March 29 · Soft Secession
America's Governors Have a Choice: Build Something Better or Watch It All Burn
The American Reformation
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The governor sees it on her phone before she’s had coffee. Trump posted it on Truth Social at 2 a.m., just a few sentences with the force of policy: her state will not receive emergency wildfire relief funds. Medicaid reimbursements are frozen. SNAP disbursements suspended. Science grants to state universities cancelled. The reason, to the extent there is one, is that her state voted against him.
That is the leverage, and it is built entirely on the accumulated dependence of a state that spent 250 years assuming the federal partner would, for the most part, remain a partner. Trump and the Republican Party know exactly what happens when those transfers stop. They are using the lives of the most vulnerable as collateral. What do they want? Suffering.
Tier 2 is about taking that weapon out of their hands as fast as possible.
This is the second piece in The American Reformation, a public series built around the working paper “The Constitutional Architecture of State Opposition: A Taxonomy of Sovereign Posture Under Federal Authoritarian Capture and Electoral Autocracy,” currently available for public review and forthcoming in peer-reviewed journals.¹ The first piece covered Tier 0 and Tier 1. This piece covers Tier 2: soft secession, or financial independence if you prefer. You do not need Part 1 to follow this, but here is the full map so you know where we are.
The architecture runs five tiers. Tier 0 is the normal operating condition, states and the federal government working as partners, cooperation as the default. Tier 1 is uncooperative federalism, where states refuse to help the federal government do things they find harmful or unlawful, withdrawing the cooperation a federal enforcement apparatus needs to function. Tier 2 is soft secession, or financial independence, where states build parallel financial infrastructure and social safety nets so their people are not hurt by what the federal government withholds, harm reduction through institution building. Tier 3 goes on offense, using state criminal law and sovereign authority to impose direct personal consequences on federal actors who break state law on state soil. Tier 4 is constitutional non-compliance, where states construct competing legal regimes that directly contradict specific federal directives and, in its most active form, move to stop what the federal government is doing when the threshold conditions of constitutional emergency have been met.
This architecture works even if elections are stolen and even if the federal government is completely captured, because the framers designed it that way. They were not building a failsafe against one bad president. They were building a system structurally resistant to the kind of consolidated power that had broken English liberty, one with multiple sovereign entities at multiple levels, each with independent authority and independent relationships with the people. States have been deploying pieces of this framework throughout American history without calling it anything, doing it in one domain without realizing they could be doing it in four others simultaneously. What has been missing is the intentionality, deploying these tools deliberately and concurrently across policy areas rather than stumbling into them one at a time.
The name soft secession is provocative, and that is deliberate. The Existentialist Republic’s work creating this framework has been cited by the Brookings Institution and covered by Mother Jones, NPR, PBS, and others.⁵ On the internet, engagement drives reach, and a name that gets people into the argument is more useful than one that does not. Two objections come up consistently: that secession carries Confederate associations, and that the language hands the federal government a rhetorical weapon to cast legitimate state action as radical. The Confederacy used sovereign power to preserve slavery; this framework has been used throughout American history by abolitionists, civil rights organizers, and communities protecting themselves from federal overreach, so the history belongs to whoever claims it. As for the second objection, the federal government will call legitimate state action radical regardless of what we name it.
Alexander Hamilton understood the relationship between financial independence and sovereign power before the states ratified the Constitution. Writing in Federalist No. 30 in December 1787, he stated it plainly: “Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions.”² In Federalist No. 31, he confirmed the other half of the equation, that states retain “an independent and uncontrollable authority to raise their own revenues for the supply of their own wants.”³ A government without independent financial capacity governs at someone else’s pleasure. During the Depression, federal and state governments employed people directly and built things that needed to be built, and that spending pulled the country out of economic collapse. States can do the same thing now; the catastrophe is different but the mechanism is the same.
Tier 2’s posture toward the federal government is: we do not need you, and we won’t let you take us down with you.
The legal ceiling and floor of federal financial leverage over states come from two Supreme Court rulings. In South Dakota v. Dole, decided in 1987, the Court held that Congress can attach conditions to federal funding, but those conditions must relate to the program’s purpose, remain unambiguous, and stay within constitutional limits.⁶ In National Federation of Independent Business v. Sebelius, decided in 2012, Chief Justice Roberts applied that framework and struck down the Medicaid expansion enforcement mechanism, calling the threat to withdraw all existing Medicaid funding from non-compliant states “a gun to the head.”⁷ Federal funding threats have constitutional limits, and a state with non-tax revenue streams is less exposed even to the threats that pass constitutional muster.
Here is what that looks like in practice, and why authoritarian movements have always moved first against it. The United States Postal Service ran profitably for the vast majority of its existence and operated the Postal Savings System from 1911 to 1967, offering basic banking services to tens of millions of Americans who could not access or did not trust private banks.⁸ The financial crisis the USPS faces today grew directly from the 2006 Postal Accountability and Enhancement Act, which required the USPS to pre-fund 75 years of retiree health benefits within ten years, an accounting obligation imposed on no other government agency or private company in American history.⁹ Without that requirement, the USPS would have reported profits in most subsequent years. When public infrastructure works well enough to give people an alternative to extraction, those doing the extracting move to destroy it through legislation rather than competition. There is a reason authoritarian movements have always moved first against organized labor, well-functioning government, and revenue-generating public options: each one distributes power to people rather than concentrating it, and combating that concentration is what this country was founded on.
This is also just solving our problems. The mechanisms of Tier 2 are not abstract policy tools. They are the answer to pretty much everything people are furious about right now, built at the state level without waiting for Congress.
The mechanisms themselves are neither new nor exotic. Eighteen states operate government-controlled liquor distribution or retail systems, generating revenue that flows directly to state and local governments rather than to private operators paying taxes.¹⁰ Pennsylvania, Virginia, Utah, and the others have run these systems for decades, and most people who live in those states have bought alcohol from a state-owned store without thinking of it as parallel public infrastructure, which is exactly the point. The Bank of North Dakota, founded in 1919, gives North Dakota financial infrastructure independent of the federal banking system and the private banks that dominate it.¹¹ When the 2008 financial crisis dried up private lending across the country, a farmer in Minnesota couldn’t get a loan to plant. Forty miles north, across the state line, a farmer in North Dakota walked into a branch of the Bank of North Dakota and got one. Same crisis. Different infrastructure. Different outcome. Municipal broadband networks, state fiscal reserves large enough to absorb federal funding cuts, and interstate compacts that coordinate state action without federal participation all represent the same tier deployed across different policy areas.
States can use this same infrastructure to build public health insurance options that generate revenue rather than just spending it, covering people who need free care while returning money to fund other public priorities. They can build revenue-generating public housing that sets a floor on the market, stabilizes costs for everyone, and stops treating shelter as a speculative asset. They can use public banking to keep credit local, circulating in the communities that generated it rather than flowing to shareholders in other states.
State and municipal spending, contracting, and investment authority is one of the most powerful levers a government holds, and most governments are barely using it. This is where Tier 2 gets its teeth against the companies profiting from the police state and endless war. Governments have broad discretion over who receives public contracts, subsidies, and public investment. A state that decides Palantir does not get its contracts, that defense contractors profiting from civilian surveillance do not get its pension money, that corporations offshoring jobs or funding authoritarian political campaigns do not get its subsidies, is using the combined weight of public purchasing power to reshape market behavior in ways that antitrust enforcement alone cannot reach.
That same authority provides an end-run around something people have wanted to fix for twenty years and been told was out of reach. Citizens United protects private political spending from government prohibition,¹² but it does not require governments to subsidize or contract with entities that engage in it. The Supreme Court confirmed in Rust v. Sullivan and Regan v. Taxation with Representation that the government is not required to subsidize the exercise of constitutional rights, and that the decision about who receives public money belongs to the government writing the check.¹³ If you have enough money to give to political action committees, you do not need our tax dollars. States that apply this principle systematically are not overturning Citizens United. They are making it irrelevant, one contract and one divestment at a time. Divestment, contract refusal, and subsidy cancellation are expressions of this authority, deployed sporadically today and deployable systematically tomorrow.
In some states a governor or treasurer already holds sufficient executive authority to act without new legislation; in others the legislature needs to move first. No state prohibits building this kind of infrastructure. The cleanest, most durable path everywhere runs through the legislature, but the barrier is always political, never constitutional.
The stakes of that political choice have never been clearer. The National Association of Counties estimates that the Trump administration’s 2025 budget legislation could shift costs approaching one trillion dollars onto states and counties over ten years.¹⁴ The federal government has withheld broadband infrastructure funds from multiple states, clawed back emergency management funding, cancelled climate resilience programs, and frozen grants that states had already committed to spending. California has emerged as the national leader in the current movement to expand public banking, with San Francisco implementing a municipal finance corporation and statewide advocates accelerating their push directly in response to federal funding threats.¹⁵ New York has passed legislation creating a framework for municipalities to establish public banks.¹⁶ Wisconsin introduced public bank legislation with plans to advance it through the next session.¹⁷ East Bay, covering Oakland and Richmond, hired its first public bank CEO and is pursuing a charter.¹⁸
The governor who read that Truth Social post before sunrise can absorb the cuts and explain to constituents why their wildfire equipment did not arrive and their Medicaid checks are late. She can fight in court and wait years for a ruling that may or may not hold. Or she can build the infrastructure that makes the next post irrelevant, that keeps the hospital open and the food bank stocked and the broadband running regardless of what gets posted at 2 a.m. That infrastructure saves lives right now, not after the next election, not after the courts catch up. It builds a resilient local economy that keeps money circulating in the communities that generated it. And a state that builds it is simply better off, with nothing lost in the building.
The federal government’s leverage ends exactly where state financial independence begins.
Tier 2 builds the foundation that makes everything that follows survivable. A state with financial independence is less vulnerable to the federal retaliation that comes when it starts going on offense, and Tier 3 is exactly that: states going on offense directly against the federal actors who have broken the law on state soil. That is the subject of the next piece in this series.
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Notes
¹ Armitage, C. (2026). The constitutional architecture of state opposition: A taxonomy of sovereign posture under federal authoritarian capture and electoral autocracy [Working paper].
² The Federalist No. 30 (A. Hamilton, Dec. 28, 1787).
³ The Federalist No. 31 (A. Hamilton, Jan. 1, 1788).
⁴ Deist, J. (2021, September 21). The prospects for soft secession in America. Mises Wire. https://mises.org/mises-wire/prospects-soft-secession-america
⁵ Armitage, C. (2025). Soft secession: How blue states can build parallel systems and outlast federal overreach. The Existentialist Republic [Substack]. Subsequently cited in: Gale, W. G., & West, D. M. (2025, September 17). The war over federalism. Brookings Institution. https://www.brookings.edu/articles/the-war-over-federalism/; Jeffery, C. (2025, October 6). It’s time for soft secession. Mother Jones. https://www.motherjones.com/politics/2025/10/its-time-for-soft-secession/. Covered by NPR and PBS.
⁶ South Dakota v. Dole, 483 U.S. 203 (1987).
⁷ National Federation of Independent Business v. Sebelius, 567 U.S. 519, 581 (2012).
⁸ Fuller, W. E. (1972). The American mail: Enlarger of the common life. University of Chicago Press.
⁹ Postal Accountability and Enhancement Act, Pub. L. No. 109-435, 120 Stat. 3198 (2006).
¹⁰ National Alcohol Beverage Control Association. (n.d.). Control state directory. https://nabca.org/control-state-directory
¹¹ Bank of North Dakota. (n.d.). BND operations. https://bnd.nd.gov/about-bnd/bnd-operations/; North Dakota Legislature. (1919). House Bill 18.
¹² Citizens United v. Federal Election Commission, 558 U.S. 310 (2010).
¹³ Rust v. Sullivan, 500 U.S. 173, 193 (1991); Regan v. Taxation with Representation of Washington, 461 U.S. 540 (1983).
¹⁴ National Association of Counties. (2025). The big shift: An analysis of the local cost of federal cuts. https://www.naco.org/resource/big-shift-analysis-local-cost-federal-cuts
¹⁵ Friedline, T., & Treuhaft, S. (2025, July 18). Public banks offer an opportunity to reclaim local power and build inclusive economies. City & State New York. https://www.cityandstateny.com/opinion/2025/07/opinion-public-banks-offer-opportunity-reclaim-local-power-and-build-inclusive-economies/406816/
¹⁶ New York State Legislature. (2022). New York Public Banking Act, S.1762-B, signed by Governor.
¹⁷ Wisconsin State Legislature. (2024). AB 1220.
¹⁸ Public Banking Institute. (n.d.). East Bay Public Bank. https://publicbankinginstitute.org/
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