Beginning in the late 1950’s and lasting through the late 1960’s, federalism went through a creative phase that saw a flurry of new programs and a greater linkage of the federal, state, and local governments. The creative phase achieved its zenith during the administration of President Lyndon Johnson (1963–69), who coined the term in a famous commencement address at the University of Michigan in 1964. In fact, the creative phase is closely identified with Johnson’s Great Society series of programs and policies as well as his administration’s views of intergovernmental relationships, which focused on increased cooperation between levels of governments, enhancing the role of local governments and citizens, and identifying innovative, or “creative,” ways of tackling policy problems, particularly poverty and racial injustice. Overall, during the 1960’s, the federal system, as David Walker put it, became bigger in dollars and programs, broader in the range of governmental functions affected, deeper regarding grant conditions and the expanding number of recipient local governments and nonprofit organizations involved in implementing programs, and more complicated.
Specifically, three key features of federalism emerged in the creative phase: a proliferation of categorical project grants, enhanced program planning and a greater focus on administration, and increased citizen and interest group participation in intergovernmental affairs.
During the creative phase, the federal government increasingly created categorical project grants that sought to help state and local governments address policy problems and further certain federal goals in nearly every policy area, such as health, social welfare, the environment, transportation, and crime and justice. For example, federal grant outlays increased from $4.9 billion in 1959 to $23.9 billion in 1970, and in just a two-year period of time (1964–66) over 100 project grants were approved. These grants had the effect of the federal government increasingly driving the policy priorities of state and local affairs, as most of the grants narrowly defined the ways the funds could be used, defined targeted populations or geographic areas, and contained reporting requirements. In addition, many grants had matching requirements that make states or localities fund a certain share of the program and supplement the federal funding—thereby increasing the federal role in state and local allocation of fiscal resources.
During this period, the federal government also created intergovernmental programs that had significant planning and administrative requirements attached to them. The federal administrative requirements focused on requiring state and localities to stipulate how the money would be used to address the goals outlined by Congress or a federal agency. In fact, many federal grant programs required states and localities to submit elaborate proposals or requests before federal funds were approved. Applying for and administering these grants required extensive administrative skills and substantial resources. In fact, during the creative phase, securing and administering federal grants became an increasingly important activity for governors, mayors, program professions, and other state and local officials. Due to differences in the fiscal administrative resources, not all governments were equally able to tap into the new flood of federal money. However, in many cases program administrators at the state and local levels had a great deal of flexibility to use the federal grant funds, once they were approved.
A third key feature of the creative phase was the increasing participation of citizens and interest groups in the federal system. Many Great Society programs attempted to achieve maximum citizen participation at the local level and were aimed at increasing opportunities for minorities and the economically disadvantaged to have a say in how they were governed. In fact, creative phase categorical grants often bypassed state governments and were provided directly to local governments in order to provide support to those closest to the citizenry. For example, some new federal programs encouraged or even required state and local governments to involve clients of the programs in operating them and making administrative and policy decisions. The promotion of community action agencies in the War on Poverty—with the intention of empowering local citizens and advocates to become more involved in their own affairs—exemplified this approach. However, this approach often led to clashes between citizens and advocates on one side and elected officials and program professionals on the other side. In addition, interest groups also became a more significant part of the intergovernmental system during the creative phase. For example, some cities began using lobbyists and private consultants to push for, identify, secure, and even help manage federal grants.
During the creative phase, the federal government also implemented a series of far-reaching new programs and laws that have had a fundamental impact on federalism. Most of these were established in a brief period of time as part of the Great Society efforts of the mid-1960’s. These new programs and legislation included Medicaid, Project Head Start, Model Cities, the Water Quality Act, the Elementary and Secondary Education Act, the Voting Rights Act, and the Older Americans Act. This period also saw the creation of a number of new federal agencies that further helped the federal government to extend its reach into state and local affairs, including the Departments of Transportation and of Housing and Urban Development.
As government officials and citizens gained more experience with the programs and policies of the creative phase, several problems emerged. For one, there were often gaps between high expectations and performance or results, which contributed to the citizen disenchantment of the late 1960’s. In 1975, the Government Accounting Office released a comprehensive evaluation of federal aid programs created during this era and summarized a number of other problems that are commonly associated with the creative phase. For example, the report noted that the federal government lacked mechanisms for disseminating information needed by state and local governments to adequately identify and manage grant programs; state and local government experienced difficulties in identifying sources of federal aid, as well as applying for and administering it; and the federal grant system was highly fragmented with similar programs being administered by different federal agencies, fostering complex and varying application and administrative processes and requirements that created obstacles to meeting citizen and client needs. Accordingly, during the 1970’s there were heightened calls for consolidating categorical grants into broader block grants, simplifying application and implementation requirements, and increasing state and local flexibility in administering grant programs.
U.S. General Accounting Office, Fundamental Changes Are Needed in Federal Assistance to State and Local Governments, GAO/GGD-75-75 (Washington, DC: GAO, 1975); David Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham House, 1999); and Deil S. Wright, Understanding Intergovernmental Relations (Pacific Grove, CA: Brooks/Cole Publishing, 1988).