Block Grants: A Perennial, But Unstable, Tool of Government

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Abstract
During 1995 and 1996, the Congress and the president gave considerable attention to block granting over $200 billion in federal intergovernmental grant programs, ranging from large entitlement programs to smaller programs in housing, vocational education, and law enforcement. In the end, the record of successes was modest—highlighted by welfare-reform legislation that, in some respects, resembled a block grant and in others did not. The contrast between process and outcomes in this most recent block-grant cycle reinforces the point that block-grant prospects depend on fundamental fiscal, political, and programmatic forces that are separate from federalism considerations. The states' maturation as leaders in many domestic policy areas strengthens the performance rationale for block grants. The federal fiscal crisis will continue to stimulate interest in block grants among fedeal as well as state policymakers. The proposals offering the greatest fiscal advantage (i.e., Medicaid and AFDC) may not be those with the strongest performance rationale. Although recent congressional developments suggest stronger support for states, nationalizing forces remain embedded in domestic policymaking. Thus, substantial questions remain, posing obstacles to a fundamental and sustained role for block grants in the federal system.

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