Autonomy and interdependence: The scope and limits of “fend for yourself federalism” in the United States

Despite a gradual, intermittent trend toward greater centralization, the United States remains one of the world’s most decentralized federal systems. The federal government has nonetheless had a growing fiscal influence over time, thanks to the increase in federal grants to state and local governments since the 1930s and the unprecedented number of federal mandates handed down over the past five decades. As fiscal interdependence has grown, the institutional structures that helped knit together the levels of government have eroded or disappeared altogether. This chapter will explore each of these facets of fiscal federalism in the United States, including the role of state fiscal rules and the implications of national policies – especially intergovernmental grants – for state and local government. It will particularly examine the paradox of deinstitutionalising intergovernmental consultation mechanisms in an era of rising interdependence, and it will explore its implications.