Fiscal federalism - taxing, spending, and providing aid within the federal structure
The national government can have an immense amount of influence over what the states do by offering grants-in-aid to the states. (We can just refer to them as grants) This is money that is given to the state by the national government to aid the state governments in doing something.
Grants come in 2 forms: categorical grants or block grants
Categorical grants - money is designated and can only be used for a specific purpose (category)
Example: Money is provided to the state to assist specifically with bridge repairs/renovations
Block grants - money that is provided for use in a general area
Example: money is provided to the state to assist with general transportation needs
So the national government just gives away money to state governments? Is the national government the most benevolent institution or what? Well.......no.
As with many gifts, there are strings attached. The strings, we call mandates.
Mandates - conditions of aid
Things the state has to do in order to receive the grant money
Examples: Education money & 'No Child Left Behind'; National Drinking Age
Some mandates exist, not so that a state can get aid, but so that the state can continue to receive the aid it already received regularly. These are referred to as unfunded mandates. (comply or else)
Again, it all comes down to money. What is money? (Power) How much of it do you want? (All of it or as much as you can get) So are you willing to comply with some rules and stipulations in order to get it?
Welcome to the world of grants & mandates. Fiscal federalism at its finest.
