ABSTRACT
In 1932, at the International Congress of Cities, the United States delegation was the only one to report that no direct national-local fiscal ties existed. This chapter explains why American fiscal federalism took so long to emerge, and to analyse its development in the four decades after 1932. The Great Depression changed things dramatically. For the first time, local governments, and particularly municipal governments, found themselves in such deep financial trouble as to raise the prospect of civil disorder. As the epochal election of 1960 approached, local governments were demanding federal help with a forcefulness not seen since the darkest days of the Great Depression. Lyndon Johnson’s determination to improve the quality of American life, his legislative leadership and his overwhelming victory at the polls in 1964 broke the conservative opposition that had stalemated New Deal liberalism for so long. Richard Nixon’s first term was over, however, federal-local fiscal transfers had been widened to encompass re venue-sharing.
