Experts Debate Merits of Bush's Block Grant Plan

 

Amid a raft of recent Bush administration proposals to shift more responsibility for federal programs to the states, U.S. Sen. Jim Talent (R-Mo.) is sounding a cautionary note.

"What I constantly hear is that states are going to take a piece of the money and they aren't going to add any value to the process," Talent said.

Talent's remark came at a panel discussion last week of Bush administration proposals that would turn at least six existing federal programs Medicaid, housing for the poor, workforce development, child protection, transportation and Head Start into block grants. The grants would cap the federal funds flowing to the states in exchange for greater freedom at the state level to tailor these programs to local conditions.

The discussion, which was hosted by the Brookings Institution, a Washington, D.C.-based think tank, featured comments from elected officials, bureaucrats and policy experts.

Jack Tweedie, a policy analyst at the National Conference of State Legislatures, an organization that represents state legislators' interests, said federal block grants can be problematic because they rarely include safeguards against changing economic conditions.

"When the economy declines, revenues go down and states have less money to work with, while [demand for these programs] goes up," Tweedie said. "The history of block grants is flat funding they don't go up and increasing restrictions over time."

But Robert Rector, an analyst with the Heritage Foundation, a conservative think tank in Washington, D.C., said the strings attached to some block grants are an important check on waste.

"Conservatives believe in limited government because they basically believe that people spend their own money more wisely than they spend other people's money. ...The worst possible situation you could have is one group of politicians spending money raised by another group of politicians. It's a recipe for non-accountability," he said.

The Bush administration's block grant proposals are loosely based on the Welfare Reform Act of 1996, which gave states the freedom to create new welfare programs in an attempt to encourage work and family formation.

In general, state and federal officials are pleased with how the 1996 law has played-out. But many state lawmakers are resisting Bush's attempt to apply the law's reform model flexibility, funding caps, specific goals to other federal programs.

Last summer, for example, the nation's governors failed to agree on the terms of a Bush administration plan that would change Medicaid a state-federal health care plan for the poor by giving states more freedom to shape the program in exchange for a cap on the amount of money they receive from the federal government.

Many Republican governors embraced the plan, saying it would enable them to save money by innovating at the state level. But some Democrats countered that the plan was too risky because it would force states to foot the bill for growing caseloads should the economy fall into another recession. The Democrats said the federal government, with its greater ability to borrow money, should share this risk, as it does now.

This funding question who should bear the risk for increased demand for government services is one of the central issues of the block grant debate, according to Talent.

"One of the reasons there is pressure on funding is that there is pressure on funding. There's just never enough money no matter how you spend it," he said.

 
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