1. Chapter 4 Section 3
Mr. Gordon

2. Federalism Today
Fiscal federalism is a system in which the national government uses grants and mandates to influence state policy to achieve national ends.
Grants-in-aid from the national government to the states have increased the influence of the national government.
Today American federalism continues to evolve in the face of new issues.

3. Fiscal Federalism
The beginning of the twenty-first century marked yet another shift in relations between the states and the nation. In the wake of the September 11, 2001, terrorist attacks, the need for increased national security led to an expansion in the powers of the government.

4. Fiscal Federalism
Fiscal federalism: power of federal government to influence state policies within context of spending, taxing, and providing aid in federal system
Goes back to Land Ordinance of 1785, took shape during 1900s
National government gave land to states for establishing schools

5. Fiscal Federalism Latest Trend
20th century: power of national government expanded with increased use of grants-in-aid
Includes money, other resources national government provides to pay for state and local activities
Low-income housing, community arts programs, energy assistance, disaster preparedness

7. Grants and Mandates Categorical Grants
Most federal aid is distributed to states in form of categorical grants
Can only use for specific purpose, such as building new airport, crime- fighting in certain areas
Used to provide money to areas affected by natural disaster

8. Grants and Mandates Block Grants
Block grants: federal grants given for more general purposes, broad policy areas
Welfare, public health, community development, education
States prefer block grants; designed to allow state to spend money as it sees fit
In the 1980s, President Reagan used block grants in an attempt to decrease the size and influence of the national government.

9. Grants and Mandates Federal Mandates
State and local governments are usually pleased to receive money from the national government, but the national government often distributes money with strings attached.
Federal mandates: demands on states to carry out certain policies as a condition of receiving grant money
Particularly important in enacting civil rights and environmental policies
School busing, desegregation, affirmative action—results of federal mandates
Environmental regulations come from national government as well
Clean Air Act of 1970: national mandate requiring states to meet national air-quality levels
In exchange for grant money, states required to create programs to reduce pollution or risk losing federal funding

11. Issues in Federalism Today
New issues challenge American federalism. Political debates over how to best address key policy areas drive new changes in our federal system.

12. Issues in Federalism Today
Poverty
1996: Congress passed welfare reform law, gave states authority to manage own systems
Since reforms, number of people on welfare has decreased
Some credit decrease to flexibility, creativity when handled by states
Others say decrease represents strong economy, question whether states will be able to continue to meet needs of poor

13. Issues in Federalism Today
Homeland Security
Department of Homeland Security formed after 9/11 terrorist attacks
Local and state governments worked alongside Homeland Security to respond to Hurricane Katrina
In aftermath of storm, some question whether better leadership and cooperation between levels of government might have saved more lives

14. Issues in Federalism Today
Environment
Many reasons why efforts to protect environment seen as responsibility of national government
Congress has been asked to limit reach of EPA in favor of local efforts
Immigration
National government handles policies, citizenship, border protection
Several states have international borders and take immigration-related responsibility—education costs, health and social services, low-cost housing
Health Care
Americans turning to state, national governments for solutions to rising costs
Some think U.S. may be on the verge of health care crisis
Which level should take lead on issues—state or national?