Question

1. Describe how the American system of federalism experienced important transformations during the 1970s, 1980s, and 1990s.

(Describe these changes by discussing “New Federalism,” devolution, and the Supreme Court’s rulings on federalism.)

2. How did the developments of this period differ from the previous eras of American federalism?

Answer 1

1. Federal system or federalism means system where power is shared between federal and state administration. The history of Federalism in USA is very old which started in 1787 when USA constitution was adopted. Since then there has been evolutions in USA federalism pattern. Before, 1970s, there was co-operative federalism in the country. But after 1970 onwards, co-operative federalism was replaced with innovative type of federalism also known as New Federalism, in which there has been further delegation of power to the state government but Federal Government's role still remains dominant under New federalism. Under new federalism structure, state governments are delegated more power so that they can effectively manage and finance some key programs. The new federalism is based on the idea that state government should be given more control on certain programs by the Federal government. US president Nixon in 1972 added a new feature called Revenue sharing which allowed state governments to receive funds with no restriction from the Federal Government.

The Federal Government reforms in 1996 enabled state governments to get more federal funds for spending on various programmes. The Apex court in USA also favoured State governments in its several judgments making state governments stronger than that in cooperative or other federalism era.   Aids and grants play prominent role in New Federalism. For effective implementation of federal programs, in this system, Federal government sanctions funds to various state governments in the country which are categorized as:

Project Grants: State governments for this grants submit details of specific project to the federal government and receives grants from the federal government.

Categorical Grants: Money is sanctioned to the state administration with specific restrictions on expenditure.

Block Grants: It is also a type of categorical grants released by federal government to state governments with restrictions on how to spend the sanctioned amount.

In the new federalism, Federal government has exclusive authority to withhold certain grants to state governments due to noncompliance of grant conditions and financial emergency in the country.

2. New Federalism is more innovative system than other forms of federalism such as co-operative federalism era ( 1945-1969). Under co-operative federalism, state government depends heavily on grants from Federal government. The best example is interstate highway construction in which state governments received 90% of the project costs from Federal Government. Before, co-operative federalism, USA also passed through dual federalism era that lasted till World War II. In dual federalism structure, Federal government can formulate policies on broader areas such as national defence, foreign affairs, international trade etc. and state government can make policies in low profile areas such as law and order, local trade etc. Under dual federalism, most powers were vested in the hand of Federal government. There was prominent role of Federal government in USA in view of growing industrialization and trade liberalisation.