A government of limited powers 5hospitals, and other services. For more than a century after independence
the combined expenditures of the states, together with the cities and coun-
ties under their control, exceeded those of the federal government. However,
as the role of government in economic and social policy changed, particularly
after the Great Depression of the 1930s, the importance of the federal gov-
ernment increased and federal expenditures surpassed those of the states.
The powers and functions of the American states far exceed, therefore,
the role of local governments in unitary countries, and they enjoy consider-
able constitutional and legal autonomy in the way they fulfil this role. They
are subject to two major limitations: first, they must observe the Constitu-
tion of the United States and obey valid laws of the federal legislature made
under that Constitution. If state laws offend against the Constitution or con-
flict with valid federal laws, then the Supreme Court will declare the state
laws to be unconstitutional. In the same way, if an Act passed by Congress is
found to be an improper exercise of power over state governments, then the
Supreme Court will invalidate the federal law. The Court invalidates federal
statutes in this way from time to time, but it invalidates far more laws of the
states. Over the past two centuries the Court has gradually expanded the
constitutional power of the federal government, and consequently restricted
the power of the states, but federalism in America is still very much alive and
it draws its vigour from the diffusion and decentralisation of political power
as well as from the precepts of constitutional law.
The second limitation on the power of the states is their relative lack of
financial resources compared with those of the federal government. The lat-
ter’s ability to tax effectively is greater than that of any individual state, or of
all the states combined, and this financial power enables the federal govern-
ment to obtain the compliance of the states by offering them grants-in-aid to
which conditions are attached. Since the 1930s the federal government has
chosen to administer many of its programmes through state and local gov-
ernments, and has therefore put them in the position of acting as its agents.
In 2003 state and local governments received $387 billion from the federal
government in grants-in-aid, but most of the social welfare programmes that
are set up in this way require the states to match the money provided by the
federal government with their own funds from state taxation. The level of
provision of social welfare benefits varies considerably from state to state;
rich states can provide better benefits than poorer states. In 2004 the aver-
age monthly payment to the disabled varied from $960 in Nevada to $
in Maine; the average weekly payment for unemployment benefit ranged
from $351 in Massachusetts to $172 in Mississippi. To some extent these
differences reflect differing levels of income in the states; to some extent
they reflect differing social philosophies from state to state. It makes a real
difference which state you live in.
There have been powerful centralising forces at work, particularly in the
twentieth century. It can be argued that the states have lost so much of their
autonomy that the United States is no longer truly federal in character, but