ABSTRACT
This chapter shows that there is need of intergovern-mental fiscal cooperation for general assistance to the states and to local governments, as well as for specific grants-in-aid. It has been long recognised that state and local governments by themselves do not have the resources necessary to meet the demands placed on them for continually improving and expanding essential public services. Unless the federal government takes on substantial new responsibilities, it seems unlikely that its expenditures will increase as rapidly as potential revenues at present tax rates. The Task Force believes that the time is ripe to add a new approach to inter-governmental fiscal cooperation. State and local governments account for more than two-thirds of all government spending for civilian purposes. The Task Force believes that there are too many pressing public needs to justify reliance on tax reduction as the sole mechanism for eliminating the fiscal drag.
