Federalism

Federalism, system of government in which states form a union by granting a central government supreme power in common or national affairs, while retaining their independent existence and control over local affairs. Federations today include the United States, Canada and Australia. In the United States, the federal government is supreme in defense, foreign affairs, the postal and monetary systems, and interstate and foreign commerce. All levels of government may levy taxes and spend money, but the federal government accounts for the vast majority of public spending.