Coercive Federalism #2

Last week, we introduced the idea of coercive federalism, having reviewed dual federalism and cooperative federalism before that. This week, we conclude with a few notes on coercive federalism, revenue sharing, and block grants.

The Nixon and Reagan administrations attempted to push back against the growing use of coercive federalism – without lasting effect.  The Nixon and Reagan administrations worked with Congress to consolidate dozens of categorical grants into broader block grants.[1]  Yet, today, block grants account for only a fraction of the total grant-in-aid shared with the states.  The Nixon administration also introduced the use of general revenue-sharing grants. General revenue sharing distributed funds to states from 1972 to 1981 and to localities from 1972 to 1986.[2]

Why are block grants not a larger share of total grants?  In theory, block grants can make sense when federal and state objectives are aligned, and the states are assessed as knowing best how to meet policy objectives.[3]  In reality, according to some experts, many federal politicians dislike the reduced oversight and reduced opportunities for receiving political credit.[4]  Those same reasons may have contributed to the end of general revenue-sharing as well — in addition to the appearance of budget surpluses in many states at a time when the federal deficit was growing.[5]

If you feel impatient and want to read ahead, please click here for access to the full course. We are in Part 3 of 4 now.

Image: Ronald Reagan, 40th president of the United States of America.

[1] Congressional Research Service (2009 & 2020).

[2] Congressional Research Service, 2019a, Footnote a in Table 4.

[3] Congressional Research Service, 2020, p. 11.

[4] Congressional Research Service, 2020, p. 7.

[5] Ferrara, P. (1985). For revenue sharing, time has run out. The Heritage Foundation.

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