Interposition, nullification, and secession. These are the means by which a state can check the power of a federation.
That is how American federalism was supposed to work. The three branches of the central government would check each other, but it would be up to the sovereign States to keep the central government itself in check. The Constitution was to be enforced through political action of the States not by the legalism of nine unelected Supreme Court justices.
That’s from Donald Livingston’s excellent essay at the Tenth Amendment Center.
“Interposition” brought to mind the recent gestures by several state governors to reject federal “stimulus” funds. Those gestures were viewed as symbolic, empty, and perhaps silly because rejecting the federal money would not have had any real effect on federal power or spending. They would have had real consequence had the governors truly interposed against what they claimed was unconstitutional federal spending: I.e., the concomitant gesture to rejecting the federal funds should have been the recovery and return to their states’ taxpayers all federal taxes that were supposedly being spent unconstitutionally.
Federalist 
A more concrete proposal for interposition is offered over at GeorgiaFirst.org:
More on tax interposition from the Tenth Amendment Center:
Your read of nullification/interposition and constitutional history is defective. As Andrew Jackson said in 1832, the Constitution established a Government, not a league. The government was created of and by the people, not by the States. Any attempt to interpose or nullify the acts of the people through their Congress on the part of any state is an act of treason. Nullifiers are well advised to not walk down this road again. What do you think the Force Act of 1833 was all about? Why do you think the Framers put in a Supremacy Clause much less the later privileges and immunities clause of the 14th Amendment? Recall the various efforts to go down this road: the Civil War, Massive Resistance…. and what resulted.
To the objective among us, it is abundantly clear that the Supremacy Clause is inviolable ONLY insofar as an executive order, Congressional legislation or a judicial decision is not unconstitutional or otherwise contravenes the federal government’s enumerated powers. The Supremacy Clause absolutely does NOT grant unrestrained, unlimited powers over the States and the People. The Framers never intended such unchecked, open-ended power on either the part of the states OR of the federal government. They strove for a sensible, workable balance between the federal gov’t and the states, this to ensure liberty and constitutional order. They intended that the feds be supreme in their sphere of authority as defined by the Constitution and the 10th Amendment. Again, ratifying states (who created the federal govenment) did NOT grant unlimited authority to the federal government. All understood that to do so would invite tyranny, tumult and the end of the Republic.
Andrew Jackson is the be-all-end-all constitutionalist? Sorry, if anything, Jackson goes down as the one of the most imperious of Presidents in our nation’s history. Not at all intended by the framers. Again, the Supremacy Clause does not grant unchecked authority to the feds. If that were the case, then why not throw in the towel and obsequiously accept Dictatorship because that is precisely what will occur if we accept the insane notion that the federal government is supreme in all matters. Our founders counseled rebellion and both Jefferson and Madison counseled nullification in the face of federal overreach, aka tyranny. They were spot on. Today, an entire generation of statist drones have taken over the reigns of power and the so-called legal system. Any wonder our Constitution and our individual liberties are more imperiled than ever? Will we survive as a constitutional republic? Probably not. Thus, I go further than espousing the well-founded principle of nullification. If necessary, secession should ALWAYS be on the table. Indivisibility at all costs is dangerous and delusional. God didn’t enjoin me to bow to tyranny under any circumstances, and most Americans feel the same way.
That’s certainly the line of argument big-government proponents follow. All of the points of history and law you raise are addressed extensively from the point of view I espouse in articles on the 10th amendment center. In short, however, the Constitution does establish a government of and by the people, but it is a limited federal government, not an unlimited and supreme government. The Supremacy Clause is limited in scope to the powers enumerated in the same constitution that declares it. The Privileges and Immunities clause does empower the federal government to preserve natural rights of the people against infringement by any other government, but it does not confer any new or arbitrary power on the federal government.
And no, interposition or nullification by states are not “an act of treason,” as was established quite early in the history of this republic.
Michael Trinklein gives a summary of secession and merger movements throughout the history of the United States.
More historical and legal background on nullificaiton: Skim the post, focus on the comments.
See Tom Woods Nullification: Answering the Objections.
http://www.downsizedc.org/blog/carts-horses-and-secession
How would true interposition work when most of Federal spending is done with “borrowed” dollars? What would get returned to the state?
Ideally, nothing would be taken from the state to begin with. I.e., the Federal government can borrow and spend all it wants, but if a state strenuously objects and says it’s neither going to forward taxes nor accept liability, the Federal government is then limited by the credit and funds it can obtain through taxation of interstate commerce.
I don’t know how something like this would play out today. I’m reminded of the politics that resolved the new republic’s debt crisis, but that was a means of resolving a problem faced primarily by the people and the individual states themselves, and which had been created largely in the course of the war to win freedom in the first place.