Categorical grants, mandates, and the Commerce Clause | US government and civics | Khan Academy

In a previous video, we've introduced ourselves to the idea of federalism in the United States. At a high level, you could view it as a contract between a national government and the states of which it is made. But you could also view it as a layered form of government, where you have your local government, and then layered on top of that, your state government, and then layered on top of that, your national government, often referred to as the federal government.

We looked at the example of a layered cake but have said that over the course of American history, the layers have gotten more and more mixed, more like a marbled cake. It's been mixed more in the favor of the national or the federal government, even though certain powers were historically more associated with the states. As we will see, there are several levers that the federal government has used in order to extend its power into the domain of what used to be associated with primarily the states.

So one is the notion of categorical grants. These are grants for a specific purpose where the federal government says, "Hey states, we're going to give you some money, but you've got to use this money in exactly the way that we're telling you." Now to be clear, not all grants are categorical grants. You have things like block grants, where the federal government can give a grant to a state and say, "Hey use this to generally improve the safety of your citizens." That would still give a lot of leeway to states, but in categorical grants, it's very specific in terms of how the states are to use that money, even if historically it was something where the states had the powers.

An example of this would be the federal program, the Special Supplemental Nutrition Assistance Program for Women, Infants, and Children, or WIC. To get an idea of how prescriptive it is, here is an outline of the program on the USDA website, a federal government agency. If we go down here, you can even see things like income requirements, and there'll be income eligibility guidelines. These are set by the federal government, not by the states.

Along those lines, you also have mandates. A mandate is the federal government tying funding to one thing based on state compliance with another thing. For example, the National Minimum Drinking Age Act, which was passed in 1984, ties federal highway funds to states raising their minimum drinking age to 21. I had direct experience with this act when I was growing up in Louisiana. Louisiana decided not to comply with the National Minimum Drinking Age Act, so the drinking age was 18. But because they didn't comply, they weren't getting as much federal funding for highways, and the highways weren't as good as in other states.

So, even though the drinking age is something that might be considered a state power, the federal government was able to exercise a lot of influence on most states by tying what the federal government wanted to highway funds.

Now, outside of these examples of the federal government tying state funds to the states doing what the federal government wants, the federal government has also made use of the U.S. Constitution in order to broaden its powers. In particular, the commerce clause, Article 1, Section 8, you might remember that's the part where they say, "The Congress shall have power," and then they list a bunch of powers. But one of them, the commerce clause, is to regulate commerce with foreign nations and among the several states and with the Indian tribes.

The key part of the commerce clause is "among the several states." Over the course of American history, this ability to regulate interstate commerce, commerce between states, the federal government has used that to justify regulations and laws that focus on issues that may at first be perceived as a state power but use the argument that it affects interstate commerce in order to regulate it.

As you can imagine, when you have free-flowing commerce between states, you have the same currency, you don't have tariffs between states. Many things that you would traditionally view as the power of the state, one could argue, would have some influence on interstate commerce. One notable example of this would be federal drug laws, where a state could decide to say legalize marijuana, but the federal government can make it pretty difficult by regulating how is that marijuana transported or where does the cash for that marijuana get deposited. Does it get deposited in a bank that has associations with the Federal Reserve that needs to transfer that money across state lines?

So, the interstate commerce clause has more influence on state affairs than you might initially think.