What Is Federalism? Definition and How It Works in the US

A Government System of Shared Powers

U.S. Capitol Building
Gage Skidmore / Flickr / CC BY-SA 2.0

Federalism is a hierarchical system of government under which two levels of government exercise a range of control over the same geographic area. This system of exclusive and shared powers is the opposite of "centralized" forms of governments, such as those in England and France, under which the national government maintains exclusive power over all geographic areas.

In the case of the United States, the U.S. Constitution establishes federalism as the sharing of powers between the U.S. federal government and the individual state governments.

The concept of federalism represented a solution to functional problems with the Articles of Confederation which failed to grant several essential powers to the national government. For example, the Articles of Confederation gave Congress the power to declare wars, but not to levy taxes needed to pay for an army to fight them.

The argument for federalism was further strengthened by Americans’ reaction to Shays’ Rebellion of 1786, an armed uprising of farmers in western Massachusetts. The rebellion had been driven, in part, by the inability of the federal government under the Articles of Confederation to pay the debt from the Revolutionary War. Worse yet, due to the federal government’s lack of power to raise an army to deal with the rebellion, Massachusetts had been forced to raise its own. 

During America’s Colonial Period, federalism generally referred to a desire for a stronger central government. During the Constitutional Convention, the Party supported a stronger central government, while "Anti-Federalists" argued for a weaker central government. The Constitution was created largely to replace the Articles of Confederation, under which the United States operated as a loose confederation with a weak central government and more powerful state governments.

Explaining the new Constitution’s proposed system of federalism to the people, James Madison wrote in “Federalist No. 46,” that the national and state governments “are in fact but different agents and trustees of the people, constituted with different powers.” Alexander Hamilton, writing in “Federalist No. 28,” argued that federalism’s system of shared powers would benefit the citizens of all of the states. “If their [the peoples'] rights are invaded by either, they can make use of the other as the instrument of redress,” he wrote. 

While each of the 50 U.S. states has its own constitution, all provisions of the states’ constitutions must comply with the U.S. Constitution. For example, a state constitution cannot deny accused criminals the right to a trial by jury, as assured by the U.S. Constitution's 6th Amendment.

Under the U.S. Constitution, certain powers are granted exclusively to either the national government or the state governments, while other powers are shared by both.

In general, the Constitution grants those powers needed to deal with issues of overarching national concern exclusively to the U.S. federal government, while the state governments are granted powers to deal with issues affecting the particular state only.

All laws, regulations, and policies enacted by the federal government must fall within one of the powers specifically granted to it in the Constitution. For example, the federal government’s powers to levy taxes, mint money, declare war, establish post offices, and punish piracy at sea are all enumerated in Article I, Section 8 of the Constitution.

In addition, the federal government claims the power to pass many diverse laws – such as those regulating the sale of guns and tobacco products – under the Commerce Clause of the Constitution, granting it the power, “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

Basically, the Commerce Clause allows the federal government to pass laws dealing in any way with the transportation of goods and services between state lines but no power to regulate commerce that takes place entirely within a single state.

The extent of the powers granted to the federal government depends on how the pertinent sections of the Constitution are interpreted by the U.S. Supreme Court.

The Founders and Federalism

Seeing the importance of balancing liberty with order, America’s Founding Fathers identified three main reasons for creating a government based on the concept of federalism:

  • Avoid tyranny
  • Allow for greater public participation in politics
  • To use the states as "laboratories" for new ideas and programs

As James Madison pointed out in The Federalist, No. 10, If "factious leaders kindle a flame within their particular states," national leaders can prevent the spread of the “conflagration through the other states.” In this context, federalism prevents an individual who controls a state from attempting to overthrow the central government.

The necessity to elect both state and national officials creates more opportunities for citizens have input into their government. Federalism also prevents a disastrous new policy or program created by one of the states from harming the entire nation. However, should a program created by a state prove especially beneficial, federalism enables all other states to adopt similar programs

Where the States Get Their Powers

An 1862 diagram of the federal government and American Union
An 1862 diagram of the federal government and American Union. Wikimedia Commons/Public Domain

The states draw their powers under our system of federalism from the Tenth Amendment of the Constitution, which grants them all powers not specifically granted to the federal government, nor forbidden to them by the Constitution.

For example, while the Constitution grants the federal government the power to levy taxes, state and local governments may also levy taxes, because the Constitution does not prohibit them from doing so. In general, state governments have the power to regulate issues of local concern, such as drivers’ licenses, public school policy, and non-federal road construction and maintenance.

Exclusive Powers of the National Government

The Constitution grants the U.S. national government three types of powers:

Delegated Powers

Sometimes called enumerated or expressed powers, the delegated powers are specifically granted to the federal government in Article I, Section 8 of the Constitution. While the Constitution delegates 27 powers specifically to the federal government, the most notable of these include:

  • Establish and collect taxes
  • Borrow money on the credit of the United States
  • Regulate commerce with foreign nations, the states, and Indian tribes
  • Establish laws regulating immigration and naturalization
  • Print money (bills and coins)
  • Declare war
  • Establish an army and navy
  • Enter into treaties with foreign governments
  • Regulate commerce between states and international trade
  • Establish post offices and postal roads, and issue postage
  • Make laws necessary to enforce the Constitution

Implied Powers

Though not specifically stated in the Constitution, the implied powers of the federal government are inferred from the so-called elastic or “necessary and proper” clause. This clause in Article I, Section 8, gives the U.S. Congress the right “to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and other powers vested in the government of the United States.” Since these powers are not specifically listed, the courts often decide what constitutes an implied power.

Inherent Powers

Similar to the implied powers, the inherent powers of the federal government are not specifically listed in the Constitution. Instead, they come from the very existence of the United States as a sovereign state—a political entity represented by one centralized government. For example, the United States has the power to acquire and govern territories and to grant statehood, because all sovereign governments claim such rights.

Exclusive Powers of State Governments

Powers reserved to state governments include:

  • Establish local governments
  • Issue licenses (driver, hunting, marriage, etc.)
  • Regulate intrastate (within the state) commerce
  • Conduct elections
  • Ratify amendments to the U.S. Constitution
  • Provide for public health and safety
  • Exercise powers neither delegated to the national government or prohibited from the states by the U.S.Constitution (For example, setting legal drinking and smoking ages.)

Powers Shared by National and State Governments

Shared, or "concurrent" powers include:

  • Setting up courts through the country's dual court system
  • Creating and collecting taxes
  • Building highways
  • Borrowing money
  • Making and enforcing laws
  • Chartering banks and corporations
  • Spending money for the betterment of the general welfare
  • Taking (condemning) private property with just compensation

The ‘New’ Federalism

The late 20th and early 21st century saw the rise of the “New Federalism” movement—a gradual return of power to the states. Republican President Ronald Reagan is generally credited with starting the movement in the early 1980s when he launched his “devolution revolution,” an effort to transfer the administration of many public programs and services from the federal government to the state governments. Before the Reagan administration, the federal government had granted money to the states “categorically,” limiting the states to using the money for specific programs. Reagan, however, introduced a practice of giving the states “block grants,” allowing the state governments to spend the money as they saw fit.

Although New Federalism is often called “states’ rights,” its supporters object to the term due to its association with racial segregation and the civil rights movement of the 1960s. In contrast to the states’ rights movement, the New Federalism movement focuses on expanding the states’ control of areas such as gun laws, marijuana use, same-sex marriage, and abortion.