The state of American federalism is characterized by polarization and punitiveness. As in previous years, political polarization continues to shape intergovernmental relations. But we also identify punitiveness as an increasingly prevalent aspect of vertical power sharing. Punitive federalism describes the national government's use of threats and punishment to suppress state and local actions that run contrary to its policy preferences. In this Annual Review of American Federalism overview article, we introduce the concept of punitive federalism and discuss its application to contemporary public policy. We also highlight federalism implications concerning the COVID-19 pandemic; discuss recent policy developments concerning the environment, gender identity, health care, immigration, reproductive choice, and sexual orientation; and review recent Supreme Court decisions that impact intergovernmental relations.

While substantial research examines the dynamics prompting policy adoption, few studies have assessed whether enacted policies are modified to meet distributional equity concerns. Past research suggests that important forces limit such adaptation, termed here "policy inertia." We examine whether block grant allocations to states from the Ryan White HIV/AIDS Program have evolved in response to major technological and political changes. We assess the impact of initial allocations on later funding patterns, compared to five counterfactual distributional equity standards. Initial allocations strongly predict future allocations; in comparison, the standards are weak predictors, suggesting the importance of policy inertia. Our methodology of employing multiple measures of equity as a counterfactual to policy inertia can be used to evaluate the adaptability of federalist programs in other domains.

The architecture of fiscal federalism in the United States represents an obstacle for prompt and comprehensive policy responses to economic crises, especially by subnational levels of government. As both a public health and economic crisis, the COVID-19 pandemic has put unique fiscal pressures on subnational governments. This article reviews the pandemic's fiscal effects on these governments, as well as the federal government's response. By comparing the response to the COVID-19 crisis during the Trump administration with the response to the Great Recession during the Obama administration, we show that while the speed and magnitude of federal aid was unprecedented in 2020, it was nevertheless conditional in nature and beset by familiar political and institutional obstacles. Despite major fiscal pressures, state revenues rebounded earlier than expected, in part due to the relaxation of public health measures and the collection of taxes from online transactions; yet, state resources remained strained throughout the year, especially in states reliant on the hospitality and the oil sectors. And while local property taxes were buoyed by a surging housing market, cities and counties were confronted with declining revenue from other sources and intense emergency spending needs. Thus, despite unprecedented levels of federal support for state and local governments, the legacies of "fend for yourself" federalism live on.

The nation's governors took strong and decisive action in responding to the 2020 COVID-19 pandemic, often directly affecting their local governments. These actions allow us to examine this question: Will governors' actions in an unprecedented emergency situation centralize the authority of the state or rely on local governments to deal with localized problems? Additionally, what factors affect those decisions? We examine all governors' executive orders affecting local governments in the first five months of the 2020 pandemic. We find that preemption did occur, especially in the early months of the pandemic. States that gave their localities more autonomy were associated with preemption throughout the pandemic; the governor's party affiliation and her ideological match with local officials were associated with greater preemption in some phases of the pandemic but not others.