The Handbook of Municipal Bonds

CHAPTER 1

The Central Place of States and Local Governments in American Federalism

Richard Briffault Joseph P. Chamberlain Professor of Legislation Columbia University School of Law

 

 

 

Writing in Federalist Number 45, James Madison predicted that the states would dominate the new federal union created by the Constitution. The powers of the federal government were “few and defined,” he pointed out, limited primarily to “external objects, as war, peace, negotiation, and foreign commerce.” By contrast, the states, he explained, would have authority over “all the objects which, in the ordinary course of affairs, concern the lives, liberties and properties of the people, and the internal order, improvement, and prosperity of the State.” As a result of their greater role in governance and their closer ties to the people, the states would also enjoy stronger popular support than the distant national government. Madison assumed the principal problem of federalism would be protecting a fragile federal government from the states, not protecting the states from the federal government.

For more than a century, American federalism developed largely as Madison forecast, with the federal government exercising a limited role in peacetime domestic life, and most government power wielded at the state and local levels. On the eve of the Great Depression, federal spending accounted for barely one-sixth of total domestic government—federal, state, and local—spending. The federal government provided ...