Public Budgeting and Fiscal Federalism Essay

Fiscal Federalism

To the Cato Institute:

The Cato Institute policy statement on "Fiscal Federalism" is an excellent example of 'throwing the baby out with the bath water.' Yes, there may be unnecessary government bureaucracy involved in the awarding of federal grants to states. But the need for more efficiency does not mean that the entire program should be scrapped. During the recent 2008 recession, many states were cash-strapped and desperately needed funds to support Medicaid and unemployment insurance. Unlike states, the federal government can spend at a deficit. If there were no grants, this would have caused tremendous privation and social unrest.

The relationship of the states and the federal government is necessarily a symbiotic one. States are presumed to have better knowledge of what programs are needed to address critical issues within states' borders. The federal government acknowledges this expertise, even though it may use its prerogative to prioritize certain areas of concern, such as the need to extend health insurance to more citizens.Although the Cato Institute calls redistribution unfair, given the vast discrepancies between wealth and poverty in the nation, the government has a responsibility to promote the general social welfare, which includes enabling people to break the cycle of poverty with social support. There must be a dialogue between state and federal authorities in terms of prioritizing certain issues. This ensures that states have a say in the use of grant funds, but the federal government can ensure that individual rights are protected by promoting policies such as high-quality education. The Cato Institute's statement that Washington politicians should be attending to 'important' tasks like national security vs. unimportant tasks like healthcare and education indicates a profound ignorance of what policies often most directly impact citizen's lives.

Q2. Dysfunctional….....