Can Federalism Survive? It’s Up to Congress.

by Robert Romano: Under the original Constitution, and even with its subsequent amendments, power was supposed to be distributed between the federal and state and local governments, with the idea that the national government would have the fewest powers to affect local administration except in certain areas.

And so, the federal government was tasked with regulating interstate and foreign commerce, creating uniform immigration laws, building roads, bridges and the like, post offices, intellectual property laws, establishing courts, ensuring the national defense and so forth.

Those are all Article 1, Section 8 powers under the Constitution. Those powers not articulated were granted to the states under the 10th Amendment.

But one big advantage the federal government and Congress have is the power to spend and borrow money on the credit of the United States and to print money. States cannot do that, and so with the power of the purse, the federal government has been able to progressively expand control over state and local governments by attaching terms and conditions to federal funding, sometimes for good and sometimes for otherwise.

This power has been utilized a few times using federal transportation funds: in 1974 to set the speed limit to 55 miles per hour and in 1984 to set the national drinking age to 21. Sometimes it works in reverse: in 1995, Congress undid the speed limit law.

Other examples include the 2001 No Child Left Behind that conditions federal education funding on the use of standardized testing by states.

In 2010, Congress enacted Obamacare which included a provision compelling states to expand Medicaid if they wanted to continue to receive Medicaid funds. This was struck down in the 2012 Supreme Court ruling, which stated in portion, “that portion of the Affordable Care Act violates the Constitution by threatening existing Medicaid funding. Congress has no authority to order the States to regulate according to its instructions. Congress may offer the States grants and require the States to comply with accompanying conditions, but the States must have a genuine choice whether to accept the offer.”

There, the majority opinion by Chief Justice John Roberts does appear to put a limitation on the exercise of the power of the purse, but one could argue it was contradictory. If funds are tied to “accompanying conditions,” and the penalty of not complying is losing the funding, then there never is “genuine choice.” Every grant of federal funds to states is usually for a specific purpose, and generally, they can take it or leave it. What appears to have tripped up Congress here was the fact that states had been implementing Medicaid for decades and so were dependent on the prior stream of funding. Still, Roberts’ definition of coercive appears somewhat arbitrary rather than a rule to make it easy to spot when the line is crossed. I suspect future Supreme Court implementation will be haphazard.

In 2015 the Obama administration via the Department of Housing and Urban Development sought to condition community development block grants on the rezoning neighborhoods along income and racial guidelines. This was done in pursuance of the Fair Housing Act’s mandated to “affirmatively further fair housing.”

In 2017, the Trump administration sought to condition federal funds on state and local law enforcement cooperating with Immigration and Customs Enforcement on detaining illegal immigrants for deportation.

Generally, exercises of federal power in enumerated powers, like commerce or immigration, are thought to “preempt” state exercises in similar areas under Article VI of the Constitution, making the Constitution and all laws pursuant to it the supreme law of the land.

More broadly, Congress has sought since the 1860s to regulate states in the post-Civil War era under the 14th Amendment’s prohibition on states depriving any person of life, liberty or property without due process of law. Section 5 of that Amendment gives Congress the “power to enforce, through appropriate legislation, the provisions of this article.”

That has led to decades of civil rights laws, which combined with the powers to regulate interstate commerce, has given the federal government the ability to regulate employment discrimination, public accommodations and fair housing issues. The aforementioned Affirmatively Furthering Fair Housing regulation in 2015 fell under that rubric. That same year, the Supreme Court found in Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project that disparate impact analysis could be used to overturn a state’s implementation of federal housing grants.

But just because the federal government can do something under the Constitution, does not mean it ought to. After the Texas decision, Congress actually got together and did a 180 on the Affirmatively Furthering Fair Housing regulation and passed a funding prohibition to prevent HUD implementation of the rule if it included terms and conditions for changing local zoning laws.

This was novel. It sought to use the power of the purse, not exert federal control over states and localities, but to limit it.

Other times, lawmakers may find good reasons to compel local law enforcement cooperation in federal enforcement matters, as with the ICE detainer problem. Americans for Limited Government has certainly supported items like that in limited circumstances. It seems a good principle that matters that are within the scope of enumerated federal powers ought to remain national, and those not clearly explicated ought to remain local.

But this is where discretion comes in. Ultimately, the people decide many of these issues when they elect their representatives in Congress.

The lesson here is that the Supreme Court won’t always be there to intervene because the Constitution is not necessarily always an obstacle to intruding on state and local affairs. The federal government is about as limited as the Constitution makes it to be; which is another way of saying that it is pretty darn powerful. More constraints could be added, but that will require more constitutional amendments. Within the existing constitutional constraints, therefore, Congress has the ability to further limit the exercise of federal power over the states with the power of the purse. And where necessary they should probably exercise it more often.
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Robert Romano is the Vice President of Public Policy at Americans for Limited Government.

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