Federalism and Policy of Public Budgeting

Federalism in the United States is a form of governance when power is divided between individual states and the central government. Although the federal government was established in 1787 in Philadelphia, the debate of what type of ruling should exist in the U.S. is still ongoing (Rozell & Wilcox, 2019). There is no consensus on the preferred kind of government because different states have unique legislation in such issues as same-sex marriages, abortion, environment, marijuana legalization, and some other controversial topics (Rozell & Wilcox, 2019). Some researchers state that this form of governance is inefficient because it limits progress and innovation in the entire country (Shin, 2019). On the other hand, other scholars claim that fiscal decentralization resulted in economic growth and development for some states (Shin, 2019). Moreover, it is believed that the federal type of governance provides an opportunity for better public spending because local governments and agencies have more accurate information on needs and priorities within their states (Shin, 2019). Indeed, federalism is the lever that maintains constitutionally limited government and reasonable public budgeting in the U.S. for more than 200 years.

The Role of Federalism in Maintaining Constitutionally Limited Government

The decentralized two-party system is the cornerstone of American politics for the last two centuries. Federalism in the United States provides relative legal and financial independence to state governments (Conlan, 2017). Still, scholars claim that the lack of centralization of American federalism ensures the unity of all states (Conlan, 2017). Specifically, the autonomy and interdependence between states create a perfect balance to maintain integrity and constitutionally limited government (Csehi, 2020). Historically, federalists argued that a strong centralized government “would destroy personal liberties by leading ultimately to despotism” (Rozell & Wilcox, 2019, p. 86). Thus, states strived to maintain relative fiscal and legislative autonomy, leaving the national government with the Constitutional right to regulate foreign policy and military defense but not internal policies (Rozell & Wilcox, 2019). Still, some state governors’ role in the geopolitical arena elicits the question of the importance of the United States’ main governmental body located in Washington, DC (Lequesne & Paquin, 2017). Nevertheless, states cannot participate in international relations that contradict the overall political strategies of the U.S. government.

The U.S. government is elected to establish the general direction for all states. The state governors have to act based on public interests within the limits of American legislation (Urbano, 2014). Moreover, the country leaders should ensure moral and professional behavior at local levels by celebrating ethical practices and punishing unethical conduct (Downe et al., 2016). Ethical leadership is vital for maintaining public trust and improving federal agencies’ performance to practice honesty and integrity (Androniceanu, 2013; Menzel, 2015). If communication is broken, the entire system becomes ineffective. Indeed, federalism in the United States is polarized due to a two-party system; therefore, it creates tension between local and central governments, impeding its economic growth. For example, Republican governors of Ohio and Wisconsin refused to receive federal funding for building high-speed railroad systems in their states (Conlan, 2017). It appears that the federal government has legislative power that determines a strategic plan for all states, but polarization between parties results in variation between their development.

Impact of Federalism on Public Budgeting

The efficiency of a government can be measured based on its external and internal achievements. Governmental performance can be classified into three broad categories: product, procedure, and regime – that correspond to “success in matching resources,” “keeping government fair and honest,” and “keeping the public sector robust and resilient,” respectively (Van Dooren et al., 2012, p. 493). One of the essential concepts that enable the successful implementation of organizational strategies is budgeting. Budgeting can be defined as the document about governmental plans in distributing public resources to meet specific goals (Van Dooren et al., 2012). Indeed, any form of management is multifaceted, requiring a unique approach (Melton & Meier, 2017). Despite decentralization, Csehi (2020) argues that the federal government has stringent control over budgeting because it requires a balance between “power-sharing” and “power-separation” (p. 3). For example, the national government gives annual federal grants to states to support local educational, healthcare, and environmental programs (Rozell & Wilcox, 2019). Federal funding helps reduce the gap between states that appears due to unequal distribution of resources on their territories.

Federal Agency Spending and Public Budgeting

Reasoned spending of the public budget by federal agencies leads to economic prosperity and higher social satisfaction. Constitutionally, taxing and spending on military defense systems, roads, post offices, and international trade rights belong to the national government, while all other functions and powers belong to states (Rozell & Wilcox, 2019). States receive funding from the national government and collect their local taxes. According to Shin (2019), the more federal agencies invest in public programs, the higher the level of economic development in states. For example, federal spending includes education, healthcare, research, public buildings and transport, air transit, housing, and natural resources (Shin, 2019). Federalism is advantageous in restricting the central government’s power, but it creates inequality between states in access to social services due to variations in income and spending (Rozell & Wilcox, 2019). Therefore, wealthy states can provide high-quality education in public schools, better healthcare, libraries, roads, and environmental protection, whereas poor regions have limited resources and low-quality social services.

A Judeo-Christian Analysis of Federalism Concepts in Public Budgeting

Although the United States has secular governance, Judean and Christian religions play an essential role in defining most citizens’ worldviews. For example, the Biblical idea of covenant, an agreement between parties to form a long-term relationship, and the Hebrew concept of hesed, serving for the good of covenant, resonate with American federalism (Fischer, 2010). Indeed, the federal form of governance implies teamwork, shared responsibility, and decentralization (Fischer, 2010). The aim of the federal government in the Biblical perspective is to create healthy and self-sustaining culture (Fischer, 2010). Therefore, the concept of covenant can also be applied to public budgeting in the U.S. that combines states’ fiscal autonomy and financial interdependence with the federal agencies.


To sum up, federalism in the United States is rooted in Christian and Judean ideas of organizations based on mutual support and benefit. In modern days, the American federal type of ruling allows maintaining the national government within the frames of the Constitution, preventing it from gaining tyrannical power. However, participation in geopolitics, military defense, and international trade belong to the central federal agencies. Although states possess fiscal autonomy to establish income taxes and plan a public budget, the national government gives federal grants to each state to facilitate local economic development. Still, federalism’s fiscal autonomy creates inequality in public financing across the country.


Androniceanu, A. (2013). Ethical values and the human resources behavior in public management. Revista Administratie Si Management Public (RAMP), (20), 49-61.

Conlan, T. J. (2017). The changing politics of American federalism. State and Local Government Review, 49(3), 170-183. Web.

Csehi, R. (2020). Federalism and the stringency of balanced budget rules–A comparative study of Canada, the European Union, and the United States of America. Regional & Federal Studies, 30(1), 73-91. Web.

Downe, J., Cowell, R., & Morgan, K. (2016). What determines ethical behavior in public organizations: is it rules or leadership? Public Administration Review, 76(6), 898-909. Web.

Fischer, K. (2010). A biblical-covenantal perspective on organizational behavior & leadership. Pearson Custom Publishing.

Lequesne, C., & Paquin, S. (2017). Federalism, paradiplomacy and foreign policy: A case of mutual neglect. International Negotiation, 22(2), 183-204. Web.

Melton, E. K., & Meier, K. J. (2017). For the want of a nail: The interaction of managerial capacity and human resource management on organizational performance. Public Administration Review, 77(1), 118-130. Web.

Menzel, D. C. (2015). Leadership in Public Administration: Creative and/or Ethical? Public Integrity, 17(4), 315-318. Web.

Rozell, M. J., & Wilcox, C. (2019). Federalism: A very short introduction. Oxford University Press.

Shin, G. (2019). Welfare, innovation capacity, and economic performance: Evidence from American federalism. Public Policy and Administration, 34(3), 349-381. Web.

Urbano, R. C. (2014). Public administration ethics: James Svara’s model. Journal of Human Values, 20(1), 7-17. Web.

Van Dooren, W., De Caluwe, C., & Lonti, Z. (2012). How to measure public administration performance: A conceptual model with applications for budgeting, human resources management, and open government. Public Performance & Management Review, 35(3), 489-508.

Cite this paper

Select style


DemoEssays. (2022, December 28). Federalism and Policy of Public Budgeting. Retrieved from https://demoessays.com/federalism-and-policy-of-public-budgeting/


DemoEssays. (2022, December 28). Federalism and Policy of Public Budgeting. https://demoessays.com/federalism-and-policy-of-public-budgeting/

Work Cited

"Federalism and Policy of Public Budgeting." DemoEssays, 28 Dec. 2022, demoessays.com/federalism-and-policy-of-public-budgeting/.


DemoEssays. (2022) 'Federalism and Policy of Public Budgeting'. 28 December.


DemoEssays. 2022. "Federalism and Policy of Public Budgeting." December 28, 2022. https://demoessays.com/federalism-and-policy-of-public-budgeting/.

1. DemoEssays. "Federalism and Policy of Public Budgeting." December 28, 2022. https://demoessays.com/federalism-and-policy-of-public-budgeting/.


DemoEssays. "Federalism and Policy of Public Budgeting." December 28, 2022. https://demoessays.com/federalism-and-policy-of-public-budgeting/.