July 8, 1975
Page 21528
ANTIRECESSION AID TO STATE AND LOCAL GOVERNMENTS
Mr. MUSKIE. Mr. President, last April 7, I introduced legislation, along with. Senator HUMPHREY and Senator BROCK to provide emergency antirecession assistance to State and local governments; which have been hard hit by the current recession. The bill, S. 1359, was introduced in response to growing evidence that the combined pressures of inflation and recession were taking a severe toll on local government budgets. These pressures have been detailed in countless newspaper articles, a survey by the Joint Economic Committee, and in testimony presented to the Subcommittee on Intergovernmental Relations, so I will not reiterate them here.
What I would like to speak to today is a subsequent development which concerns me very much – and one which I feel should be clarified for the entire Senate.
Since S. 1359 was introduced, there have been repeated efforts to portray it as a substitute for revenue sharing. These efforts have continued despite my own repeated statements that it was never the intention of this legislation to serve such a purpose. And I am sure that I can speak for my colleagues, Senator HUMPHREY and Senator BROCK, on this same point. In fact, Senator BROCK and I are both cosponsors of entirely separate legislation to extend the life of revenue sharing.
So I would like to take this opportunity to set the record straight.
First, revenue sharing and countercyclical assistance are simply not the same.
On the surface, there are some similarities between the two.
Both measures are government to government in nature. Both provide Federal assistance to State and local governments with relatively few strings attached. But there the similarity stops.
Revenue sharing arose in the context of debate over the merits of different types of permanent Federal grants, as to which kind was best suited to local needs. It was enacted as an attempt to decentralize decision making over local priorities, recognizing that Washington does not always know best what needs at the local level are.
Revenue sharing has now become an important fixture in the overall mix of Federal grant-in-aid programs. Its merits must be judged and its future determined in the context of that same discussion.
Countercyclical assistance, on the other hand, has arisen in the middle of a very different debate – how to deal with the worst recession this country has seen in several decades. The proposal recognizes the preeminence of Washington in determining national economic policy, and
asserts that there must be greater coordination between the various levels of government if such policy is to be effective. It is an antirecession measure only. Its merits can only be compared to those of other antirecession proposals, as to which contributes most to regaining a sound national economy.
I happen to believe that revenue sharing belongs in the mix of Federal grant-in-aid programs.
I also happen to believe that countercyclical assistance belongs in the mix of Federal anti- recession efforts.
But whichever way one comes down on either of these two issues, they simply cannot be equated. Those who try to do so are doing a disservice both to State and local governments and to the quality of public debate on two very important questions – how the Federal Government should share its revenues, and how the Federal Government should deal with recession.
A second point that needs to be made in the course of this debate is that revenue sharing and countercyclical assistance should not be considered mutually exclusive. The enactment of one should not preclude the enactment of the other.
There are those suggesting that if the countercyclical assistance proposal is adopted, then the future of revenue sharing will be in jeopardy. The reasoning behind this argument is not entirely clear.
Perhaps it stems from the President's well known opposition to any new Federal spending. If that is the case, countercyclical assistance must be voted up or down on its own on that question, regardless of the fate of revenue sharing. Countercyclical assistance would put new Federal spending into the economy immediately, when it is needed to help with local budgetary crisis.
Hopefully, by early 1977, the economy will have improved, in which case outlays under S. 1359 would have been substantially reduced. Revenue sharing, on the other hand, would not commit any new Federal dollars until January, 1977, even if it were reenacted tomorrow.
Another possible explanation for this argument may be uncertainty about the workings of the new budget process. If this is the case, I would like to lay such fears to rest.
The argument is made that if countercyclical assistance is enacted this year, it will delay reenactment of revenue sharing until next year – why, I am not exactly sure – and that such delay would make is impossible for local governments to plan for revenue sharing in planning for their fiscal year 1977 budgets.
In the first place, it is worth pointing out that the reenactment of revenue sharing this year was in substantial doubt long before S. 1359 was introduced.
But more importantly, the plain facts of the budget process undercut this argument. The first concurrent budget resolution is required to be in place by May 15. It will include and endorse projected outlays under a renewed revenue sharing program for 1977 and beyond. State and local governments would continue to receive their current revenue sharing allocations under existing law until it expires in December 1976.
Rather than State and local governments being faced with enormous uncertainty about planning their budgets, as has been suggested, the new budget process will in fact give much greater certainty about revenue sharing, at a much earlier date.
The U.S. Conference of Mayors, now holding its annual conference in Boston, is about to endorse resolutions calling for both a reenactment of revenue sharing and for emergency antirecession aid to the cities.
President Ford has invited about 100 mayors to meet with him on Thursday, to discuss the renewal of revenue sharing.
I am most hopeful that the President will use this opportunity to demonstrate his concern about the critical budget situation facing many of our cities – a situation which belies administration claims that the worst of the recession is over, and that we can now sit back and wait for things to get better.
Today, Senator BROCK and I have written to the President, urging him to take the lead in a bipartisan effort to develop a national urban economic policy – one which will help our cities out of the trough of recession, and stabilize them over over the long haul as well.
The Senator from Tennessee and I believe that both revenue sharing and countercyclical assistance are essential ingredients for such a national policy.