clause that expands them, the Supremacy Clause in Article VI, and the Tenth Amendment. Article IV binds the states to one another, requiring full faith and credit for other states' judgments and guaranteeing each a republican form of government. The commerce and spending powers have done the most to enlarge the national government's reach.
See the practical division of labor in states vs. federal: who does what, follow the money in how federal money reaches your town, or explore state government in how state government works.