Federalism and American Power

David McCormick & Jared Cohen

Current Issue

America's union is the greatest source of its strength, both at home and abroad. As such, a guiding principle of American foreign policy has long been the need to speak and act with one voice. Yet America's domestic structure — a decentralized, multi-layered network of national, state, and local governments — makes it unique among nations. This arrangement could offer the country a potent source of strength on the international stage.

People typically think of our federalist system as a purely domestic phenomenon, but federalism creates the opportunity for state and local leaders to serve their residents by acting internationally. Many of these leaders are taking advantage of this opportunity today, and have been for some time. From South Carolina positioning itself as an attractive destination for international automakers, to Maryland governor Larry Hogan negotiating with South Korea for Covid-19 tests during the pandemic, subnational actors are reaching out to foreign countries on issues such as trade, investment, public health, and the environment.

As globalization continues to render international relations an increasingly local concern, enterprising governors and mayors are searching for opportunities abroad to serve their constituents at home. Given the latitude afforded to state actors today, as well as the capabilities at their fingertips, we should expect them to test the limits of their power in this realm more frequently in the coming years. The courts may step in to invalidate their actions on occasion, but barring any major changes, Congress and the executive branch will likely remain quiet.

With some direction and support from Washington, America's states could serve as a strategic asset to the national government as it confronts global challenges. The need for federal officials to tap subnational actors will become even clearer as lines between the national and the international continue to blur, as states engage more directly with foreign powers, and as economic relations become increasingly intertwined with geopolitical competition.

America's national leaders should recognize federalism as a principle that guides not only how Americans relate to one another, but how our nation can relate to the world. Such an approach would be an exceptionally American effort — one in keeping with the framers' vision as well as 21st-century subnational statecraft.

GUARDRAILS AND OPPORTUNITIES

The role of the states in the American republic was at the top of the framers' minds during the nation's earliest days. While they recognized that the new republic would unite the states under a single national government, as James Madison observed in Federalist 45, "the States will retain, under the proposed Constitution, a very extensive portion of active sovereignty." The result was a "partly federal and partly national" system, with the states remaining central to Americans' political life.

But the states' role in foreign affairs was not so clear. Looking back at the failure of the Articles of Confederation, Madison wrote in Federalist 42, "[i]f we are to be one nation in any respect, it clearly ought to be in respect to other nations." Thomas Jefferson agreed, writing to George Washington that the proper arrangement was "to make our states one as to all foreign concerns, preserve them several as to all merely domestic."

To ensure America spoke with one voice in foreign affairs, the framers established guardrails to restrain the states' international activity. Since the founding, the Constitution has prohibited states from regulating foreign commerce, levying tariffs, negotiating on behalf of the country, and entering treaties or other legally binding compacts with foreign nations without Congress's consent.

In the years following ratification, Congress took a lead role in supplementing these provisions through legislation. One notable example occurred after the XYZ Affair, during which Pennsylvania state senator George Logan traveled to France to negotiate with the French foreign minister without the federal government's sanction. This led to the passage of the Logan Act in 1799 to prohibit such activity. (Though rarely enforced, the act has caused controversy since).

As America became more engaged in world affairs over time, the lines between foreign and domestic became less clear, and Congress began delegating enforcement of the Constitution's guardrails to the judiciary. Federal judges tasked with this responsibility struggled to define whether state policies were lawful, or whether they unlawfully "[rewrote] our foreign policy," as the majority in United States v. Pink put it in 1942. Through a few seminal cases, including Zschernig v. Miller in 1968, the courts eventually developed what Harvard Law School professor Jack Goldsmith called "the federal common law of foreign relations."

Judges still largely determine whether state actions contradict federal policy or impede Washington's ability to conduct foreign affairs. But they do so episodically, and with minimal guidance from policymakers. What has emerged in the meantime are 50 powerful states with significant global influence in their own right. Many state leaders regulate populations, territories, and economies that are larger than those of some G20 countries, and are naturally looking to advance the interests of their residents around the world.

FEDERALISM IN FOREIGN POLICY

The fact that America's states are important international players may be lost on many Washington officials, but it's not lost on leaders in foreign capitals. A telling example occurred in February 2020, when the Chinese consulate in Chicago sent a letter to a Wisconsin state senator requesting that he introduce a resolution praising China for being "transparent and quick in sharing key information of the [coronavirus] with the [World Health Organization] and the international community." It asked him to add that "the risk of [the] novel coronavirus to the general public in the U.S. remains low," and to encourage the federal government to work with the World Health Organization on the matter.

The senator didn't take the consulate up on its proposal, instead introducing his own resolution stating that the Chinese Communist Party "deliberately and intentionally misled the world" on the coronavirus, and that the Wisconsin Senate "stands in solidarity with the Chinese people," who have been "held hostage by a brutal and oppressive regime for these past 70 years." For a moment, a Wisconsin official was at the center of the global competition between two of the world's premier powers.

The event highlighted a growing trend of America's great-power competitors targeting subnational actors. As is to be expected, China is the most notable character in these plays. The Chinese Communist Party's espionage efforts against U.S. mayors, police departments, universities, and other subnational entities are not only well documented, but have been occurring for some time.

Aside from being targeted by international actors, states often take their own initiative in engaging in foreign affairs. They do so particularly when their residents include large diaspora communities, as when Florida governor Ron DeSantis sent a letter to President Joe Biden requesting federal assistance to provide internet access to the people of Cuba during this summer's protests against the regime in Havana.

Within certain constraints, states can also enact their own agreements with foreign governments. California's size and wealth, which give it the status of the world's fifth-largest economy, make it an especially powerful player in this context. A recent illustration occurred after the federal government announced its withdrawal from the Paris climate accords in 2017. In response, California governor Jerry Brown helped launch the U.S. Climate Alliance — a coalition of 25 states that pledged to meet America's original commitments under the accords.

The group grew out of the Under2 Coalition, which Brown started in 2015 with the minister-president of Baden-Württemberg, Germany. This coalition brought together more than 220 governments — including those of several American states — that share the goal of keeping the global temperature rise under two degrees Celsius. Since neither agreement is legally binding, they are permissible under the Constitution's Compact Clause.

Individual states can also advocate for their own economic interests abroad, and have the ability to attract investments from around the world. While states like California, Texas, and New York boast some of the largest numbers in terms of jobs created through foreign investments, smaller states like Georgia, along with Rust Belt states like Pennsylvania and Ohio, support hundreds of thousands of domestic jobs this way.

To further encourage investment in their jurisdictions, states have opened offices in foreign countries staffed with representatives who are somewhat analogous to U.S. ambassadors. According to the Council of State Governments, states began establishing these offices on a large scale during the 1980s and '90s. The council's latest data indicate that today, states maintain around 200 such offices in 30 countries. The most popular location is mainland China, which boasts more than 20 U.S. state offices. While Taiwan may not be able to host official representation from the federal government, it has hosted offices from Florida, Iowa, Missouri, and other states.

On the domestic front, state leaders have used their authority to direct how and whether their residents do business with foreign actors. As of today, 33 states have passed laws that limit their contracting with and investment in companies that boycott Israel. Such state laws ensure continued economic engagement with a fellow democracy and key U.S. ally.

Finally, any state governor can call on National Guard units that are more powerful than the militaries of many countries. National guardsmen have been deployed abroad for reasons ranging from warfare to disaster relief. Recently, state Guard units have engaged in efforts to combat the spread of Covid-19. Guam and Hawaii National Guard units held a virtual subject-matter expert exchange on the virus with the Philippines' armed forces last year, while guardsmen from Nebraska and Texas shared best practices for fighting the pandemic with their counterparts in the Czech Republic.

It's not just states that are involved in such matters; America's cities are, too. New York City provides a remarkable example. Through the International Liaison Program established shortly after the September 11th attacks, New York's Police Foundation stations officers in foreign capitals to gather counter-terrorism intelligence. The city now has 18 police officers stationed abroad, and they can pop up in unexpected places: When a New Yorker ran into trouble in Thailand in 2018 and an NYPD officer showed up at his hotel room, he wondered (quite naturally) how the officer arrived so quickly.

America's state and local governments have deep and varied connections abroad. Though they were never meant to serve as appendages of Washington, with some additional direction from federal leaders, our nation's subnational actors can serve as a strategic asset to the United States as it confronts global challenges.

MAKING FEDERALISM AN ASSET

Today's geopolitical environment requires a foreign policy that takes advantage of every tool at our disposal. Federalism should be counted among those tools. America's vertical separation of powers is exceptional among modern nation-states, and stands in especially stark contrast to the top-down model of central planning adopted by America's chief competitor, China. An ambitious foreign-policy agenda built around federalism would involve leveraging states and localities to supplement our national defense, support worldwide vaccination efforts, strengthen democratic institutions abroad, enhance America's global economic competitiveness, and more.

Leaders at the state level are already collaborating with the federal government to advance America's national-security interests and those of its allies. A powerful case study in this regard is the Department of Defense's State Partnership Program (SPP). The program is managed by the National Guard Bureau, executed by combatant commands, and sourced by U.S. state and territory National Guard units. A total of 54 American states and territories participate in the program, through which they cooperate with other nations' militaries on everything from leadership development to disaster response.

The program began in 1993, with partnerships between the United States and three Baltic republics. After nearly three decades of collaboration, the SPP has grown to include 89 partner nations. State Guard units have not only built trusted international relationships, they've also increased the effectiveness of America's military partners. The benefits can be seen most clearly in Europe, and particularly in the Baltic states, which face the continual threat of Russian aggression.

America should seek a similar strategy in the Indo-Pacific, where the military balance in the region is shifting precariously toward China. Any effective strategy to reverse that trend must enhance relationships with regional partners — particularly in Southeast Asia, where partnerships already exist — and strengthen the U.S. military's ability to operate with them.

Building new partnerships and deepening existing ones in the Indo-Pacific would help America create working coalitions to stand against Chinese aggression in the region. This effort would require greater federal funding and likely some improvements to the oversight and management of the SPP, but the return on investment could be significant. It would help smaller states develop their sovereign power and form binding ties with one another. Better military-to-military relations could also help pave the way for U.S. troops to disperse more widely throughout the region — a much-needed step for competing with China's highly touted missile- and bomber-heavy force.

A second way federalism can be leveraged as a foreign-policy asset is through vaccine diplomacy. Americans began receiving vaccinations against Covid-19 on a massive scale just under a year after the pandemic reached our shores, and a large majority of America's adult population is now vaccinated. This achievement remains a long way off for the billions of people living in the developing world. Vaccinating the world's population will be a daunting, multi-year process, but it should be one of America's top foreign-policy priorities.

When confronted with the most significant global challenge of the new decade, it was America's unique, multi-layered system of government that created the conditions for subnational actors to step up within their institutional roles and do what was necessary to combat the virus's spread. America's governors, mayors, local health officials, and business leaders now have substantial on-the-job training in vaccinating large populations against Covid-19 in relatively short order. Washington should work with these officials to share their vaccine-distribution and public-health communication experiences with other nations.

The rollout has not come without hurdles, of course; some states continue to struggle in convincing more of their residents to get the vaccine. But when compared to that of even many highly developed societies, America's vaccination record is excellent. It's tough to deny that the 50 American states have public-health lessons to offer the nearly 200 countries of the world.

In addition to providing reservoirs of vaccine diplomats, states can also serve as key partners in strengthening democratic institutions throughout the world. One possible avenue for them to do so is through the administration of elections. Since American elections are governed largely at the state and local levels, it is our state and local actors, not federal ones, who have the experience and expertise that will be of most use to their foreign counterparts.

The 2020 elections in the United States were challenging in unprecedented ways. The presidential election in particular was historically contentious, involving multi-front litigation efforts and resulting in violence at the nation's Capitol. And the whole process took place in the midst of a global pandemic. Yet through it all, America's state and local officials acted with integrity, the judicial system upheld the nation's election laws, and Congress was able to fulfill its constitutional responsibility to count the states' votes. When America's decentralized systems of voting and adjudication were tested, they proved successful. And they succeeded across all 50 states and the District of Columbia.

America's long, unbroken democratic tradition is an exceptional accomplishment in human history. The institutions and processes that allow it to endure should be of great interest to international observers looking to build and fortify democratic institutions abroad. In fact, the Organization for Security and Cooperation in Europe (OSCE) already sends observers to the United States to monitor our elections, write reports on their findings, and offer recommendations about how to improve electoral processes. Since our elections are run at the state and local levels, organizations like the OSCE should look beyond Washington when organizing delegations and conducting their observations.

In turn, states should be more open to allowing international observers to learn from how they run their elections. Although over half of U.S. states allow international election observers in some contexts, 11 states prohibit them. In many states, there is no statutory guidance at all. States in these latter two groups would do well to consider whether allowing foreign election observers to learn from their electoral processes might be appropriate in certain contexts.

A final way states and localities can be instrumental in American foreign policy is by contributing to the nation's global economic competitiveness. We've already seen how leaders at the subnational level are working to attract foreign investment in their jurisdictions. Federal authorities should build on these efforts by working with state and city officials to expand opportunities for American workers and families.

Immigration policy offers a useful place to start. Although the issue is hotly debated, it's becoming increasingly clear that in order to enhance our global competitiveness and ensure that our communities prosper, the United States needs to attract top talent from around the world.

One way to make that happen would be for Congress to create a heartland-visa program that states, cities, and counties can join. States and localities themselves can also be more proactive in making America more attractive to immigrants — and especially to scientists and other researchers, who are key drivers of innovation. A vital step in this regard could involve investing more heavily in America's higher-education institutions. Our state colleges and universities have particularly strong records of open-sourcing or otherwise commercializing their research. By increasing public investments in these institutions, governors and state legislatures can help attract the innovators that their states need to thrive and that our nation needs to maintain its competitive edge in the international realm.

America's states and cities can also take steps to help American workers and families become more productive than their competitors abroad. Efforts to increase worker mobility and skills development in a changing labor force would go a long way toward achieving this goal. That might mean reforming occupational-licensing policies that restrain workers' ability to start in a new field or relocate, or limiting non-compete clauses that curb individuals' freedom to join new firms or launch their own.

Under our federalist system, these issues are often left to the discretion of states and local leaders, and for good reason: These officials know better than officials in Washington what their residents need. But such matters are not solely of local concern, since America's economic standing in the world depends on its domestic productivity. State and local leaders should thus take international competition into account when crafting and reforming their economic policies.

On a related note, states and cities can also be instrumental in supporting American economic security. In recent years, lawmakers have recognized the wisdom of establishing domestic production lines and securing America's supply chains, especially in fields like high-end semiconductor manufacturing. Here, states are already leading the way. In 2020, Arizona governor Doug Ducey helped encourage the Taiwan Semiconductor Manufacturing Company to begin building a foundry in the state. The approximately $12 billion initial investment could result in 1,600 new domestic jobs in this crucial high-tech industry while cultivating a new innovation ecosystem within the United States. If successful, this move could serve as a model for how states can enhance America's economic and national security while also serving their residents' needs.

The ideas outlined above are not exhaustive, but they do offer examples of opportunities that America's system of federalism presents for foreign-policy experimentation at the state and local levels. They also show that there are plenty of opportunities to align federal, state, and local efforts in ways that make them sources of American strength, both at home and abroad.

MANAGING THE RISKS

In an era of increased international competition, it is incumbent on national actors to recognize the powerful asset our federalist structure provides and to use it to America's advantage. Yet, as is the case with all policies, these engagements entail trade-offs that have to be weighed against one another and risks that must be mitigated.

For starters, America's international competitors can exploit relationships with states and municipalities to their own advantage. One recent example was the U.S.-China Governors Collaboration Summit, which was ostensibly intended to help Chinese and American governors submit projects for investors to consider funding. The summit turned out to be an effort led by a subsidiary of the United Front — a strategic propaganda network that advances the global interests of the Chinese Communist Party.

State and local governments don't always have the capacity, resources, or experience necessary to avoid such pitfalls. Even if many state governments have international-relations offices — as do cities like Atlanta, Los Angeles, and New York City — they are often ill-equipped to understand the global implications of their decision-making. The complexity of international affairs is challenging enough for dedicated teams of diplomats to grasp, let alone governors and mayors who have more immediate, more varied, and more localized concerns.

Additionally, the goals of state and local governments are not always aligned with Washington's. One of the most dramatic events in American history, the Nullification Crisis in 1832, involved a dispute between state and federal interests. The crisis was sparked by the passage of a federal tariff, to which South Carolina vehemently objected. The resulting tension nearly led to federal forces firing on the Palmetto State.

Today's disagreements do not threaten to plunge the nation into civil war, but they do cause significant problems of their own. Competing views of proper immigration policies, for example, have led to the creation of sanctuary cities and inconsistent enforcement of national borders. These actions not only complicate domestic politics, they send mixed signals abroad. The disconnect between state and national policies can also create confusion about who is speaking for the country, undermining what remains of the one-voice principle in American international relations.

The risks posed by states' activity on the international stage are serious. Given the tense nature of today's geopolitical environment, as well as deepening divisions here at home, it is vital that America maintains its united front — especially in the conduct of foreign affairs. Closer ties between the nation's capital and state capitals would help in this regard. It would also help address the knowledge problem at the state and local levels.

American officials throughout the country should also be aware that while states have a special place in our federalist system, federal law — especially on foreign affairs — remains supreme. The states should never presume to speak for the nation or to conduct the nation's foreign policy on their own. When they do test the waters and step out of line, the federal government should use the mechanisms it has at its disposal to enforce constitutional and other guardrails that distinguish between state and federal jurisdiction. This can be accomplished through the courts, as already described, and through executive entities like the Office of Treaty Affairs at the State Department, which reviews state-level agreements with foreign governments to ensure they do not violate the Constitution's Compact Clause.

Critically, any effort to uphold limits on state authority in the international realm must involve Congress. In fact, this was the norm during the early years of the republic, as the laws passed in the wake of the XYZ Affair illustrate. The aftermath of the Nullification Crisis offers another useful example: The confrontation culminated in the passage of two new laws — the Force Bill, which authorized the president to use military force against the states to enforce federal tariffs, and a modified tariff. Congress's involvement would guard against both overreach by states and draconian measures from Washington that might attempt to shift the existing balance of power between national and state capitals.

The federal government has broad authority to compel state action in foreign affairs. But if Washington officials are to use federalism as a strategic asset effectively, they should wield this authority sparingly. Most subnational government activity is ad hoc and intended to advance local interests in ways that are perfectly acceptable in a Madisonian system. While state and local governments should be wary of overstepping their bounds, they should also guard their prerogatives to ensure that they maintain their distinct status in America's system of government and on the world stage.

UNLEASHING AMERICAN FEDERALISM

With the rise of serious geopolitical competitors in the post-Cold War era, America's leaders are increasingly looking outward to confront the challenges of today. But to meet those challenges, this moment also requires us to look inward, and to rediscover what is best and most exceptional about the United States. That effort should guide America's role in a rapidly changing world.

America's domestic political structure — built on the distribution of authority among federal, state, and local governments — makes the nation unique. And yet federalism has long been an underappreciated asset in American foreign policy. Actors at all levels of government should look for areas where they can align strategically on issues ranging from national security to public health to economic prosperity. Where alignment may be possible, the federal government should create avenues for states and municipalities to act. It should then guide and support their actions while policing any oversteps that may occur.

This would require federal, state, and local actors to think and act in new ways and build new institutional supports. It would require high-level personnel in Washington to come together and liaise with authorities across the country to answer such questions as: Where are the opportunities? Where are the overreaches, both from Washington and from state and local leaders? How should those overreaches be rectified? What is the best coordinating mechanism in particular instances? What is Congress's role in the matter?

The primary purposes of federalism are to diffuse power among the states and localities, and to ensure that America's experiment in self-government takes place, to the greatest extent possible, at the level closest to the people. These purposes align well with a foreign policy that embraces federalism. Far from detracting from their ability to fulfill their institutional roles, governors and mayors in our increasingly globalized world have to ensure that their communities remain competitive internationally, which requires awareness of foreign affairs and engagement with other countries. They also need a place at the table to ensure that America's foreign policy represents the interests of every state, not just the ones that already think of themselves as international players, like California and Texas.

The federal government, too, has every incentive to incorporate federalism as a principle of foreign policy. States and cities have advantages on the global stage that Washington does not, including National Guard access, election-administration experience, practical public-health expertise, diaspora communities with strong connections to their home countries, and direct business ties abroad. As states will no doubt expand their international footprint in the coming years, national leaders should use it as an opportunity to create a more coherent and effective foreign policy.

Federalism is one of America's most powerful domestic features. With some leadership and creativity, it can become a key asset in the international realm as well.

DAVID McCORMICK is the CEO of Bridgewater Associates and has served in senior positions in the White House, the Treasury Department, and the Department of Commerce.

JARED COHEN is the CEO of Jigsaw and an adjunct senior fellow at the Council on Foreign Relations. He previously served as a member of the U.S. State Department's policy-planning staff.


Insight

from the

Archives

A weekly newsletter with free essays from past issues of National Affairs and The Public Interest that shed light on the week's pressing issues.

advertisement

Sign-in to your National Affairs subscriber account.


Already a subscriber? Activate your account.


subscribe

Unlimited access to intelligent essays on the nation’s affairs.

SUBSCRIBE
Subscribe to National Affairs.