Which mechanism funds federal programs by contracting with state governments and private groups to staff and administer them?

• A. Bureaucracy
• B. Government by proxy
• C. Laissez-faire
• D. Competitive service

Answer: (B)

Government by proxy is the practice where the federal government funds programs and delegates much of the implementation to state and local governments or private contractors. Rather than running the programs directly at the federal level, Washington provides grants or contracts that require the recipients to staff and administer services according to federal guidelines. This lets the national government extend its reach while using local administration and expertise. Medicaid is a classic example: the federal government sets standards and funds the program, but states oversee administration and private providers deliver the actual services. The other terms describe different ideas—bureaucracy is the broader system of agencies, laissez-faire means minimal government intervention, and competitive service refers to how federal employees are hired. The mechanism described here specifically captures funding and outsourcing of program delivery through intermediaries.