Question

Which of the following is correct concerning federal aid to the states? (List the letters of all the correct answers. If none are correct, write “none”.)

(a) In the 1960s, the pattern was for the federal government to impose national preferences on the states without providing more aid. Indeed, they threatened to withdraw existing aid if additional requirements were not met.

(b) Since 1980, the national government has increasingly sought to buy state compliance with federal objectives. New federal money has been available to states that agreed to conform to federal preferences.

Answer 1

Each state has its own source of revenue according to its budget.Taxes are important source of revenue.In federal system most of the state functions are left to the state government. But In some cases state receive some financial assistance from federal government known as 'federal aid'.

Federal aid is provided to the state for various purposes such as medical payments, infrastructure development assistance,educational assistance etc.Federal aid is provided in the form of grants or on the basis of law.  

a)The first example given is representing the correct structure of federal aid. Upto 1960s not providing more federal aids to the state was the usual practise in existence.Sometimes federal goverment threatened the state government to withdraw the proveded aid if it require more money.Actually fedaral aid was very less in olden period .But recently it rised to a huge amount.

In a federal system State governmet is provided with their own duties.state goverment perform their duties with the help of state revenue rather than grant in aid.Availablility of less grants in aid would not help budget deficit but it improve performance of state and local governments.Recently state governments are provided with too much of federal aid. It develop a tendency of excessive spending ,irresponsive policy making and in efficient-costly bureaucracy.Expansion of federal aid is favourable for elected representatives and officials but unfavourable for public.citizens distrust federal goverment.It rises state tax and cost of administration.

b)It shows the tendency of expansion of federal aid to the state government which is not favourable.