What Is Competitive Federalism? 

The Constitution’s greatest achievement is dividing government power effectively to better protect individual liberty against government abuse. The Framers separated the national government’s powers among its three branches and, innovatively, divided power between the national and state governments, which is called federalism.  

The Constitution’s federalism grants the national government limited, enumerated powers, while the States retain broad authority, and certain rights are retained by the people that no government may violate.  

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When federalism functions properly, the national government stays within its constitutional limits, allowing states to compete over taxes, education, health care, and other policies. And individual states also remain within constitutional limits—by not violating federal law or by acting beyond their borders to govern other states’ citizens and businesses.  

Federalism is not about “states’ rights.” States do not have rights; people do. The federal system was not created to protect state power at the expense of individual rights. Nor is federalism a “balance” between national and state power. Specific powers were granted to the national government for particular reasons, and others were left to state governments for opposing reasons.  

Instead, the Constitution’s national-state allocation of powers created a competitive dynamic that protects individual rights because people can discipline abusive state governments by “voting with their feet.”  

Why This Still Matters 

When that constitutional design breaks down, individual rights suffer.  

Since the New Deal era, the federal government has expanded far beyond its constitutional boundaries, often imposing one-size-fits-all national rules on a large and diverse country. It also increasingly uses federal funding to pressure states into administering centralized, national policies and programs. That so-called “cooperative federalism” often weakens accountability, blurs responsibility, and discourages the very competition that federalism is designed to promote. Equally concerning is the increase in state attempts to regulate others beyond their borders. 

When Washington imposes a one-size-fits-all policy, people lose policy choices, and states no longer compete in that policy area. The benefit to “voting with your feet” declines, reducing the check on abusive policies at all levels. Similarly, when states exceed their powers and regulate beyond their borders, people living elsewhere have no ability to check that state policy by moving, or even at the ballot box.  

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CIR brings lawsuits to restore and maintain constitutional limits on both the national and state governments, which helps protect individual rights and keep government more transparent, responsive, and constrained. For example, CIR successfully argued for stronger limits on the national government in the landmark case United States v. Morrison (2000), the last case where the Supreme Court struck down a federal law as exceeding Congress’s power under the Commerce Clause.