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Another Effort to Cut the Federal Behemoth


Washington. -- House Republicans, intent on cutting domestic programs to balance the budget over seven years, aim to fold 336 separate categorical aid programs into block grants. The Senate has voted for $190 billion in cuts, with committees instructed to combine hundreds of programs into block grants.

And the Clinton administration, too, is urging the consolidation of 271 categoricals into 27 so-called Performance Partnerships -- a clear form of block granting.

The block-grant idea is not new. In Richard Nixon's administration, they were associated with "New Federalism." The common theme has been to repudiate Roosevelt's New Deal, defang Washington bureaucrats, give more programs and responsibilities to the states -- and save money. Nixon's Community Development Block Grant program is still a mainstay of funding for poor neighborhoods. His General Revenue Sharing program, however, eventually was killed under President Reagan.

Reagan's famed Omnibus Budget Reconciliation Act of 1981 created nine big block grants, incorporating 57 categorical programs. But the overall saving -- less than $10 billion a year -- was a pale shadow of what's now on the table.

At the same time, neither Nixon nor Reagan could stop the proliferation of small categorical aid programs; they increased by more than 100 under Nixon and Gerald Ford. Reagan's block grants got slowly "recategorized" with new congressional conditions. Today, by latest count of the Advisory Commission on Intergovern- mental Relations, the nation has 618 categorical aid programs -- a historic high-water mark.

Will history repeat? Will efforts to cut the federal behemoth down size by handing more responsibilities to the states be frustrated again?

Maybe -- but maybe not. People are more fed up with Washington than ever before. And the spending cuts being contemplated by the new Republican Congress are of gargantuan proportions. They make Nixon look like a liberal, Reagan like a downright moderate.

Some will hurt, maybe a lot. Earlier generations of block grants went to state and local operating and capital expenses. This time the human side will be targeted. Functions ranging from AFDC welfare to Medicaid, infants' nutrition to services for abused and neglected children are to be blocked, and then cut back heavily in size.

Education, training, economic development, Head Start, criminal justice, housing -- all are to be blocked and shrunk. Even Nixon's legacy, the Community Development Bloc Grant program that sustains many community-development and other grassroots efforts, will be reduced 20 to 50 percent.

In the '80s, when Reagan cut back, states were coming out of a recession, had lots of cash and were able to make up for a good chunk of the federal cutbacks. Today, with states and cities strapped for funds and competing bitterly for new businesses, the prospects for that kind of relief are very dim. We're seeing a "race to the bottom" by federal and many state legislators scurrying to see how many government programs and opportunities can be choked off, and how fast.

Then there's the issue of state bureaucracies. Sometimes they're as impervious as Washington's.

John DiIulio and Donald Kettl, writing about the GOP's Contract with America in a Brookings Institution Report this spring, warned: "The contract contains virtually no administrative fine print. The language of devolution does more to hide than highlight the administrative realities of federal-state relations."

Messrs. DiIulio and Kettl question whether "devolved" programs will be structured to succeed more than today's ostensibly failed programs.

So far, as Congress rushes headlong toward change, one looks in vain for sensible requirements for state matching funds, or protection for vulnerable populations, or protection for funds that have flowed to this nation's hard-pressed inner cities.

It would be much more effective, says "Reinventing Government" author David Osborne, if block grants were structured as "challenge grants," providing more assistance to states or localities that can show real performance -- jobs actually created, changes in family health, or private investment leveraged.

And what about the new metropolitan reality? States could be encouraged to give proportionately greater funds to citistate regions that can come up with smart plans and approaches -- ways to put turf differences aside and tap region-wide public and private resources for greater results.

And what about using federalism reform to connect estranged citizens with their government -- is anyone in Congress thinking of that?

We should be using block grants to achieve reform that works, instead of just inflicting pain. We could, if we'd only stop to think.

Neal R. Peirce writes a column on state and urban affairs.

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