Governors: Two Cheers For Grants

March 26, 1995|By C. FRASER SMITH

In the budget-cutting process now under way in Washington, likely losers include teen-age mothers on welfare and their children, drug abusers and legal immigrants.

Winners are present and future taxpayers, deficit-reduction proponents and promoters of the "Contract with America" -- groups that support the Republican agenda made up of an increasing number of Democrats.

Another small political group falls somewhere in between: the nation's governors.

So far, the discussion has focused on social programs and state-by-state accounting of dollars to be slashed by "cruel" Republicans or defended by "liberal" Democrats. Beneath the rhetoric is a proposal that would fundamentally alter the nation's governing system. It could permit a new round of program development or a dramatic step away from the nation's commitment to the poor.

It will almost certainly involve a massive shift of money and power from Washington to the states even if all the contemplated program-by-program reductions are made. The National Governors Association calculates that the welfare reform bill passed by the House on Friday would return about $235 billion per year to the states. Block grants -- lump sums of federal money -- would be given to the states to fund hundreds of programs. While the states would receive less money, the governors would be allowed to set their own spending priorities, within broad guidelines.

This means that Gov. Parris N. Glendening and his 49 colleagues could find themselves with new opportunities to showcase management skills.

But if there is any cheering, it is muted. Too many important decisions are yet to be made. So, the dramatic changes draw most of the attention: cutting off benefits for drug abusers, ending cash welfare payments to unmarried parents under age 18, and barring legal immigrants from receiving food stamps or non-emergency health care.

While carefully establishing his bona fides as a critic of welfare as we know it, Mr. Glendening decries what he calls a "headlong rush" to undo the current relationship between the state and federal governments. In areas such as pollution control, mass transit and nutrition standards for children, Mr. Glendening says, the federal government must continue to lead.

"But the emphasis is all on the cuts, how we get rid of things, not how to make them work better," he says. That thrust looks "punitive" and "divisive.

"It makes the underclass the whipping boy of Middle America," he said. A university professor who has written a textbook called "Pragmatic Federalism," he said change of this sort is not unusual. But as it stands now, he said in an interview last week, the proposed change leaves him deeply apprehensive.

He would be willing, he said, to absorb a 10 percent to 15 percent cut in some programs if outlays could be guaranteed and if the advertised freedom from regulations would actually be delivered. He fears the worst of both worlds: too little money, too little regulatory relief.

"I doubt that they'll say, 'Here's our share of the program dollars. You go ahead and do what you want with it.' They're just not going to say that."

For this reason and others, Mr. Glendening persuaded the Maryland General Assembly's Democratic leadership last week to put off consideration of a tax cut at least until next year.

Republicans ridiculed the decision.

"We've got so much money we don't know where else to sock it away," said Del. Robert L. Flanagan, a Howard County Republican, observing that $350 million had been tucked into a rainy day fund and another $50 million in a special projects fund.

A successful transition from dependency on federal money, he said, "requires growing the private sector economy. You retard that growth when you suck all the tax money out and you don't put any back in."

At the heart of the debate in Annapolis and in Washington is the issue of "entitlements," a four-letter word to some.

Critics of entitlements equate them to a "free lunch." As a concept in federal law, however, entitlements were designed to overcome resistance to welfare in some states: Those who qualified by virtue of low income, for example, are "entitled" to benefits. States are compelled to provide assistance if the applicant is eligible.

Entitlements would be eliminated under welfare reform.

Programs would be limited to the amount of money in the block grant; and when the money ran out, the payments would end, no matter how many people were in need.

Detractors say the proposed changes are unduly harsh. Some fear that the real objective is to aggressively ratchet down or eliminate social welfare spending.

And governors can envision themselves holding the empty bag: The money will be shifted to them, so they will be asked to answer for any damage down the road.

A new entitlement

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