October 31, 1963
PAGE 20803
PERIODIC CONGRESSIONAL REVIEW OF FEDERAL GRANTS-IN-AID
Mr. MUSKIE. Mr. President, on September 4 I had the privilege to introduce S. 2114, a bill to provide for periodic congressional review of future Federal grants-in-aid to States and to local units of government. Twenty-seven other Senators initially cosponsored this legislation. During the subsequent 7-day period that the bill lay on the table, both the senior and junior Senators from Wisconsin joined this distinguished list. And recently the name of the junior Senator from Indiana was added by a unanimous-consent agreement, bringing the total number who have endorsed S. 2114 to 31.
In my remarks accompanying its introduction, Mr. President, I cited some of the basic reasons for my support of this legislation. It is appropriate at this time, however, to present a more detailed explanation of my strong commitment to this measure.
The need for Periodic congressional review of Federal grant programs has been pointed out by: First, the so-called Kestnbaum Commission in its June 1955 report entitled "Commission on Intergovernmental Relations, a Report to the President for Transmittal to the Congress"; second, the House Committee on Government Operations in its "30th Report: Federal-State-Local Relations, Federal Grants-in-Aid" -- House Report No. 2533, 85th Congress, 2d session, 1958 -- and, third, by the Advisory Commission on Intergovernmental Relations June 1961 report entitled "Periodic Congressional Reassessment of Federal Grants-in-Aid to State and Local Governments." The August 30, 1963, Congressional Quarterly Fact Sheet on grants-in-aid, which the distinguished minority leader inserted in the CONGRESSIONAL RECORD on September 3, and a draft report of the Advisory Commission on Intergovernmental Relations on "The Role of Equalization in Federal Grants-in-Aid" provide much-needed updated information on the operation of these programs and, in effect, additional arguments in favor of S. 2114.
What, then, are the basic reasons for seeking the enactment of this measure? On September 21 of this year the President of the United States declared in an address to the Fifth Annual Conference of State Legislative Leaders in Boston, Mass.:
The indestructible union of indestructible States, created by the Constitution, has been envied and imitated by many other nations. It is the best system yet devised. We have to make it work. It should have constant attention.
Mr. President, all of us can agree with this wise counsel. Further, since the Federal grant-in-aid has become the most important single manifestation of today's elaborate intergovernmental relations system, all of us should be cognizant of the need for more constant attention on the part of the Congress to this indispensable feature of contemporary federalism. For those who are unaware of the scope of these programs or who deny the need for this special congressional scrutiny, ponder a few of the statistics relating to these Federal grant programs.
In the first place, we have seen a significant increase in the number of these programs in recent years. According to the Advisory Commission's latest figures, some 59 grant programs are now in effect. This number could be expanded or contracted, depending on the extent to which particular categories are separated. Most authorities would agree that this is a modest estimate, however. Of these 59 programs, 9 were enacted prior to 1930, 12 between 1930 and 1939, 2 during the 1940-45 war years, and 36 from 1946 to 1962. Included among the many programs enacted since the end of World War II are such important grants as those for urban renewal, education aid to federally impacted areas, national defense education, airports, hospital and medical facilities, sewerage facilities, and public works acceleration. Eight new programs alone were enacted by the 87th Congress, and the present Congress is considering still others.
In discussing the increasing number of Federal grant programs, a frequent impression is that, once initiated, a project never ends. This is not wholly true. The record indicates that from 1938 until the present, some 14 grant-in-aid programs have been terminated. Such action, however, is the exception, not the rule.
This expanded use of the grant-in-aid as a technique of implementing the cooperative Federal ideal is further reflected in the growth in dollar amounts expended for these programs. Beginning in the 1930's, Federal grants totaled about $200 million a year. Depression programs and social security legislation, including Federal work relief operations, raised the figure to the $2 billion level, but this declined to less than a billion during World War Il. Total Federal payments to State and local governments, which are somewhat larger than grant-in-aid payments alone, rose from $2.7 billion in 1954 to almost four times that figure -- $10.4 billion -- 10 years later.
Although the number and variety of Federal aid programs have increased significantly in the past decade and a half, it must be remembered that more than 60 percent of total expenditures in 1964 for assistance to State and local governments will be for highway construction and Public assistance grants. As all of us know, during the past 10 years highway construction grants have increased more than sixfold and public assistance grants have doubled.
Another way to gage the expansion in Federal aid programs in recent years is to examine what percentage of total State and local revenues is provided by Federal grants. In 1902, for example, Federal aid programs constituted seven tenths of 1 percent of the total general revenue of State and local governments. The proportion increased to 3 percent by 1932, and to 6.9 percent in 1946. By 1954 the Federal share stood at 10.2 percent and a decade later, at 13.6 percent.
When these growth rate figures are viewed from other vantage points, they appear less spectacular. When Federal aid to State and local governments is examined in terms of its proportion to the total Federal administrative budget, for example, the jump between 1947 and the estimated figure for 1964 is 4.3 to 6.7 percent. Similarly, in terms of the Federal budget expenditures for civil functions, the grants-in-aid share of this figure stood at 29.8 percent in 1947 and an estimated 30.7 percent in 1964.
The grant programs' percentage of the Federal administrative budget's civil functions -- which excludes defense, space, veterans, and interest cost -- has averaged more than 25 percent most of the years since 1947 and never fell below 20 percent, nor rose above 36 percent. Furthermore, during the 15-year period from 1948 through 1963, when Federal aid expenditures rose $7.7 billion, State and local expenditures increased more than $45 billion.
In considering this growth in Federal aid, it is always important to remember that at least two of the large programs -- interstate Highway System and Unemployment Compensation and Employment Service Administration -- are in many respects national rather than State programs which are financed from earmarked Federal taxes levied for these specific purposes. Moreover, in examining the many reasons for this increase, we must recognize that the postwar growth in national production, population, urbanization, and standard of living has had a tremendous impact on the American people's needs for governmental services. The limitations experienced by the States in financing these needs out of their own revenue sources must also be weighed in any objective assessment of this development.
No matter what statistical norms we use, no one can deny that there has been an increase in the number, scope, appropriations, and overall significance of Federal grant-in-aid programs in the past decade and a half. The grant has become the most dynamic symbol of that sometimes overworked but still meaningful term, "cooperative federalism." Yet, the grant-in-aid is subject to severe criticism in many quarters. Some see it as the great subverter of our traditional Federal system. With this viewpoint I disagree. At the same time, it is essential -- in light of the figures that I have presented and the recent admonition of the President of the United States -- that Congress give "constant attention" to those facets of our intergovernmental relations that come within our constitutional mandate.
In my opinion, one of the most meaningful ways of providing this much needed "constant attention" is to enact this periodic review legislation.
Under S. 2114, any new grant program hereafter enacted by the Congress would automatically expire at the end of 5 years unless an earlier date was specifically provided, or unless application of the act had been specifically waived in recognition of the intent to provide continuing Federal assistance in a given program. This measure provides that the appropriate legislative committees shall, at the end of 4 years, address themselves to these basic questions:
First, the extent to which the purposes for which the grants-in-aid are authorized have been met;
Second, the extent to which the States or Political subdivisions thereof are able to carry on such programs without financial assistance from the Federal Government; and
Third, whether or not any changes in the purpose or direction of the original program should be made.
Existing grants would not be covered by the proposed legislation, but all of us hope that such programs would be assessed periodically by Congress and the executive agencies in terms of the same criteria set forth in the bill. I am convinced that this legislation will facilitate the modification, redirection, or termination of grants whose purpose has been changed due to circumstances occurring subsequent to its enactment. Few would presume to claim that Congress now possesses a systematic procedure by which to determine whether a grant program is achieving its objectives, or whether it should be redirected in emphasis, or whether it should be terminated or extended. Witness the fact that many grants still possess outdated features and only 14 such programs have been terminated.
This proposed legislation would achieve other beneficial results. Through periodic review, it should be possible to spur the development of standard criteria by which Congress and its committees can determine what problems can or cannot be solved by the use of grants-in-aid. By having a statutory requirement that the congressional committees review grant programs within their jurisdiction at least every 5 years, Committees will also be prompted to reexamine the many inflexible financial and other provisions which recently have created so many problems in grant programs at the State and local level.
The failure to reassess fully these grant programs at appropriate periods may result in an unnecessary burden and cost to the Government and to the American taxpayer. Periodic review, however, could enable Congress to make a better allocation of public funds and to meet changing patterns of need -- both at the State and local levels. Unnecessary expenditures obviously occur if programs continue after there is no longer a clearly recognizable need for them.
Enactment of this proposed legislation, in my opinion, would actually strengthen the programs subject to its provisions in that they should achieve better public understanding and support than many of the existing ones. The record clearly demonstrates that programs with a built-in periodic review provision have rarely suffered as a consequence. In the same vein, while periodic review may allow critics to get another chance to defeat the legislation, it could also force Federal, State, and local officials to marshal more effectively their forces in defense of a particular grant program. This could have two salutary effects.
First, the realization that a comprehensive review will be made every 5 years could lead to a renewed awareness of the importance of good administrative practices. In addition, many programs which are taken for granted will impress themselves more on the minds of local officials who, for lack of information, tend to underestimate the significance of Federal grant programs operating in their community.
Periodic review under S. 2114 would affect grant programs enacted after January 1, 1965, and then only those extending over a period of 4 or more years. Congressional committees would not have the burden of examining existing grants-in-aid. They would have sufficient time to properly conduct hearings on the operation of each future program. As a practical consideration, many interest groups, for obvious reasons, would oppose having all existing grants-in-aid subject to this kind of review. Such opposition could endanger the fate of this bill.
In restricting the scope of this legislation to future programs, the bill will facilitate an objective reevaluation of grant programs before the "forces of the status quo" become so strong as to make difficult, if not impossible, any redirection or termination of a given program. A grant intended solely for incentive purposes unfortunately carries with it the hazard that many interests may resist termination once the Federal objectives have been achieved. This measure successfully circumvents this problem.
In assessing this bill it must be remembered that the integrity of the whole grant-in-aid concept depends upon the application of some policy of constant review. Failure to reassess regularly the need for these programs could cause the eventual breakdown and collapse of this approach to solving problems that require joint action. Use of the grant-in-aid has permitted our Federal system to remain a vital and flexible system of governing, while insuring that needed services are performed for its citizens. If the grant-in-aid remains the subject of intense public criticism, then the Federal Government may be forced to intervene directly. This can only undermine our present cooperative arrangements.
In the final analysis, this legislation is designed to make Congress more mindful of its clear responsibility of doing a thorough job of reappraising these programs. If Congress accepts this duty, we will provide that "constant attention" that the President sanctioned so strongly in his Boston speech. If we succeed, both the Congress and our Federal system of government will be strengthened.