President Reagan's New Federalism and social inequality: An analysis of county government social welfare expenditures

This research brings into focus the impacts of President Reagan's "New Federalism" on the Americans social welfare system and extends the scholarship on the relationship between Reagan's New Federalism and social inequality. It examines trends in federal government financial aid to county governments and county government expenditures during the 1980s. Specifically, data from the U.S. Bureau of the Census Annual Survey of Government Financial Statistics are employed to analyze the relationship between financial aid to county governments and changes in disparity of county government expenditure among types of counties in the state of North Carolina during the 1980s. The Reagan Administration cut federal financial aid to states and localities substantially in the 1980s, leading to state and local government financial difficulty, especially for poor areas where governments were more reliant on federal financial aid. As a result, disparity of county government expenditures among different counties increased. The conceptualization of social inequality in terms of disparity in per capita county government expenditures represents an expansion in the way scholars have looked at inequality in Americans social economic well being. Federal government reduces social inequality not only through federal tax policy and entitlement programs, but also through federal financial aid to states and local governments to help poor jurisdictions provide national standard social services and social welfare assistance. Social equity requires that Americans under the same circumstances but living in different jurisdictions should have equal opportunity to access and receive the same standard of social service and social welfare assistance. The results from this research suggest that: Cuts in federal financial aid to county governments under Reagan's New Federalism weakened the equalization function of federal grants-in-aid. As a result, social inequality, measured by per capita county government general expenditure and per capita social welfare expenditures for persons in poverty, increased among the three types of counties in the state of North Carolina. In light of these research results, policy makers should not focus just on government efficiency, but should also be concerned about social inequality, especially for the poor who need social welfare assistance.