New Federalism and Minority Rights: After Three Years

By Alex Willingham

Vol. 5, No. 6, 1983, pp. 3-5

When Ronald Reagan was elected President, he was widely regarded as a threat to the progressive social policies gradually put in place over the preceding five decades. In the main these policies--in civil rights, economic justice, environmental protection, care for the aged and handicapped, rights of the accused--had been based on an expanding federal role in domestic affairs. Reagan attacked these policies directly. He criticized them as costly. He questioned the very propriety of federal involvement. The arguments were not new but Reagan's attack was particularly troubling because persons sharing his views made major gains in decision-making positions during the election of 1980.

Furthermore there was a self-conscious effort to avoid compromise or moderation in developing alternative policies. The new President believed that a major part of the problem had been a reluctance even on the part of conservative administrators, including Jimmy Carter's, to put forth bold plans to brake the expanding role of the federal government. His strategy was to redefine federal-state relations. Thus the "New Federalism" of Reaganomics was a direct challenge to the array of protections that social liberalism had valued since the 1930s.

Reagan did make a bold step to change things, particularly in the heady first year when his influence was highest. But in the three years of his administration, dramatic change in federal-state relations has been minimal--a curious circumstance given the self-conscious attention brought to the question of federalism. We might ask why the results have been so small? The answer lies, I believe, in a certain contradiction within the Administration's philosophy of government.

We may review the record. Attempts by the Reagan Administration to change federal-state relations started with proposals for a "block grant" system that would continue federal funding to local govenments but eliminate federal administration. The block grant tactic was a sort of half-way house between the old categorical federal aid system and a system of unregulated revenue sharing. Under the categorical system the federal government sets specific purposes and guidelines for administration. Under revenue sharing there are no strings attached to federal money sent to local governments.

Even though the latter system would fit better the "states' rights" philosophy of Reaganism, it was unacceptable primarily because it contradicted another of this Administration's cherished principles: that social wellbeing is only promoted through private sector market relations. Therefore, coupled with the return of federal power to the states was a proposed cut in the level of funding amounting to between twenty and twenty-five percent in the funding levels of block grant programs in the 1981 proposals.

Reagan's federalism reform attempted to serve two contrary purposes. The call for local control evoked values of democracy. It painted the traditional liberal policy with its over-reliance on Washington as antipopulist. When pursuing this line, the Administration tried to take advantage of a growing conviction, among diverse local officials and community based groups, that it is desirable to expand local initiatives. This conviction reflected a residual American distruct of central government and a growing confidence among some community groups that local alliance


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could be struck to protect and expand hard won opportunities.

That conviction was evident in several forms. During the first year of the Reagan administration one of the more loyal spokesmen for the reform plan was Georgia Governor George Busbee, then chairman of the National Governor's Association. And, while national staffs of associations of local officials remained skeptical about the proposal, local chapters tended to support it. Civil rights groups were dubious, especially concerning the impact in the rural South, but even in race relations there was no denying the growing legitimacy and influence of black voters and public officials at the local levels. Empowerment of minorities was likely to coninue if, as finally did happen, federal voting rights protections were reenacted.

In this atmosphere the Reagan Administration did make some bold moves. A specific proposal for block grants was included in the Economic Recovery Plan put forth within months of taking office. A more detailed plan was subsequently proposed to Congress when the revised FY 1982 federal budget (Reagan's first) was submitted. That budget emerged as the Omnibus Budget Reconciliation Act, still the crowning legislative achievement of the Reagan presidency and a symbol of his power at its highest. The Act contained nine block grants, substantially fewer than the President wanted but still a change of large dimensions. The $7.7 billion would eventually change hands based on funding limits set in the Reconciliation Act.

In 1982 the administration proposed a "revolutionary" New Federalism plan that would replace the block grant system already in place. This was the widely publicized proposal containing the "swap/turnback" scheme and the federal trust fund. Under the swap, the federal government would take full responsibility for all medical assistance programs while the states would take responsibility for AFDC, food stamps, and a number of other categorical programs. The "trust fund" would be funded by federal excise taxes. The fund would be distributed to the states over a four-year period. They could either continue present services or divert the trust fund money to some other area. Reagan proposed to phase out this trust fund after four years--a firm target date when the federal role in local affairs would end.

The 1982 New Federalism proposal was sketched out in the January State of the Union Address. Specific legislative proposals were to be sent later. Meanwhile, the President continued his initiative by proposing to expand block grants. These proposals were placed in the Executive Budget submitted to Congress. The budgetary proposals would follow the example of a year earlier, creating new block grants that would in effect relinquish federal responsibility in certain program areas. The reform of federal state relations was moving on two tracks.

All observers, including the President's detractors, concluded that during the early months of 1982, he had succeeded in focusing public attention on federalism reform. It was labeled the centerpiece of his domestic policy. These federalism proposals were promoted with the same optimism as the proposals in the budget battles six months before. The sheer magnitude of the proposed changes, and a certain regard for the president's momentum, commanded attention as many groups debated the merits. Congress reviewed the expanded block grant system in the federal budget while it awaited the Administration's legislative package embodying proposals for the broader reform. Intense public debate occurred in the context of expectations of inevitable change in federal-state relations.

But the federalism reform movements of 1982 never got on track in a practical sense. By midyear the Administration had not sent a specific legislative package to Congress as promised. Public discussion, although intense, was limited to the proposals sketched in the January speech. These were subject to diverse interpretations. The President did not communicate an overriding goal for federalism reform and, increasingly, his motives became the issue. Was he aiming to increase local autonomy? Was he primarily concerned about reducing the role of government?

Local officials who would welcome the former feared the latter, especially in an era of declining economic conditions in the states. Many became convinced that the call for local control, while couched in sometimes appearing philosophical terms, in fact masked a concrete drive to cut back federal resources in the local communities and, generally, to cripple the public effort in social development. In this way the 1982 federalism reform proposals lost credibility with local officials and stirred the ire of traditional liberals.

The Administration may have been able to build a consensus had it not met its own internal contradictions. It was unable to unify its forces. The budget cutters supported the programs as a way to reduce the federal budget. Conservative ideologues feared the proposal because the expansionary implications of the swap for medical services seemed to carry the beginnings of a bureaucracy which could ultimately lead to "socialized" medicine. In spite of an auspicious start, no part of the 1982 federalism reform proposals have become law. The Reagan Administration never submitted a specific legislative package and Congress refused to accept any of the proposed block grants in the budget.

The turn-around was dramatic in other ways, too. The year before, Busbee, as chairman of the governor's group, had pleaded for support of the federalism reform even as a member of the opposite political party. In 1982, his replacement (Richard Snelling of Vermont), though generally a loyal Republican, became increasingly critical of the federalism proposals, declaring them dead in December.

But Reagan's federalism reform was to have one more chance. In January of 1983, the President once again called for major overhaul in federal-state relations. In February, he submitted a comparatively modest plan to Congress based on the block grant system. But the debate of 1982 had taken its toll. The 1983 proposals were given a flashy introduction and supportive testimony to Congress was made by Budget Director David Stockman. But, after that, the proposals received no serious attention.

Nor are the prospects very bright for any federalism reform in 1984. An election year makes any major change difficult. Ironically, the improved business climate argues against justifying any such change to pecuniary enterprise. Finally the President himself seems to have decided that foreign affairs need his attention and has entered major engagements of American troops abroad.

Has the Reagan federalism reform effort been a failure? The answer here would have to be yes and no. There clearly


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has not been the whole scale reform that Reagan wanted. In that sense he has failed. On the other hand a fledgling block grant system is in place and the effect has been increased latitude for local officials. It is a significant system that will be of interest to community groups and others concerned about empowerment at the local level.

Does the apparent end of the Administration's states' rights push mean an end to its challenge to federal institutions that protect the disadvantaged? The answer is no! It only means that one tact has so far proved ineffective. The Reagan Administration still has full control of other federal compliance mechanisms (with the possible exception of the U. S. Civil Rights Commission, a non-enforcement agency), and has established a track record of lax enforcement faithful to its anti-liberal views. The failure, so far, of the Administration's federalism reform is merely brief respite in an otherwise continuing attack on the rights of minorities.

Alex Willingham is a political scientist currently living in Shreveport, Louisiana. This article is drawn from his research as a research fellow in public policy of the Southern Education Foundation.