By Robbin Laird
The United States was not born as a centralized nation-state. It was improvised as a federation, then repeatedly re-engineered in crisis.
From the loose league of the Articles of Confederation to the stronger architecture of the 1787 Constitution, from the Union victory in the Civil War to the centralizing wave of the New Deal and World War II, the balance between Washington and the states has never been static.
What we call American federalism is, in practice, a living arrangement—always contested, always evolving, and always shaped as much by political economy as by constitutional text.
Today the next federal reset is unfolding without a single constitutional amendment or a landmark Supreme Court ruling.
It is happening instead through millions of individual decisions about where to live, where to invest, and where to build businesses.
The internal migration of people, jobs, and capital away from high-tax, high-cost coastal states toward faster-growing Sun Belt and Mountain West states is quietly rewriting the map of American power—and with it, the working profile of the union itself.
The Long History of Federal Resets
The first American experiment in union was deliberately weak. Under the Articles of Confederation, the states retained almost all meaningful sovereignty; the central government could not even tax directly. The 1787 Constitution was a reaction to that failure. It created a stronger national core, vesting taxing, spending, and defense powers in Congress and the executive but still left police powers, education, and most economic regulation to the states. Madison’s “compound republic” was designed as a balance of jealous sovereignties, not as a blueprint for a consolidated state.
The Civil War and Reconstruction forced the first great reset of that design. The Union victory decisively settled the question of secession and began the slow nationalization of civil rights through the Thirteenth, Fourteenth, and Fifteenth Amendments. The federal government was now not merely a referee among sovereign equals but the ultimate guarantor of individual liberties against them.
It took another generation, and the catastrophe of the Great Depression, for the second reset to take shape. The New Deal and World War II transformed Washington into the dominant fiscal and administrative actor in American life, concentrating resources and decision-making in the capital in ways that the founders would scarcely have recognized.
By mid-century, scholars spoke of “cooperative federalism” to capture the dense web of grants-in-aid, shared programs, and regulatory preemptions that now linked federal and state governments. States remained constitutionally significant, but in practice they depended on federal dollars and operated within federal frameworks across domains ranging from highways to health care.
The story from the 1960s through the early 2000s is largely one of incremental nationalization: civil rights enforcement, environmental regulation, education standards, and financial rules all moved toward Washington, even as political rhetoric oscillated between calls for “New Federalism” and demands for stronger national solutions.
If this were the whole story, one might conclude that the centripetal forces of the twentieth century had settled the question.
They have not.
A new centrifugal dynamic has emerged not through formal devolution, but through the shifting geography of growth and decline inside the union.
The Migration Decade: Federalism from Below
The 2020s have become, almost despite themselves, a migration decade. The pandemic, the remote-work revolution, and the brutal arithmetic of housing costs and state tax burdens have combined to accelerate trends already visible before 2020. Census state-to-state migration tables show sustained net outflows from large, high-tax coastal states, California and New York, and net inflows into lower-tax, faster-growing states across the South and Mountain West.
The July 2024–July 2025 period place California and New York at the top of the net domestic out-migration list, while North Carolina, Texas, South Carolina, Tennessee, and Arizona rank among the leading net-inflow states.
These flows are not driven primarily by retirees or ideologues. They involve working-age households and firms responding rationally to cost structures and regulatory environments. Moving-industry data for 2025 show a pronounced tilt toward more affordable, mid-sized metros in the South and Mountain West, with California and New Jersey featuring prominently as outbound origins. Venture-capital investment still concentrates in coastal hubs, the Bay Area, New York, Boston, but recent assessments note a diversification of capital expenditures, particularly in AI-related infrastructure, toward a broader range of states and metropolitan areas. Macroeconomic forecasts for 2026–2030 anticipate comparatively stronger growth in several Southern and interior states, driven by both domestic migration and business investment.
Census demographers have also highlighted a revealing interaction between domestic and international migration. A January 2026 release on population change finds that net international migration remains heavily concentrated in a handful of large states, Florida, Texas, California, New York, New Jersey, but that domestic flows are simultaneously redirecting Americans away from high-cost coastal states toward lower-cost destinations. County-level analysis for 2011–2025 reinforces the pattern: many of the counties with the strongest positive domestic migration balances are in the South and interior West, while large coastal counties increasingly record net domestic losses.
The details can be debated; the direction of travel cannot. The postwar pattern, growth clustered in a few coastal blue megastates, with the rest of the union orbiting around them, is being replaced by something more polycentric and more competitive. Federalism, in other words, is being reshaped not by constitutional argument but by the accumulated relocation decisions of millions of households and thousands of firms.
New Centers of Fiscal Power
This migration-driven reshuffling of population and output is already altering the distribution of fiscal power inside the union. Nothing illustrates the shift more vividly than a simple budget comparison. In June 2025, the New York City Council adopted a budget of $115.9 billion for Fiscal Year 2026, a figure confirmed by both the Council and the Comptroller’s Office. Roughly a quarter of that total, some $31.2 billion, is allocated to education, with another $19.3 billion going to social service agencies.
Days earlier, Governor Ron DeSantis had signed Florida’s Fiscal Year 2025–2026 budget into law at $117.4 billion, following $567 million in line-item vetoes. Florida’s budget maintains $15.7 billion in reserves, triples the state’s Budget Stabilization Fund relative to pre-2019 levels, and allocates $830 million to accelerated debt repayment.
In other words, the entire state government of Florida, governing roughly 23 million people across 67,000 square miles, spends only about $1.5 billion more per year than a single municipality housing roughly one-third that population.
The precise ranking matters less than the scale. A single municipal government nestled within a blue coastal state now operates at roughly the same fiscal magnitude as one of the largest and fastest-growing states in the union.
That contrast crystallizes two structural realities. First, American federalism has evolved into a multi-level system in which large cities and counties, not just states, wield enormous fiscal and regulatory power. Second, the divergence in governance models between older blue urban cores and rising red-state Sun Belt jurisdictions is not a matter of political rhetoric alone; it is embedded in the actual size and footprint of their public sectors.
It is easy to over-interpret any single comparison. California’s budget remains far larger than Texas’s, and both dwarf those of smaller states. Yet when budget size, population, and migration direction are overlaid, a pattern emerges.
States and cities that have built expansive, high-cost public sectors are losing residents to states that while hardly minimalist in their ambitions offer a lower tax and regulatory burden alongside growing public-sector capacity. Florida’s net domestic inflows have fallen from more than 300,000 at the height of the pandemic boom to just over 20,000 in 2025, but they remain positive; California and New York continue to record large net domestic losses.
Competitive Federalism and National Politics
What does this mean for national politics? The most straightforward implication is demographic. Population flows translate, with a lag, into reapportioned House seats and Electoral College votes. Census state-to-state migration tables, constructed from the American Community Survey, already show which states are accumulating or losing residents through domestic mobility.
Over time, those shifts are reflected in the reapportionment math governing the allocation of House seats after each decennial census. States that gain population, Florida, Texas, and others across the South and Wes, gain clout in Congress and the Electoral College; states that lose population, such as New York, Illinois, and California, lose it.
But the deeper effect concerns the nature of federalism itself. We are entering an era of more overtly competitive federalism, in which states function as rival political economies offering distinct blends of taxation, regulation, and public services. Americans are responding accordingly. In the postwar “cooperative” model, the federal government set broad programmatic terms and states adapted within those constraints.
In the emerging model, states are increasingly setting the terms of competition on everything from environmental regulation and labor law to education and cultural policy—and Washington is being forced to adapt to a more fragmented, regionally differentiated political economy.
This shift is already visible in how the parties behave. Republicans have oriented their growth strategy toward consolidating and expanding their hold on the Sun Belt and Mountain West, where migration and investment trends are favorable and fiscal models, Florida’s most prominently, emphasize low taxes, robust reserves, and debt repayment. Democrats face the structural challenge of governing large, complex blue metros whose residents and firms can increasingly exit to red or purple jurisdictions when costs and constraints become too onerous.
Ideological debates about “red” and “blue” models of governance are no longer abstractions; they are embedded in the infrastructure, budgets, and legal codes of jurisdictions competing for the same citizens and companies. Seen in that light, the migration and budget data are not curiosities. They are leading indicators of a deeper recalibration of the American union.
When a city of eight million can match the spending of a state of twenty-three million; when that city’s state is losing people even as the state next door gains them; when Electoral College votes and House seats follow those flows, it is reasonable to speak of a genuinely new profile of American federalism emerging from below.
A Reset Without a Convention
Unlike 1865 or 1937, this reset has not produced a constitutional crisis or a great national debate about first principles. There is no secession crisis, no court-packing plan, no sweeping constitutional amendment campaign. What we have instead is a slow, data-driven rebalancing of where Americans live, work, and pay taxes and with it, of which jurisdictions possess the fiscal, demographic, and political weight to shape national policy in the years ahead.
The challenge for analysts and policymakers is to recognize that this too is a federal moment. The architecture of American federalism has always been defined as much by practice as by text: by who commands resources, who delivers services, and who can credibly threaten exit. In the 2020s, those practical realities are changing. If the dominant story of the last century was centralization in Washington, the emerging story is one of a more dispersed, competitive, and regionally differentiated union in which the real action often lies in the budgets and zoning codes of states and cities rather than in national rhetoric alone.
This does not mean that national power is ebbing in any simple sense. The federal government remains the decisive actor in defense, monetary policy, and social insurance.
But it does mean that any serious account of American power, domestic and international, must now reckon with a map in motion. The union is being renegotiated from below, household by household and quarter by quarter. Federalism is on the move again, and this time the moving vans, not the Supreme Court, are leading the way,
Note: With this article, I am returning to my roots as a political and historical analyst of the United States and Europe. As both an undergraduate and graduate student, I engaged deeply with historical and contemporary questions in American and European political development, questions that have never ceased to preoccupy me, even as my career carried me in directions I had not originally anticipated.
At Columbia, I had the great fortune of studying with Wallace Stanley Sayre, the Eaton Professor of Public Administration and one of the foremost authorities on New York City government of his era. Sayre was a figure of remarkable intellectual range and practical engagement. He co-authored the landmark 815-page study Governing New York City with Herbert Kaufman, a work that dissected the stakeholders and power dynamics of municipal government with an analytic rigor that set the standard for the field. He was also the namesake of Sayre’s Law, the wry observation, later attributed to him in the Wall Street Journal, that academic politics is the most vicious form of politics precisely because the stakes are so low. Sayre had convinced me that urban analysis was the most consequential arena for applied political science, and I had set my course accordingly.
But fate intervened in the most dramatic of circumstances. On May 18, 1972, while meeting privately with Mayor John Lindsay at City Hall, Sayre suffered a sudden and fatal heart attack. He was just weeks short of his sixty-seventh birthday. The loss was shocking, he died, as it were, in the very arena he had spent a lifetime studying and it closed, almost overnight, the intellectual path he had opened for me.
What followed was an odyssey I could not have foreseen.
Bibliography
Atlas Van Lines / North American Van Lines. Annual Migration Pattern Studies, 2020–2025. Inbound/outbound summaries by state, noting outbound concentrations in California, New York, and New Jersey and inbound concentrations in Florida, Texas, North Carolina, Tennessee, and Arizona.
U.S. Government Publishing Office. “Federalism: An Overview.” https://www.govinfo.gov. Background surveys on cooperative federalism, federal grants-in-aid, and state–federal regulatory frameworks from the New Deal through the early twenty-first century.
U.S. Census Bureau. “State-to-State Migration Flows.” American Community Survey 1-Year Estimates, 2020–2025. https://www.census.gov/topics/population/migration/guidance/state-to-state-migration-flows.html.
ResiClub Analytics. Net Domestic Migration by State, July 2024–July 2025. Private synthesis of Census “components of change” data, placing California and New York at the top of net domestic out-migration and North Carolina, Texas, South Carolina, Tennessee, and Arizona among the leading net-inflow states. Tracking data 2021–2025 showing Florida’s net domestic inflows declining from over 300,000 at peak to approximately 20,000 in 2025.
SSTI (State Science and Technology Institute). Venture Capital and Innovation Investment Report, 2026. Analysis of capital-expenditure diversification toward AI-related infrastructure and broader geographic distribution beyond Bay Area, New York, and Boston hubs.
Moody’s Analytics / Oxford Economics. U.S. and State Economic Outlook, 2026–2030. Projections of comparatively stronger growth in Southern and interior states, driven by domestic migration and business investment.
U.S. Census Bureau. “Net International Migration,” January 2026 release. Population growth components showing net international migration concentrated in Florida, Texas, California, New York, and New Jersey, alongside redirected domestic flows toward lower-cost states.
U.S. Census Bureau. County-Level Domestic Migration Analysis, 2011–2025. Positive domestic migration concentrated in South and interior West counties; net domestic losses recorded in many large coastal counties.
New York City Council. “City Council Adopts $115.9 Billion Budget for Fiscal Year 2026.” Press release, June 2025. https://council.nyc.gov.
New York City Comptroller’s Office. FY 2026 Budget Adoption Statement, June 2025. Confirmation of $115.9 billion total, $31.2 billion for education, $19.3 billion for social services.
Office of Governor Ron DeSantis. “Governor DeSantis Signs Florida’s $117.4 Billion Budget for Fiscal Year 2025–2026.” Press release, June 2025. Budget includes $567 million in line-item vetoes, $15.7 billion in reserves, and $830 million in accelerated debt repayment.
Florida Office of Policy and Budget. Fiscal Year 2025–2026 Budget Summary. Tripling of Budget Stabilization Fund relative to pre-2019 baseline; low-tax, low-debt fiscal strategy supporting reserve accumulation.