The Political Economy of New Deal Fiscal Federalism

John Joseph Wallis

Economic Inquiry, 1991, vol. 29, issue 3, 510-24

Abstract: While the introduction of federal matching grants to finance the New Deal relief programs is usually viewed as a mechanism to insure federal control over state relief spending, a careful study of the New Deal reveals that the reverse was the case: matching grants allowed the states to escape close federal control. The standard economic model of intergovernmental grants reveals that the federal government will, if allowed, prefer to use discretionary rather than matching grants. With discretion, however, came power; power that neither the states nor Congress wished to see concentrated in the executive branch. Copyright 1991 by Oxford University Press.

Date: 1991
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