September 25, 1974
Page 32552
IS REVENUE SHARING IN TROUBLE? – YES, NO, AND MAYBE
Mr. BROCK. Mr. President, there appears to be a question arising regarding revenue sharing. Is it in trouble? According to articles by three very distinguished gentlemen who should know, the answer is "yes," "no," and "maybe." The gentlemen representing the various views are David S. Broder, Charls E. Walker, and EDMUND S. MUSKIE, representing the "yes," "no," and "maybe" views respectively. In my opinion revenue sharing, more accurately the State and Local Fiscal Assistance Act of 1972, is one of the most important pieces of legislation that Congress has ever passed. Revenue sharing is supported virtually 100 percent by those concerned – the State and local officials – and any suggestion that the program might be in trouble should be carefully examined. I would like to have these three articles reprinted in the RECORD, but before that, considering the importance of the program and the importance of the three authors, I would like to make a few comments on each.
David Broder opened the debate in an article of May 29, 1974, entitled "The Future of Revenue Sharing." Citing a recent poll of Representatives, he came to the conclusion that "yes," revenue sharing was in trouble. He felt that when the act came up for renewal in the next, 94th Congress, that the Democrats might make a major push to terminate general revenue sharing, or to tie it more tightly to Federal priority programs. In a "Taking Exception" article by Charls Walker entitled "Permanent Revenue Sharing," he dismissed this conclusion because he reminded us that "the first point to understand is that Congress did 'not' pass revenue sharing because it wanted to." In other words, whether you have a Democratic controlled Congress or not, Congress will be forced into renewing the program. Mr. Walker thus concluded that "no," revenue sharing was not in trouble.
Then, just recently, my distinguished colleague from Maine, Senator ED MUSKIE, wrote an article on "Saving Revenue Sharing" with the tone that "maybe" revenue sharing was in trouble, because:
Despite its long-standing promise that general revenue sharing would be new money, the Administration some time ago launched an all out attack on the budgets or numerous Federal social programs.
The obvious question arises, "Who is right?" And, the answer is, of course, they all are to a certain extent. First, we should realize that they are all very knowledgeable about the program.
David Broder is one of America's foremost journalists, and has a longstanding interest in revenue sharing and the concept of the New Federalism. Charls Walker is an ex-Deputy Secretary of the Treasury, and was given the task in the spring of 1969 to start developing the program that eventually became revenue sharing. And, Senator MUSKIE is chairman of the Intergovernmental Relations Subcommittee, which has oversight authority of revenue sharing. All three are more than just casual observers of the scene, and thus their views are important. Returning to the more substantive response to who is right, I think that Dave Broder is too pessimistic, Charts Walker too optimistic, and Senator MUSKIE close to why revenue sharing is in trouble, while yet showing why it should not be in trouble.
I think that Charls Walker's point that Congress was forced to enact revenue sharing because the people wanted it is valid. Thus, revenue sharing will not be terminated as Dave Broder suggests.
However, the latter's other point, that it might be tied more "tightly to Federal priority programs," is, in my opinion, very valid, and Charls Walker's optimism does not properly respond to this point. Why there might be "tighter" control is the theme of Senator MUSKIE's article. His point is that revenue sharing is in trouble because it cut into categorical grants. The point is well taken, but the reverse could be said, that is, categorical grants cut into revenue sharing. But, this gets into the argument about which is better, Great Society type categorical grants or New Federalism revenue sharing programs, and in some respect it could be mixing apples and oranges. Why can't you support both? Revenue sharing was introduced to help State and local governments use the money as they saw fit with as little red tape from Washington as possible. Categorical grants are based on the assumption that Washington knows best, and only they can direct. In some areas, categorical grants might have validity, but not in others. Thus, you could support both programs.
I personally would rather see more revenue sharing type programs, but I would not rule out both kinds of programs. However, it is my fear that, while revenue sharing will be extended "in name," it will be categorical grants "in fact," just the antithesis of revenue sharing. This has prompted Senators BAKER and COOK and I to introduce a bill, S. 3903, to extend revenue sharing now. I wholeheartedly recommend that those who support revenue sharing read these three articles very carefully, and make their own judgement. Mr. President, I ask unanimous consent that the three articles be printed in the RECORD.
There being no objection, the articles were ordered to be printed in the RECORD, as follows:
[From the Washington Post, May 29, 1974]
THE FUTURE CF REVENUE SHARING
(By David S. Broder)
If passage of general revenue sharing was, as many believe, the landmark achievement in the domestic record of the first Nixon administration, then repeal or drastic revision of that legislation may be the second-term result of Mr. Nixon's Watergate problems.
The possibility is clearly implied by the first systematic survey of current congressional attitudes toward revenue-sharing. It was published with a minimum of fanfare last month by the Intergovernmental Relations Subcommittee of the House Government Operations Committee.
The report written by the staff of Rep. L. H. Fountain's (D-N.C.) panel is relentlessly neutral in tone, and avoids raising any questions about the future of the five-year, $30 billion program of unrestricted grants to state and local governments.
But the replies from almost 40 per cent of the House and Senate members appear ominous for this keystone of Mr. Nixon's "New Federalism" program.
They imply that if the Democrats enjoy the mid-term election victory this November that many of them now predict, it may be a close question whether revenue-sharing is continued in anything like its present form.
That will, no doubt, come as a surprise, for there certainly has been no indication that revenue- sharing would be much of an issue in this year's campaign.
In its third year of life, the subsidy program which has been welcomed as manna from heaven by most of the 33,000 recipient governments is assumed by many to be a permanent part of the federal fiscal system.
While many believe that Congress would not dare turn off the revenue-sharing tap, such scholars of the Federal system as Harvard's Samuel Beer argue that passage of general revenue-sharing was possible only under the peculiar circumstances of 1972 – a divided government, with neither party united on priority domestic goals of its own – and that its continuance is at least problematical.
That is what makes the findings of the Fountain subcommittee survey so ominous for those who would like to see this experiment in fiscal decentralization given a real crack at proving itself.
Overall, the survey of 97 Republicans and 109 Democrats shows approval for the uses and administration of revenue-sharing funds so far. But while Republicans are heavily supportive, Democrats tend to be skeptical.
For example, when asked if they thought it desirable or not that revenue-sharing funds were being used in many instances to stabilize or reduce local taxes, Democrats, by a 46-to-37 per cent margin, said "undesirable."
By a 42-to-38 per cent margin, the Democrats agreed with the statement that revenue-sharing money is spread too thinly among the recipient units of government. Only 6 per cent of the Democrats thought general revenue-sharing plays too small a part in the present mix of federal aid, but 36 per cent said its role is too large.
By 41 to 35 per cent, the Democrats say that if Congress extends revenue-sharing, they would favor restricting state use of funds to high priority purposes specified by the Federal government.
By a wider margin, they would oppose ending the current modest restrictions on the use of the money by local governments.
On all these questions, congressional Republicans who responded to the inquiry took sharply opposing views.
What this suggests is that if the Democrats are greatly augmented in numbers in the November election, a major push to terminate general revenue-sharing or to tie it more tightly to federal priority programs may be expected in the next Congress.
This is an issue that is important enough to be debated in congressional campaigns across the country this fall. It is not a decision that should be made without debate. The Fountain subcommittee has given friends of revenue-sharing adequate warning to be on their toes.
[From the Washington Post, June 20, 1974]
"PERMANENT" REVENUE SHARING
(By Charls E. Walker)
David Broder's outstanding reputation for accuracy in reporting and analysis is so welldeserved that one takes pen in hand only reluctantly to challenge his recently stated conclusions (May 29) regarding a House subcommittee survey of congressional attitudes on general revenue sharing.
Broder concludes from the survey that revenue sharing is in trouble.
But, as the former Nixon administration official who was asked by the President in the spring of 1969 to start developing the administration proposal (which was sent up in August of that year) ; as one who said from the start that revenue sharing would pass the Congress sooner rather than later; and as the Treasury official who had primary responsibility for "lobbying" the legislation through in 1972, I think I can rightfully say that I understood the forces at work which led to original passage, and have some credibility in analyzing the results of the subcommittee survey.
After having done so, I am much more optimistic than Broder about the possibility of permanent and growing general revenue sharing in the United States.
The first point to understand is that Congress did not pass revenue sharing because it wanted to.
To bear the onus of taxing without the direct benefits of the spending that taxes make possible is anathema to many a politician – and especially when some of his potential opponents (translation: mayors, governors and county officials) get the primary credit for how the money is spent.
Nor do I believe Harvard professor Samuel Beer to be correct in arguing (according to Broder) that "general revenue sharing was possible only under the peculiar circumstances of 1972 – a divided government, with neither party united on priority domestic goals of its own..." To the contrary, general revenue sharing passed for two reasons: (1) the grass-roots support of state and local officials, which the administration carefully nurtured and built in 1969-71; and (2) it's not all that hard to give away $30 billion.
Nor are the figures in the committee poll convincing when closely reviewed. By the rather slim margin of 42 to 38 percent, Democrats agreed with the statement that revenue-sharing money is spread too thinly – only to vote in the next breath that its role is too large. That seems to me almost like preaching that the world is flat and round at the same time.
In addition, Broder missed an important point when he failed to note that the shelving of the Select House Committee's proposals for re-structuring committees, which would have shifted revenue sharing from Ways and Means to Government Operations, is a plus for continuation of the program.
Not that the latter committee would necessarily have been unsympathetic to extending revenue sharing; maybe so, maybe not. Rather the important point is that Ways and Means lived, breathed and slept with revenue sharing for much of the summer of 1972, and its members have keen understanding (partly as a result of countless computer runs) of the intricacies of the program.
Having said all this, however, I must strongly commend Broder for highlighting the issue now, several months in advance of the 1974 elections. He is right on the beam when he states that revenue sharing "is important enough to be debated in congressional campaigns across the country this fall," and that the subcommittee survey "has given friends of revenue sharing adequate warning to be on their toes."
The passage of revenue sharing in 1972 had its immediate political roots in the midterm elections of 1970, in which (not accidentally) it was a major issue. And if the governors, mayors and county officials are "on their toes," it will be an issue again this fall. Early and effective work on their part can assure a majority in favor of extending revenue sharing – with few "strings" and perhaps on a permanent basis – even before the 94th Congress convenes next January, regardless of its political make-up.
[From the Washington Post, Aug. 29, 1974]
SAVING REVENUE SHARING
(By Edmund S. Muskie)
Less than two years ago, the passage of general revenue sharing was hailed as the cornerstone of a "New American Revolution" – the beginning of the end of three decades of ever-increasing power in the hands of the federal government.
As one of the original promoters of this concept in Congress, I share the assessment that revenue sharing is a revolutionary step, of potentially great importance to the health of our federal system of government. And I believe that we all have a stake in making it work.
I am concerned, therefore, that this program – which dispenses some $6 billion a year in federal revenues to more than 38,000 units of government throughout the nation – is now in political trouble. It has been undercut by its most ardent supporter – the administration itself.
Despite its long-standing promise that general revenue sharing would be new money, the administration some time ago launched an all-out attack on the budgets of numerous federal social programs – making that promise meaningless. As a result of massive cutbacks in existing programs, revenue sharing can no longer be considered additional relief for financially strapped state and local governments. Instead, it has come to be judged – particularly by its liberal critics – as a substitute for existing federal programs, and an inadequate one at that.
To be sure, there are other problems with general revenue sharing, not the least of which is the formula created by Congress which provides money to more than 38,000 jurisdictions; some of which have neither demonstrated a need nor provided a use for it. In the spirit of compromise necessary to secure passage of the act, the program was transformed into a streamlined form of federal aid to virtually every local government in the nation – regardless of size, function or relative need.
Today, the failure of the allocation formula to insure that those with the greatest need receive the greatest assistance has left ample room for the criticism that revenue sharing means an abdication of our national commitment to alleviate the social ills of poverty, ignorance and disease.
A formula, however, is primarily a technical matter. It is not easy to find the proper one, but we can certainly improve upon the one we have. This and other problems with the actual implementation of revenue sharing make the program vulnerable to criticism, but these are problems that can be corrected. What cannot be corrected so easily is the highly publicized context in which revenue sharing has come to be judged. As happened so often in the Nixon administration, a widely supported federal program was turned into a political tool. The result was a serious threat to revenue sharing's continued existence. The new Ford administration has a chance to recoup those losses and regain the bipartisan support revenue sharing enjoyed in Congress two years ago. This is no small task.
In recent months, the pace of criticism of general revenue sharing has stepped up considerably, and it has become increasingly clear that changes are going to have to be made. Accordingly, early this summer, the Senate Subcommittee on Intergovernmental Relations began a series of hearings on general revenue sharing – the first such major review since the program's enactment.
As a long-time supporter of the program, I felt it imperative that we begin now to examine carefully and dispassionately both its strengths and its shortcomings, in order to focus attention on the steps that must be taken in the next year to insure its continuation.
The testimony we heard was mixed, indeed. From those officials most closely involved with the program – governors, mayors and county executives – we heard enthusiastic praise. But from representatives of civil rights groups we heard serious charges of racial discrimination in the use of revenue-sharing funds. And from citizens' groups we heard of their frustrated attempts to use revenue sharing as a lever to gain more impact on budget-making at the local level. As for the accomplishments, the news was even more mixed. Revenue sharing has helped hold down taxes at the state and local level, but has had little or no impact on efforts to make those taxes more progressive or efficient. Nor has it significantly alleviated the financial pinch for many of our nation's largest cities.
These problems are serious, indeed. If revenue sharing is to survive beyond its first five years, as I believe it should, we must set about finding solutions to them – today, not six months before the program is to expire.
Revenue sharing as a concept deserves the continuing support and cooperation of Congress. Five steps seem in order:
We must make a full-faith effort to improve upon its present administration, not kill it as its harshest critics suggest.
We must modify the formula used to distribute funds so that those with the greatest need receive the most help.
We must insist that revenue sharing be not only a buffer against higher taxes, but a catalyst for fairer taxes as well.
We must insure that revenue sharing does not become a tool for the perpetuation of discrimination, which would happen if safeguards already in the law were enforced more stringently.
Finally, we must reaffirm our original intent that revenue sharing should be an aid, not a substitute, in the battle of the fiscal stability in communities crippled by demands on local revenues that are rapidly outstripping revenues themselves.