Final answer:
The Reagan administration's move towards block grants was indicative of an effort to reduce the Federal Government's role in state and local affairs, reflecting a shift towards new federalism.
Step-by-step explanation:
The Reagan administration sought to decrease the federal government's direct involvement in state and local matters by converting many categorical grants into block grants. This shift aligns best with the idea that the Reagan administration tried to reduce the role played by the Federal Government in State and local matters. Categorical grants are usually earmarked for specific projects with more federal oversight, while block grants provide broader discretion to states on how to use the funds, thus supporting the interpretation of reduced federal oversight and increased state autonomy.
The overarching aim was for a 'new federalism' that saw a devolution of power from the federal level to the states, enhancing administrative efficiency and believing that states were better positioned to understand and manage their unique needs.
However, while Reagan did cut taxes and attempted to decrease federal spending on social programs, he saw mixed success in his overall aim of reducing government influence, encountering resistance from Congress, and not fully managing to balance the federal budget.