FEDERAL AID has evolved as a complex system of cooperation and sharing of functional responsibilities among the federal, state, and local levels of government. But within this cooperative framework, the federal government's imposition of policy and administrative requirements creates tension. State and local governments prefer discretion over the use of federal aid. As the amount and variety of federal grants have increased, so have the possibilities for tension within the intergovernmental system.
Between 1960 and 1980 the amount of federal aid increased from $7 billion to over $90 billion a year, and the number of assistance programs, mostly small, narrow-purpose grants, grew from approximately 160 in 1961 to more than 500 in 1980. With this growth has also come the imposition of many federal mandates requiring state and local officials to comply with various statutes and directives in such areas as environmental safeguards, affirmative action, and wage standards.1
As the grant system grew in size and complexity and became more regulated, governors, mayors, city managers, county executives, and organizations representing them pressed the federal government for major changes. They have urged the government to reduce the number of grants and to provide them in a way that will give state and local officials greater discretion in spending the money. They have further sought federal assumption of responsibility for certain functions, most notably welfare and medicaid.
The New Federalism of the Nixon administration was a response to these pressures. In some areas of governmental activity the Nixon admin-____________________