The State of American Federalism: 1984

Viewed in Orwellian terms, 1984 has been referred to as "the year that never came."' To be sure, the real world of 1984 bore little resemblance to that described in George Orwell's classic parable. The terrifying one-party superstate, as manifested through the eyes of "Big Brother," never materialized in the capitalist West. Instead of keeping people in line by managing scarcity, as Orwell had envisioned, most Western political systems in 1984 found themselves managing affluence. In short, "The Western donkey keeps running because of carrots far more than sticks."2 Conditions in the United States during 1984, in particular, were far from Orwellian. Indeed, according to one observer, 1984 simply was not a good fiscal year for Big Brother. On the contrary, forces of decentralization were stronger than those of centralization, especially in regard to issues of fiscal federalism. Led by an ideologically committed president and a fiscally resilient state and local sector, it appeared as if "the wisdom of the American experience-that of not placing all of our policy eggs in Big Brother's fiscal basket"-had become manifest.3 Unlike some earlier periods, fiscal distress in 1984 was observed not so much among the constituent state and local governments of the federal system but in the federal government itself. Several broad themes seemed to characterize American federalism in 1984. First, the explicit issue of federal-state-local relations received relatively little attention during 1984. This lack of attention is particularly surprising in light of the fact that the main event of the year was a presidential election. With Ronald Reagan running for reelection, and with all the changes which had occurred in fiscal federalism since 1980, one might have expected federalism to emerge as a campaign issue. In comparison to the first two years of the Reagan term, however, the place of the New Federalism on the nation's domestic policy agenda was difficult to discern in 1984. Nevertheless, the substance of policy development reflected significant