3.5 Advantages and Disadvantages of Federalism

THE BENEFITS OF FEDERALISM

Among the merits of federalism are that it promotes policy innovation and political participation and accommodates diversity of opinion. On the subject of policy innovation, Supreme Court Justice Louis Brandeis observed in 1932 that “a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”⁷⁰ What Brandeis meant was that states could harness their constitutional authority to engage in policy innovations that might eventually be diffused to other states and at the national level. For example, a number of New Deal breakthroughs, such as child labor laws, were inspired by state policies. Prior to the passage of the Nineteenth Amendment, women already had the right to vote in several states. California has led the way in establishing standards for fuel emissions and other environmental policies (Figure 3.18). Recently, the health insurance exchanges run by Connecticut, Kentucky, Rhode Island, and Washington have served as models for other states seeking to improve the performance of their exchanges.⁷¹

Figure 3.18 The California Air Resources Board was established in 1967, before passage of the federal Clean Air Act. The federal Environmental Protection Agency has adopted California emissions standards nationally, starting with the 2016 model year, and is working with California regulators to establish stricter national emissions standards going forward. The Trump Administration revoked California's authority to set higher standards than their lower federal standards; however California challenged this ruling in court. The Biden Administration is expected to reverse the Trump ruling and, in anticipation of this change, fifteen states and the District of Columbia have upped their standards.⁷² (credit a: modification of work by Antti T. Nissinen; credit b: modification of work by Marcin Wichary)

Another advantage of federalism is that because our federal system creates two levels of government with the capacity to take action, failure to attain a desired policy goal at one level can be offset by successfully securing the support of elected representatives at another level. Thus, individuals, groups, and social movements are encouraged to actively participate and help shape public policy.

The system of checks and balances in our political system often prevents the federal government from imposing uniform policies across the country. As a result, states and local communities have the latitude to address policy issues based on the specific needs and interests of their citizens. The diversity of public viewpoints across states is manifested by differences in the way states handle access to abortion, distribution of alcohol, gun control, and social welfare benefits, for example.

THE DRAWBACKS OF FEDERALISM

Federalism also comes with drawbacks. Chief among them are economic disparities across states, race-to-the-bottom dynamics (i.e., states compete to attract business by lowering taxes and regulations), and the difficulty of taking action on issues of national importance.

Stark economic differences across states have a profound effect on the well-being of citizens. For example, in 2017, Maryland had the highest median household income ($80,776), while West Virginia had the lowest ($43,469).⁷⁶ There are also huge disparities in school funding across states. In 2016, New York spent $22,366 per student for elementary and secondary education, while Utah spent $6,953.⁷⁷ Furthermore, health-care access, costs, and quality vary greatly across states.⁷⁸ Proponents of social justice contend that federalism has tended to obstruct national efforts to effectively even out these disparities. When national policy-making is stymied, and policy advocates move to the state level, it takes fifty-one different advocacy efforts to bring about change, compared to one effort were the national government to take the lead.

The economic strategy of using race-to-the-bottom tactics in order to compete with other states in attracting new business growth also carries a social cost. For example, workers’ safety and pay can suffer as workplace regulations are lifted, and the reduction in payroll taxes for employers has led a number of states to end up with underfunded unemployment insurance programs.⁷⁹ As of March 2021, twelve states have also opted not to expand Medicaid, as encouraged by the Patient Protection and Affordable Care Act in 2010, for fear it will raise state public spending and increase employers’ cost of employee benefits, despite provisions that the federal government will pick up nearly all cost of the expansion.^{80 , 81} More than half of these states are in the South.

The federal design of our Constitution and the system of checks and balances has jeopardized or outright blocked federal responses to important national issues. President Roosevelt’s efforts to combat the scourge of the Great Depression were initially struck down by the Supreme Court. More recently, President Obama’s effort to make health insurance accessible to more Americans under the Affordable Care Act immediately ran into legal challenges⁸² from some states, but it has been supported by the Supreme Court so far. However, the federal government’s ability to defend the voting rights of citizens suffered a major setback when the Supreme Court in 2013 struck down a key provision of the Voting Rights Act of 1965.⁸³ No longer are the nine states with histories of racial discrimination in their voting processes required to submit plans for changes to the federal government for approval. After a tumultuous 2020 election, many states in 2021 advanced legislation to make voting rules and processes more rigorous, a move many said was an effort to limit voting access. For example, elected leaders in Georgia passed a law making voter ID requirements much stricter and also significantly limited options to vote outside of Election Day itself.⁸⁴ In 2023's Moore v. Harper, the Supreme Court affirmed that state legislatures were not able to pass these laws with complete autonomy. Rejecting the theory of "independent state legislature," which asserted that states had the sole power to pass election laws, the Court ruled that voting laws passed by state governments were subject to judicial review. In 2023, the Court also ruled in favor of a challenge—already upheld by district courts—to new voting maps drawn up in Alabama; the plaintiffs had asserted that the new maps violated the Voting Rights Act by diluting the votes of Black voters. The Court agreed, and in the process held that the Voting Rights Act remained constitutional with regard to redistricting.⁸⁵