When you get a speeding ticket, you aren't paying the President. When you fill out your 1040 tax form in April, that money isn't going to your local mayor to fix the pothole on 4th Street. This is the messy, confusing, and genius reality of the American system. People often ask to name two levels of government involved in federalism, and while the answer seems simple on paper—the national government and the state governments—the way they actually interact is anything but straightforward. It’s a constant tug-of-war.
Federalism isn't just a term from a dusty high school civics textbook. It is the reason why you can legally buy recreational marijuana in Seattle but could face a felony for the exact same baggie in Idaho. It is the reason why some states have no income tax while others take a massive bite out of your paycheck. Basically, it’s a system where power is divided, not shared like a friendly snack, but carved out into specific territories of control.
The Big Picture: Why We Have Two Levels of Government Involved in Federalism
The guys who wrote the Constitution were, honestly, pretty paranoid. They had just finished fighting a war against a king who had too much power, but they also saw that a loose collection of states with no central leader (under the Articles of Confederation) was a total disaster. They needed a middle ground. So, they settled on federalism.
This brings us to the core of the matter. To name two levels of government involved in federalism, we look at the Federal Government (the national level) and the State Governments.
Think of it like a landlord and a tenant, but they both own different parts of the same house. The Federal government handles the "exterior"—the stuff that affects everyone, like national defense, immigration, and coining money. If every state printed its own currency, traveling from New York to New Jersey would require a currency exchange booth. That would be a nightmare.
The States handle the "interior"—the day-to-day stuff that impacts your life directly. This includes things like education, police power, and issuing driver's licenses. The Tenth Amendment is the "protective shield" for states here. It says that any power not explicitly given to the federal government belongs to the states or the people.
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The National Level: The Heavy Hitter
The federal government sits in Washington, D.C., and its powers are "enumerated." That’s a fancy way of saying they are specifically listed in the Constitution. Article I, Section 8 is the big one. It lists things like the power to declare war, regulate interstate commerce, and establish post offices.
But there’s a catch.
There is something called the "Necessary and Proper Clause." Critics often call it the Elastic Clause. It allows Congress to pass laws that are "necessary and proper" for carrying out its listed powers. This is how the federal government ended up creating a national bank or regulating the internet, things the Founders couldn't have imagined in 1787.
In the modern era, the federal government has grown massive. It uses "grants-in-aid" to get states to do what it wants. Want federal highway funding? Then you better make sure your state's legal drinking age is 21. Technically, the state can say no, but they almost never do because they want the money. It’s a "carrot and stick" approach that blurs the lines between these two levels of government involved in federalism.
The State Level: The Laboratories of Democracy
If the federal government is the broad brush, the states are the fine-tipped pens. Each of the 50 states is a sovereign entity. This is why Supreme Court Justice Louis Brandeis famously called states the "laboratories of democracy."
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A state can try out a new policy—like universal healthcare in Massachusetts (Romneycare) or mail-in voting in Oregon—and if it works, other states or even the federal government might adopt it. If it fails, only one state suffered the experiment.
States handle:
- Professional licensing (Doctors, lawyers, even barbers).
- Public health and safety.
- Marriage and divorce laws.
- Elections (Yes, even federal elections are run by the states).
This is why your life feels different depending on where you live. In Texas, the state government focuses heavily on deregulation and border issues. In California, the state government leans into environmental protections and labor rights. Both are operating within their rights under the two levels of government involved in federalism.
Where the Levels Crash Together: Concurrent Powers
It would be nice if the lines were clean. They aren't. There is a "gray zone" called concurrent powers. These are things that both the federal and state governments do at the same time.
Taxing is the biggest example. You pay federal income tax, and in most places, you pay state income tax too. Both levels can build roads. Both levels have court systems. If you rob a bank, you’ve broken both state and federal laws.
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When they disagree, the "Supremacy Clause" kicks in. Article VI of the Constitution says the Constitution and federal laws are the "supreme Law of the Land." If a state law directly conflicts with a federal law, the federal law usually wins. But "usually" is doing a lot of heavy lifting there. We see this play out in real-time with environmental regulations. If California wants stricter auto emission standards than the EPA, the legal battle can go on for years.
Real World Impact: Why You Should Care
Understanding these two levels of government involved in federalism explains why the U.S. looks so fragmented. During the COVID-19 pandemic, we saw this in high definition. The federal government (CDC) gave "guidelines," but the actual "mandates" for masks or business closures came from state governors. Some states stayed wide open; others locked down tight.
This isn't a bug in the system; it’s a feature. It prevents a single person in D.C. from making every single decision for 330 million people living in vastly different environments. A rancher in Wyoming has different needs than a software engineer in Manhattan.
Misconceptions About the Two Levels
One big mistake people make is thinking that local governments (cities and counties) are a third, equal level. They aren't. Legally, cities are "creatures of the state." They get their power from the state government. In the eyes of the U.S. Constitution, there are only two levels of government involved in federalism: the national and the state.
Another misconception is that the federal government is always the "boss." While the Supremacy Clause exists, states have successfully sued the federal government hundreds of times to stop overreach. The Supreme Court often acts as the referee in these matches. For example, in United States v. Lopez (1995), the Court told Congress it couldn't use the "Commerce Clause" to ban guns in school zones because that was a state police power issue, not an interstate commerce issue.
Actionable Steps for Navigating Federalism
Knowing how this works is actually practical for your life and your wallet.
- Check Your State's Preemption Laws: If you are a business owner, know that state law often "preempts" city law. If your city passes a minimum wage hike, the state might have a law that says cities aren't allowed to do that.
- Follow State Legislatures, Not Just Presidential News: Most of the laws that affect your daily life—property taxes, school curriculum, insurance rates—are decided in your state capital, not D.C.
- Use the "Laboratory" to Your Advantage: If you're a remote worker, you can literally choose which "version" of government you want to live under by moving across a state line.
- Vote in Every Election: Because the two levels of government involved in federalism share power, voting for a Governor is often just as impactful as voting for a President.
The friction between the federal and state levels is where American politics actually happens. It’s meant to be slow. It’s meant to be frustrating. By dividing power between these two levels, the system ensures that no single entity has total control, forcing a constant negotiation that, for better or worse, defines the American experience.