12th May 1999

(3,712 words)

Is there a bias towards centralisation?

"The Congress shall have the power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defence and general welfare of the United States." Article 1 Section 8, the Constitution of the United States.

"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 10th Amendment of the Constitution of the United States .

Before looking at federalism in the United States, two points must be clarified in order to address this question. The first questions the use of the word 'bias' and the second, the word 'centralisation'. Unless these are defined there is great scope for inconsistency.

To have a 'bias' must suggest some 'norm' from which a system is deviating from. In the case of American federalism, it is vital to suggest what this 'norm' might be. For example, the 1791 Constitution's norm would be different from that of the 1920's, following the 16th Amendment of 1913 in which Congress gained powers of income tax. Similar problems come in comparing even FDR's New Deal era with the Great Society period of President Johnson. Following Johnson were further periods of change in federal relations, especially under the leadership of Carter, and with the most rhetoric during the Reagan presidency. Another possible 'norm' to which 'bias' could be compared is governmental systems in other countries. Under such analysis, any federal system would be far less centralised than a unitary country such as the UK and more centralised than groupings such as the European Union. The last possible measure of bias which seems possible, is the one that is most commonly used. This is that there is a bias if the situation deviates from your personal goals. This was certainly evident in President Reagan's policy. Reagan showed his resentment of the centralisation of welfare funding, yet was adamant that drinking ages should be a decision of the federal government. Bias was present when the system didn't aid his policy objectives.

This leads to the second area in need of clarification. This is to ask what 'centralisation' actually is. Again, there can be various ways of measuring this. The first of these is to point to size of the central, federal government. This in turn can be broken down into the size of its budget and the number of employees that it directly controls. Another area to look at is the amount of centralised decision making. This can be seen in a variety of ways. It can be positive, by the amount of federal mandates and regulations that Washington creates and negative, by the amount of areas of autonomy held by state or local governments. The last form of centralisation that I wish to identify can also be seen as 'nationalisation'. This is evident, for example, when the issues and interests that the public perceives relate to the United States as a whole, rather than their state or locality. Nationalisation of politics can also be seen in cases of national control of previously regionally fragmented political parties or interest groups. Centralisation does not therefore need to be rooted in Washington.

It is also necessary to suggest that might be false to talk of centralisation as if it could be something that one could be biased towards. Centralisation can be seen as a symptom of other political processes, such as increased welfare provisions or need to tackle environmental problems, rather than a goal in itself. Perhaps, it is this point that explains the paradox presented by John Kincaid of 'federal dominance and state resurgence' in 1990's America.

Although there is little value in comparing modern levels of centralisation to those anticipated by the Founding Fathers, their intentions must be looked at. The progression that has occurred towards greater centralisation since this period has been largely without major constitutional reform. An understanding of developing interpretations of the constitution will therefore reveal the potential limits and scope for further federalisation.

The intention of the framers was to create a system of dual federalism. The powers granted to the federal government were listed in Article 1 Section 8 (partially quoted above). The 10th Amendment grants all other powers to the states or the people. The expectation was for separation of areas of influence, rather than having separate institutions checking each other's use of shared powers. The ambiguity of terms "general welfare of the United States" and "necessary and proper" in the Article 1 gave scope for judicial interpretations to widen the powers and areas of authority of the federal government. The case which set the precedent for this was McCulloch v Maryland (1819). Here, Chief Justice Marshall ruled that Congress was within its constitutional mandate in the chartering of a national bank according to the 'right and proper' clause. It is this judgement that was the first step towards constitutional centralisation.

The third major development in the progress towards centralisation (I have skipped over the 16th Amendment's sanctioning of a national income tax) was the presidency of Franklin Roosevelt. The changes towards centralisation that occurred through the New Deal era were more a result of the needs of the Depression than a want of FDR to change federal-state relations. The effect, however, was a move towards centralisation in every one of the forms identified above. In the 1930's the national government increased its domestic expenditure by 1.7% of GNP to 8.5% , alongside an increase in federal staff (although the rate of staff increase did not match expenditure). The New Deal programs also took the federal government into areas previously reserved for the states. These included welfare provisions. Although there were some early Supreme Court rulings in favour of states claiming unconstitutionality of New Deal legislation (such as United States v Butler in 1936), they were soon overturned. Lastly, FDR also managed to nationalised the problem of the Depression and showed that it must be solved at a federal level. This nationalisation of politics was further cemented by the pressures of the Second World War.

Although Roosevelt must be seen as creating an environment in which centralisation could occur, the largest increases came under the Great Society programs of Lyndon Johnson. The scale of Johnson's programs dwarfed those of the New Deal as a proportion of GNP, but would not have been possible without the legacy of FDR. One important shift in this period was the increase of federal funding of local, rather than state governments . This period has been described as one of co-operative federalism. Federal funds were used by state or local governments to carry out programs. These funds would come in the form of various types of grant.

The types of grant being used are interesting because they show the amount of control that the national government wishes to have over the state or local activity that it is paying for. For example, categorical grants are given for specific programs prescribed by Congress, such as Medicaid. There is very little autonomy that state and local governments have in the spending of this money and often they might be expected to contribute 'matching funds' in order to gain the grant. This therefore shows that central government, through categorical grants, have greater control over the other tiers. Block grants, such as the community development block grant (CDBG), however, are given to lower governments in order to carry out their own programs in policy areas prescribed by Washington. State and local governments therefore have greater discretion in how to implement plans. General revenue sharing (GRS) allows funds to be given by Congress to other tiers without any conditions of how it is spent. This form of funding shows why it was important to clarify the meaning of 'centralisation'. By having a policy of GRS the Congress would be seen to be raising federal government's domestic spending (so centralisation) and raising state/local government activity, by giving them more resources without conditions (so decreasing centralisation). The fact that one act can be biased towards centralisation and decentralisation at the same time shows that the word must be used carefully. In addition to making specific grants to be spent through other tiers, the federal government can also exert financial influence by carrying out federal spending, such as on military technology, in an area. The prospect of such economic stimulation to an area can give the federal government greater leverage over other tiers.

Along with this 'fiscal federalism', the Johnson era showed an increase in other exertions of national government authority over the states. Clearly many of the programs of the New Deal and Great Society eras seem to go further than the constitutional remits of the federal government. Courts allowed such programs because of the elastic, 'necessary and proper' clause of the constitution, coupled often to the fact that it was not compulsory for states to take federal moneys. This interpretation allowed the national government to add conditions to receiving grants. These conditions varied, but many were regulatory mandates which forced states to change their internal laws or provide matching funds. By having the economic carrot, the national government was able to have authority in areas distinct from those prescribed in Article 1.

Legislative autonomy of the states can be limited in other ways. One such way is through pre-emptive legislation. Congress uses the 'supremacy clause' of the constitution to make laws that are binding to states. Much of this relates to forcing national standards that state governments must ensure within their borders. These are often related to environmental issues, but can be extreme, such as amendments to the 1988 Federal Energy Management Act which displaced state authority to regulate realistic-looking toy guns. In addition, such legislation often does not allow federal funding for their implementation. These unfunded mandates are greatly disliked as they increase the costs of state and local governments, without giving them either finances or choice to regulate in their own areas. This again highlights that larger, more active state governments does not necessarily entail decentralisation.

Not only has Congress reduced state and local government autonomy this century, but so too has the federal judiciary. The Supreme Court is renowned for its creative interpretations of the constitution. Rulings on federalism are no exception. The most important constitutional interpretation made by the court was to say that the first ten constitutional amendments, the Bill of Rights, are applicable to state legislation, as a result of the 14th Amendment. This nationalisation of the Bill of Rights suggests that in such policy areas authority should be given to federal institutions. This can impinge greatly on state sovereignty. For example, 'cruel and unusual punishment' was interpreted by the Court so far that it prescribed the wattage of light bulbs that could be used in state prisons . This federal judicial power was further made clear in the civil rights decisions (starting with Brown v Board of Education in 1954) which led to the Civil Rights Act. The Court upheld the Act in cases such as Heart of Atlanta Motel v United States (1964), suggesting that because the patrons of the hotel were from across state boundaries, it counted as interstate commerce (and so under Congress's jurisdiction). An equally creative decision was made in Katzenbach v McClung (1964) when segregation in a restaurant was banned because the restaurant's supplies came from interstate commerce.

The Court, however, is not always active to take away state rights. Many see it as an anomaly that whilst the Supreme Court did decide in Roe v Wade (1973) that abortion was a national issue, capital punishment is deemed not to be. Also, the case of the National League of Cities v Usery (1976) showed the Court upholding state employee's immunity from federal working regulations under the 10th Amendment (the first time since the New Deal that Congressional legislation has been struck down for transgressing the 'permissible boundaries of federalism'). This decision was, however, blunted by Garcia v San Antonio Metropolitan Transit Authority (1985) which creatively defined who were state government employees. The basic trend of Supreme Court decisions has therefore been towards curtailing the sovereignty of state legislatures.

This analysis shows the major factors affecting federal-state relationships. There has been a general trend towards centralisation, in the sense of greater national government in size and spending as well as increased nationalisation of policy decisions. Also, much federal domestic spending is done through state or local governments. A result of this is their increase in size. Reagan was the first post-war president to actively seek to change this trend and so his 'New-Federalism' must be looked at.

Reagan claimed to want to reduce the power that federal institutions had over other levels of government. He wanted those governments that were closer to the people to gain greater power. He wished to cut federal funding for various projects and his rhetoric suggested the removing of regulatory mandates. In actuality, however, Reagan seems a classic example of why centralisation should regarded as a symptom of other political activity, rather than a goal itself. Reagan's agenda was not one towards greater power for state or local governments, but instead a crusade to cut government and taxation in accordance with his laissez-faire principles. This was illustrated by his ending of all GNS's . Had he truly wished to strengthen other levels of government, this would have been the last form of grant to disappear. The move towards greater amounts of block, rather than categorical grants does, however, mitigate his action slightly. The effect of Reagan's changes was that states were given smaller budgets and so carried out less programs or else raised taxes to pay for the services their constituents had come to expect. He passed on the responsibility to pay for previously federally funded programs to states.

To further illustrate why I believe that decentralisation is a symptom of Reagan's policy, not an aim, is in relation to his activities in non-commercial areas. Although he tried to reduce commercial regulations, he was not so keen in ceding power to the states in other areas. According to Kincaid, "Reagan signed more pre-emption and mandate Bills than any president in US history" . This is shown when, for example, in 1984 a Republican amendment was added to a transport bill that stipulated that 5% of federal highways funds would be withheld from any state that did not raise the legal drinking age to twenty-one. In the case of South Dakota v Dole (1987), the Supreme Court upheld this condition, again suggesting that as federal funds were voluntary, Congress could add conditions. The point being made is that Reagan's attacks on centralisation seem more a traditional laissez-faire attack on 'big government' and commercial regulation rather than an urge to fulfil the Founding Father's intentions of a country based on largely sovereign states.

If centralisation or decentralisation is a symptom therefore and not a goal in itself, what are the pressures that have caused the progression to centralisation described? The first of these is reflected above, that for a Congress or president to reduce or increase the size of government, their greatest powers at to change the central government, to give it more or less spending power. Many see the personal political interests of Congress members as explaining much of the expansion of federal grants. The committees which have powers to allocate these grants are some of the most powerful in the legislatures. If a member is able to secure a major program in their own constituency, it will be of great political benefit. For those members who see their individual interests in such pork barrel action, there is certainly a bias towards centralisation.

Other reasons relate to technological advances that have occurred, particularly communication advances. The national government is given powers over interstate commerce and the huge rise in such trade accounts for greater need for a larger federal government. In addition, the ease of travel between states means that uniform policies on issues such as abortion or environmental regulations seem sensible as otherwise individuals or firms could simply move between states. Transport and communications such as television and radio also make people more aware of the problems and interests of citizens in other states. Also, people will be moved to try and stop environmental problems in a neighbouring state if the pollution could affect them. To do this, they must lobby the one organisation which has some authority over their neighbouring state and is still accountable to them, the federal government. The nationalised media of the United States also makes national politics a greater focus of attention. This makes national politicians central to their perception of who governs them, so allowing a climate of greater acceptance of centralising processes. Newt Gingrich's tried to use this to claim to give a national mandate for his 'Contract with America' and although he did gain the House, most voters had never heard of the Contract (so showing that there is yet to be massive gains for such centralisation).

Another reason is that some major problems are also best tackled at a national scale. This was highlighted during the New Deal. This is not only because of the economies of scale that the national government can employ. In addition, redistributive policies are assumed to be more effective at a national level because in doing so the major regional variations of wealth in the United States can be addressed as well as those within regions.

Much of the literature about the federal composition of the United States is weighted towards focusing on federal-state relation. I believe that to do so is risking losing sight of the wood for the trees. However much it is clear that federal government has encroached on state and local government powers, it still has a very long way to go to be counted as a heavily centralised country. Above, I suggested that to identify a bias you need a norm to deviate from. If we take, for example, federal relations in the 1950's as our norm, we find that although there may be a slight leaning or bias towards greater centralisation relative to all state and governmental activity, the encroachment is relatively small. The point is that states are still fiercely different. Utah is dry, yet Nevada until recently had legalised prostitution. You can be murdered by the state in Texas, yet not in New Jersey. You can turn right on a red signal in Maryland, yet not in Pennsylvania. Sales tax varies between states as do ages of consent. For a centralised country, there is a distinct lack of uniformity; uniformity which is often fiercely fought off.

It is not hard to see how this might be the case. If California were a country, it would be the seventh biggest economy in the world The Governor of California has a constituency far larger than many national leaders and so it would be expected that even within a state, large scale programs can be organised and there will be a great breadth of competing interests. The lack of centralisation is also seen when looking at coverage of mayors in major cities such as Chicago and New York. Not only are these characters seen as important locally, but as national figures, with massive budget and freedom of action. Rudolph Giuliani's actions in New York commanded international coverage, focusing on local government policy, completely independently of anything that might be occurring inside the Beltway or national party political agendas.

Not only do state and local governments act as a source for federal politicians, but also for policies. It has been suggested that this role of policy innovation has increased as states find themselves competing for scarce federal funds. The size of states allow them to be useful test areas for policies that can be copied by other states, the federal government or even other countries. The importance is that often such innovation in rooted in local politics, not centrally controlled and delegated by Washington.

Decentralisation is also seen in national party politics. The situation that Polsby describes as "100 state parties flying two banners" highlights differences between national parties at state level. Candidates are chosen at state level on platforms often distinct from any nation party agenda. This is, perhaps, diluted by the nationalisation of politics suggested above. The effect of this, as many state politicians progress to become national politicians is the possibility of fragmentation and a decentralisational bias within the federal government.

In all, the trend for larger, higher spending federal governments, encroaching on the powers of the states has been continual through the history of the United States. The trend moved from dual federalism of the 19th century, through the co-operative federalism of the 1960-70's to the competitive federalism that is said to occur today. Only under Jimmy Carter have the costs of federal grants fallen , despite the claims of others. In addition, state sovereignty has been eroded by Congressional pre-emptive legislation and the actions of the Supreme Court. Analysis of the Clinton era also highlights a major increase in unfunded federal regulatory mandates . This seems to demonstrate a bias towards centralisation.

When put into perspective, however, these developments are muted. The independence and variation of legislation within states is a mark of decentralisation. The power of politicians at city, region and state levels also suggests this. Indeed, due to many of the policies labelled as causing 'centralisation', the size of local and state government has increased. Although often there is limited autonomy to act, by increasing the amount of activity of these tiers, even as administrators of federal programs, they are able to increase their power. Looking at the activities of states or localities, rather than simply the federal-state or federal-local relationships can point away from a feeling of centralisation.

A last point to mention is that the formation of the federal Senate seems to acknowledge a bias away from centralisation. Every state having two seats, regardless of population size, means that a voter in Vermont has the power of sixty-six in California. This means that even if power is wished to be held centrally, it will be constrained to be used evenly between the states.