Final answer:
New federalism favored decentralizing policy management to state governments, aimed at improving administrative efficiency and reducing public spending. The federal government's shift during the administrations of Nixon and Reagan provided states with greater discretion in the use of federal funds.
Step-by-step explanation:
During the era of new federalism, the approach taken by the federal government towards policy management was to decentralize policy management to state governments. This period, marked by the administrations of Presidents Richard Nixon and Ronald Reagan, aimed to reverse the process of nationalization by restoring states' prominence in certain policy areas where the federal government had expanded its influence previously. The strategy of new federalism is rooted in the belief that a decentralization of responsibilities would lead to enhanced administrative efficiency, reduced public spending, and improved policy outcomes. Revenue sharing programs with minimal restrictions were introduced, giving state and local governments more discretion in the use of federal funds. Furthermore, the Omnibus Budget Reconciliation Act of 1981, under Reagan, consolidated numerous federal grant programs into block grants that offered more flexibility to states.