- The plan initiated by Richard Nixon and later extended by Ronald Reagan to reduce the role of the federal government in national life by cutting funds available to the federal government and by shifting responsibilities from the federal government to the states. The objectives of the New Federalism were to reduce the size of the federal government, stop its efforts at social engineering, free businesses from governmental regulations, and return power to localities (increased democracy). Nixon proposed to accomplish these goals through "revenue sharing." Enacted in 1972, revenue sharing gave the states a $30 billion grant to spend as they wished over a five year period. This influx of money to the states and localities brought an expansion of government at those levels so that by the 1980s and 90s, politicians talked of retiring from Washington and returning to the states where the action was. However, many states where liberals/progressives dominated overspent and faced bankruptcy.
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