Federalism: Division of Power in the United States

FROM THE LECTURE SERIES: Understanding the US Government

By Jennifer Nicoll Victor, Ph.D., George Mason University

The federal system of government in the United States has seen many changes in the division of power. Currently, a system of cooperative federalism exists in the US. What is cooperative federalism? Who has the sovereign power?

The map of USA shown as colored silhouettes of faces, with map divided in the center and two groups facing each other.
In the United States, the sovereign power is divided between the national and state governments. (Image: Lightspring/Shutterstock)

Federalism in the US Government

Federalism is a system of government where sovereign power is divided between the national government and some other more local governments.

For much of US history, the division of powers between the federal and state governments can be described as one of dual federalism. When historians use this term, they mean to convey that state and federal powers were shared. But in practice, the states held the most important powers.

In the period between 1789 and the 1930s, states were assertive about their powers, and a coalition of states’ rights advocates were dominant in the US Congress, vocal in presidential nominations and judicial appointments, and overall, had more political muscle than advocates for the national government.

There were a few Supreme Court cases during this long period that asserted the supremacy of the national government, but on balance, states held the controls.

This is a transcript from the video series Understanding the US Government. Watch it now, Wondrium.

States’ Rights Versus National Power

As an example of how the Supreme Court attempted to assert national authority, let’s look at the 1819 case of McCulloch v. Maryland. This was a case about states’ rights versus national power.

In 1791, the national government created a federal bank for the United States. Some states objected to the creation of a national bank because they had no control over it. These states claimed that the bank was unconstitutional because the Constitution had not provided an express power to establish a national bank.

The state of Maryland decided to assess a tax on the federal bank branch in Maryland. James McCulloch was an agent of the federal bank in Maryland and refused to pay the tax. The state of Maryland sued the bank.

John Marshall’s Verdict

A portrait of Chief Justice John Marshall.
Chief Justice John Marshall had ruled that the federal government could regulate commerce. (Image: Everett Collection/Shutterstock)

When the case came to the Supreme Court, it was Chief Justice John Marshall who gave the opinion of the court. Citing the Elastic Clause of the Constitution, as well as the Supremacy Clause (which says that the federal government is supreme to the state governments), Justice Marshall said that the state of Maryland had no authority to tax the federal bank.

Furthermore, referring to the Commerce clause—also an Article 1 section 8 power—Justice Marshall said that the federal government can regulate commerce as long as it is between more than one state.

The Distribution of Power

However, the power of the federal government did not grow, relative to state powers, during the 19th century. It was not until the mid-to-late 1930s, during the height of the Great Depression, that the tides of federalism began to change.

Frustrated by a Supreme Court that continued to block his New Deal programs, President Franklin Delano Roosevelt threatened to expand the Supreme Court.

He wanted to appoint justices who were more sympathetic to his interpretation of interstate commerce, and who were inclined to see the federal government as expansive and as powerful as he did.

Ultimately, in a 1937 case involving the National Labor Relations Board and Jones & Laughlin Steel Corporation, the Supreme Court decided that the federal government could regulate working conditions, mandate minimum wages, and protect the rights of workers to organize.

This case was the beginning of a sea change in the way the judicial branch interpreted the commerce clause and protected the role of the federal government in regulating all sorts of matters in people’s lives. The federal government greatly expanded in power and scope during the 20th century, and the balance of federalism power shifted with it.

Learn more about how a bill becomes a law.

Cooperative Federalism

Currently, rather than a system of dual federalism that leans toward states’ power, there is what many call cooperative federalism, suggesting that the two levels of government form partnerships for the purpose of advancing common goals.

Under cooperative federalism, the national government has considerable power. The federal government can coerce state governments to execute particular policies by using a variety of tactics.


One such tactic is known as a grant-in-aid. This refers to a grant given by the federal government to a state government for a particular purpose. The federal government holds the purse strings and the states administer the programs. If states do not comply with Congress’s desires, it can withhold the money.

The grants-in-aid approach to policymaking began to escalate in the 1930s and continued throughout the 20th century, giving the federal government more and more power relative to states.

Grants and Mandates

Starting in the 1960s, Congress started using more targeted grants—sometimes called categorical grants-in-aid—to entice states and local governments to solve social problems related to issues like poverty, housing, and nutrition.

In some other recent cases, the federal government imposes standards on state governments, but provides no funding or grants to help offset the costs of implementing the policies. A federal regulation that states must implement, but that is not financed by the federal government, is called an unfunded mandate.

Examples of unfunded mandates include the Americans with Disabilities Act and No Child Left Behind Act.

Learn more about the creation of the US Constitution.

Balance of Power

At the beginning of the 21st century, the relationship between the states and federal government were still in flux.

If one thinks of federalism like a continuum where at one end you have total control by the national government, and the other end is total control by the states, as a country, America’s position on this scale has fluctuated over time.

For the first two-thirds of America’s existence, the balance of this power was more toward the states’ authority end. For much of the 20th century, the balance shifted more toward the federal government. Now, in the 21st century, there are signs that the relationship between states and national government is changing once again.

Advantage of Federalism

When one thinks about how federalism works, the key is to recognize the tension between the different levels of power. The tension is there by design, because it is intended to keep one part of government from becoming too powerful over the others.

While this tension can sometimes appear to be a conflict, and that can make people uncomfortable, everyone is better off if we allow that conflict to exist, because in its most productive form, the tension between the levels of power of government will both keep government power in check, and allow it enough power to address the serious problems Americans face.

Common Questions about Division of Power in the US Federal Framework

Q: Why is the McCulloch v. Maryland case significant?

The 1819 case of McCulloch v. Maryland is significant because it is an example of how the Supreme Court attempted to assert national authority.

Q: What is cooperative federalism?

Cooperative federalism means that the two levels of government form partnerships for the purpose of advancing common goals.

Q: What is a grant-in-aid?

A grant-in-aid refers to a grant given by the federal government to a state government for a particular purpose. If states do not comply with Congress’s desires, it can withhold the money.

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