The Divided States of America

1. Federalism: Madison's Essential, Yet Flawed, Invention

American federalism, in fact, has always been much less a fixed structure than a set of rules of combat.

Founding dilemma. The United States' founders faced an immense challenge after the Revolution: how to unite disparate colonies into a strong nation without recreating the tyranny they had just overthrown. The initial attempt, the Articles of Confederation, failed due to its intentional weakness, leaving the new country vulnerable and disunited. James Madison's genius lay in crafting federalism, a delicate balance of power between the national government and the states, designed to secure political support and prevent fragmentation.

Madison's balancing act. Federalism, alongside the separation of powers, was Madison's "truly essential" invention. It aimed to give the federal government enough strength to achieve national goals and maintain unity, while preserving the states' identities and self-governance. However, this balance was never static, constantly shifting through political battles and compromises, often over contentious issues like slavery. The inherent tension between national unity ("E Pluribus Unum") and state power ("E Pluribus Plura") became the defining characteristic of American governance.

A system under strain. In the 21st century, this foundational invention faces a profound crisis. Federalism, once a mechanism for managing conflict, has become a primary driver of rising inequality and political polarization. The author argues that the "government that Americans get depends increasingly on where they live," with states acting as "great dividers" rather than the federal government as the "great leveler." This erosion of Madison's original intent threatens the very stability of the American republic.

2. American Federalism's Four Shifting Generations

The invention of federalism allocated power between the federal government and the states in a way that gave the federal government enough strength to keep the country intact and accomplish national goals without making it so strong as to interfere with the self-government of the state and local governments.

Generations of evolution. American federalism has evolved through distinct generations, each defined by a shifting balance between federal and state power, and by different approaches to managing national unity versus local autonomy. This dynamic interplay has shaped the nation's response to its most pressing challenges.

• First Generation (1787–1865): Focused on drawing clear legal boundaries, epitomized by the Tenth Amendment's "reserved powers" clause. However, early disputes like McCulloch v. Maryland (1819) quickly blurred these lines, and the issue of slavery ultimately led to the Civil War.
• Second Generation (1865–1954): Characterized by political bargaining and state autonomy, despite federal assertions of power. The Fourteenth Amendment's "equal protection" clause was undermined by "separate but equal" doctrines (e.g., Plessy v. Ferguson, 1896), allowing states to perpetuate segregation.
• Third Generation (1954–1968): Triggered by Brown v. Board of Education (1954), this era saw a reassertion of federal power to promote civil rights and reduce inequality. Lyndon B. Johnson's Great Society programs, including Medicare and Medicaid, expanded federal influence through grants, enlisting states as administrative agents.
• Fourth Generation (1968–present): Marked by renewed state preeminence, particularly in administering federal programs like healthcare. This generation has seen increasing policy variation among states, inadvertently fueling greater inequality across the nation.

Constant recalibration. Each generation represents a continuous search for balance, moving between periods focused on fixed legal boundaries and those dominated by pragmatic bargaining. This constant recalibration, while preventing outright collapse, has often deferred fundamental conflicts, allowing them to resurface with greater intensity later. The inherent flexibility of federalism has been both its greatest strength and its most significant weakness.

Unintended consequences. The current Fourth Generation highlights how federalism, initially designed to unite, now contributes to division. Policies intended to reduce inequality, when implemented with significant state discretion, have instead widened disparities. This underscores the complex and often paradoxical nature of America's intergovernmental system, where the pursuit of local liberty can inadvertently undermine national equality.

3. States as "Great Dividers" Fueling National Inequality

To a large—and growing—degree, the government that Americans get depends on where they live.

The inequality paradox. Despite federal efforts to reduce disparities, inequality in the United States has grown significantly since the 1960s, both within and between states. The author argues that while the federal government has historically acted as a "great leveler," state governments have increasingly become "great dividers." This is evident in stark differences across various policy outcomes.

Widespread disparities. The quality of public services and life outcomes for citizens vary dramatically depending on their state of residence. This isn't just about individual wealth; it's about systemic differences in state policy choices and financial capacity.

• Income & Poverty: The US has among the highest income inequality in the developed world, with vast differences between states. Poverty rates range from 6.9% in New Hampshire to over 20% in Mississippi.
• Policy Outcomes: States tend to cluster, with "most-leading states" consistently outperforming "least-leading states" across indicators like health, education, infrastructure, environment, and services for children.
• Global Comparison: Compared to other federal nations (Australia, Canada, Germany, Switzerland), the US ranks lowest in income equality, health outcomes, and educational performance, suggesting that the American version of federalism is a key contributor to these disparities.

Roots of the divide. These inequalities stem from a combination of factors:

• State Wealth: Richer states can afford better services and investments.
• Policy Choices: States make different decisions about taxation and spending priorities.
• Administrative Role: Federal policies, when administered by states with significant discretion, lead to varied implementation and outcomes.

The author concludes that federalism, while allowing for cherished local diversity, has inadvertently planted the seeds of massive and pernicious income inequality, transforming the debate from one primarily about race to one based on location and residence.

4. Healthcare: A Microcosm of Federalism's Deepening Disparities

Medicaid is the very symbol of the Fourth Generation of Federalism, a generation that not only is characterized by federal policies in which the states have substantial decision-making authority but that feeds growing differences among the states.

Medicaid's peculiar bargain. Medicaid, launched in 1965 as a federal health insurance program for the poor, exemplifies the Fourth Generation of Federalism. It's a federal program brought to life through state decisions, making it "not one program but fifty-one." States have primary administrative responsibility and significant choice over coverage beyond basic federal standards, often relying on private contractors. This complex, decentralized structure has bred immense variation and inequality.

Budgetary and policy dilemmas. States find themselves squeezed by rising healthcare costs and federal standards, leading to difficult choices.

• Reagan's Missed Opportunity: Governors rejected Reagan's 1982 proposal for the federal government to fully assume Medicaid costs in exchange for states taking over food stamps and welfare. This proved to be a "biggest budgetary mistake," as Medicaid became the fastest-growing program, permanently straining state budgets.
• Obamacare's State Divide: The Affordable Care Act (ACA) further highlighted state disparities. States had options to create their own health insurance exchanges or expand Medicaid. The Supreme Court struck down the mandatory Medicaid expansion, making it optional. All "most-leading states" expanded Medicaid, while seven of the "least-leading states" did not, creating significant gaps in coverage and premium costs.

Unequal health outcomes. The variations in Medicaid administration and ACA implementation have fueled profound inequalities in healthcare access and quality across states.

• Health Index Scores: Top states like Massachusetts have health index scores more than twice as high as bottom states like Mississippi.
• Key Indicators: Life expectancy, infant mortality, drug overdose deaths, and cardiovascular disease rates vary dramatically by state.
• Uninsured Rates: Some states have uninsured rates three times higher than others, directly impacting health outcomes.

These disparities persist despite the US spending significantly more on healthcare per capita than other industrialized nations. The author argues that while Americans agree on the importance of good health, deep divisions on government's role in providing it, coupled with federalism's structure, have "hard-baked" healthcare inequality into the system.

5. Environmental Policy: State Innovation at the Cost of Uniformity

The more we allow diversity among the states in determining how that happens, the more we risk inequalities, with great potential for political conflict and personal harm.

Flint's tragic lesson. The Flint water crisis serves as a stark illustration of federalism's failures in environmental protection. State officials, prioritizing budget cuts, switched Flint's water source without proper corrosion treatment, leading to widespread lead contamination. This "finger-pointing federalism" exposed the dangers of:

• Blurred Responsibility: Federal standards existed, but state agencies were responsible for enforcement, often under conflicting pressures (e.g., budget cuts vs. compliance).
• Local Vulnerability: A poor, minority community bore the brunt of administrative failures and political inaction, highlighting how inequality is exacerbated when local governments lack power or resources.

Environmental disparities. While some states have been "laboratories of democracy" in environmental policy, this innovation has not led to uniform national improvement.

• Californiazation: California has pioneered aggressive air pollution standards (e.g., tailpipe emissions, catalytic converters), effectively setting national benchmarks due to its large market. This "Californiazation" relies on federal waivers, allowing states to exceed federal standards.
• ACE Index: State environmental quality varies enormously, with California, New Jersey, and Massachusetts at the top, and Wyoming, North Dakota, and West Virginia at the bottom. The gap between top and bottom performers has widened over time.
• "Race to the bottom": Some states prioritize industrial development over environmental concerns, leading to a "race to the bottom line" in regulatory enforcement.

The cost of diversity. The author contends that while local control is cherished, allowing wide diversity in environmental management risks significant inequalities and harm. The intermingling of federal policymaking and state administration, coupled with varying state capacities and political will, creates a system where national standards are applied unevenly, leading to vastly different environmental outcomes for citizens depending on where they live.

6. The Paradox of Waivers: Fueling Innovation While Worsening Inequality

Waivers thus not only are the tools for the states’ laboratories of democracy but they have also created those laboratories, without which many of the policy advances of the last generation—in welfare, health, the environment, education, and other areas—simply would not have been possible.

Laboratories of democracy. Justice Brandeis's vision of states as "laboratories of democracy" suggests that state-level experimentation can lead to policy innovation that other states, and eventually the nation, can adopt. This concept is central to the "Californiazation" of policy, where states like California lead the way in areas like environmental regulation.

The rise of waivers. The federal government's waiver policy has become a crucial mechanism for this experimentation. Waivers allow states to deviate from federal requirements, often to:

• Experiment with new approaches: Such as Wisconsin's "Wisconsin Works" welfare reform, which aimed to move people from welfare to work.
• Tailor policies to local needs: Giving states flexibility in administering complex federal programs like Medicaid.
• Advance policy in gridlock: In an era of federal legislative paralysis, waivers offer a bipartisan path for states to pursue ambitious agendas.

Unintended consequences. While waivers foster innovation, they also carry significant downsides, particularly regarding inequality.

• Increased Disparity: Waivers inherently increase differences among states, as each state pursues its own path, leading to varied outcomes for citizens.
• "Race to the Bottom": State discretion over benefit levels can drive overall benefits down, especially in safety net programs, exacerbating inequality.
• Information Asymmetry: Federal officials often lack sufficient information to fully assess state waiver proposals, making them susceptible to politically motivated claims of success rather than evidence-based outcomes.
• Partisan Divide: Waivers have become a tool for partisan conflict, with states using them to either advance or roll back federal policies, often along ideological lines.

The author concludes that while waivers are indispensable in a polarized political landscape, they risk encouraging innovation at the cost of greater inequality, making the quality of government services increasingly dependent on a citizen's state of residence.

7. Deepening Polarization and Budgetary Strain Exacerbate Disunity

The interplay of these four forces—the increasing geographic concentration of the population, the aging of the population, the budget pressures on the federal government and especially on the states, and the growing polarization of the states—has locked inequality into place and made it harder to close the gap.

A perfect storm. The Fourth Generation of Federalism is characterized by a confluence of forces that are locking inequality into place and making it harder to bridge the divides between states. These pressures threaten to unravel Madison's delicate balance.

Four critical pressures:

• Population Concentration: By 2040, half the US population will live in just eight states. This will deepen political divisions, as smaller, more rural states will control a disproportionate share of Senate seats, making national consensus harder to achieve and potentially leading to resource strains in both fast-growing and shrinking states.
• Aging Population: The rapidly aging population will dramatically increase federal spending on Social Security and Medicare, crowding out redistributive programs aimed at reducing inequality. This shifts more of the burden onto states, which are ill-equipped to handle it.
• Budgetary Pressures on States: State budgets face immense strain from rising Medicaid costs and pension obligations. This fiscal paralysis means states have little capacity to address income inequality or invest in programs that could narrow the gap, further entrenching disparities.
• Polarization: State legislatures are increasingly polarized, often more so than Congress, partly due to gerrymandering and the "big sort" (people clustering with like-minded individuals). This polarization makes it nearly impossible to build the consensus needed for sustained attacks on inequality.

Eroding self-correction. These forces are breaking down the self-correcting mechanisms Madison envisioned for federalism. The federal government's ability to set ambitious national standards is undermined by its reliance on states for administration, while states' capacity and will to address inequality are shrinking. The result is a system where inequality is not only tolerated but actively exacerbated, leading to declining trust in government and a more deeply divided nation.

8. Hamilton's Vision: A Centralized Solution to Madison's Dilemma

Hamilton believed that fragmentation of power would forever deny America its chance at greatness, that putting too much power into the hands of the states would lead to dangerous disintegration, and that only a strong and vibrant federal government would ensure the place in the world order that the country deserved—and had earned.

Madison's boundaries vs. Hamilton's strategy. While Madison focused on balancing political power through state autonomy and clear boundaries, Hamilton, as the nation's foremost strategist, prioritized a robust central government to ensure national greatness and solve pressing policy problems. He viewed states as instruments, or even impediments, to this broader vision.

The case for federal leadership. Hamilton's insights are particularly relevant in the current era of deepening inequality and polarization. He would have recognized these issues as rooted in the fragmentation of state power and would have insisted on federal leadership to address them.

• National Unity: Hamilton believed a strong federal government was essential to prevent dangerous disintegration among states, which he saw as inherently prone to self-interest and fragmentation.
• Economic Strength: He championed federal assumption of state debts and a national bank to foster commerce and a unified economy, recognizing that state-level economic policies could hinder national progress.
• Problem-Solving: For Hamilton, the federal government was the engine best positioned to tackle fundamental national needs, not merely to mediate state interests.

A necessary rebalancing. The author argues that Madison's boundary-based strategy is now less effective, as societal problems like inequality transcend state lines and state decisions often widen disparities. A "Hamiltonian solution" is needed to rebalance federalism, shifting towards a more centralized approach where the federal government takes the reins in solving national problems, using states as key players but not ultimate deciders. This would involve a fundamental redefinition of federal-state roles to actively combat inequality and polarization.

9. Rebalancing Federalism: Grants, Learning, and Local Empowerment

A Hamiltonian solution to Madison’s modern dilemmas would have three dimensions.

Transforming federal grants. A Hamiltonian rebalancing would fundamentally alter the role of federal grants, focusing them primarily on "inequality-busting initiatives." Historically, federal grants have been the prime driver of redistributive policies, but state discretion in their administration has led to widening disparities.

• Targeted Redistribution: Federal aid would be concentrated on programs with a clear redistributive impact, focusing on the poor, the very young, and the very old.
• Federal Oversight: The federal government would retake greater control over programs like Medicaid, ensuring more uniform implementation and reducing state-driven disparities, while still allowing states to tailor actions to local conditions.
• Strategic Investment: This approach would require a heavier federal hand in grants, ensuring that funds are directed towards narrowing gaps rather than simply incentivizing state action that may or may not achieve national equity goals.

Learning from laboratories. While a stronger federal role is needed, it doesn't mean abandoning state experimentation. Instead, federalism should be transformed into a system that genuinely learns from state innovations.

• Evidence-Based Policy: The federal government would actively identify and promote successful state experiments (like Wisconsin's welfare reform or California's environmental policies) that genuinely reduce inequality.
• National Progress: The goal would be to use lessons from state "laboratories" to inform and advance national policy, rather than allowing state variations to simply persist or exacerbate disparities.

Empowering local governments. Local governments, often overlooked in federalism debates, hold significant potential for improving trust and delivering results.

• Direct Engagement: Giving local governments a more prominent place in the federal system, acknowledging their high levels of public trust and their capacity for innovative, data-driven governance.
• Bridging the Gap: Local communities are where policy problems and proposals meet reality. Empowering them can lead to more effective, equitable service delivery that directly impacts citizens' lives.

This Hamiltonian approach seeks to leverage federal power and resources to address inequality and polarization, while still valuing state and local contributions, ultimately aiming for a more unified and equitable American republic.

10. The Peril of "Reality-TV Politics" on Federalism's Future

What the founders would not recognize is the large and growing gap between fierce national politics and the operating realities of federalism.

A widening chasm. A critical threat to federalism in the 21st century is the growing disconnect between national politics and the practical realities of governance at the state and local levels. National political discourse, increasingly influenced by "reality-TV politics," prioritizes simple slogans and dramatic clashes over complex policy solutions.

The impact of simplified politics:

• Policy Disconnect: Complex issues like climate change or infrastructure investment, which require nuanced, long-term strategies, struggle to gain traction on the national stage because they lack "sound-bite appeal."
• Problem Dumping: Federal officials, seeking to avoid difficult details or partisan gridlock, increasingly "dump" complex policy problems onto states, often without adequate resources or clear guidance.
• Erosion of Trust: This disconnect fuels public distrust, as national promises fail to translate into tangible local improvements, and citizens perceive a lack of genuine problem-solving.

Federalism's diminished role. Once a central arena for national debate and compromise, federalism has receded from prominence in national politics. While state and local governments continue to play pivotal roles in implementing policies from immigration to healthcare, their operational realities are increasingly divorced from the national political narrative. This creates a perverse irony: the institution designed to accommodate differences now widens them.

An engine of disunity. The author concludes that this combination of reality-TV politics and federalism's decline has become an "insidious engine of inequality." Federal officials avoid the implications of their decisions, while states, left to their own devices, drive policies in divergent directions, exacerbating disparities. To bring the "divided states of America" together, a fundamental shift towards a Hamiltonian vision of a stronger, more efficient federal government is needed, one that can bridge the gap between national aspirations and local realities, and actively combat the forces of inequality and polarization.

Last updated: February 19, 2026