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ABSTRACT. This paper explores the changing nature of federalism in the United States. While the paper highlights different phases of federalism and its impact on sub-national governance, the focus is on "New Federalism" a reform initiative begun in the 1970s that emphasizes decentralization from the national to state and local governments. Today, federal programs and funding are transferred to the states; however, these program responsibilities are then devolved from state to local governments. This creates tension across governments in a good economy; however, it can be a formula for disaster in times of severe budget shortfalls. The argument is made that, though devolution is largely a positive development, collaboration among interdependent national and sub-national governments needs to be advanced.
INTRODUCTION
This paper explores the changing nature of federalism in the United States by tracing its evolution from its roots in the Constitutional Convention to its current stage. While the paper highlights different phases of federalism and its impact on sub-national governance, the focus is on "New Federalism" a reform initiative that describes federalism since the 1970s and emphasizes decentralization from the national to state and local governments.
New Federalism was introduced by President Richard Nixon as a reform of the "old" federal system represented in the Great Society programs of the 1960s. His prescription for federalism reform was to decentralize national programs and restructure the roles and responsibilities of governments at all levels. Nixon sought to simplify intergovernmental relations by providing funds to general levels of government through block grants and general revenue sharing. Spending now would be funded by the federal government but controlled at lower levels.
In the 1980s, the Reagan administration viewed New Federalism as part of a broader strategy to reduce the role of government at all levels. Like Nixon, Reagan wanted to reverse the centralization of power in Washington and to bring government closer to the people. Yet, he also wanted to minimize government's interference in people's lives and roll back the modern welfare state.
In the 1990s, the size of the national government with its burgeoning deficit brought about renewed promises to streamline the federal bureaucracy and devolve power and decision making to state and local governments. Federal spending was to be cut and capped and New Federalism,...