In 1984, Congress attached a condition to federal highway funding: states that did not raise their drinking age to 21 would lose 10 percent of their federal highway dollars.
No state refused. Within a few years, all fifty states had complied.
Congress does not have the constitutional authority to set a national drinking age. The Twenty-First Amendment, which repealed Prohibition, explicitly reserved the regulation of alcohol to the states. Congress understood this. The condition on highway funding was not a law prohibiting states from setting their own drinking ages. It was a financial arrangement: accept our policy preference or lose the money.
The Supreme Court upheld the condition in South Dakota v. Dole (1987). The majority held that Congress could attach conditions to federal spending as long as the conditions were related to the federal interest and not unduly coercive. A 10 percent penalty, the Court reasoned, was an inducement, not a mandate. States could refuse.
No state refused. Because no state could afford to.
This is how the federal government governs in domains where it lacks direct constitutional authority. Not through law, which requires constitutional authority, but through money, which does not. And this is exactly what Brutus meant when he warned in 1787 that the federal taxing and spending power, combined with no genuine limit on how conditions could be attached to that spending, would eventually reduce states from sovereign counterweights to administrative delivery systems.
What Brutus Said Would Happen
Brutus published his first letter on October 18, 1787. It is the most widely read of the Anti-Federalist documents, and for good reason: it identifies, in the opening pages of the constitutional debate, the core architectural tension that has defined American governance ever since.
He was analyzing three provisions in combination: the Supremacy Clause, which makes federal law supreme over state law in areas of conflict; the Necessary and Proper Clause, which gives Congress the power to make all laws necessary and proper to carry out its enumerated functions; and the taxing and spending power, which gives Congress the authority to collect taxes and spend money for the general welfare.
Taken together, he argued, these provisions contained no genuine limit on federal authority. The Supremacy Clause made federal law supreme wherever it reached. The Necessary and Proper Clause could justify federal action in almost any domain if a plausible connection to enumerated functions could be drawn. The spending power could be used to impose conditions on states that Congress could not directly mandate. The design, he warned, pointed in one direction: toward the gradual absorption of state authority into a consolidated federal government.
He wrote:
“The powers of the general legislature extend to every case that is of the least importance, there is nothing valuable to human nature, nothing dear to freemen, but what is within its power. It has authority to make laws which will affect the lives, the liberty, and property of every man in the United States; nor can the constitution or the laws of any state, in any way prevent or impede the full and complete execution of every power given.”
He did not claim the federal government would immediately occupy every domain. He predicted the trajectory: consistent, incremental expansion toward the center, with states losing effective authority over their own affairs as federal spending conditions and Supremacy Clause preemption accumulated over time.
The trajectory he described has run, without meaningful interruption, for 235 years.
The Spending Condition as the Core Mechanism
Direct federal mandates, Congress simply requiring states to do things, face constitutional limits. The Supreme Court has periodically enforced those limits, most notably in striking down the mandatory Medicaid expansion provision of the Affordable Care Act in NFIB v. Sebelius (2012) as unconstitutionally coercive.
But the spending condition faces a much lower bar. The Court in Dole articulated a test: conditions must be unambiguous, must relate to the federal interest in the program, must not be independently unconstitutional, and must not be unduly coercive. “Unduly coercive” has proven a nearly impossible standard to meet: in Sebelius, a majority held that conditioning all of a state’s existing Medicaid funding on expansion was unduly coercive, but that was a rare exception to a long pattern of deference.
The result is a vast federal influence apparatus operating through the spending power, across nearly every domain of state governance:
Education: Federal education funding comes with requirements, No Child Left Behind, Race to the Top, and successor frameworks, that set standards, testing requirements, accountability structures, and curriculum priorities. States that wish to deviate from federal educational priorities can do so only by forgoing the funding.
Healthcare: Medicaid is nominally a state program with federal partnership. The federal government provides matching funds, currently between 50 and 90 percent of program costs depending on the state, in exchange for compliance with federal eligibility, coverage, and administrative standards. States have flexibility at the margins but operate within a federal framework they did not design and cannot exit without losing billions of dollars per year.
Law enforcement: Federal grants from the Department of Justice and the Department of Homeland Security flow to state and local law enforcement agencies with conditions attached regarding data sharing, cooperation with federal immigration authorities, and compliance with federal standards. The sanctuary city debates of recent years turned on whether the federal government could condition law enforcement grants on immigration cooperation, a question the courts have answered inconsistently.
Transportation: Highway funding flows to states through formulas that reflect congressional priorities. The conditions attached to that funding, speed limits, drinking ages, commercial vehicle standards, environmental compliance, represent federal policy choices imposed on states through financial dependency rather than direct law.
This is not a list of programs the federal government runs. It is a list of domains that are nominally state-governed but effectively federally shaped through the leverage that funding dependency creates.
The Laboratory That Couldn’t Experiment
The phrase “laboratories of democracy”, the idea that states should be able to experiment with different policy approaches, with successful experiments spreading and unsuccessful ones being abandoned, is attributed to Supreme Court Justice Louis Brandeis in 1932. It captures what many believe federalism is supposed to do: allow genuine variation, genuine competition among approaches, genuine diversity of governance that reflects the diversity of the country.
The Federal Farmer understood this value intuitively. He argued that governance closer to the governed would be more responsive, more accurate, and more accountable than governance exercised at a continental distance. A state government knows its citizens more directly than a federal government can. It faces more immediate consequences for policy failure. It is more accessible to ordinary citizens seeking to participate in or influence the decisions that affect their lives.
The spending condition system has not eliminated state variation. States do differ from each other on policy, in ways that matter and that reflect genuine differences in political culture, economic conditions, and citizen preferences. But the variation operates within federal parameters. A state cannot choose not to have Medicaid; it can only choose how to administer it within the federal framework. A state cannot choose its own educational accountability system without risking federal funding; it can only negotiate at the margins.
The laboratory has been partially closed. Experiments that deviate significantly from federal priorities require either forgoing federal funding, politically unacceptable in most cases, or securing a federal waiver, which requires federal approval of the deviation. The state cannot simply choose differently. It must ask permission.
The Non-Partisan Inconsistency
Federalism as a principle is invoked by both parties when convenient and abandoned when inconvenient. The pattern is consistent enough to be predictable.
Republicans invoke federalism when opposing federal environmental regulations, federal healthcare mandates, federal education standards, and federal minimum wage requirements. They abandon federalism when it comes to federal preemption of state gun regulations, federal marijuana policy that overrides state legalization decisions, or federal conditions on immigration enforcement.
Democrats invoke federalism when opposing federal preemption of state consumer protection laws, state-level environmental regulations that exceed federal standards, and state-level healthcare expansions. They abandon federalism when it comes to federal conditions on state education policy, federal civil rights enforcement that overrides state discrimination, or federal Medicaid requirements.
Both parties use federal spending conditions to impose policy preferences on states when they hold power. Both parties complain about federal overreach when the other party holds power and uses the same mechanism. The inconsistency is not hypocrisy in the simple sense, both parties have genuine reasons for their positions in specific cases. It is the structural inconsistency of an arrangement in which “states’ rights” is a political argument rather than a constitutional commitment.
The Anti-Federalists were calling for genuine structural commitment: not states’ rights as a convenient argument against federal policies you dislike, but states as genuine, durable counterweights to federal power, sovereign entities with real authority to govern their own citizens differently, and real protection from federal financial coercion.
That structural commitment was not built into the Constitution in the form they demanded. Both parties have spent 235 years confirming the prediction.
What Happened to New York
New York provides a concrete illustration of the federalism dynamic at the state level.
New York State spends roughly $93 billion per year on Medicaid, the highest Medicaid spending of any state, more than the next two states combined. The federal government covers approximately half of that. The federal matching funds come with federal standards: eligibility rules, coverage requirements, administrative requirements, and reporting obligations that New York must comply with to receive the money.
New York has some flexibility within the federal framework, it has expanded eligibility beyond federal minimums and organized its program differently than other states. But it cannot exit the framework without losing tens of billions of dollars per year, and it cannot deviate significantly from federal requirements without a waiver.
The rural communities that are the focus of much of this series, the Southern Tier counties, the North Country, the agricultural communities upstate, receive healthcare primarily through Medicaid and through rural hospitals that depend heavily on Medicaid reimbursement. Those reimbursement rates are set within the federal-state framework. The rural hospitals that have closed or are at risk of closing are operating within a financial structure they did not design and cannot change unilaterally.
The Federal Farmer argued that governance closer to the governed would be more responsive to local conditions. A state government that understood the specific healthcare landscape of rural Delaware County could, in principle, design a Medicaid program that addressed it better than a federal-state structure designed for the average of fifty states. Whether it would is a different question, state governments have their own failures. But the capacity for that kind of localized response requires the kind of genuine state autonomy the Anti-Federalists demanded and the spending condition system has significantly eroded.
What the Structural Argument Requires
Brutus and the Federal Farmer were not arguing for states to be free from any external standard. They were arguing for genuine federalism, a system in which the division of authority between the federal government and the states was real, durable, and enforced, rather than nominal and eroding.
What that would require in the current environment:
Spending conditions that are genuinely limited to the federal interest in the specific program, highway money for highway safety, not highway money for drinking ages; education money for educational outcomes, not education money for specific curricular approaches the federal government prefers. The Dole test was designed to do this but has not been enforced rigorously enough to prevent the sprawl of conditions that has developed.
Block grants with genuine flexibility, transferring federal funds to states with overall outcome accountability but without the detailed administrative requirements that effectively nationalize state program design. The tension here is real: detailed requirements often exist because Congress or federal agencies do not trust states to use funds for their intended purposes, and that distrust is sometimes justified. But the solution to distrust is accountability for outcomes, not administrative control of process.
A genuine commitment from both parties to the structural principle, that states should be able to govern differently, that federal preemption and spending conditions should be narrower than they have become, and that genuine variation in state governance is a feature rather than a problem to be solved by federal uniformity.
The last requirement is the hardest. Federalism as a structural commitment requires accepting that states you disagree with will make choices you believe are wrong, and that the structural value of genuine state sovereignty is worth accepting those wrong choices rather than overriding them from the center. Both parties find this acceptance difficult when they hold power and can do the overriding.
The End of the Series, and What It Means
This is the ninth piece in the CFP Anti-Federalist series. It is the most abstract, the furthest from the daily life experience of a family in Broome County or a farmer in Delaware County.
But the connection is there. The rural hospital that is closing, the bridge that hasn’t been fixed, the broadband that hasn’t arrived, the school that can’t retain teachers, these are not merely failures of state or local government. They are the product of a system in which state governments administer federal programs within federal parameters, without the genuine autonomy to make different choices, and without the financial capacity to make those choices without federal partnership.
Brutus said that the constitutional architecture pointed toward consolidation. He was right, and the trajectory he identified has run in one direction for 235 years. States retain formal sovereignty and exercise real discretion at the margins. But they are not the genuine counterweights to federal power that the Anti-Federalists demanded, the independent centers of authority that could experiment, resist, and offer citizens an alternative when the federal government went wrong.
The citizen who asks why a problem in their community cannot simply be solved by the people closest to it, why every answer leads back to Washington, to federal programs, to federal standards, to federal funding cycles, is asking the right question. The answer is structural.
Brutus gave the answer in 1787. He was describing the architecture before it was built. We are living in what it produced.
A Final Note on the Series
Nine categories. Nine articles. Nine writers from 1787 and 1788 who read a document and predicted, with specificity that still astonishes, what it would produce.
They were not enemies of the republic. They were committed to it, committed enough to argue, in public, against ratification of a constitution that they believed contained structural flaws that would accumulate over time into the conditions we now inhabit.
Most of them eventually accepted ratification. Several supported the Bill of Rights as the best available mitigation of the flaws they had identified. Some continued to argue, throughout their lives, that the structural problems they had named had not been resolved.
They were right. And the measure of how right they were is not found in constitutional law or political theory. It is found in the grocery bill, in the savings account that lost its value, in the defense budget that crowds out the bridge, in the Court decision that cannot be appealed, in the congressman who does not know your town, in the pharmaceutical regulator who took a job with the company whose drug he approved, in the senator serving his fourth decade, in the Fourth Amendment that means something on paper and something different in practice, and in the state government that would fix the problem if it could but cannot, because the money comes from Washington with conditions attached.
The Anti-Federalists asked for a different architecture. They were overruled. These articles are an accounting of what that cost.
Brutus, Letter I, October 18, 1787. Federal Farmer, Letter III, October 10, 1787. Available at the Avalon Project, Yale Law School, and the Library of Congress American Memory collection.