Mental health programs always reflect changes in the political environment. For instance, Under the Carter administration the President's Commission on Mental Health displayed great interest in reforming the community mental health center service system, expanding mental health research, and developing a new national health insurance package. In contrast, the Reagan administration has sought to minimize the federal government's role in operating many health programs. The authors examine the repercussions that block grants and reduced federal funds will have on mental health research, training, and insurance policies. Competition for funding between community mental health centers and state hospitals, future strategies for mental health services, and fundamental policy questions are also discussed.