New Federalism Explained

The two presidents most associated with New Federalism, Nixon and Reagan, had ambitious plans to re-empower the states but they only had partial success. President Nixon was keen to combine existing categorical federal grants to the states, which Congress authorised for specific purposes, into block grants, which gave the states much more freedom over what they were spent on. Congress was resistant to these proposals, largely because they deprived its members of control over an important source of benefit to their constituents. Of the six block grants President Nixon proposed, only two were approved — those for housing and community development, and for employment and training. Nixon was not averse either to seeing the federal government expand its role if it suited his political purposes. Incongruously, for a Republican from today's perspective, he established the Environmental Protection Agency in 1970 and signed amendments to the Clean Air Act into law establishing national air quality standards. 

President Reagan's single biggest achievement was the passage of the Omnibus Reconciliation Act in 1981, which eliminated and consolidated dozens of existing categorical grants into nine new block grants, at the same time cutting the overall amount of federal aid to states and cities by over 10%. However, the following year he ended up abandoning his ambitious plan to transfer all welfare and food stamp programs to the states in return for the federal government taking charge of Medicaid, after negotiations with state governors broke down. 

The high point 

The 1990s represented the high point of the New Federalism movement, for a number of reasons: 

· The economic growth of the 1990s led to an increase in state revenues, supplemented by the huge influx of funds from the tobacco settlements of the late 1990s, through which major cigarette manufacturers agreed to pay the states a total of $246 billion over 25 years. 

· There was an increased willingness by the states to use new methods to solve social problems, particularly related to crime: boot camps were introduced in 27 states; the first `Megan's Law' was introduced in New Jersey in 1994, followed by federal legislation in 1995; 'three strikes' laws were introduced first in Washington in 1993; New York city pioneered 'zero tolerance'. 

· Supreme Court decisions by the so-called 'federalist five' (Justices Rehnquist, O'Connor, Kennedy, Thomas and Scalia), most notably US v Lopez which, in striking down the Gun-Free School Zones Act of 1990, was the first decision since the New Deal to limit Congress's power under the 'interstate commerce' clause. 

The decline 

President Bush's rhetoric, both as governor of Texas and at the beginning of his administration, led many to expect that he would adopt a traditionally conservative  'states' rights' approach to the federal-state relationship. However, the overall record  of his administration was a disappointment to conservatives; there was no concerted move to shift power back to the states, federal spending rose by about a third through the course of his administration, and he showed himself willing to use the power of the federal government to implement his favoured policy options.

In defence of the president, it could be argued that two of the most often cited examples of federal government expansion his administration oversaw — the creation of the Department of Homeland Security, and the bank bailout legislation of autumn 2008 — were driven by calamitous national events that demanded action from the federal government. However, several programmes could not be justified on these grounds, in particular: 

· The 'No Child Left Behind' education legislation passed in 2001 created federal requirements over school syllabus content, testing and teacher qualifications when, as recently as 1996, the Republican Party platform called for the abolition of the federal department of education. 

· The Medicare prescription drug benefit, passed in 2003, was widely described as the biggest expansion of the federal role in healthcare since the creation of Medicare itself. 

The area of medical ethics saw some of the stranger federal interventions, as the administration and Republican Congress sought to ensure their 'pro-life' values were upheld by the states. In the case of Terri Schiavo, Congress passed legislation transferring jurisdiction just for her case from the state to federal courts, which the president flew to Washington to sign from his holiday in Texas in the early hours of the morning. 

Unlike his predecessor, President Obama had never served as a state governor and, as a senator with a voting record that tended liberal, there was no expectation he would emerge as a champion of the states. The main legislative achievement of the president's first term, the Patient Protection and Affordable Care Act, generated heated debate over the constitutional extent of the federal government's powers, and 26 states were parties to a case that was decided by the Supreme Court in 2012, National Federation v Sebelius. The court upheld the federal government's right to require every citizen to have health insurance (the 'individual mandate') but, in a minor victory for the states, the court held that the federal government could not punish states that refused to expand Medicaid as the act required them. 

In other areas, the Obama administration encroached on states' autonomy. Despite the president's campaign pledge to respect state laws on the use of medical marijuana, a report issued in 2013 by the 'Americans for Safe Access' group claimed that the Obama administration had spent more money, $289 million, in its 41/2 years on the enforcement of federal laws than its predecessor did in 8 years. In 2010 the Justice Department began legal action challenging the Arizona 513 1070 law, which in various ways sought to strengthen state laws against illegal immigrants. The case Arizona v US eventually reached the Supreme Court and, in a judgement delivered in 2012, the court held that the state was infringing on the federal government's constitutional right to determine immigration policy.

States are 'Laboratories of policy’ Louis Brandeis

New Federalism represented a reassertion of the role of the states, and they continue to play a significant role in the life of the nation. The replacement of categorical grants with block grants as well as revenue sharing gave the states more fiscal freedom and this has remained. Even under an administration as unsympathetic as that of George W. Bush's, they showed a considerable degree of independence. A system of almost universal healthcare was begun in Massachusetts, and same-sex marriage was legalised in a number of states. Colorado and California have legalised cannabis. In 2017 when Trump announced he would not enforce the Paris climate agreemnet, 30 states announced they would still comply.

But it is the Supreme Court who have been most successful in maintaining the federal balance.  The Supreme Court struck down part of the Affordable Health Care Act in NFIB v Sebelius- which required states expand medicaid. In Lopez v US and Morrison v US- the Supreme Court declared that the School Gun Zones Act and Violence against women Act were not a regulation of commerce. The Supreme Court divided 4-4 and so the lower court's decision remained which struck down DAPA in 2017 in Texas v US.

The term grants-in-aid refers to the federal government giving money to the states for a particular purpose. There are two general types of grants-in-aid:

Block grants: Money given for a fairly broad purpose with few strings attached.

Categorical grants: Money given for a specific purpose that comes with restrictions concerning how the money should be spent. 

In 1972, the Nixon Administration initiated a practice called revenue sharing, in which the federal government gave money to the states with no restrictions attached whatsoever. 

However, it would be difficult to argue that New Federalism brought about any fundamental shift in the federal-state relationship, and the experience from 2000 showed its limitations. These limitations were particularly exposed in the economic slowdown from 2008, which put severe pressure on many state budgets, reducing the scope for state initiative. A few states such as Wyoming and North Dakota, with small populations and rising revenues from energy production, were immune, but the majority saw declining revenues and increasing demand for services. Nearly all states are required by their own laws or constitution to run a balanced budget, which means they are much less able to run prolonged deficits than the federal government, and consequently are vulnerable should revenue drop in an economic downturn. The Patriot Act, No Child Left Behind Act Real ID Act. Obama Care and the Stimulus ARRA- (American Reinvestment and Recovery Act) were all seen as an extension of government power in the states. Both Bush and Obama were accused of 'Carrot and stick Federalism'.Example: When the federal government decided to raise the drinking age to twenty-one, it denied certain highway funds to states that opted not to comply.

This growth of central power has been also due to the growth of social conservatism and the increasing reach of the central government in the moral lives of its citizens Bush was an ‘authoritarian social conservative’ e.g  Partial-Birth Abortion Act 2003 & Terri Schiavo case

It is arguable that the role of the federal government cannot be significantly rolled back. The operation of a modern society creates a need for centralised management of the economy and for an educated workforce; and the demand for a basic standard of healthcare requires national standards enforced by the federal government. Most significantly perhaps, Congress and the president, whatever their ideological stance, want to exercise control over domestic policy. All presidents have policy goals they wish to achieve, and they are unlikely to willingly renounce the means of achieving them. Similarly, members of Congress are keen to retain control over federal funding of state and district projects, as these are crucial to their prospects of re-election.