ABSTRACT
This chapter examines the political arrangements that characterize a federal system and then the fiscal objectives that should be attained under the system, in terms of stabilization and growth, allocations and distribution. It also examines the devices for fiscal accommodation, with particular reference to grants-in-aid. The fiscal and administrative patterns that accompany a federal system are subject to as much difficulty of analysis and appraisal as the nature of the system itself, whether dual, cooperative, or creative. The foregoing discussion emphasizes that a federal system complicates the achievement of the traditional goals of the public sector. In a federal system without clearly designated areas of expenditure responsibility, program concerns and fiscal disparities are the generalized forces that account for the establishment and expansion of grants-in-aid. The legal, political, and fiscal complexities of intergovernmental fiscal relations in the United States are well illustrated by the controversy that has recently been directed to proposals for revenue sharing.
