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...
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