For example, if a state wants its legal drinking age to be 18 instead of the federal government age of 21, the federal government can threaten to withhold funds for that state's highway fund.
The benefits and disadvantages of federalism are closely related to its strengths and weaknesses.
1. Federalism manages social and political conflict by dispersing political power within and among governments. This is accomplished with geographic diversity, ethnicity, language, religious preferences and other differences that are represented in state and local government groups.
2. Administrative efficiency in the form of fiscal incentives:
a. Categorical grants - money is provided for specific state projects, with federal agencies overseeing exactly what to fund.
b. Block grants for general purposes such as education or welfare.
c. Revenue sharing -funds were provided to states based on a specific formula such as population, tax effect and income levels.
3. Innovation. States and local governments customize policies to accommodate demands a