As the Bush administration heads down the home stretch of eight years in office, it is important to assess how the president's political orientations/perspectives, policy agenda, and legislative initiatives have altered or reinforced fiscal relations within the context of American federalism. Has President Bush followed in the footsteps of previous presidents and left his imprint on federal-state, federal-local, and federal-state-local fiscal relations, or has fiscal federalism continued to evolve on its own without any influence from the current incumbent and/or members of the Republican majority in Congress? Obviously, a more definitive answer to these questions will have to be postponed, at minimum, until a new president is inaugurated in late January 2009 but, in all likelihood, will not be forthcoming for a number of years so as to permit historians, political scientists, and posterity the opportunity to carefully review and analyze the totality of his actions, or as the case may be, inactions while in office. However, one of the most likely federalism legacies of the George W. Bush administration will be in the area of federal aid. It appears that federal aid funding to state and local governments has accelerated during Bush's tenure in office, while federal aid as a proportion of total federal government outlays is also increasing. These trends represent a significant departure from the Clinton administration and even from the administrations of George H. W. Bush and Reagan. In fact, one has to go back to the Carter administration to find similar trends. But, perhaps the most important observation about fiscal federalism trends during the Bush administration is the marked increase in federal aid that was designated to local governments and the increasing amount of federal funds characterized as pass-through grants to local governments. These trends are significant, given that Congress and presidents historically has elected to allocate federal aid monies directly to the states with no requirement that they share these funds with their local governments. It is also interesting that a president with no local political experience would be supporting increased aid to local governments. Perhaps, the impetus for this change in direction in federal aid allocations can be traced back to the 9/11 and Hurricane Katrina experience. Simply put, it may be the recognition that most terrorism threats and natural disaster events are local in nature. Shortly after 9/11, the Congress and the Bush administration collaborated on the development of a series of first responder grants to assist state and local (but especially, local) anti-terrorism and all-hazard efforts. In addition, Bush and the Congress agreed on the use of Community Development Block Grants (CDBG) as a means to provide emergency assistance to local communities in the wake of Hurricane Katrina. Indeed, the use of CDBG to channel billions of dollars of assistance was both innovative (avoiding the normal authorization and appropriation process necessary for both spending programs) and on an historic scale not seen previously. Therefore, the rationale for funneling more money directly to where the needs are (that is, local communities) rather than to the states could be seen as strategy for by-passing often sometimes cumbersome, unresponsive, and inefficient state bureaucracies. At any rate, these new federal aid patterns have the potential to substantially alter relations among the national, state, and local governments. Another point worth noting in regard to federal aid patterns during the Bush administration is the appearance that they are uncharacteristic of previous Republican administrations. For example, while federal aid also increased significantly during the Nixon years, more federal money flowed to state and local governments via block grants and directly to local governments and fewer strings or conditions were attached to the receipt of federal funds. However, federal aid during the Bush years bears none of these characteristics. Also, consider that federal aid during the Reagan years slowed down considerably (and even declined overall in FY 1982), and state and local government dependence on federal fiscal assistance declined markedly. In addition, a concerted effort was made to redirect more of the dwindling federal aid dollars through block grants. Although George W. Bush's approach to federal aid may out of character for Republican presidents, his approach is similar to that of his father, especially during the latter part of George H. W. Bush's administration. For instance, federal aid under George H. W. Bush began to increase at a faster pace than was the case under Reagan. Consequently, state and local governments exhibited signs of increasing dependence on federal aid during that time. However, the George H. W. Bush administration, like the administrations of Nixon and Reagan but unlike that of his son, was marked by an increase in the proportion of federal aid available through block grants. As odd as it may sound, George W. Bush's federal aid legacy may bear a closer resemblance to those of Democratic presidents rather than those of presidents of this own party. And, consider that with the Democrats (who traditionally have favored a greater federal government role in state and local affairs) now in control of both houses of Congress, the Bush administration's penchant for expanding federal aid may actually have more of an ally in Congress. But, his federal aid legacy may still be distinctly different from both Republicans and Democrats, given his willingness to use federal aid to further his overall policy goals. And, unlike other Republican presidents before him (but especially Nixon and Reagan), he is better positioned to do so because he does not appear to have-and therefore, is not bound by-a conscious federalism philosophy to guide his policy decisions.
