June 2, 1971
Page 17580
SENATOR MUSKIE AND REVENUE SHARING
Mr. RIBICOFF. Mr. President, a number of people in Washington these days are trying to sell revenue sharing as a panacea for America's many ills. They claim that all Congress has to do is to give a large amount of money to the cities and States with no restrictions on the use of these funds and the financial crisis faced by these cities and States will be solved.
This is an example of devising a simple solution to a complex problem. If revenue sharing as a concept is to succeed in reality, it will have to be very carefully designed to reach those areas most in need.
All of the plans introduced to date recognize this fact. They differ, however, in their approach and scope. One plan which has not yet received the notice it deserves was introduced by the distinguished Senator from Maine (Mr. MUSKIE). Senator MUSKIE, one of the original advocates of revenue sharing, has developed an approach which deserves serious attention.
The New Republic of May 29, 1971, contained an analysis of Senator MUSKIE's approach to revenue sharing which is well worth reading. I therefore ask unanimous consent that the article be printed in the RECORD.
There being no objection, the article was ordered to be printed in the RECORD, as follows:
REVENUE SHARING THAT WORKS
The Administration has been given too little credit for the political shrewdness of its revenue sharing plan. It casts the President in the role of rescuer of the states and cities from a dire fate, a modern-day Disraeli effecting fundamental reform and restoring the federal as well as fiscal balance. It allows him to use the phrase "power to the people" with only the faintest blush – and all with minimum budgetary impact, at best $6 billion in "new" money. Most important, it has great potential for the onrushing presidential campaign. Mr. Nixon has come to realize that the cities, and more recently the large industrial states, are starving. He knows that those who starve do not too closely examine the nutritional content of a crust of bread. He knows also that the Congress is not eager to cede its control over the spending of any federal dollar. Revenue sharing, then, offers the chance to divide the congressional Democrats (including virtually all of the serious 1972 contenders) from their needful brethren in the statehouses and city halls – and to conquer.
In March, this potential seemed to have been realized at the expense of one Democratic challenger. The occasion was a legislative conference of the National League of Cities and US Conferences of Mayors. The 800 mayors had arrived in Washington with a well-formulated position. They favored general revenue sharing, with its promise of an initial $5 billion in stringless aid. This was not surprising, since their two organizations had been "closely consulted" in formulation of the plan; they considered the automatic pass-through of nearly half the amount to localities (with mayors and county officials free to negotiate an even larger cut from their governors) a signal victory. On the other hand, the mayors were suspicious of the President's so-called special revenue-sharing proposals, since they would terminate some urban grant programs and consolidate others in six broad categories, with a net gain to the impoverished cities of only a single billion at most.
The March session was more rally than conference. Walter Heller, a certified Democratic economist and pre-Nixonian parent of revenue sharing, delivered a stump speech, branding anyone opposed to the idea as a foe of federalism and doubter of provincial wisdom. Vice President Agnew attacked those who would play politics with so sacred a subject, singling out Wilbur Mills' proposal for federal assumption of welfare costs as a "red herring." Both drew hearty applause. Senator Edmund Muskie, in a luncheon speech, drew something else.
He began by saying, soberly, "I know many of you support the concept of revenue sharing, and so do I." He pointed out that he had introduced a revenue-sharing bill last year. But he went on to say that he did not support a plan which would "gut essential categorical aid programs," which "fails to allocate funds for the cities which need them most," and which "provides inadequate safeguards against the use of funds to perpetuate discrimination." Therefore, he did not support the Administration plan, which, he noted, would provide rich Beverly Hills with twice as much money per capita as broken down New York and four times as much as Cleveland. He expressed "serious doubts" that a "meaningful program of revenue sharing" could get through the present Congress and counseled support of a federal welfare takeover. The mayors' reaction was swift and critical. The welfare takeover would benefit only a handful of cities; they all need help immediately; they don't expect their friends to quibble over its precise form.
Senator Muskie's initial response was to smooth things over at a private meeting with Philadelphia's James Tate, president of the Conference of Mayors. His more substantive response came May 5 when he reintroduced his own revenue-sharing bill with modifications. The bill got less attention than it deserves. For together with other Muskie initiatives in Congress it constitutes not just a solid Democratic alternative to the Administration proposals but the beginnings of an adequate federal program.
The Muskie bill retains the guarantee of automatic aid to states and cities, which is the essence of revenue-sharing's appeal to those who are tired of pleading with one grudging Congress after another. While Nixon would give cities and States 1.3 percent of federal income-tax revenues, Muskie adds to this federal dollars in the amount of 10 percent of aggregate state income-tax collections. This puts another billion into the pot the first year, as well as tying future amounts to how heavily states tax themselves. But Muskie's plan goes on to weight the amount localities would receive on a scale that takes into account both the incidence of poverty and the level of public assistance payments. And it adds a nondiscrimination string in the form of a mechanism for individual or class-action suits against offending jurisdictions.
Muskie's bill is offered as a supplement to categorical aid programs, not a substitute for them. His introductory remarks delineated the functions such programs should serve: "Revenue sharing is needed because the distribution of income and wealth varies so widely throughout the country. There are vast differences in the tax-paying abilities of the various communities across the nation." "At the same time," he went on, "we must continue and expand federal categorical assistance. These programs are directed at critical problems, national in scope, which must be attacked by the federal government because the States and localities alone cannot deal with them or have not dealt with them effectively in the past."
Sen. Muskie still supports a federal welfare takeover, again recognizing that poverty like so many other problems called "urban" is national in scale. It is this fact which makes stringless revenue sharing not just inadequate as the major urban assistance device, but dangerous. For it perpetuates the cities' responsibility for paying a disproportionate share of society's bills, and it makes the remedying of our most critical domestic ills a matter of state and local option, while reducing incentives for remedial action.
The mayors are beset by a battery of conflicting claims upon their attention and resources. The political clout of the urban poor and minorities is rarely powerful enough to compete with that of rival claimants. There are far larger constituencies behind better street paving and larger police forces than behind welfare reform or compensatory education. This competition is getting increasingly bitter. The white working class, especially in the industrial cities of the Northeast, is flexing its muscles and voicing genuine grievances. Its increasingly militant resistance to "singling out" others for attention, combined with the decline in the patience and "reasonableness" of long-deprived minorities is a new fuse on the urban time bomb.
The President would simply throw money into this pit and let the contending groups scramble for it. The effect would be to remove the protective shelter of federal restrictions from those mayors – and there are many – who understand that the plight of the poor and of minorities is the most urgent they confront. With this shelter, of course, come webs of federal administrative strings, which is another reason for the mayors' fondness for general revenue sharing.
The Democratic mayors and governors (and John Lindsay, too) can continue beating what Wilbur Mills has certified to be a dead horse. Or they can try to rally the Democrats behind a comprehensive program of fiscal reform, including: (1) revenue sharing weighted according to both tax effort and need; (2) expansion and consolidation of existing grants-in-aid; and (3) federal assumption of responsibility for welfare and other poverty-related services. The Muskie initiatives offer the structural skelton for such a program. They will not in themselves, as he acknowledges, "reverse the order of our national priorities." Nor would they use the full leverage of federal revenues to effect state and local reform. But they would, as modestly claimed, provide "a logical and workable beginning toward correcting the fiscal imbalance in our system."