Hearings on the Federal Role 

ADVIsOnv COYYIsslO* on I*TsnQOVsnYYsllTAL nsl.ATIOns 

Washingtoin, D.C. 20575 l October 1980 

A-87 
Preface 

T he Advisory Commission on Intergovernmental Relations (ACIR) was established by Public 

Law 380, which was passed by the first session of 

the 86th Congress and approved by the President 

on September 24, 1959. Section 2 of the act sets 

forth ~the following declaration of purpose and 

specific responsibilities for the Commission: 

Sec. 2. Because the complexity of modern life intensifies the need in a federal 

form of government for the fullest cooperation and coordination of activities between the levels of government, and because population growth and scientific 

developments portend an increasingly 

complex society in future years, it is essential that an appropriate agency be established to give continuing attention to 

intergovernmental problems. 

It is intended that the Commission, in 

the performance of its duties, will: 

(1) bring together representatives of 

the federal, state, and local governments 

for the consideration of common problems. 

(5) encourage discussion and study at 

an early stage of emerging public problems that are likely to require intergovernmental cooperation; 

(6) recommend, within the framework 

of the Constitution, the most desirable 

allocation of governmental functions, reii 

sponsibilities, and revenues among the 

several levels of government. 

Pursuant to its statutory responsibilities, the 

Commission from time to time has been requested 

by the Congress or the President to examine particular problems impeding the effectiveness of the 

federal system. The 1976 renewal legislation for 

General Revenue Sharing, Public Law 94-488, 

mandated in Section 145 that the Commission: 

. study and evaluate the American federal fiscal system in terms of the allocation and coordination of public resources 

among federal, state, and local governments including, but not limited to, a 

study and evaluation of: (1) the allocation and coordination of taxing and 

spending authorities between levels of 

government, including a comparison of 

other federal government systems. (5) 

forces likely to affect the nature of the 

American federal system in the shortterm and long-term future and possible 

adjustments to such system, if any, which 

may be desirable, in light of future developments. 

The study, “The Federal Role in tbe Federal 

System: The Dynamics of Growth,” with which 

this hearing dealt, is part of the Commission’s response to this mandate. Staff were directed to: [a) 

examine the present role of the federal govern- 
merit in the American federal system; (b) review 

theoretical perspectives on American federalism, 

the assignment of functions, and governmental 

growth; and (c) identify historical and political 

patterns in the development and expansion of national governmental domestic activities. 

This hearing was held to elicit the views of four 

intergovernmental authorities-William G. Colman, consultant and ACIR’s former executive director; Prof. Daniel J. Elazar, director of the Center 

for the Study of Federalism, Temple University, 

Philadelphia, PA; Prof. Arthur N&din, a former 

Commission member and Mayor of Minneapolis 

and now serving witb the Department of Public 

Affairs, University of Minnesota, Minneapolis, 

MN; and Neal R. Peirce, consulting editor, National Journal, Washington, DC--on the summary 

findings and initial draft recommendations considered by the Commission at its 69th meeting 

held on March 13-14, 1980. Hence, it serves as 

part of the Commission’s response to the Congressional mandate. 

Abraham D. Beam 

Chairman 
T. his volume was prepared by the governmental 

structure and functions section of the Commission. Major responsibility for the staff work was 

shared by David R. Beam, Cynthia C. Colella, end 

Bruce D. McDowell. Lyon C. Schwalje assisted in 

editing and provided secretarial support. 

This~ hearing focused on the draft recommendations [see Appendix A) presented for Commission consideration and was designed to help facilitate its deliberations on these proposals on 

March 14, 1980. Therefore, special thanks go to 

the four witnesses who helped make this proceeding the lively and informative event that it 

was: William G. Colman, Prof. Daniel Elazar, Prof. 

Arthur Naftalin, and Neal R. Peirce. Commission 

members attending the hearing included Chairman Abraham D. Beame, State Sen. Fred E. AnAcknowledgments 

demon, Gov. Bruce Babbitt, State Sen. Jason Boe, 

Supervisor Lynn G. Cutler, Gov. John N. Dalton, 

Freeholder Doris W. Dealamen. Rep. L. H. Fountain, the Honorable Bill G. King, Mayor Tom 

Moody, Mayor John P. Rousekis, and the Honorable Mary Eleanor Wall, as well as Deputy Mayor 

Ray Remy of Los Angeles, representing Mayor 

Thomas Bradley, end Assist. Sec. Donna Shalala, 

representing Secretary of Housing and Urban Development Moon Landrieu. 

The Commission gratefully acknowledges the 

assistance and cooperation of the witnesses, both 

in preparing their statements end in editing their 

respective portions of the recorded trtiscript. 

Full responsibility for the accuracy of the hearing 

record rests, of course, with the Commission and 

its staff. 

Wayne F. Anderson 

Executive Director 

David B, Walker 

Assistant Director 

iv 
Contents 

Chairman’s Opening Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 

StaffPresentations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

Statement Presented By Professor Artlmr Naftalin, 

Hubert H. Humphrey Institute of Public Affairs, 

University of Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . 15 

Statement Presented By William G. Colman, 

Consultant........................................................ 23 

Statement Presented By Professor Daniel J. Elazar, 

Director, Center for the Study of Federalism, 

TempleUniversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 

Statement Presented By Neal R. Peirce. 

Syndicated Columnist, 

Conkibuting Editor, National Journal . . . . . . . . . . . . . . . . . . . . 39 

Appendix A: The Federal Role in the Federal System: 

Analysis of Basic Findings, Key 

Questions Raised, and Recommendations . . . . . . . . . . . . . 45 

Appendix B: Reshaping the National Government’s Role 

in the Federal System 

Formal Statement of William G. Colman, 

Consultant............................................ 73 

Appendix C: Is the Federal System Still There? 

Formal Statement of Professor Daniel J. Elazar, 

Director, Center for the Study of Federalism, 

Temple University.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 

A Hearing on 

The Federal Role in 

The Federal System 

Conducted by 

the Advisory Commission on 

Intergovernmental Relations 

March 13,198O 

New Executive Office Building, Room 2010 

17th and Pennsylvania Avenue, NW 

Washington, DC 

Chairman’s Opening Remarks 

B efore we have the hearing on this very important major subject-“The Federal Role in the Federal System”-I’d like to take this opportunity to 

welcome to the meeting two new Commission 

members: Gov. John N. Dalton, who had been appointed prior to this meeting but couldn’t attend 

the last one, and Ms. Mary Eleanor Wall, who is 

the newly appointed public member of the Commission. We welcome you here. We know that 

we’re going to get a great deal of help from both 

of you. 

The program for today, incidentally, does+ not 

require a quorum because a hearing under our 

rules is permissible if two members are present. 

The plan first provides for a staff briefing of this 

long study, and then we will hear from four witnesses whom we’ve asked to appear, each of 

whom is expert in the field and is very wellknown to the Advisory Commission of Intergovernmental Relations (ACIR). They will be introduced as they are called, and each will make a 

presentation of about 10 or 15 minutes, or whatever time that is necessary. Following each presentation, discussions and questions from Commission members will be appropriate. 

It is expected that no action will be taken at this 

meeting in connection with this subject, but we 

will meet tomorrow at 9:OO a.m., 6s is indicated 

in the docket book. That meeting will take place 

in the Rayburn Building, Room 2154. 

Now, if there’s no question that anyone wants 

to ask, we can begin by having the staff, led by 

Dave Walker and followed by Bruce McDowell, 

Cindy Colella, and Dave Beam, make a brief presentation on the subject of the federal role in the 

federal system. 

3 

Staff Presentations 

INTRODUCTION BY 

DAVID B. WALKER 

Mr. Chairman, members of the Commission. 

1x1 approximately 40 minutes, we’d like to highlight two years of work. This will be done in four 

parts. In a moment Bruce McDowell will highlight major findings as we’ve discovered them, 

using some graphics that have been passed out to 

you. Subsequently, Cindy Colella will suyarize 

a very difficult chapter that she did and which 

you have received, describing the process, and 

political dynamics by which the federal role has 

become what it is. This is largely an input type of 

analysis that Cindy will get into. Next Dave Beam 

will highlight the outputs and some of the criteria 

relating to functional assignmentthat we’ve looked 

at and made judgments on. Finally, there will be 

a brief windup on my part. 

At this point I’ll turn it over to Bruce McDowell, 

who will begin to highlight the graphics that you 

have in front of you. 

PRESENTATION BY 

BRUCE D. MCDOWELL 

This is a little booklet entitled “Briefing on Indicators of Federal Gmwth.” I’ll :o through it 

quite quickly, with the idea of simply orienting 

you to some of the data that we have available. If 

these data seem appropriate during your discussion tomorrow, we can go into it in more depth, 

and I’ll be happy to answer any questions that 

might be pertinent. 

5 
This is a briefing on Chapter 2 of Volume I of 

this series-A Crisis of Confidence and Competence. Chapter 2 is one of three chapters that was 

mailed to you in a separate package, at about the 

same time as your docket book. 

The chapter is broken into three parts. The first 

part deals with the size of the federal government. 

The second part deals with the increasing scope 

of activities, the broadening functions of the federal government. The third deals with what we’ve 

called “The Depth of Federal Influence”-that 

is the pervasiveness of the effect that federal programs and policies have on all of us. 

Let’s start by taking a brief look at “size.” 

The federal government, obviously, has gotten 

much larger in many ways. This has happened 

mostly since the 193Os, but with increasing rapidity since the 1960s. You can see that on page 41 in 

Figure 11-1: those bars indicate the period of rapid 

growth in current dollars or in actual numbers of 

employees or whatever the indicator is there. You 

can sea that all of those indicators up toward the 

top have had rapid growth since the 1930s. As we 

go down the list, there is more recent growth. But 

in almost every case, that growth continues right 

up to the present time in current dollar or actual 

number terms. 

Now, if you take into account the growth in the 

size of the nation and the economy, as measured 

by the Gross National Product (GNP) and other 

relative ways of looking at this growth, there is 

much less startling growth than you might otberwise think. That’s indicated to you cm page 67, 

Figure 11-31. The blank space toward the righthand side of those bars indicates that the rapid 

growth has begun to level off, or in some cases is 

even in decline at the present time. 

There is therefore quite a difference between 

looking at these in figures straight out of the budget and looking at them in relative terms-percentages of GNP, of population, of state and local 

expenditures, of all government, and so on. 

I think one of the most startling things you can 

see on page 63 is that civilian employment in the 

federal government really passed its peak growth 

quite some time ago, particularly in relative indicators, which are the four boxes toward the top 

of the page. 

Employment in all governments together-federal, state, and local-is pretty level now. The federal government experienced a jump during World 

War II, but otherwise has been pretty level. 

If we look at federal employment per thousand 

population, it’s been declining for soma, time. If 

we look at it in terms of per million dollars of 

outlays of the federal government, it’s really gone 

down steeply. So there is an awful lot more 

money than people in the federal government. 

The story is beginning to be somewhat the same 

with regard to federal aid. If you look at page 48, 

Figures II-19 and 11-20, you’ll see on the left-hand 

side, in actual dollars, that federal aid is still 

going up, as is the number of programs. But if you 

switch over to page 61, Figures II-38 through II41, you’ll see in every case+percent of GNP, percent of federal outlays, percent of state and local 

expenditures, and in constant dollars--that federal aid has begun to decline. This has been going 

on for two or three years now. Some people believe that perhaps we are past the big growth period in federal aid. It certainly seems so this year. 

Well, so much for size. Let’s take a brief look at 

the scope of the federal government. If you turn 

to page 66, Figure II-54, you’ll see the point in 

history at which each of the federal departments 

was established. 

You can see that there are three stages. First is 

the institutionalization of the federal government-that is, State, Defense, Treasury, and Justice were created early. Then the big middle 

group was economic development, with I&nterior, 

Agriculture, the Post Office, Commer& and 

Transportation, and Energy later. The mora recent 

kind of department has been in the area that might 

be termed “social benefits,” with Labor, Health, 

Education, and Welfare (HEW), Housing and Urban Development (HUD], and the new Education 

Department coming along in Stage III. 

Figure 11-7, on page 43, includes not only departments of the federal government, but also major agencies. As you can see, although this graph 

only goes up to about 1974, the 1970s saw a real 

surge in the development of new agencies. There 

were sane other smaller surges earlier. 

On federal aid, prior to 1960. federal aid programs were rather few and far between. Not too 

many functions were receiving federal aid prior 

to 1960. In 1978, however, there ware multiple 

programs in almost every category that you can 

think of. The federal grant programs actually 

funded in 1978 for state and local governments 

numbered 492 categorical aids. To that. you add 

five block grants and General Revenue Sharing for 

a total of 498. There is really a graat deal more 

6 
variety occurring in federal aid in recent years 

than there ever was before. 

On page 70, Figure 11-59, you can see that not 

only are there more types of federal aid, but more 

a& getting big money. If you look at the graph at 

the top, 80% of federal aid went for income security and transportation in the mid-1950s. That 

has dropped to about 30%. Big new categories 

have developed for education, training, health, 

general fiscal assistance, and community and regional development. We’ve really branched out. 

If you look at Table 7 below, in 1950 there was 

only one program, one type of aid, that was getting over a billion dollars. If you look at 1980, 

there were saven areas of federal aid that big. 

Pages 52 and 68 examine the total budget of the 

federal government, not just aid. You can see on 

page 68, Figure 11-57, that defense programs really 

have moved down, while domestic programs have 

moved up, particularly for income security, health, 

and education. In types of expenditures on page 

52, Figure B-26, you can see that grants-in-aid and 

domestic transfer payments have been the big 

gtiwth areas. 

Page 50 shows that there’s been a tremendous 

growth in the use of loan guarantees and the use 

of tax expenditures to carry out federal policy, 

rather than always using direct grants. 

The top graph on page 77 shows how new regulatory programs of the federal government have 

been established. Economic regulation was big 

back in the early part of the century. But the ones 

that have been growing recently have been health 

and safety regulation-with agencies such as the 

Environmental Protection Agency (EPA), the Occupational Safety and Health Admininstration 

(OSHA), and the Consumer Product Safety Commission-and social equality regulation consisting of programs for civil rights, the handicapped, 

and the disadvantaged. 

The lower graph on page 77 shows that administrative funds to run these regulatory programs 

have increased only very recently, particularly in 

the areas of consumer safety and health. That’s 

the really big one. Others have grown, too. 

If you turn back just a moment to page 52, Table 

4, If you look at the right-hand side of this table, 

you will see that 30% is for ditict federal operations, or what you might term the services that 

the federal government itself provides. That’s 

only 30% of the total federal financial influence, 

whereas 70% is in financial benefits that are given 

out to others as transfer payments, aid programs, 

or incentives in the tax system. Thus, 70% of the 

federal influence isn’t through services it provides itself. This means that we have to look in a 

pretty broad way across the activities of the federal government to see what its full impact is. 

Very briefly, concerning the depth of federal influence, federal taxing and spending is affecting 

everyone. Page 83 shows how it affects individuals. Through income tax, about 80% of us are 

involved. Through social insurance programs, 

around 90% of payrolls are subject to Social Security and unemployment insurance. Almost all 

people 65 years and older are beneficiaries one 

way or another of federal financial aid. And welfare, of course, has grown quite substantially. 

In terms of the effect of regulation, the vertical 

lines on page 85, Figure U-89, show the traditional kind of regulation-where a regulation affected a single industry. If you look at the horizontal lines, on the other hand, these regulations 

really affect all of us. The Consumer Product 

Safety Commission affects all consumers. OSHA 

affects all workers. Equal employment opportunity affects everyone that is in the job market. Environmental protection affects everyone that lives 

in our environment. Thus, the effect of these 

newer federal regulatory programs is much i . broader than the more tradItIonal, single iddustiy 

ones. 

All this results in a lot of paperwork and compliance costs. These are outlined for you on pages 

47, 98, and 100. I don’t have time to detail them. 

You can see on pages 48,61, and 85 that federal 

aid dominates more and more agencies. This~ data 

is just for state agencies. But Figures II-21 (page 

48) and II-90 (page 85) show that 75% of all state 

agencies are receiving some federal aid in one sort 

or another, while about 25% of state agencies receive 50% or more of their budgets from federal 

dollars. 

On page 89, Figure II-92 roughly correlates the 

enactment of some major federal bills with the 

growth of litigation. See civil rights in 1961. 

Around 1970 environmental protection comes in. 

Amund 1974 or so, consumer product safety 

comes in. There sre other laws indicated also. Litigation has continued to increase as these laws 

have come along, and much of it can be attributed 

to them. 

Despite all this federal growth, a look at some 

individual functions, on pages 72 and 73, shows 

7 
that the federal financial share turns out to be relatively small in most functions. On 72, the only 

function that shows up with significant federal 

participation is welfare, where about 50% of the 

money going out from state and local expenditures has a federal origin. On 73, you can sea the 

two functions in which the federal government 

really dominates--social insurance grants, as well 

as housing and urban renewal grants. But, by and 

large, most programs aren’t dominated by federal 

money. They have more state and local money, 

mom private money, or a combination of both. 

Finally, concerning employment, page 76 shows 

that only one major intergovernmental function 

has large federal employment in relation to state, 

local, or other. That is natural resources, where 

the federal government is a large land owner, with 

the federal forest and reclamation projects, National Parks, and so on. Most of the rest are run 

largely by state and local employees. 

That is a brief summary of the chapter. I can 

certainly take questions tomorrow or anytime that 

you care to pose them. 

MR. WALKER: Thank you, Bruce. 

Next, we will have Cindy Colella give us a brief 

description of her chapter from Volume X of the 

series, which deals with the dynamics and the 

primary, secondary, and tertiary actors in this 

drama. This provides a perspective of about 30 to 

40 years, really. 

PRESENTATION BY 

CYNTHIA C. COLELLA 

Thank you. Bruce has just given us the broad 

picture or macro view of the current size, breadth, 

and depth of the federal government. But our 

study also tried to determine on a micro level how 

and why this growth occurred, and what have 

been its effects. 

We attempted to do this through a series of 

functional case studies covering a broad and representative range of federal policy endeavorsfkom the very large to the vary small. These seven 

case studies, six of which you have received, detail the federal role in public assistance (both cash 

categorical and food stamps], unemployment, elementary and secondary education, higher education, environmental policy, library assistance, 

and fire protection. 

From these studies, each of which was entirely 

unique in certain respects, we were able to come 

up with a composite picture of the policy process-of the actors, forces, and political dynamics 

that have shaped the current federal role. 

As might be expected, the picture was very 

complex. Policies are made in an interactive and 

reactive environment. Yet, despite this complexity, we were able to discern some very clear policy 

determinants and dynamics that were commcm to 

all or most of the cases studied, particularly over 

the past tan to 20 years. 

For the next few minutes, I’d like to present our 

major findings in the realm of political dynamic-r who and what make government grow. 

Since the mid-1960s and continuing at an accelerated pace through the 197os, two factors or 

forces have been the major contributors to the 

growth of the federal government. Ths first and 

most important in the sense of program initiation 

or first generation policymaking has been the 

widespread existence of policy entrepreneurs 

within government. A policy entrepreneur is so 

named because he or she acts in the public sector 

much like an entrepreneur or producer in the private sector. That is, the policy entrepreneur parceives something to be a problem or a potential 

national public issue, devises a strategy (such as 

a regulatory or grant strategy) for solving the 

problem, and then seas or attempts to~see the &ategy through to programmatic or policy fruition. 

Obviously this sort of entrepreneurship is not 

a new phenomenon, and in one of our case studies, we identified an instance of individual policy 

entrepreneurship as early as the 1650s. But in the 

past 20 years, and even more so in the past ten 

years, such entrepreneurial activity has distinguished itself in two very important ways, and 

with profound consequences for the current size 

of the federal government. 

First, although policy entrepreneurs are found 

throughout government, they are primarily, and 

especially since the 197os, found in Congress. In 

fact, in each of the case studies, Congress played 

the most consistently crucial role, and in all but 

one, the Congressional iole was manifest most 

often not in the form of Congress as an institution, 

but rather in the form of Congress as au individual. In other words, through Congressional entrepreneurship or issue activism. 

The other and more significant characteristic of 

modern policy entrepreneurship, however, is its 

frequency, and by and large, this frequency has 

been due to the breakdown of certain traditional 
barriers to new program initiation. The weakening of constraints began slowly in the mid-1930s 

with the virtual demise of Constitutional limits to 

federal activism. Gradually, this legal unfettering 

was bolstered by changing public attitudes and 

expectations and, consequently, the breakdown of 

most political constraints to program activism in 

the 1960s. Moreover, in the 1970s the trend toward widespread policy entrepreneurship was 

encouraged even further by the dismantling of 

many institutional and leadership constraints. Finally, the whole process was abetted, until very 

recently, by the lack of immediate fiscal constraints. 

As a result of all these factors, program initiation has become a relatively unrestrained activity. 

There seem to be no mechanisms left for separating large-scale injustices from small grievances, 

important issues from trivial questions, or problems of national significance from those of local 

interest. Every problem becomes a national action 

item, often with little thought of the practical 

post-enactment consequences, and quite often 

with the result that the large array of minor issues 

frustrate efforts to devise solutions to large, genuinely national problems. 

In short, the old complaint about government 

not being responsive has been turned upside 

down. Through the process of unconstrained policy entrepreneurship, government has become almost indiscriminately hyper-responsive. 

Our second major finding in the realm of political dynamics deals with existing policies. In this 

post-initiation or second generation policy phase, 

an entirely different dynamic takes over-one that 

tends to change first generation hyper-responsivaness. into policy intransigence. 

It has become nearly common wisdom that new 

programs are made by, and for special interests. In 

fact, in most instances, the case studies demonstrated the opposite causal pattern-new special 

interests are formed, more often than not, by and 

for new programs. For example, a common policy 

scenario sees the creation of a program by a policy 

entrepreneur, and upon creation of the program, 

groups+&m entirely new groups-who perceive themselves to be potential program beneficiaries will rush to fill the newly created policy 

space. 

Having built themselves rapidly around the 

program and into the policy space, these “resultant interests” thereafter will strive to keep the 

program alive, enlarge the policy arena, and/or 

add on to it with additional programs. At that 

point, for all practical purposes, the interest, and 

consequently the policy, will have become entrenched. 

Professor Aaron Wildavsky of Berkeley has recently written that, “because policy is evermore 

its own cause, programs depend less on the external environment than on events inside the sectors from which they come.” In other words, policy, once begun, tends to achieve its own internal 

momentum. It becomes its own reason for being. 

After initial enactment, through intense group 

maintenance and expansion efforts, a program or 

grouping of programs rapidly tends to become institutionalized, or put less kindly, it becomes intractable. 

The fallout from hyper-responsiveness in the 

first generation of policymaking becomes a kind 

of policy obstinance in the second generationan obstinancy in which unworkable programs 

flourish along with the good, in which the system 

all too often is overloaded with unmanageable 

and nationally unnecessary programs. 

The practical, the programmatic, and the implementation results of this policy dynamic will 

now be discussed by Dave Beam. 

MR. WALKER: Thanks, Cindy, very mudh. 

From Dave we will hear more on the fallout. 

PRESENTATION BY 

DAVID R. BEAM 

There has been an organization that we are 

trying to follow here in the three presentations. 

Bruce McDowell was explaining the changes in 

the size and scope and regulatory depth of the 

federal role-especially over the past 20 years, but 

a broader sweep of history as well. Cindy Colella 

was describing the political patterns we found to 

be typical in policy development, who the actors 

were, and how things occurred on the political 

front. 

The chapter I want to describe is the third of 

the background chapters that were mailed out to 

you. It attempts to be evaluative and judgmental 

about the results of the political patterns and the 

changes in governmental activity that we’ve studied. It’s the only one which really takes an ex9 
plicitly nmnative and explicitly evaluative cast 

to it. 

The chapter is the “Federal Role; Criteria, Assessment, Analysis” from Volume X of the federal 

role series. If you want to follow along, you can 

look at the summary bullets that are in the last 

couple pages. 

The question really is: “How well does all of 

this work?” What are the programmatic implications of the political patterns that we have described, of the entrepreneurial pattern of program 

initiation, and the rigidities of the second generation policymaking? 

I think the summary judgment would be that 

we found very serious deficiencies in many of the 

program areas, as well as in the political process 

that led to creation of many of the programs we 

studied. 

There have been five standards that ACIR has 

used in previous studies to evaluate assignmentof-function issues. The terms will be familiar to 

you instantly. One is the concept of “national purpose.” Others are the idea of “fiscal equity,” of 

“administrative effectiveness,” of “economic efficiency,” and of “political accountability”al1 

standard norms that can be applied to governmental programs and decisionmaking. 

In the past we have tried to show or suggest 

how these might be used to evaluate or assess the 

proper activities of government at different levels, 

especially within states-state and local levels, 

metropolitan, and so forth. Here we try to use 

them as evaluative standards for the intergovernmental system as a whole and see how it stacks 

up in the five criteria in that manner. Each standard frequently has been used in political rhetoric 

and argumentation for the creation of new programs, as well as in the literature on intergovernmental relations. 

It’s been hoped or thought that intergovernmental programs can be used to advance major 

national goals and leave other matters to state and 

local decision; to help equalize income among 

poor people, as well as among states with lower 

fiscal capacity; to help equalize service levels; to 

provide an effective and efficient means for administering services on a cooperative basis; and 

to assure the responsiveness of the political system and the needs of all other systems. Our findings, however, cast serious doubts on all of these 

propositions. We found serious deficiencies in 

these five areas. 

I think it’s fair to say that in past years, when 

the intergovernmental sector was smaller, less 

complex, and less overloaded than it is now, the 

descriptions were a little more accurate. But as 

time has passed and as we look at current conditions, all of these norms or ambitions become 

less and less descriptive. Some perhaps were 

never really very descriptive of actual existing 

grant programs, as opposed to what an ideal system might be like. The shortcomings that we 

found are greatly associated with the problems in 

the political process or the characteristics of the 

political process that have already been described. 

Let me try to give you an example of a typical 

grant program. There is no one pattern, of course. 

Every program in every functional area has its 

unique features. Still, it is possible to put together 

a story that has elements in ccmmmn with many 

real programs. 

A typical program is established, as Cindy Colella suggested, through the activities of one or a 

small group of entrepreneurs, most commonly in 

the Congress, perhaps with some support from a 

few affected interest groups, perhaps with a modest Presidential push-a Presidential endorsement--at one point or another, but with very little 

consideration of real national needs and priorities, and what would be the best mech+nism for 

addressing them. 

There is another way, a reverse way, of stating 

the same idea. It’s been possible to justify an enactment of almost any character in almost any 

area as in some manner addressing one or another 

generally accepted national objective or goal; 

helping to reduce unemployment; helping to advance national defense in some fashion: helping 

to protect the environment; and so on. Some of 

the case studies-for example, fire protectionoffer a fascinating story. It showed how some 

global types of national concerns can be intimately involved with a very local service. 

The typical program employs an allocational 

formula. Or if it’s a project grant, the funds are 

allocated by federal agencies in a manner that 

ends up dispersing moneys very, very broadly 

among states and localities, rather than targeting 

funds to the areas that have the greatest fiscal 

need or the greatest programmatic need. This is 

necessary, or at least it happens frequently, because it speeds passage in Congress and helps 

maintain a supportive political coalition. But the 

10 
politics of the situation work against the ideals of 

equity. 

A typical program is created without very much 

attention to its probable effectiveness in solving 

the problem that it addresses; its possible costs or 

disadvantages which might be imposed either directly or through various side effects: and the 

problems that might occur in implementation, 

either at the federal, state, or local levels. There 

is little attention as to whether or not the capacity 

to effectively implement the program is available; 

what the courts might make of it should they become involved; and little consideration of alternative mechanisms that might be employed for 

accomplishing the same objective. 

Finally, the political accountability point. You 

remember that we’re talking about something approaching 500 grant programs. A few are wellknown, but the typical program is largely invisible to the general public: does not get much attention on the floor of Congress, within the White 

House, or by the political parties: does not become 

an election issue; and, instead, is chiefly the province of a comparatively small group of specialists-people with expertise who usually have 

some kind of direct and professional or occupational stake in the issues involved. Each program 

is a little political arena of its own. 

For this reason-Cindy Cole& was describing 

this in the terms of the resultant group or the institutionalization of policy-me a program is in 

place, it tends to become very resistant to reforms 

or to termination in the light of changing national 

needs, because it involves a problem that is of 

lesser priority, or one that has been solved or reduced, because of actual program performance. 

To reverse the logic and state this in a positive 

way, we found very few programs that have been 

adopted with a careful weighing of national priorities, in which there was a well designed allocation program that targets funds to the most needy 

jurisdictions, where the program was very carefolly conceived and thoughtfully developed or 

devised in a manner that takes full account of the 

problems that might occur in the implementation, 

and which was adopted in a manner that gave it 

full consideration by a broad range of affected interests and by the public. 

In short, a lot of deficiencies of particular intergovernmental programs or in the intergovernmental arena as a whole are closely related with 

political deficiencies in the ways in which programs are adopted and developed in the initial 

instance and thereafter. The problems of Intergovernmental programs and the intergovernmental 

system, and problems of which we’re all aware of 

in the political arena, in the national policy process, are very, very closely related. 

SUMMARY COMMENTS BY 

DAVID B. WALKER 

To complete tbis presentation on behalf of the 

staff, simply project yourself back in time to the 

year 1960, or even as late as 1963, and then place 

yourself where we are now in the year 1980; observe the changes over the past 17 to 20 years. 

These, I personally feel, are more dramatic and 

have had more impact on the system than those 

of any other 20-year period in American history. 

Most of this change has occurred In ways that 

permit us to think we are still pretty much under 

the same system that prevailed under Presidents 

Dwight Eisenhower or John Kennedy. 

Now, how does one paint this extraordinary 

picture of change vis&vis the federal role? 

If you go back to 1960, aware of points that 

Bruce McDowell made, the federal government 

then had assumed a significant role in promotional activities, subsidies. and regulation, predominantly in the economic area. Its intergovernmental role was small, and its direct servicing mle 

wes minimal. It had only a couple hundred thousand employees less than we have now. 

If you look again at the picture in 1960. federal 

aid amounted to $7 billion and included about 

132 programs, three-quarters of which were focused into four areas. In an administrative sense, 

those areas really were old ones. ranging from 

over 50 years in one instance, to 27 for another, 

to two standing with 33 years in terms of administmtive linkages with state government. 

These were primarily federal-state relationships. Local governments at that point were caught 

up in approximately only 8% of the aid in a few 

programs-urban renewal, public housing, a little 

bit of airport aid, one or two natural resource pmgrams that reached rural counties. That was it in 

terms of federal-local assistance. In terms of total 

dollars, 1% of local revenues from own sources 

derived was represented by federal aid in the year 

1960. One percent! 

At this juncture, 20 years later, there’s no n&d 

to regale you with the numbers. There’s no need 

11 
to regale you with the cost. There’s no need to 

regale you with the ins and outs of the “explosion 

in the eligibles.” There’s no need to regale you 

with the significant shift in the regulatory rolefrom the economic into the social. Nor is it necessary to highlight the way in which, at this 

point--and it’s emerged only within the past 12 

years-we utilize grants-in-aid as a new regulatory technique. 

In the old days, this was the job of independent 

regulatory commissions or of units within the Department of Justice directly impacting on the private sector, but not utilizing grants in any sense 

for national regulatory purposes. To put it differently, the conditions attached to grants in 1960 

were specific to the program, were of a financial, 

managerial, or programmatic character. The conditions now encompass these older concerns of a 

government disbursing funds to another jurisdiction, plus an army of conditions that do not relate 

directly to the purpose of the program at all. So a 

new style regulation, in addition to the old style 

economic regulation, has emerged which utilizes 

an intergovernmental technique rather than the 

direct to private sector approach. 

If one had to highlight the fallout, I guess one 

would have to draw back and ponder the way in 

which the roles have changed. There is the illusion-some would say delusion, but I’ll say illusion-that there is, and has been an extraordinary 

centralization of policymaking as a result of what’s 

transpired in the past 20 years. Among the activities of the courts, of Presidents, or of Congresses, 

one might have that illusion. 

But draw back. Unlike any other system on the 

face of this Earth that has experienced growing 

centralization in the past 30 to 40 years, we still 

rely upon-and more so at this point in history 

than any other timethe intergovernmental technique to resolve not simply national problems but 

an array of extraordinary local problems. 

If one goes through the listing of current programs that highlight the degree to which we have 

confused national interest with parochial and minor ones, we run from urban gardening to noise 

control, to arson, to home insulation, to jelly fish 

control, to snow removal, to aquaculture, to rat 

control going back to 1966, to museums, to pothole repairs almost every year in March, to runaway youth, to school security, to art education, 

and as we mentioned more than Once thus far, to 

rural fire protection. 

That’s just the tip of the peak in the assistance 

iceberg in terms of the c~ncems of the Congress 

and of some folks in all Administrations. These 

grants suggest what passes for the national interest and the concern for the national interest. 

Immense intergovernmental areas exist that are 

a source of fundamental, major national concern, 

but these seem to become trivialized in the same 

sense that these trivial issues have erupted on the 

national level. I won’t say they are all treated on 

a par. There’s a dollar differential between them, 

thank goodness, with about 440 on one side aggregating about $8 billion, and about 56 on the 

other side, aggregating about $72 billion. 

We have reached, therefore, a point where there 

are similarities with the past. The politics look 

familiar. It’s mostly the traditional technique by 

which we get things done in this country. There’s 

nothing particularly new about it. And it’s called 

log rolling. But at this point, to use the grant-inaid system in the same fashion that we used to 

treat rivers and harbors--and that’s exactly the 

way in which the aid system has been workingto treat it in the same fashion in which we used 

pork barrel legislation (and we haven’t eliminated 

omnibus rivers and harbors legislation) is to denigrate the national interest. 

It’s brought us to a point politically where Congress sometimes resembles a municipal br county 

council: where Presidents frequently behave, act, 

and talk like Mayors or neighborhood councilmen; where Governors and Mayors occasionally 

play President, discussing national policy, without holding the office that presumably deals with 

such policy. 

Finally, if one puts it in political theory terms, 

the paradox of why things worked in 1960 and do 

not work now is the paradox of understanding 

what has been termed by the academicians as 

“cooperative federalism”-that is, the sharing of 

program goals, the sharing of personnel, and the 

sharing of the public purse was relatively modest 

in 1960, but massive now. And with this triumph 

came its collapse. 

To put it differently, there were significant major elements of dual federalism left in the system 

right through 1963. Whole areas of governmental 

services were untouched by federal grants or regulations. At least one-half of the state government 

departments in 1960 could not get a federal dollar 

for anything. There was not one judicial or traditional municipal function that could get a fed12 
era1 dollar for anything. And the array of traditional county functions, other than those which 

were channeled through state government in the 

welfare area, couldn’t get anything. With the 

school districts, other than impact aid, nothing. 

Nothing! 

Through the year 1963, therefore, a whole array 

of servicing activities-the bulk of domestic 

American government-was fundamentally under the old orbit of dual federalism. These were 

not encompassed by the sharing of programs, 

powers, and the purse. Cooperative federalism, 

then, encompassed very little of the domestic governmental sector in 1960 or 1963. Now it encompasses nearly every program activity one could 

imagine. Again, the results have brought about a 

change in role playing by all of the participants. 

If federalism historically was meant to mean 

anything, it was meant to achieve a certain division of labor. That division of labor no longer exists. Everybody is laboring in everybody else’s 

vineyard. And the vineyard is producing a vinegar not a wine if my sensing of the public opinion 

polls on this issue is correct. 

That perhaps is the point to draw in my conclusion, since I have only 30 seconds more. Look 

at the public opinion polls in 1960. Analyze 

the summary volume of the surveys of the 1950s 

that were brought forth in the American Voter. 

Compare the findings with today’s polls of public 

opinion, as they relate to the system as a whole 

and to the political parties. As of 1960, you find 

three-quarters of the electorate having very favorable, loyal, and deeply emotional commitments to 

either one or the other or to both of the parties. 

At this point, if you can find 25% of the electorate 

with comparable sentiments, you’re doing very 

well. Faith in the system at this point need not be 

highlighted. We have chronicled and John Shannon has probed the decline on that particular 

front. 

All this is not simply coincidental. We believe 

there is a direct relationship between current popular attitudes and the fact that the system to most 

people--even those allegedly running it and 

sometimes running for office-is essentially incomprehensible. In a democratic system, and this 

is a democratic federal republic, if the system is 

incomprehensible, not only to the electorate, but 

also to the vast number of people who are officeholders, where do we stand and where does the 

system stand? 

It isn’t, therefore, so much cooperative federalism. Cooperative federalism conquered in the 

1960s and collapsed in the 1970s. It’s our view 

that a new descriptive phrase is needed. Perhaps 

“dysfunctional federalism” best highlights the 

elimination over the past 20 years of any residuals 

of dual federalism that were very much present in 

the year 1960 and that provided the basis then for 

assuming that cooperative federalism was a viable 

way of doing things. 

Thank you, Mr. Chairman and members of the 

Commission. 

CHAIIWAN BEAMB: Thank you very much, 

Dave. I want to thank the rest of your staff for 

summarizing what is a very intricate and complex 

problem. I just wondered whether we shouldn’t 

leave our questions of the staff until tbmorrow, 

when we will again be discussing this topic, and 

when they will provide some additional briefing. 

Let’s go on right to the hearings. Any question on 

that? 

If not, we have as our first invited witness-Mr. 

Arthur Naftalin, professor of public affairs at the 

University of Minnesota, a former Mayor of Minneapolis, and a former member of ACIR (from August 1, 1962, until June 17, 1969). I know that 

Prof. Naftalin knows our problem as much as he 

knows the general subject, so that I’m sure he will 

cast all possible light on it. I want to thank you 

for appearing. 

13 

Professor 

Statement Presented By 

Arthur Naftalin 

Hubert H. Humphrey Institute of Public Affairs, 

University of Minnesota 

MI. Chamnan, members of the Commission. 

I’m pleased to be back with ACIR again. I recognize a number of people here. If what I have to 

say sounds like a continuation of Dave Walker’s 

statement, you’ll know that I was trained well by 

him, by Al Richter, and by others on the staff 

when I was a member of the Commission. I believe, if memory serves right, that the only current 

Commissioner who was a member when1 served 

is Congressman Fountain. I’m glad to see Del 

Goldberg, his long-time aide, with us. 

I must say, although I’m pleased to be here, I’m 

greatly intimidated by the assignment, especially 

to be termed a “thinker!” I can assure you that my 

being considered a thinker will be of great SUP 

prise back at the University of Minnesota and the 

City of Minneapolis. 

The report is superb. I’m greatly impressed with 

its candor and its passion. It serves us very well 

to have ACIR make such an unusually clear and 

articulate statement about the character of our federal system. 

Clearly, our federal system is out of control, as 

Dave Walker said in his oral statement. ACIR’s 

detail in this regard is compelling, but the Commission is better at cursing the darkness than in 

lighting candles. That’s, of course, true of all of 

us; we are all finding it difficult to work our way 

through the problem of federalism, because what 

we are talking about involves a convergence of so 

many economic, social, and political factors along 

with philosophical, psychological, and ethical 
concerns. Our objective is little short of restructuring the entire political and governmental world. 

But ACIR has made an auspicious start. 

My views concerning federalism were very 

much influenced by my experience as Mayor of 

Minneapolis. I early discovered that the Mayor of 

a major city is trapped in a federal system that in 

some ways is overresponsive, and in other ways 

not responsive enough. I discovered that the important problems I had to deal with-whether 

transportation or waste disposal or finding adequate resources--were beyond the city’s control. 

They were metropolitanwide or statewide or national in scope. Like everybody else, I rushed off 

to Washington to try to get help. 

There’s good reason why the federal govemment has been overresponsive. We need to understand what ACIR has been trying to say ever 

since it began its work: For 200 years our federal 

system served us very well. While we were building as a nation, the private interest and the public 

interest were at one and it was possible for the 

nation’s many wide-ranging private interests to 

have what the late Morton Grodzins called a 

“crack” at the system. With our enormous resounxs, with our boundless frontier, it was possible to respond to the proliferating demands of 

a restless and energetic people. 

The federal government’s response persisted, in 

good measure, because the states and local governments wouldn’t or couldn’t respond. It’s a familiar story; state legislatures were controlled by 

rural influences at a time when the nation’s urban 

centers were developing and they did not respond. Over the years federal programs and projects multiplied as the national government did 

respond. 

The report speaks convincingly, as did Cindy 

Colella in her testimony here, of the emergence of 

policy entrepreneurs. They are familiar figures in 

American government. We should remind ourselves that they are not motivated by personal 

mendacity but by the needs of the system. Jet aircraft, television, and computers widen the range 

of those seeking a fair share of the economy. As 

more and more groups come into the picture, demanding a response from government, seeking to 

penetrate a crack in the system, the policy entrepreneur plays a larger and larger role. 

In the process, as the AClR report makes clear, 

the system has become fragmented. It has become 

imperative that we find a way to reintegrate it, 

and in a way that is consistent with our traditions. 

The forces at work today have increased specialization, particularization, and individualization. 

This is pluralism in action, and pluralism is centrifugal in effect. It tears us apart as we seek to 

respond to all the particularized demands. We 

need to generate countervailing forces against the 

centrifugal pressures. We need centripetal pressures that will serve as a brake on our undisciplined use of resources and on the reckless way 

in which we make public policy. 

But where shall we intervene? How can we as 

a nation achieve some measure of cohesion, of 

discipline, of reintegration? I give my response 

most tentatively and with an awareness that much 

of what I say may strike you as very extreme. I 

have four observations, the first of which addresses the need for greater internal cohesion at 

the national level. 

For ZOO years, our fundamental doctrine of the 

separation of powers served us very well; it provided the cracks in the system that I mentioned. 

But now the gaps have grown too large and today 

we have, in effect, two national governments-the 

government of the Presidency and the government of Congress. As a result, we are unable to 

fashion national policies or to develop effective 

go”ernance. 

ACIR addresses this condition with a variety of 

incremental and specific proposals, and many of 

them are very good. But some of them move us in 

an opposite direction. To create, for example, a 

national referendum that would enlarge public 

participation in policymaking, as the report suggests, will push us in the direction of greater diffusion. It is important that all of the Commission’s 

proposals be examined against the test of whether 

they will help us achieve a new coherence as a 

nation. 

I have a modest proposal in this connection, 

which to my knowledge has never been suggested 

before, probably because nobody has been quite 

as foolhardy as I’m about to be. I would propose 

that instead of selecting Presidential nominees 

through primaries-which are enormously centrifugal, which I believe destroy rather than build 

a sense of national unity, and which leave us with 

candidates that offer only the fuzziest of policies 

and no proof of their capacity to govern-that the 

members of the two houses of Congress in each 

party choose their party’s Presidential nominee. 

I believe this would bring a measure of coherence 

16 
to our parties and to national leadership. It 

wouldn’t require a Constitutional amendment, 

only statutory implementation. 

I would hope that ACIR might consider serious 

attention to proposals of this sort. Even if they are 

unlikely to be adopted, wide discussion would 

help to lead the American people to an understanding of the need to achieve some form of political cohesion to counteract the pluralistic pressures that are dividing us. We need proposals that 

will help us work toward a positive and constructive form of intergroup mediation and policy brokerage. Today there is no party accountability, no 

party responsibility, and, in the end, no direction 

for the nation. 

My second observation involves states and local 

governments. For a long time states have been anachronistic in our system. In recent years many of 

them, thanks in part to ACIR’s good work, have 

roused themselves and have embarked on constructive programs. But the fact remains that 

states lack the capability of coping with the critical needs of their citizens. Their elevation to the 

status of effective partners in the federal system 

would constitute a most compelling counterpressure to the forces that pull at the national center. 

But for the states to become effective, certain fundamental conditions must be satisfied: economic 

disparities among them must be overcome, and 

they must make appropriate and equitable use of 

their own resources. 

As part of our national policy, we should seek 

the reconstruction of local government, giving 

primary attention to substate regionalism. In many 

places the city or the county is no longer the natural community. Local governments as we know 

them can’t reach the resources they need to support essential services. The natural planning area 

is no longer the city but rather the region. Therefore, helping the region, whether urban and metropolitan or rural, should be high cm our agenda. 

Once we have achieved a larger viability at the 

state and local levels, we can begin to devolve 

effectively many national programs, and thus begin to counteract the proliferation that gives us so 

much concern. 

Incidentally, the separation of powers problem 

also afflicts the states. Governors and legislatures 

tend to be at war with each other; one reflects atlarge concerns, the other interests of limited constituencies, and their reconciliation becomes more 

difficult, as witness the rise of one-issue politics. 

I would like to see one state (I would hope it 

might be mine) amend its Constitution to establish a parliamentary form of government under 

which the Governor would be selected by a unicameral state legislature and major departments 

headed by key legislators. It would be an attempt 

to achieve party responsibility, which we do not 

now have either in the states or nationally. 

My third approach to achieving a new cohesion 

in the federal structure would involve a reversal 

of trends that atomize political power. We suffer 

in this nation from enormous diffusion of political 

power. We now have, for example, 37 Presidential 

primaries, and most states use primaries for the 

election of nominees for state office. Many states 

have the initiative and referendum, and-I’m disappointed to not-the report suggests that a national initiative and referendum might be a good 

reform. 

I think we should reverse these trends. I believe 

we should seek to rebuild the political party and 

make it a responsible agent for policysetting, both 

nationally and within the states. I think we should 

abandon primaries at all levels and reestablish the 

convention system. We should get rid of subcaucusing. We should make it possible and necessary 

for our political parties to establish policies and 

platforms that give voters a meaningful choice. 

I would go so far as to have total publip financing. It is enormously alarming, the amount of 

money that corporations are now pouring into our 

political framework. They are making our elected 

officials their captives. 

Finallyand here I may really be soaring-1 

would like to see us consciously strive for a new 

political and governmental ethic, to find a way of 

using our magnificent communications system to 

internalize a new form of behavior with respect 

to governmental and political policy. 

Alvin Toffler has written a new book, The Third 

Wave, in which he advances the thesis that we 

may be undergoing a major psychological transformation in reaction to the pressures that are creating individuation. In the process we may achieve 

a new capability for reconciling our individual 

interests with our collective needs. At least that 

is one possible interpretation that gives a measure 

of comfort to my hope that a new political ethic 

may emerge. 

What happens if the centrifugal forces go unchecked? What happens when the proliferation of 

interests becomes so engulfing that we’re no 

17 
longer able to govern? A breakdown in national 

civility could happen here just as it is already beginning to happen elsewhere. 

The answer, as I see it, must involve e new 

sense of interpersonal relationships, a new sense 

of the importance of democratic government that 

is not responsible and effective. This means sustained mutual education in which we come to 

understand national policies that speak to fundamental issues and to understand how they can 

be achieved democratically, informed by a national sense of equity, fairness, and basic human 

COIltXTIl. 

I believe a basic shift in outlook is not entirely 

unrealistic or beyond realization. In recent weeks 

we’ve witnessed the rise of John Anderson as a 

major Presidential challenger. Whatever the success of his effort, he has demonstrated that shifts 

in outlook can happen quickly. 

It is important, I think, to understand that there 

is a deep ambivalence in this nation. The people 

who seek the many programs that create the proliferation are the same people who don’t want tax 

increases: the people who press for more response 

from government are often the same people who 

call for a greater measure of governmental discipline and restraint. There is frustration and concern, but there is not despair. The people, I believe, are prepared to support constructive efforts 

to achieve a new national cohesion. What the public wants is for agencies, such as ACIR, to think 

in creative and constructive terms and recommend measures that offer some rational response 

to our dilemmas. I commend ACIR for producing 

a report that seeks to respond to that challenge. 

You have undertaken an extraordinarily important bit of work. 

Thank you. 

CHAIRMAN BEAME: Thank you, professor, for 

a very interesting and challenging presentation. 

Incidentally, while you were talking, I just thought 

that if we had a convention setup, we wouldn’t 

have John Anderson. 

PROF. NAFTALIN: Well, that may be true. 

CHAIRMAN BEAME I think it would be appropriate at this time for the Commission to present any questions they might have. 

SECRETARY S&kLALA: I’m interested in your 

recommendation for a parliamentary system. As 

far as I know, the only justification for changing 

structure is if you produce different kinds of outputs, a better set of programs, a more rational intergovernmental system. 

Is there some evidence, looking at parliamentary systems in other parts of the world, that they 

both have more compassionate and better targeted 

programs than we have with our system, or lack 

the kind of intergovernmental problems that we’re 

concerned about? As far as I know, there is not. 

PROF. NAFTALIN: Yes, I think I would concede that. I think what one engages in here is a 

certain amount of deductive reasoning. 

In times of civil disorder and threatened breakdown, we know what has happened in some Presidential countries where there is no sharing of the 

ultimate authority. We had some signal of the 

problem in the Watergate episode, where the President was not held accountable to a political 

party. There is no way for the government to be 

brought to terms except through an elaborate impeachment process. I think that’s highly dangerous, especially in a volatile period. 

When I say a parliamentary system, I mean a 

system in which the government would fall if that 

government was no longer-in the view of the 

public’s representatives-meeting the nation’s 

fundamental problems. I think that’s the case today. If our government were compelled to confront our basic problems in a responsible way, I 

think it would do a better job. 

We give the President and members of Congress 

an easy ride. We do not compel them to answer 

for their failure to deal with major problems. 

We’re not compelling them to answer why we 

don’t have an energy policy, why we are not fighting inflation. 

SECRETARY SIWLAIA I thought that was 

what the election was about? 

PROF. NAFMLIN: Is it? I do not see in the 

election any coherent relationship to policy, if by 

the election you mean the Presidential primaries. 

I see quite the opposite. The premium is entirely 

upon trying to create some illusion of capability 

without any meaningful commitment to program 

implementation, such as a party is compelled to 

do under a genuine party system. I think that’s 

highly dangerous. 

MAYOR ROUSARIS: Professor, I’m curious as 

to what sort of reaction you get from other thinkers and students, citizens in general, to these proposals that you make. Before you answer, how 

many terms did you serve as Mayor? 

18 
PROF. NAFTALIN: Four terms, four two-year 

terms. 

MAYOR, ROUSAIUS: Did you bring any of 

these into play? 

PROF. NAFK4LIN: Well, not these particular 

ones, but some equally crazy. 

I can answer your question by saying this, that 

in 1961 when I became Mayor, I was an early advocate of metropolitan government. When1 would 

go about the community talking about metropolitan government, there was a lot of feeling that 

the idea was far out. I was viewed as a nice fellow, 

but way out. 

I am amazed today-there were other forces that 

converged to produce our metxopolitan councilbut it has been established and now the feeling is 

entirely different. I’ve spoken in many places on 

metropolitan government, end I find a vast difference today from what it was in 1961. I see a dialectical relationship between leaders and followers. If leaders are constantly handing back what 

the Gallup poll says, that’s all their followers will 

believe in. But if leaders set out advance positions, argue for them, educate for them, by and by 

people begin to support and work for them. 

The answer to your question is that most people 

are amazed, sometimes bemused, and at times put 

off. They will say, “Well, it’s a great idea but you 

can’t make it work because it’s not feasible and 

it’s just not within the realm of possibility, so let’s 

go on to something that is.” 

I have often said that I can think of nothing that 

will serve us well that is feasible. Many ideas I 

had as Mayor seemed very unlikely, but by and 

by some of them became feasible because it was 

clear that action needed to be taken. What once 

seemed impractical over time became more practical. 

I’ve had a lot of experience with our Citizens 

League in Minneapolis and St. Paul. Very often 

the league has shaped proposals and recommendations that are way ahead of public opinion: the 

proposals have been out there dangling. By &d 

by public opinion has come around to them as the 

problem worsens and as more and more people 

begin to think about possible approaches. 

This is the function of leadership. I think that’s 

what the President should do. I think that is what 

the Commission should do. I think that’s what 

teachers should do. Address the problems honestly as they see them. You don’t always have to 

win, but at least you get people talking in realistic 

terms. If my ideas aren’t so good, come up with 

yours and we’ll have it out. We aren’t going to do 

it if all we do is reflect the Gallup poll. 

SUPERVISOR CUTLER: I can always count on 

our good neighbors to the north to come up with 

something wonderful. 

I am from Iowa, professor. I had to take eiception to your suggestion that Congress nominate 

the Presidential candidate-ven as crazy as the 

current system is, and our having been through 

what we went through recently in tbe Iowa caucuses. Frank Mankiewicz came in right after; 

when everyone else was going east, he came west 

to do an instant analysis. The thing that he observed were basic changes in behavior because. of 

the process. It’s infinitely true that those processes really have moved beyond the realm of, I 

think, real policy discussions. 

I served on the Platform Committee of the Democratic Party in 1972 and honestly believed I was 

writing national policy and some great document 

for the future. Nobody paid any attention to it, 

least of all our nominee. He was not alone in that. 

I’m not sure anybody’s nominee pays attention to 

it, least of all the members of Congress. 1 don’t recall the last time I heard anybody reference a party 

platform. It’s fun for those of us who care about 

those things to engage in writing them, and for 

those people who like to appear before party platform writers. 

But I guess my point is: I fail to see how having 

the members of Congress-who don’t appear to 

be tied into the party platform, that statement of 

principles of the party---will do anything more to 

tie the candidate to it. 

PROF. NAFTALIN: In my mind it would be a 

step in the direction of party responsibility. I 

think that once the members of Congress had the 

nominating responsibility, we would know where 

to apply pressure and we would soon be psrticipa&g in the nominating process in a representative way. When we voted for members of Congress, we would want to know how they stood 

with respect to the top leadership of the party and 

the nation. I think it would be a positive step toward achieving party responsibility. But it’s not 

perfect, and I would certainly entertain alternative suggestions. It seems to me that my idea has 

merit and would be fairly simple to achieve. 

SEN. BOE: Professor, would you carry your 

analogy back to having the state legislatures elect 

or choose the nominees for the U.S. Senate? I say 

19 
that from the historical point of view; prior to the 

Constitutional amendment that allowed the free 

and open election of U.S. Senators, the Senate as 

a body was far more responsive to state and local 

governments than it has been since that time. 

After that time came the domination of the Senate Foreign Relations Committee. They got away 

from the problems on the state and local level, 

and were looking at the “big picture in the U.S. 

Senate.” Would you carry your analogy that far? 

PROF. NAFTALIN: I would examine it with 

some sympathy, because I think the reestablishment of that old-time relationship might help 

achieve a degree of party responsibility. I’m prepared to examine any idea that would help move 

us in that direction. 

FREEHOLDER DRALAMAN: I have a concern 

about, again, your thrust to reenforce, if you will, 

the political structure, and get some kind of definitive ideas. What do we do, and how do we 

respond to the overwhelming number of independents that we currently have who are unwilling, 

either because they are not involved enough to 

know the platform or they are just not interested 

enough to do it? In my state they think they’re 

going to get called for jury duty, so they’re not 

going to sign up. We have got the driver’s licenses 

on them now. How do you weave that into the 

framework that you delineate? 

PROF. NAFTALIN: You’re absolutely right. 

Many millions of Americans abdicate their responsibility as citizens. They say they’re independent and let others choose the nominees: they 

might not even vote in the general election. 

I favor a political system in which the campaigns for office provide a genuine educational 

experience unlike the Presidential primaries, 

which just obscure the issues. Participation in 

them is not a meaningful exercise in citizenship. 

They just throw dust in everybody’s eyes. I’d abolish them. Independents by and by would find that 

the only meaningful participation is involvement 

in the party caucus. 

I want enlarged not diminished participation. 

Today we have only meaningless participation. 

It’s just a lottery, a grab bag. I want participation 

through clearly structured and representative party 

mechanisms, so that people will attend caucuses, 

ward meetings, and county conventions and be 

genuinely involved in the shaping of the party 

program. 

CHAIRhMN BFAMJ? May I ask you one question? 

In sorting out the responsibilities of the federal 

government and local governments, do you see 

any justification where if any local governments 

throughout the country are picking up, assuming, 

national responsibilities, that there would be 

logic in setting up a class of cities that might be 

known as national cities, and treatment given to 

them in accordance with the burdens and responsibilities they carry out? 

PROF. NAFTALIN: Mr. Beame, this carries me 

back a few years ago. When I was Mayor of Minneapolis, I talked in those precise terms. This was 

during the 196Os, when I felt acutely the threat 

our cities were under. I believed then and still do 

that the embattled cities ought to be protected by 

the nation. 

What happens to New York City, Chicago, 

Cleveland, Newark, and other cities is enormously important to the entire nation. This is not 

inconsistent with our tradition. The problem is 

that special help is not consistent with our Constitution, so we may have to add this item to our 

list of unlikely solutions. 

I would, in any event, like to see our state governments develop sufficient capability and commitment so that they would assume the appropriate responsibility. 

CHAIRMAN BEAME: Sometimes, it isn’t the 

Constitutional problem, but the political one. 

PROF. NAFTALN That’s true. 

GOV. DALTON: Professor, would you limit 

your Presidential candidates to members of Congress? 

PROF. NAFTALIN: In the initial go-around, no. 

I would permit Congress to choose the candidate 

from within the entire citizenship that qualifies. 

GOV. DALTON: Do you really think that would 

happen? If they all know each other and see each 

other every day, do you think that they would 

pick somebody outside their own ranks? 

PROF. NAFTALIN: I think they would very 

likely pick one of themselves and that might not 

be a bad idea. 

MAYOR MOODY: You know my great affection 

and my great admiration for your powers. 

PROF. NAFTALIN: It’s mutual, Mr. Mayor. 

MAYOR MOODY: And I do agree substantially 

with all of your analogies. I almost totally disagree with your proposed solutions. 

I would ask for your comments on an exactly 

20 
opposite view shared by many people. You mentioned something about the President and the personality and strength of that person. A great number of people, in my judgment, really want a king, 

but don’t want to admit it. To them the Congress 

or the parliament is essentially irrelevant. They 

would deny they want a king, and that they want 

an imperialist, but yet, in practice, they seem to 

want the imperial kind of leader, until they find 

that he’s abusing the office somehow and not satisfying their needs. 

They reach that conclusion on the same evidence that you use to reach your conclusion about 

the parliamentary system. I am just very curious 

what your views are on that. 

PROF. NAFTALIN: On the monarchy? 

MAYOR MOODY: Yes. 

PROF. NAFTALIN: I believe in representative 

government. I believe in enlarging and making 

citizen participation more meaningful. In a few 

minutes, it’s difficult to spell my idea out fully, 

but the thrust, the ultimate objective of what I’m 

seeking is a more coherent relationship between 

the government and the citizens, a more understandable, rational, and meaningful one. 

I completely reject the notion of any authoritarian government, whether it’s a monarchy or any 

other kind. My whole thrust is to make the government more democratic and more representative. I believe that given the pluralism of this nation, what I called its centrifugal tendency, my 

recommendation whould help move us in that 

direction and in a fashion consistent with democratic principles. 

Now I do not say that if you disagree with me, 

you believe in anarchy or in the politics of the 

jungle. Some people believe that we should totally dismantle the federal government, that we 

ought to restrict greatly the scope of government, 

that we ought to require unusual majorities to increase taxes, that we ought to permit referenda on 

everything the legislature does. Their purpose is 

to prevent the government from doing very much. 

I reject that just as I reject a monarchy. And I 

suspect you reject that, too, even though you may 

have some concern about government becoming 

too powerful. 

MAYOR MOODY: Well, that certainly is true. 

But we are examining your ideas, rather than 

mine. 

PROF. NAFTALIN: I understand. I’m just trying 

to illustrate my point. The fact that I suggest one 

form of cohesion for our system doesn’t mean that 

I embrace the extreme in that direction any more 

than your challenging it means that you embrace 

the extreme in the other direction. 

MAYOR MOODY: I’m concerned also about the 

point regarding a republic. As a matter of fact, I 

think a large part of the disaffection of our electorate has to do with their distaste for the representative system. For example, all the surveys 

seem to show that they like their own representatives, but they don’t think much of the Congress. 

They like their own representative in the state, 

but they don’t think much of the state legislature. 

You’d rather quickly reject the idea of a pure 

democracy, I assume, on the basis of the present 

state of knowledge and an affection of the electorate. Would you care to examine that just a little 

*0P3? 

PROF. NAFTALINz I’m sorry, Mayor. I don’t 

quite get the question. 

MAYOR MOODY: Well, you indicated that you 

would not like the system where we turned everything over to the people to vote on. 

PROF. NAITALIN: Right. 

MAYOR MOODY: I’m a little puzzled about 

that, because it would seem to me that’s a natural 

conclusion of the direction in which you’re going. 

PROF. NAlTALJNz I would just say again that 

I believe that the problems we face are extmordinarily difficult and are getting more and more 

difficult, requiring careful thought, analysis, and 

mediation. It gets more and more difficult and 

places greater and greater premium on leadership 

that is skilled, informed, and prepared to communicate with the public and to make tough decisions. 

I believe that if we are to have effective and 

meaningful governance, we just can’t throw it up 

for grabs and say come and express your sentiments, your prejudices, and your preferences. The 

government has to make hard choices and it 

should make them in a responsible and representative way. If it makes the wrong choices, it 

falls. Then the people should have the opportunity to txy something else. 1t’s going to be an imperfect relationship, but at least it keeps the system open in a way that I think our system is 

closed. 

Take one complicated problem, like hazardous 

waste disposal. If we leave this problem to an initiative or referendum, we will never arrive at a 

policy. Government must make tough decisions. 

21 
Either we will stop producing hazardous waste or 

we will put it somewhere. Government must decide; there is no way for the people to decide. The 

function of government is to moderate, ameliorate, adjust the conflict between our private interests and public necessity, and this involves tough 

choices. We’re not coping with our problems precisely because OUT government is not held accountable under our political system for making 

the decisions. 

I’m proposing a system under which I think we 

might get cohesion and coherence and still preserve our basic freedoms. We’re not going to solve 

inflation, we’re not going to protect our environment and meet our other problems by putting 

them on the stomp and having 200 million come 

and vote on them. That’s my case in a nutshell. 

To restate my basic premise, the centiifugal 

forces that are fragmenting our nation are going 

to continue. Our task is to find countervailing 

forces that preserve our traditions of individual 

liberty and at the same time make it possible for 

us to govern ourselves. 

I offer my ideas tentatively with no confidence 

that they’re necessarily going to improve our situation. If they’re not acceptable, I’m happy to hear 

other proposals. That’s why I think the debate that 

the ACIR report is generating is an important one. 

CHAIRMAN BEAMS: Thank you very much, 

Professor. I appreciate your presence and your 

ideas. 

PROF. NAFTALIN: Thank you very much. 

CHAIRMAN BRAh4R: The next invitee is William G. Colman. h4r. Colman is known to everbody here. He is a private consultant, and was the 

first executive director of ACIR from 1960 until 

January 31, 1970. He’s the author of a book on 

cities, suburbs, and states. Thank you very much 

for coming. 

22 
William G. Colman 

Con8ultanl 

T hank you, h4r. Chairman, members of the Commission. 

I have submitted a prepared statement, and in 

the interest of time, I’ll just try to hit the highlights of that statement and make myself available 

for questions.* I will try to deal with four areas in 

my comments. 

First, to give certain suggestions with regard to 

making the report that’s before you more m&nageable and somewhat narrowing and focusing its 

scope. 

Second, to point out some additional problems 

of intergovernmental relations that do not seem, 

at least in my view, to be addressed adaquately in 

the draft report. 

Third, to make some additional suggested cri- 

.@a for sorting out the grant system and the funcSonal and financial responsibilities among our 

major levels of government. 

Finally, and in my own view most importantly, 

to recognize the need for basic Constitutional and 

statutory changes to redress growing imbalances 

in the structure of federalism, including provision 

of a stronger framework to tighten fiscal discipline within the national government. 

Now, I want to second what Prof. NatWin said 

about the quality of this report. I think it’s very 

good. I’m going to be emphasizing criticisms here 

23 
rather than singing praises, but the draft that’s 

before us represents a lot of very good and careful 

thinking. 

Now for the criticisms and suggestions. First, 

I think the report endeavors to cover too much. I 

think that it should concentrate on issues that are 

uniquely intergovernmental. Instead, in at least 

three areas the report endeavors to grapple with 

the problems of OUT whole political system and 

American politics in general, as the preceding 

disussion with Prof. N&din has illustrated. Those 

issues range far and wide and are much larger 

than the issues of federalism and the relationship 

among national, state, and local governments. 

I would respectfully recommend for your consideration that those broader areas dealing with 

politics, the party system, the general structure of 

government, participatory democracy, and so on 

be deleted OI narrowed to only the federalism aspects. Room would be created thereby for two or 

three areas that are really and strongly intergovernmental and that are not addressed in the report. 

Finally, with regard to the report in general, 

there is an inconsistency between the rhetoric 

that’s used to describe the damnable shape that 

we’re in and to set forth the range of recommendations for the Commission’s consideration, which 

are kind of pale if we’re in as bad a shape as the 

report alleges. 

I believe that we are in as bad, or nearly as bad, 

a shape as the report alleges. Consequently, I 

think there needs to be a greater emphasis on 

some really basic and fundamental questions 

about our federal system. 

To go now to some two or three areas that need 

additional attention. I would suggest, and I won’t 

make too much of this, but I think that the role of 

the private sector as it relates to federalism needs 

to be addressed in the report. The alternatives as 

presently given tend to present the options, as far 

as the national government is concerned, of either 

performing a function directly or giving grantsin-aid to states and local governments to have it 

carried out. 

I would submit that the provision of economic 

incentives, the play of the marketplace through 

some stimulus or deterrents placed by government, and a greater degree of self-financing in a 

number of areas are alternatives that also should 

be considered whenever the question is considered of whether or not the national government 

or any level of government is to enter a new field. 

The extent to which the use of the private sector 

can achieve all or part of the results that are striven for is the initial issue, and only after a negative 

finding do we consider what level or part of the 

public sector is to be given responsibility. 

I would also agree strongly with the draft report’s conclusion that the intergovernmental grant 

system is overloaded and overcongested, and that 

in quite a number of areas, transfer payments to 

individuals, firms, or other nongovernmental organizations need to be considered as an alternative to transfer payments to state and local governments. I could point to the fields of job training, 

housing assistance, and several others where that 

might be the case. 

Mr. Chairman, and members of the Commission, a very important political fact is at the basis 

of this suggestion: the demonstrated inability 

time after time and year after year on the part of 

the Congress, and to a lesser extent of state legislatures, to legislate selectively among places. On 

the other hand, these legislative bodies (both the 

Congress and the state legislatures) have shown 

themselves much more able to legislate selectively when it comes to classes of people, the 

handicapped, the hard to educate, the low income, and so forth. This issue of targeting governmental assistance to places rather than to 

classes of people is a rather pervasive problem of 

the federal system today. 

I have some comments in the statement about 

the disarray into which economic and fiscal indices in our government has fallen. Although very 

important, I won’t go into those issues here: the 

Congress has some of them under consideration 

presently, including the use of the Consumer 

Price Index (CPI) versus the GNP deflator when 

it comes to adjusting Social Security benefits, veterans’ benefits, federal retirement benefits, and so 

forth. 

Let me move to another area that I think has 

gotten short shrift in the report and is truly intergovernmental. That is the role of federal and state 

regulation under the interstate commerce clause 

of the Constitution, including the preemption of 

regulatory authority by the national government. 

There are a great many federalism problems in the 

regulation area. Examples of those problems are 

given in my statement. 

One current example relates to hazardous 

wastes, about which Prof. Naftalin was just talk24 
ing but in another context. The Secretary of Transportation has published or is about to publish in 

the Federal Register a regulation that preempts to 

the national government the responsibility for 

regulating the interstate transportation of hazardous wastes. Now, I would not argue about the 

merit of national action in this field. But the very 

idea of preempting state powers under the interstate commerce clause by administrative fiat rather 

than by act of Congress goes, I think, far beyond 

the pale of what the founding fathers had in mind 

in delineating national and state powers in this 

field. 

First, I think that among the alternatives the 

Commission might wish to consider in regulation 

is~a Constitutional amendment providing that any 

preemption by the national government must be 

by statute, and that such statute explicitly state 

the intent to preempt so that you don’t have decades and generations of litigation, with federal 

judges trying to fathom the intent of the Congress. 

In essence such an amendment would assure that 

any future preemption of regulatory power under 

the interstate commerce clause was explicit rather 

than implicit. 

Secondly, a sorting out process is badly needed 

in regulatory fields, comparable to what is discussed in the draft report on the grant programs, 

and some criteria for this sorting out should be 

proposed. In this connection, let me refer you to 

a chapter of the 1955 Kestnbaum report dealing 

with this issue. 

Thirdly, we need the enactment of some parts 

of the Ribicoff-Mathias bill providing for cost benefit analyses of new governmental regulations. 

And finally, with regard to this terrible problem 

of crosscutting requirements in federal grants 

that is treated in the report, I don’t believe it’s 

sufficient to say, as the draft now does, that the 

regulatory agencies ought to come back to the 

Congress with some recommendations as to what 

to do about mitigating their own sins. I think that 

the Executive Office of the President needs to 

have a strong role in this. I realize that’s very controversial. But there needs to be lodged, either in 

the Executive Office of the President or at some 

other point, the authority to lay down simplification proposals with regard to these crosscutting 

requirements, and have them go into effect unless 

they’re vetoed by the Congress. 

I believe that this is a better approach than the 

one in the current intergovernmental legislation 

before the Congress for assigning responsibility to 

a lead agency. This lead agency business has been 

tried on many occasions, and it’s very sticky to 

make work with any degree of productivity. 

Please keep in mind a cardinal principle of public 

administration: equals cannot coordinate equals! 

I would suggest finally, Mr. Chairman and 

members of the Commission, some additional criteria with regard to this grant sorting-out process, 

as set forth in my statement. I would particulary 

encourage the Commission to formulate some 

new criteria, updated from those enunciated a 

quarter of a century ago by the Kestnbaum Commission, as to the conditions under which entry 

by the national government into a new field of 

enterprise would be warranted. 

Now let me mov+because I know the time is 

pressing here this afternoon-to my fourth major 

suggestion: that is, to address the Constitutional 

fundamentals of our federal system. Like a lot of 

the public school partisans say, “Let’s get back to 

the basics.” 

There are several key provisions in the Constitution that constitute the very foundation of the 

federal system. One of the most important is Article V, which sets up the procedure for amending 

the Constitution. This is very important, ladies 

and gentlemen, because throughout our history, 

up until the present time, amendments t6 the Constitution have been initiated solely by the Congress. Under this approach, if any basic structural 

change is to be made in the Constitution with regard to the federal system, that decision has to be 

made by the folks at the center who have been 

centralizing this governmental system for the past 

30 or 40 years. 

There is another avenue for change provided in 

the Constitution, emanating from the bottom up, 

and that is the initiative of Constitutional change 

by the states. This approach causes members of 

Congress extreme pain. We are talking about the 

well-known section on state petition for a Constitutional convention to deal with a particular subject or subjects. Three times in the past two decades, a score or more of states have initiated an 

amendment petition-on legislative reapportionment, on revenue sharing, and now on balancing 

the federal budget. 

There are three or four key questions on Article 

V that the Commission ought to address. It is hard 

to conceive of a study of the operation of the federal system that can duck them. I make no sug25 
gestions here about which way the decisions 

ought to go. Question one is: Should the states 

continue to have the power to initiate amendments to the Constitution? 

If your answer is no, they should not continue 

to have this initiating power, then you would 

need to make a recommendation for repeal of that 

clause in Article V. If they should continue to 

have the power, should it be strengthened or modified? Is the current provision in Article V the 

most desirable way for the states to have a role in 

Constitutional change, or should it be by some 

other means? Unless you decide that the clause 

in Article V should be repealed or modified, it 

would be very much in order for you to reaffirm 

the urgency of enacting the Ervin bill, which has 

been before the Congress for quite a long time and 

which sets up ground rules for handling state petitions for a Constitutional convention. 

A second area of possible change in the Constitution for strengthening the federal system is 

with regard to the uniformity clause in connection with national revenues. The uniformity clause 

might well be amended to authorize state governments, local governments, and intentate compact 

agencies to piggyback on the federal personal income tax for financing projects of a strictly regional or interstate nature. This would provide 

flexibility in the pooling of regional resources for 

regional projects. Secondly, it would provide 

more flexibility to the federal government’s own 

financing system, so that if the Congress wants to 

do something for Appalachia, it can do so without 

having to do it for the rest of the country whether 

the other areas need it or not. The Congress would 

be enabled to legislate and to fund programs on 

a regional basis rather than covering all 50 states, 

the District of Columbia. and Puerto Rico under 

a national program. 

Finally, Mr. Chairman--and I’ll close withthisConstitutional change of some kind is certainly 

warranted with regard to the whole problem of 

fiscal discipline. Again, the Congress has shown 

itself absolutely incapable, politically and substantively, in managing the national budget in a 

responsible way. Only once, I believe, since 1968 

has the federal budget been balanced. Several 

times during that period you’ve had periods of 

full employment, flourishing economic growth, 

and general prosperity. 

The draft report alludes to a Constitutional 

amendment providing for a Presidential item veto 

in appropriation bills. This clearly is warranted. 

It is the same power that most Governors have 

now and that has been exercised very effectively. 

You see no efforts anywhere in the country to repeal those gubernatorial item veto powers. 

Secondly, an amendment prohibiting a deficit 

except with a three-fifths or two-thirds vote of the 

Congress, or a majority vote if the nation were at 

war, has much to command it. Extraordinary majorities are as old as the Republic. It takes a twothirds vote to override a Presidential veto. In 

many local governments it takes an extraordinary 

majority to adopt zoning provisions contrary to 

master plans or to make emergency appropriations. In many states, certain kinds of actions 

must be passed by an extraordinary majority of 

the legislature. Such a Constitutional requirement 

would slow down the runaway growth of public 

expenditures, but it would also enable the Congress to incur a deficit whenever an etiaordinary 

majority of its members felt it in the national interest to do so. 

I would suggest also that the Congressional 

Budget Act be strengthened with regard to multiyear appropriations. the off-budget items, the 

loan guarantees, the tax expenditures. and the entitlement programs. If Congress is ready to bite 

the bullet, it can amend the Budget Act and bring 

these and other aspects of the budget ahd appmpriation process under tighter control. 

Now, these things that I have brought up, Mr. 

Chairman and members of the Commission, for 

the most part are neither original with me nor 

new. Deficit spending has brought this nation to 

the very brink of fiscal and economic disaster. 

More than half the states have called for a budget 

balancing amendment. Several of the serious suggestions in the draft report for decongestion of the 

intergovernmental transfer system become, unfortunately, largely rhetorical unless placed in a fiscal framework that is conducive to careful choice 

rather than an atmosphere of a continuing 

Congressional invitation to all and sundry in this 

nation to the proverbial free lunch. 

Thank you very much, Mr. Chairman. 

CHAIRMAN BJiAMEz Thank you. Mr. Colman. 

Any questions from any of the members? 

MS. WW: I would like to ask you what, in 

your own analysis, do you think are the reasons 

for this proliferation of grants in the past 15 years? 

MR. COLMAN: I think one of the major reasons. 

26 
Ms. Wall, is that the Congress has not had to count 

the cost when enacting a new grant program. It 

has not had to make choices. So, when Congress 

has been faced with an array of choices, it’s chosen everything, not the most urgent. 

The ready availability of deficit financing is a 

very great factor in the proliferation of grants. 

There are various other reasons that are given in 

the draft report that are also highly contributory. 

The report points to what John Gardner has celled 

the “Iron Triangle”-interaction among the bureaucracy, the Congressional subcommittees, and 

the special interest groups on the outside. 

There are a number of other factors that are 

pointed out in the dreft report. But I don’t think 

that the fiscal side of this phenomenon and the 

ready availability of deficit financing as a primary 

reason for the proliferation has been given its due 

in the draft. That is the reason I am pressing on 

it here. 

QMlRMAN BEAME: Mr. Remy? 

MR. REMY: Mr. Colman, in California we’ve 

had a redistribution of income through Proposition 13 and potentially another redistribution 

through Proposition 9, involving roughly $12 billion. We built into our Constitution by those 

measures the super majority of two-thirds to modify that system. 

In essence, people who I think are losing by the 

loss of services and other things are not the people 

who are distributing income. Yet, it’s going to be 

very difficult to undo that system. In light of that, 

would you support the super majority redistribution of income? 

MR. COLMAN: Absolutely. I do not support the 

Proposition 13 route, because it’s aimed at the tax 

rate rather than expenditures. But I do look at an 

expenditure level tied, as many other states are 

doing, to the growth in personal income and so 

on-a sliding type of scale, but nothing as arbitrary and as drastic as Proposition 13. 

In my own county (Montgomery County, MD)~, 

where I served in elective office for e while recently, I initiated, got on the 1978 ballot, campaigned for, and got passed a charter amendment 

requiring an extraordinary majority anytime that 

the budget increase amounted to more than the 

increase in the CPI. 

Now, the CPI is not the best measure or benchmark. The GNP deflator would be much better. 

But I had the political problem of explaining what 

in the devil the GNP deflator was. So I dropped 

that end put in the CPI. For FY 1980, the first time 

in about ten years, we adopted a county budget 

that did not grow faster than the CPI. It not only 

got five votes, it got seven on the seven-member 

county council. 

Yes, I support extraordinary majorities for purposes of fiscal discipline, as long as there’s e reasonable safety valve, and as long as you’ve got it 

tied to a proper measure. But to just slam the 

brakes on a particular property tax rate and freeze 

it at a numerical level is highly inequitable, and 

it produces a lot of bad results. 

Now this is hindsight, but I believe that local 

governments in California made a real bad mistake in poor-mouthing Proposition 13 before it 

was voted on. They predicted all kinds of disaster, 

and the disasters did not arise due to the state 

bailout. Now the lid is about to go on at the state 

level. The services, probably, are going to be hurt 

in some cases. Even in California, I would argue 

that this fiscal austerity that now pervades the 

state, or soon will prevade the state, is going to 

force much tougher priority setting than local 

governments in California have had to face up to 

for a long, long time. 

CHAIRMAN BEAME: Ms. Shalala. 

SECRETARY SHALALA: I have only one question. In the report, state and local government is 

lumped together as one word. Do you think 

there’s a need to sort out the federal role in relationship to state and local governments separately, as well as a need for some insights in relation to the two of them, typically? 

MR. COLMAN: Yes, I do. The reason that I 

didn’t get into that is that from time to time this 

Commission has made recommendations about 

the channeling of federal grants and the role of 

the state government therein. A number of years 

ego, it offered a provision that states could “buy 

into” federal programs, and if they bought in, 

then you would channel the federal money 

through the state with all of the policy and priority setting that goes with that. A number of local 

officials, particularly Mayors and so on, viewed 

this recommendation as rather infamous, as did 

certain Governors and state legislators. 

Well, that is one of the examples. I think by 

implication you raise another question: If the 

Commission is going to look at some Constitutional restructuring, whether or not local governments should be named, recognized, and so forth, 

in the U.S. Constitution? That is a very good ques27 
tion. There are stmng arguments for and against 

doing that. I would like to see that question added 

to this list of Constitutional issues that I have been 

talking about. 

REP. FOUNTAIN: Before he leaves, Mr. Chairman, I’d like to take this opportunity to welcome 

our friend, Bill Colman, back before the Commission. He and I started out together here. As a matter of fact, I was a member of the selection committee that picked Bill Colman as the first executive director. It was a unanimous selection, and 

we had a lot of highly competent people. 

I think, as the years passed, we were all extremely grateful that we had a man of Bill Colman’s caliber, because during that time, we felt 

that had we not had him, the Commission could 

not have survived. It had to have a strong, intelligent, wise counselor to begin. 

I’d like to say it’s just delightful, a privilege, for 

me to see him back. He has kept in touch with the 

work of this Commission. I would say that whether 

you agree with what he says or not, any counsel 

he gives this Commission, or any part or branch 

of government, is worthy of objective, very careful 

consideration. 

MR. COLMAN: ti. Chairman, I appreciate the 

generous comments of Congressman Fountain. 

His generosity, I think, illustrates why he has 

been returned to the Congress so many times. 

CHAIRMAN BRAME: I was just going to suggest that I’m sure all members of the Commission 

would join Cong. Fountain in what he said, t@ 

after what you said, it would look as If we are all 

looking for something. 

MR. U&MAN: Thank you, very much. 

CHAIRMAN BJiAME: Thank you, very much, 

for coming. 

Our next invitee is Prof. Daniel J. Elazar, director of the Center for the Study of Federalism at 

Temple Univeristy. He’s editor of Publius and author of American Fedemlism in the States and 

The American Partnership. Welcome. 
Statement Presented By 

Professor Daniel J. Elazar 

DhCtOr, 

Center for the Study of Federalism, 

Temple University 

T hank you, very much, h4r. Chairman.* 

It’s a pleasure to be here. It’s been .some time 

since I have had that pleasure, and I am very 

happy, indeed, to have this opportunity. I only 

apologize for being a little late for the beginning 

of the session. 

I came down from Philadelpia by Amtrak&w 

of the classic examples of direct federal administration of a service, and perhaps one of the better 

ones when you consider others. It did not sway 

me, however, from my earlier position that that 

generally is a bad idea on the domestic side of 

things. 

Indeed, Amtrak operates on a principle that 

seems to be a growing principle of government in 

the United States. It’s like the old dart game in 

the pub-first you throw the darts; then you draw 

the bull’s eye. Their schedule has been lengthened at least four times in the past year so that 

the trains will arrive more or less on time, and 

today we were still 40 minutes late. 

Chairman Beame, I’m very pleased to be able to 

compliment ACIR on what I believe is an admirable report--one that certainly in its first section, 

closely reflects views that I have come to during 

my own work over the past 25 years in the study 

of American federalism. 

* Prof. Elamr’s formal statement appears as Appendix C, “Is 

the Federal System Still There?” 

29 
I have come to such conclusions, very sadly, 

from what was once perhaps a more optimistic 

look at the situation. Today one has the sense that 

one can only be optimistic in Daniel Boone’s 

way-and I’ll explain that in a minute--because 

I think that the American people and their representatives have lost their way, are lost in the 

woods with regard to what the federal system was 

intended to be, and what it should be. 

Daniel Boone once was asked if he was ever lost 

in the woods. He looked around and said, “Well, 

I have never been lost. That would really not be 

my way. But once I was bewildered for three 

days.” At the very best, I think we have been bewildered for a good while. I hope that perhaps 

this report will be a first step in dealing with this 

bewilderment. 

I’m not going to repeat the valuable comments 

in the first section of the report with its analytical 

section and basic findings. As I indicated, they 

really square with my own findings and perceptions to a very, very great extent. In fact, I might 

restate some in even more emphatic terms, because I strongly believe that the cardinal question 

before us transcends the specifics of this massive 

effort: Whether or not the federal system in the 

United States still exists as such? 

In that regard, I do have to raise some questions-in some cases minor ones, in some cases 

serious ones-about the recommendations of the 

report. Are we dealing with the right questions in 

the recommendations, and are the results likely 

to be the intended results? 

I’ll tell a North Carolina story very briefly to 

illustrate this point. It’s about a North Carolina 

courtroom after the Civil War in which a case was 

being tried about a railroad train that killed a local 

farmer’s cow. The farmer’s lawyer, a local man, 

got up before the judge and described the virtues 

of this cow in great detail-how it gave milk, kept 

the family sustained in all the good things, and 

was very friendly to everybody. But it had been 

killed and the railroad was liable. 

The judge was so moved by this argumentconsidering how important this cow was, how local this family was, and how much of a voting 

family it was-that he turned to the railroad lawyer and said, “You might as well not even present 

your case, because there’s no point in it. I’m going 

to find for the plaintiff in this.” 

The railroad lawyer says, “Look, your Honor, 

I’m down here from the big city, and my employer 

is going to ask me whether I did my job. At least 

you have to let me present my case so he can think 

I did my job.” 

The judge allowed that this was fair. So the lawyer proceeded to give what is known, I believe, as 

a Confederate speech, evoking shades of Jefferson 

Davis and Robert E. Lee, “the lost cause,” and 

ending it all with a rebel yell. The judge, being a 

Confederate veteran, wiped his eyes and said, “If 

that doesn’t beat all. Case dismissed.” 

Well, we can start with the Confederate speech, 

but in the end we have to come back and consider 

the cow and decide whether the cow has really 

been treated properly when we get right ~down to 

it. I have, indeed, some reservations and questions 

about that. 

In this regard, I think I’ll be neither as radical 

as my good friend Arthur Naftalin, nor as specific 

as Bill Colman, whose words, as Congressman 

Fountain has said, are always worth listening to 

closely. I will try, however, to tread some ground 

in between. 

I believe that the essence of the situation is that 

we have crossed a line-horn what once was considered to be the legitimate dimensions of cooperative federalism to an unrestrained process that 

goes every which way. Unlike the tone of the report and much of the discussion on the subject, 

however, I don’t believe we would fall Apart if 

this situation were to continue one minute longer. 

I think that there’s every possiblity for this system 

to continue and to work for the indefinite future. 

The problems that may or may not transform 

the United States are not problems of the red tape 

surrounding grant programs, the proliferation of 

such programs, or the confusion of responsibilities in the narrow progr ammatic sense. They are 

not even the problems of ways. For example, The 

New York Times this morning reported a billion 

dollar overpayment in welfare payments on the 

part of the federal government. I don’t know 

whether that’s an accurate figure or not, but this 

is not even a problem of ways. (I have had the 

opportunity to study other political systems 

around the world in the last number of years, and 

believe me, we are far from being the worst.) 

In nearly all cases, the changes raise one class 

of entrepreneurs to power instead of another class 

when it comes to making the system work. The 

people who learn how to make it work tend to 

adjust and to achieve the appropriate positions in 

the legislative and executive branches of the gov30 
emment and in the bureaucracies and the administrations of local government, provisional or state 

governments, and national governments. Those 

who do not, sit outside and in some cases rail 

against the system, saying that it’s unworkable. 

I don’t thi&, therefore, that the immediate issue is whether the system is going to continue to 

work. The real question is larger, more important. 

And that is the question so admirably addressed 

by the first part of the report: Is this the right way 

to work? Is this the way to achieve the larger goals 

for which the American federal system was 

brought into being? 

Here we come to a problem that I think is not 

one of structures or of procedures, but a problem 

of people. Here, in effect, we confront the essence 

of the American problem today-n a whole variety of fronts and not just on this one. 

Although it may sound trite, I think we have to 

start from this point, even if we are frustrated in 

dealing with it. We are back to the Pogo syndrome: “We have met the enemy and they is us.” 

Without dealing with that questionand I don’t 

think we have the answers, frankly, that we would 

like to have-all the rest of the report becomes, in 

a sense, a series of palliativeHome of which are 

desirable, some of which won’t make any difference, some of which, indeed, may be counterproductive. But they are still only palliatives. 

I think the comment has been made-by Bill 

Colman just a moment or two agwthat once one 

finishes with the Confederate speech at the beginning of the report--and I don’t say this in a substantive sense, but only in the symbolic sensethen ona reads the~recommendations and gets the 

impression of a large gap between the two. I think 

the situation has been analyzed properly and critically. We have stated that the problem is a serious one, but we have very little to say. Indeed, the 

closer we come to the heart of the issue, the less 

we really can recommend. 

For example, the report properly comments on 

the important role that U.S. Supreme Court has 

played in this changing circumstance, adding that 

the Court has moved from being an umpire to 

being a spectator or a participant. But it’s not only 

the Supreme Court; it’s also lower federal courts. 

I’m not going to tell you some of the horror stories 

that I have heard from judges in describing their 

role, which I believe would clearly document this 

statement. Yet, there’s very little that the report 

says on this matter. Maybe there’s very little that 

the report can say, given the mandate of the Commission about that problem, but as a result, we 

are left with something of an anticlimax. 

Moreover, perhaps we have omitted the most 

important recommendation of all. I will get back 

to that. 

I believe the heart of the issue is that somewhere along the line the sense that the federal 

government was Constitutionally limited has disappeared. The report states this, clearly. I think 

that it is correct. It is not only the Supreme Court 

seeking to take its Constitutional role seriously in 

the same way that earlier courts might have, but 

also the fact that the executive and legislative 

branches of the federal government have abdicated their roles as Constitutional interpreters. 

Nowhere in the Constitution or in tbeFedemlistwhich comments on the Constitution and is, shall 

we say, the authoritative commentary on the Constitution insofar as there is on-nowhere does it 

say that the interpretation of the Constitution is 

the sole and exclusive responsibility of the U.S. 

Supreme court. 

Quite to the contrary, in previous periods the 

President and certainly Congress have understood 

their functions to include preserving and protecting the Constitution. Indeed, it’s in the Presidential oath. I believe there’s a similar phrage in all 

other oaths of those holding high federal office in 

the United States. 

Today we have a situation in which Presidents 

and Congresses will do anything and say, “Well, 

if it’s unconstitutional, we’ll let the court declare 

it unconstitutional.” I don’t have to cite chapter 

and verse to this distinguished body, but once 

that happens, there’s no sense of Constitutionality 

and everything goes. 

The natural history of this situation is easily 

traced. In the 1950s the federal government became actively involved in a supportive role in virtually every field of governmental endeavor other 

than the most utterly local. The 1960s witnessed 

a shift in that involvement--from supporting state 

and local initiatives to taking the initiative and 

requiring the states and localities to conform to 

federally established directions. This, in turn, 

lead in the early 1970s to increasing federal 

preemption of state and local powers, and in the 

mid-1970s to the notion that the federal government was the policymaker by right; the states and 

localities were merely viewed as convenient administrative arms to be subjected to all kinds of 

31 
federal regulations, whether authorized by Congress or not. The report certainly addresses this 

situation. 

By the end of the decade, we had reached the 

point whereby the states increasingly were being 

excluded by federal preemption, formal or informal, from fields that were considered their exclusive prerogative until relatively recently. It seems 

to me that this is the key change that has taken 

place. 

Elsewhere I have suggested that at this time, 

when the rhetoric on behalf of federalism has 

grown-and the report admirably refers to thiswe have a substitution of decentralization for federalism under the slogans of “creative federalism,” “new federalism,” or whatever. It’s been 

going on since the Johnson Administration. And 

it is a bipartisan matter. Indeed, I think there is 

almost no distinction between the parties on this 

issue. Anybody who reads the hesitancies SUTrounding the statements of even the conservative 

Republican candidates, or the ringing generalities 

of even the most liberal of Democratic candidates, 

will see how little difference exists. 

What these slogans masked was an attempt to 

change a noncentralized system-a system in 

which powers and functions were really dispersed, not separated. I think they have not been 

separated significantly since the beginning of the 

Republic. 

In this respect I differ, I think, from the implicit 

assumptions underlying the report. In my view 

the old system was one of dispersed, noncentralized powers, and the new is one of decentralizetion. That is to say, a central government-formerly known as the federal government and still 

referred to es such in official documents--decides 

what shall be done at the center, and what shall 

be given out to the states and localities in the peripheries. Anything in the peripheries, by definition, is peripheral; therefore, it cannot command 

respect or talent or interests or long-range concern. It can only be treated as one treats branch 

offices-that is to say, is it working well or isn’t 

it? Is it productive or isn’t it, based upon a series 

of measures that are derived from one place or another? 

The interesting thing is that this is not noble 

decentralization. There are those who advocated 

the change because they wanted noble decentralization for noble reasons. They thought that the 

states and localities really weren’t doing well, and 

that a strong federal hand was needed. But what 

32 

did we get? We got people. We got people who 

do what people normally do. What came out was 

a kind of perversely arranged system. Vulgar decentralization would not be too strong a word for 

it-maybe even vicious decentralization. 

In other words, Presidents and Congresses increasingly acted on the basis of the following 

principle of decentralization: “What I or we can 

improve upon, we will do; what is likely to cause 

us loss or pain or bring dissatisfaction on the part 

of our constituents, we will give to the states and 

localities to do.” 

That is a normal human reaction in a variety of 

situations. We cannot fault people for being human. It is for that reason that we established the 

Constitution in the first place--to deal with human frailties and failings that affect and afflict 

US. 

The end result was, of course, the kind of unedifying controversy that arose during the energy 

crisis of the past summer. The President was trying 

to stick it to Governors with the powers, indeed, 

the necessity, to control prices, set allocations, 

and so forth. This was explained on the grounds 

that he was being a federalist and wanted to give 

responsibilities to the states. But the Governors 

said, “No, this is a national responsibility, and the 

President should keep it.” 

Having given up the Constitutiona; theory of 

federalism, and replaced it with a half-baked theory of decentralization (under whatever name), 

we have come to a natural conclusion, which, of 

course, any one of the founders of this Republic, 

federalist or antifederalist, would have predicted, 

simply on the basis of being a fairly intelligent 

judge of human nature. Beyond that, I think we 

have discovered something else. This will be my 

last general observation before I try to make a few 

recommendations. My formal statement cites some 

other examples. 

We have reached the point where even the best 

arguments on behalf of a greater federal role have 

become problematic. If all this centralization had 

led to the desired improvements that originally 

were touted by its advocates, perhaps even those 

of us who are committed federalists-who believe 

that the federal system is one of the fundamental 

bulwarks of liberty, who support it for that reason 

and not because of vested interests, who still believe that liberty remains a principal goal of the 

American experiment--even we might be prepared to pay the price. Alas, the true record is 

now emerging. 
Again, I give you only some immediate examples. The New York Times of March 8, 1980, includes an article on the increase in traffic deaths 

in 1979, which quotes Howard L. Anderson, the 

recently retired Federal Highway Administration 

associate administrator for safety: “Much of our 

present highway design criteria is based on what 

is now an obsolete design vehicle [the large automobile]. . . .Concrete median barriers which 

safely redirect the two-ton and larger vehicles 

have shown a disturbing tendency to cause the 

subcompact car to roll over.” 

,Those of us who are witness to the defacing of 

miles and miles of highway with ugly concrete 

barriers, destroying green median strips, at untold 

costs because the federal government required 

that change if the states were to continue to receive highway funds, are now faced with the 

spectacle of those barriers serving as killers rather 

than the safety purposes for which they were presumably designed. It is important to recollect that 

those barriers were being erected in the mid197Os, after the energy crisis of 1973-74, and precisely when the country was being pushed by 

other federal agencies--quite properly, in my 

opinion, if not sufficiently-to shift to smaller 

CWS. 

One also can talk about the deinstitutionalization policy mandated upon the states. The assumption. of course, was that the best would happen, that the communities would rise up and care 

for the deinstitutionalized. Now we know this is 

not the case; there have been a spate of news articles on this in recent weeks. Once again, the 

assumption that we would get perfection was the 

enemy of the good. 

One can forgive all the well-meaning people 

who are involved in making these mistakes. None 

of us can foresee the unanticipated consequences 

of our acts. I would hate to be called accountable 

for every decision that I made, nor would I expect 

anybody else to be accountable in that sense. One 

cannot forgive them, however, for arrogating to 

themselves and to the federal government a presumed omniscience that they did not have--all at 

the expense of the federal system. 

So here, I submit, we have a federal government 

unrestrained in all three branches-one in which 

the Constitutional issues are never raised and are 

considered irrelevant by those who presumably 

have taken an oath to preserve, protect, and dafend the Constitution. 

Where does that leave us? If we’re to accept 

Alexander Hamilton’s minimalist definition of a 

federal polity in Federalist Number 9, 

Simply. .an assemblage of societies or 

an association of two or more states into 

one state. The extent, modifications, and 

objects of the federal authority are mere 

matters of discretion. So long as the separate organization of the members be not 

abolished: so long as it exists, by a Constitutional necessity, for local purposes; 

though it should be in perfect subordination to the general authortity of the 

union, it would still be, in fact and in 

theory, an association of states or a confederacy. . 

then we can be confident that we still have a federal system. 

If, however, we modify that definition with 

Madison’s in Fedemlist Number 14, which describes what the American federal system should 

be: 

The general government is not to be 

charged with whole power of making 

and administering laws. Its jurisdiction 

is limited to certain enumerated objects, 

which concern all the members of %e 

Republic, but which are not to be attained by the separate provisions of any. 

The subordinate governments extend 

their care to all of those other objects 

which can be separately provided for, but 

retain their due authority and activity. . 

then we have much to worry about indeed. 

We have long since encroached on the Madisonian definition, which if one notes carefully, 

limits national intervention to those objects that 

concern all the members of the Republic, but 

which are not to be obtained by the separate provisions of any. Lately we’ve been saying that any 

little thing, because it doesn’t concern all the 

members of the Republic, must be done by the 

federal government. 

Education, for example, concerns all members 

of the Republic, but under this definition, and according to the founding fathers, it was held to be 

separately attainable by each state-yea, by each 

locality-acting separately. It’s not simply the national interest, but the national interest that can33 
not be attained by separate provisions of any of 

the constituent units. 

We have long since encroached on that stand. 

The fact is that we are now encroaching on the 

Hamiltonian definition by indirect mean-with 

federally mandated commissions to implement 

the latest federally supported fads in governmental structural reform, which are likely to become 

the concrete barriers and deinstitutionalization 

programs of tomorrow, and federal executive overrides of legitimate state laws to expedite this 

project or that. 

What would I recommend? Permit me to discuss this for a minute or two. Here, unfortunately, 

the report and I diverge in our prescriptions. The 

range of options offered in the report is, in my 

opinion, incomplete. Indeed, the most important 

option is missing. 

I repeat, the most important point to be made 

is that the old palliatives will not work. Nor will 

transferring welfare, health insurance, and social 

insurance programs to exclusive federal control 

with the concomitant expansion of a bureaucracy 

already too big at specific points, even if its total 

size is no greater than it was 30 years ago. From 

the perspective of federalism, that will only provide further reason for turning public attention to 

Washington, something which the report explicitly~ decries. 

Even the case for transfer rests on an unproven 

assumption. Moreover, in today’s climate, such a 

transfer or any other transfers will simply 

strengthen the centralizing tendencies--which 

the report has presented so well-by knocking out 

the last prop and of maintaining a semblance of 

the old federalism-namely, the still accepted 

idea that domestic social functions ara primarily 

the province of the states, and if no longer theirs 

exclusively, are at least to be treated or handled 

intergovernmentally. I would be very careful before we knock out that last prop, unless we are 

confident that other props have come to take their 

place. 

Indeed, the fact is that it is precisely those social program areas which in the United States are 

taken for granted by many as being naturally national. In most other federal systems, they are naturally intergovernmental, with the programmatic 

burden falling on the intermediate planes of government, the equivalent of our states. 

I would submit that only a restoration of Constitutional good sense can save the situation. Most 

of the conditions described in the report--such as 

the prevalence of individual policy entrepreneurs, state and local lobbies, iron triangles, intergroup pressures-are endemic to American political life and are not likely to be altered by 

anything that we do. They can only be stopped or 

restrained by Constitutional barriers, as they have 

been in the past. What is crucial is which Constitutional barriers are there to stop them. 

A campaign to restore those barriers is the only 

hope that we have. I’m going to recommend a 

campaign for public education. That must be the 

last desperate straw, but I think we are down to 

it. We need to develop a constituency that looks 

for those barriers; that allows a Congress to say, 

“Sorry, it’s a real urgent problem, but it’s not in 

our bailiwick;” that allows a President, when 

asked on the campaign trail what he is going to 

do about the street sign that’s down, to say, 

“That’s a wonderful question, but ask me about 

Afghanistan.” 

Such a campaign must begin by developing an 

understanding of what those Constitutional barriers are, and an interest in restoring them. Such 

a campaign can only be undertaken, it seems to 

me, by people in institutions disengaged from the 

interest group struggle. 

Those whose main concern is the system-the 

Whigs of our tim+must launch it. The American 

people and their representatives may not have the 

interest or the will to respond to such a campaign, 

especially in a time of alienation, cynicism, and 

self-indulgence, part of which, of course, are reflected in the very way in which the system has 

been operating. But those of us who have these 

Whiggish tendencies can do no less than try. 

Somewhere in the report it talks about restoring 

power to the sovereign citizen. That is precisely 

the problem. In the founding of the United States, 

Americans became a sovereign people. We did 

not develop sovereign citizens, each of whom can 

go about and do whatever he or she chooses. Indeed, it is the reinterpretation of the notion of 

popular sovereignty and its transference from the 

people to individual citizens that has destroyed 

the very sense of public in this country, that 

makes it so difficult to talk about the kind of public educational campaign, which I would submit 

is the only way to deal with this problem. 

Specifically, then, in addition to such a political education campaign to advance the understanding of Constitutional federalism, we should 

34 
probably do relatively little. We have been, perhaps, too activist, too interested, too unrestrained. 

What we can do is rewrite certain aspects of 

federal legislation that have interfered with the 

possibility of a more state-centered political system. We can perhaps restrict the scope of conditions attached to federal grants-in-aid. And we 

cm cull federal grant programs to drop those that 

do not deal with any substantial federal question 

[along the lines of the Madisonian definition), or 

that are explicitly directed toward the institutions 

of state and local government. By being directed 

to those institutions, they make those institutions 

themselves dependent upon the federal largess 

and federal policy direction to far too great an 

extent. 

If we can achieve these great although seemingly modest-sounding reforms, then perhaps we 

can help along an increasing public-mindedness 

on the subject-with some even more active steps 

later. 

Forgive me for taking so much time. Thank you 

very much. 

CHAIRMAN BFAME Thank you. 

Questions? 

SIN. ANDERSON May I ask one, Mr. ChairDlWl? 

Dan, when you were talking about your education program on restoring federalism I wasn’t 

quite clear whether you thought that some Constitutional change to better spell out the functional responsibilities of the federal and state governments is required, or whether it’s a straight 

matter of education. 

PROF. ELAZAR: At this point, 1 would say it’s 

a straight matter of education. I don’t think that 

one can undertake Constitutional change unless 

one has an educated community that can consider 

those changes. 

I don’t think we should ever rule out Constitutional change. That is why we have an amendment clause and a long appendage of various 

interpretations. I think the need now is for a constituency, for a public, that understands the Constitution before it contemplates whether or not 

changes are necessary. 

SUPRRVISOR CUTLER: I raised the same proposal with Prof. Naftalin about education. The 

point is that we need to be educating people. 

I’m intrigued by that. I agree with it. I just 

couldn’t help but play with the scenario where 

the people who would develop that educational 

program came together to decide which viewpoint they were going to put forth, and how they 

were going to do it. He mentioned using television. I just cannot imagine-maybe it’s the hour 

and the gloomy day-1 can’t imagine any coming 

to a consensus about what should be contained in 

such a program-the National Advertising Council sitting down to draft a Sesame Street-type. 

“Know Your Government” program. 

I guess I sense that people are giving up; for 

example, The Empty Polling Booth-if you have 

not read it, I recommend it to you; it will ruin 

your day. But with the growing influence of single interests, especially interest groups affecting 

voting behavior, and other people sitting it out, 

I just wonder if you or Prof. Naftalin have given 

any thought to the kind of format that it might 

take. 

I guess I still believe-and this may sound 

really utopian-that only by finding really good 

people to run and to present the case through candidacies are we going to get people believing 

again in the system. I’m not sure they would even 

listen to it if you put it on television. Maybe you 

have some more hopeful thoughts. 

PROF. RLAZAR: I don’t think we are read) to 

put it on television, so I agree with you in that 

sense. Starting from the other side, people would 

not listen to it. Again, I think that Prof. Naftalin 

made a very strong point and a correct point about 

leadership. That is to say. leadership following 

Gallup polls or other polls is not leadership. Leaders have to lead. 

This is the time, I think, when leaders really do 

have to lead. There are times when the public is 

sound enough, perhaps, in its own mind so that 

leaders could rely on such devices. But this is not 

one of those times. Indeed, it’s more and more 

Eric Hoffer’s old statement that seems to ring 

true-“only a people that don’t need great leaders 

get them.” 

I would say then that the first task is not to use 

television, but to start a public education campaign-not about what the prescriptions should 

be, not even about what the federal government 

should do and the states should do in that specific 

sense, but simply to deal with the Constitutional 

dimensions of the question. 

35 
There are some clear-cut Constitutional prescriptions that in application lead to a lot of varying opinions. But at least the prescriptions are 

fairly well accepted for what they are. 

I said at the beginning, “Lord help me for recommending a public education campaign.” I consider it to be a desperate step, even though I’m a 

teacher by profession. If you have to launch an 

education campaign, it already means that the 

problem has gotten extraordinarily severe. And I 

think it has. But perhaps the initial steps need not 

be, and should not be, as I said, to jump to the 

television before we have some sense of what we 

want to say. 

CHAIRMAN BEAME: Gov. Babbitt? 

GOV. BABBITT: I’d like to try a little defense 

of the Commission’s position on transfer payments. I’d do it by adding to Mr. Madison’s criteria another one, where we’ll say that we should 

leave at the local level-and, indeed, ought to 

transfer to the local level right now-all the programs in which there is, or reasonably ought to 

be, broad-based community interest and support. 

On that basis, I would send back education; I’d 

send back the arts; I’d send law enforcement back 

tomorrow; probably highways, and waste water 

treatment. All those things that benefit the whole 

constituency. 

My concern about transfer payments is if you 

send welfare back to my state, there may not be 

any welfare. It’s a small constituency, and it’s historically not been of interest to the large constituency. I sense that that is the criteria that lies at 

the divergence here. 

PROF. ELAZAR: I have two responses. One is 

a very narrow, pragmatic response. That is, assuming there’s going to be a two-way transfer, as 

you’re suggesting (and the report comes down 

hard on a transfer of income maintenance, health 

insurance, and welfare to the federal authority), 

then it gets very blurred with regard to transfers 

that should go in the other direction. 

My own guess is that the transfers, if they come 

about at all, would only go one way. The whole 

history of our experience in the past one-and-ahalf generations demonstrates that quite clearly. 

So this is a strictly pragmatic consideration. 

But beyond that, there’s another interesting issue to consider. Maybe there would not be the 

constituency for welfare that would exist for other 

programs. By the way, I think what is really quite 

clear is that after the 1935 federal act was passed, 

there was almost no resistance to implementing 

36 

a state-centered intergovernmental program. There 

was an argument over whether or not there should 

be patronage appointments in the welfare offices. 

There was an argument over how high the benefits should be. But no state tried to abolish the 

program. 

This situation was the old federalism, as it 

were-when the federal government sometimes 

reflected a national consensus, which somehow 

had to be stated nationally, as well as expressed 

through the individual states and localities. So 

I’m not entirely convinced that welfare should be 

transferred to Washington. 

Beyond that, if, at the same time, Social Security had been set up on a federal-state basis-so 

that the whole income maintenance framework 

would have been as it is in other federal systems 

(routed to the states with federal funding or supplements]-then I think the states would have 

built themselves up to deal with the range of such 

problems (just as their counterparts abroad have), 

because they would have touched the whole community that way. 

I would argue that we had the opportunity. We 

may not want to do that at this stage of the game 

with Social Security. It probably wouldn’t even 

be considered. But sooner or later we’re going to 

have some kind of national health insurance, I 

believe, and we have an opportunity f&r doing 

this with health insurance. I think it would be a 

useful thing to do in this area. I think it would 

provide a better health insurance system than any 

of the proposed options, which essentially are 

built upon direct federal control. I don’t know if 

this is the place to go into that, but I’d be happy 

on another occasion to do that. 

CHAIRMAN BF.AME: Gov. Dalton. 

GOV. DALTON: I was interested in what you 

had to say, and what one of the other speakers 

had to say, about forgetting the polls, being a 

leader, and doing what you think is right. I don’t 

know what the other members have experienced 

in their states, but certainly in my state, anybody 

who doesn’t conduct a poll before he starts running for statewide office better stay home. Do you 

really believe that you can ignore what the people 

think and still get elected, that you can do that in 

America today? 

PROF. ELAZAR: I don’t think I said that. If I 

did, let me correct that. 

No, I don’t think you can. I’m not even sure if 

you can ignore it and get reelected. Unfortunately, 

many of the Governors who have been leaders- 
and Governors are a particularly vulnerable group; 

Mayors too, perhaps a little less so, because 

they’ve had a little less opportunity-have suffered as a result. That is a sad commentary on the 

present attitudes of the American people. And it 

has to do with some things the report highlights. 

As I mentioned, today we talk about sovereign 

citizens instead of sovereign people. Now, it’s 

easy for me to sit here and say what has to be said. 

It’s much more difficult for somebody who is on 

the firing line like yourself to have to confront the 

reality of it. I’m perfectly aware of that. But I think 

the job, at the very least, involves having to say 

it. 

Sooner or later, we must note what Thucydides 

warned of in his Peloponnesian Wars: “At every 

crucial case, the people of Athens chose the popular course rather than the necessary course, which 

lead to their destruction.” 

Maybe Thucydides’ formula is going to be ours. 

But if that doesn’t happen-and I have faith in the 

American people that it won’t-at some point 

people are going to say, “We want some leadership. We need it because we don’t have the answers to this. And we can’t even judge what the 

answers are, because we’re not privy to everything that we need to do so.” At that point some 

people hopefully will come along who will be real 

leaders, and we’ll say, “By golly, he’s a leader.” 

That’s nice, you know. It hurts for a moment, but 

it’s like when you put medicine on a sore: It feels 

good afterwards. 

&AH&UN BFAME: Thank you very much. 

GOV. DALTON: I think you can be a leader, but 

without relying entirely on what the polls show 

you. I think if you get too far out front from what 

the people are looking for, you’re going to be retired. 

PROF. ELAZAR: I couldn’t agree with you 

lllOP3. 

CHAIRMAN BEAhlE: Our final invitee is Neal 

R. Peirce, a contributing editor of the Notional 

Journal, a nationally syndicated columnist, and 

author of several books on state governments. 

37 

Statement Presented By 

Neal R. Peirce 

Syndicated Columnist, 

Contributing Editor, 

National Journal 

T. his afternoon I will not be taking issue with 

the Commission staff’s basic analysis of the present-day ills of the American federal system. You 

are fortunate to have on your staff David Walker 

and other persons who have watched, analyzed, 

and red-flagged the evolution of American federalism in the past few years-more and better, 

indeed, than any other group in American society. 

1n that sense, the experiment of having ah Advisory Commission on Intergovernmental Relations 

has proven its worth. 

Part of my admiration of the staff work is also 

gratitude, I might add. Late last year, for instance, 

I was able to write a four-part series on the mounting problems of American federalism by relying 

to no small degree on ACIR materials and staff 

wisdom. 

Now, having said a complimentary word or two 

about your Commission, I will also suggest this 

afternoon that ACIR is going to have to take at 

least one very bold, innovative, high-visibility 

step if it hopes to gain the broad national attention 

necessary for any serious consideration of reforms 

in the federal system. But more of that in a bit. 

Your briefing paper defines two extreme schools 

of thought on possible chang-ither “the system requires drastic Constitutional change” or 

“the system is already responding.” The paper 

implicity rejects both; I would too. I read over 

“Alternative Strategy A-Incrementally Improve 

the Present Intergovernmental System,” and found 

it terribly weak tea; about equivalent to the status 

39 
quo. On the other hand, “Alternative Strategy CToward a Second Constitutional Convention” 

seems both unnecessary and far too likely to raise 

fears. The very idea of a fresh Constitutional convention causes people to quake, as we learned in 

the debate over a balanced budget amendment to 

the Constitution. Moreover, I’m not sure that the 

specific reforms a convention might adopt-short 

of a parliamentary system of government-would 

make all that much difference in the year-to-year 

functioning of federalism. 

The most interesting ideas are in what your staff 

paper calls “a more surgical school of thought 

that calls for fairly drastic change” in specified 

areas, or “systemic reforms, short of total overhaul.” I’ll comment for a moment on those reforms brought up in tbe paper, and then irreverently add a couple of my own. 

Recommendation 1 is for some sorting out of 

the grant system by tradeoffs. This is a bully idea, 

and one with which I assumed ACIR already identified itself. The present-day “marbleization” of 

government functions does make it virtually impossible for a citizen to know which level of government can be held definitively responsible and 

accountable for any function. The management 

efficiencies flowing from a sorting-out process 

could also be quite impressive. And I find it quite 

healthy to acknowledge that some functions, such 

as income imnsfer, must be federal, while others, 

education included, are intrinsically local. Sorting out should be attractive to elected officials, 

because they would have clear, unimpaired authority over an activity assigned to their level of 

government. Of course, they could also be held 

more clearly responsible, so that some might shun 

the privilege of clear authority! 

Recommendation 2 is for strengthening the internal processes of the national government and 

includes the Presidential authority to institute 

categorical consolidations subject to Congressional veto, sunset legislation, clearer definition 

of “national purpose” in new legislation, reducing the number of Congressional subcommittees 

and subcommittee assignments, and fiscal notes 

on new bills. All are stellar ideas. 

At a federalism conference held at the Woodrow Wilson International Center for Scholars a 

couple of years ago, Elliot Richardson noted that 

when he was Secretary of Health, Education, and 

Welfare, only a handful of persons from Capitol 

Hill and the executive branch even began to understand HEW’s 300 categorical grant programsfrom adult education to the needs of handicapped 

children to research funds to combat leukemiawell enough to weigh seriously the claim of one 

program against another. 

The pmbl&, said Richardson, is compounded 

at the state and local levels, where programs are 

actually delivered. Their profusion, he added, 

“makes a responsible, democratic system impossible” because Congress, in its “distrust” of Mayors, county executives, and Governors, has insisted on “the piling up of reporting requirements, 

systems of oversight and audit, and creating new 

agencies regardless of whether they make sense.” 

Richardson alleged that because of proliferating 

subcommittees, “the claims on the time of the 

Senate and House have multiplied to the point 

where Senators and Congressmen don’t have time 

to discharge their duties.” That, ladies and gentlemen, seems to me to be a pretty serious charge. 

Yet when I have spoken personally with members 

of Congress, all confess to an enormous overload 

in their work. 

Recommendation 3, on the Supreme Court as a 

neutral arbiter, sounds alright to me, but I would 

be amazed to see the Justices taking a new turn in 

decisions because of a recommendation by any 

outside source. 

Recommendation 4(afito strengthen the party 

system-1 hope might be possible. We are suffering because of the atomization of the parties, the 

proliferation of single-purpose interest groups. 

We could stand a strong, fresh infusion of party 

discipline. 

I shudder at your alternative Recommendation 

4(b), to increase public participation in national 

policymaking, because the specifics therein-+ 

national initiative and referendum process, for instance-would be destructive of representative 

government in this country. I am distressed that 

the staff has listed preservation of the current 

electoral college as one way to strengthen parties, 

and a direct popular vote for President as a way 

to strengthen citizen participation under 4(a). As 

you may have concluded from my remarks, I believe strongly in American federalism. But I think 

that using the electoral college as a way to preserve federalism is foolishness in the extreme. 

Federalism has suffered a lot with the college in 

place. If the electoral system blew up in our faces, 

federalism would be blamed, because there would 

be no rational way to explain an election outcome 

40 
that defies the popular vote plurality-where 

votes in Wyoming for some reason are more important than those in California or New York. I 

believe the electoral college should be abolished 

to strengthen federalism and our political parties. 

I would totally reject the method in which it is 

treated in your staff paper and suggest you simply 

excise all mention of the electoral college in this 

debate. 

On the other hand, I would say “right on” to 

your Recommendation 5-21 more assertive response on the part of states and localities to the 

overloading of the system.” There are clear-cut, 

sound, specific proposals in the paper: for states 

and localities to assess short and long-term fiscal 

costs and benefits of federal programs with a view 

to withdrawing from those found to be cost-benefit negative; a joint state-local legal defense foundation to fight off coercive elements of federal 

policy: identifying in two years 25 federal grant 

programs for recommended termination; and so 

0*. 

Concurrently, I would hope states and localities 

would move rapidly to make their national-level 

associations independent of direct federal funding. There is a kind of soapbox hypocrisy about 

state and local spokesmen proclaiming their independence, state sovereignty, and so on, and 

then not even coming up with the modest amounts 

required to run their national-level lobbies and 

research arms. 

So much for the specifics of the staff paper. 

Again, let me say it contains many most valuable 

ideas. Let me now add two of my own before closing. 

One I would label “negotiated federalism.” It 

seems to me that the present forms of federal aid 

to states and localities undermine accountability 

in two ways. The categoric&, with their countless 

rules and regulations, weaken the accountability of 

state or local officials to their own constituencies. 

But block grant programs, to the extent they aren’t 

tied down with various “strings,” offer no assurance that important national goals-the sustenance 

of cities, land conservation, social equity-will be 

respected by the recipient governments. 

A possible alternative lies with active negotiations between the federal government and its state 

partners, and concurrently between states and localities. In a major grant area, such as economic 

development or social services, for instance, the 

federal government might invite a state to draw 

up a comprehensive general plan, consolidating 

elements now found in multiple categorical programs, and reflecting that state’s own particular 

needs and priorities. A team of federal officials 

might then negotiate with state officials: to agree 

on the state plan as reasonably responsive to national policy goals, to set down benchmarks for 

state use of the federal funds as well as use of its 

own funds in a complementary manner, and to 

establish in later years that the state is living up 

to the performance standards it has agreed to. 

There might possibly be a “carrot and stick” funding formula, with states that live up to their negotiated goals receiving a bonus in subsequent 

years’ funding, while those that do not are penalized to a degree. 

Such a process would allow substantially different plans in different states or regions of the 

nation, recognizing the vast social, economic, and 

political differences among states. It would permit the targeting of funds and effort to areas of 

legitimate need in states, obviating the flow of 

money [as the present categoricals dictate) in 

ways that distort state or local priorities and generate the growth of unneeded state and local bureaucracies. The negotiation of a clear-cut state 

plan would permit citizen groups to hold state 

governments clearly accountable for the use of 

federal funds that they are receiving. 

You may say, the federal goverm&t still 

maintains the upper hand under such a system 

of negotiated federalism. Ultimately, of course it 

would-and so it will until the states say “no” 

to federal funds and determine to collect their 

own revenues. From this Commission’s own 

stiong support of federal revenue sharing, I 

gather that even you are unwilling to contemplate such a revolution. 

Finally, I believe that if reform is going to 

achieve any significant advance in the 198Os, 

there must first be a convocation of the Constitutional partners to identify the problems in the 

system and to chart out paths of reform. There is 

presently a glaring absence of any highly visible 

“neutral” forum in which the key partners in 

American domestic policy-the Congress, the 

President, Mayors, county executives, and Governors--can meet to thrash out problems in the 

operation of the federal system. White House 

meetings, Congressional hearings, and meetings 

of Governors or local officials all have obvious, 

severe drawbacks as a neutral setting in which a 

relaxed conversation and planning for the future 

can take place. And the meetings of this Commis41 
sion, as its history has shown, simply do not attract enough public attention. 

Yet we see the crying need, implicit in all ACIR 

research, for some form of negotiation between 

the partners, addressing areas such as sorting out 

of functions, forms of negotiated federalism, and 

other ways to return clearer authority to all levels 

of government. 

So I believe serious consideration should be 

given to a convocation of the federal partners, requiring the personal participation of the President 

himself, Congressional leaders, and state and local government leaders, early in this decade. The 

meeting should be planned to last several weeks. 

It would be an ideal forum to start some hardheaded bargaining and trade-offs, to see just which 

functions of government should be the responsibility of what levels within the federal system. 

Your own Commission would be the ideal 

group to do the background studies and staffing. 

The product of the convocation should be an 

agenda for reform of American federalism. Out of 

this, a principal goal for the years leading up to 

the 200th anniversary of the Constitution in 1987 

could be the effort to implement the reform 

agenda. Indeed, to underscore its importance and 

relationship to the Constitution’s bicentennial, 

the convocation might well be held in Philadelphia rather than in Washington. 

Any political realist knows the odds are high 

indeed against getting such a convocation called, 

and then against any proposals it might make to 

change existing power relationships. But who can 

argue, as your own studies have shown so clearly, 

that the fundamental nature and operation of 

American federalism has been radically altered by 

the events of the past 20 years? And, if that is so, 

what could be more appropriate than to have the 

highest leaders of the branches and levels of 

American government gather together to examine 

and debate those changes and hopefully map out 

an appropriate reform agenda? 

At a minimum, the convocation would provide 

a bully forum for the airing of the problems of 

American federalism. At a maximum, it could be 

the first step-perhaps with subsequent meetings 

during the decade to check on progresstoward 

a number of timely, important, systemic changes. 

No lesser proposal from your Commission is 

likely, in these confused and hectic times, to generate a sufficiently high level of public attention. 

What could be the harm, I would ask, if ACIR 

were to formulate a proposal for some type of Constitutional convocation, to throw that idea out like 

bread upon the waters, and to wait for citizen 

groups and political leaders to take the bait and 

start the process of reform moving forward on a 

fast, visible, and thus potentially~effective track? 

These are my remarks. 1 thank you. 

CHAIRMAN BEAME: Thank you, very much. 

SEN. BOE: First of all, let me compliment you, 

as I have before, on your filling the void in national publications on state and local government. 

We are appreciative of it. 

I must take issue with you on at least one of the 

points you covered. I go back to Bill Colman’s 

testimony. I don’t know if you were here. 

MR. PEIRCE: Yes, I was here. 

SEN. BOE: I guess I asked the question or made 

the comment that it was a rather cavalier manner 

in which you threw out the idea of a Constitutional amendment. Other than by the Congressional method, as I understood your remarks, you 

are ignoring that part of the Constitution that provides the state legislatures with an opportunity to 

initiate amendments because of the actions that 

you see down the road that this unbridled, unprincipled body might or might not take. 

MR. PEIRCEt Might I interject. I WEIS saying that 

others are very fearful of a convention. 1% not so 

sure whether that is a terrible idea. I believe probably if you had a Constitutional convention that 

came up with a bunch of kooky ideas, they’d be 

turned down. 

SEN. BOE: That is the safeguard. My point is 

that the 75% ratification process of whatever the 

convention does is a tremendous safeguard. Yet, 

I would say that the very heart of the reason we’re 

here discussing this report is that the system isn’t 

working, 01 at least isn’t working very well anymore. It very well may take a tremendously visible 

Constitutional convention, whether the proposal 

is ever adopted or not, but the visibility of that 

Constitutional convention idea. And it would 

have to be called by the state legislatures, because 

I think Congressman Fountain would agree with 

me that it wouldn’t be called any other way. 

So I would take issue with the tenor of your 

remarks with respect to the possibility and the 

probability. In my mind, before this century is 

over-in fact, much sooner, whether it’s the balanced budget or some other item that comes up 

under this agenda that we’re on now-that there 

42 
will be a Constitutional convention called by the 

state legislatures. 

MR PEIRCEz That is an interesting point. When 

the balance-the-budget amendment was being 

pressed by a number of persons, including yourself, it was made quite clear to everyone that the 

convention would consider that one matter alone. 

If one wants to have a convention that is going to 

look into the broad nature of the system, I guess 

it would have to be proposed in that manner. That 

would raise, I suppose, more fears at the outset, 

although it presumably would gather more attention than any other step you might take. 

SEN. BOE: I think most of us have always predicated the call for the Constitutional convention 

upon Congressional enactment of the Ervin bill, 

or some type of a Congressional guideline that 

presumably would be tested Constitutionally before a convention came. I think that’s a given for 

most of us, at least for what I would call the responsible group of legislators and others who 

have been calling for this. A call then would be 

predicated upon that issue, decided prior to the 

Constitutional convention being convened. 

QMIRMAN BEAME: Lynn Cutler. 

SUPERVISOR CUTLER: Now, I’m just wondering, in your idea of negotiated federalism, I can 

think of one program that begins to get to a little 

bit of what you’re saying-Title XX on social services. Here each state must devise a plan with certain federally stated goals and prove performance. 

I think it begins to get it, but we are leaving out a 

layer. 

What provision do you see for the further negotiation between the state and locals as to the 

fulfillment of those goals: how that happens? 

How far down does the carrot and stick go? From 

our perspective, which Dan said a little bit earlier 

about federal mandates to the states, what the 

states don’t like, they pass to the locals. I submit 

that all this budget cutting is simply passing inflation down to many of us at the local level who 

are faced with looking people in the eye. What do 

you see as the intergovernmental play between 

the states and the locals? 

MR. PEIRCE: I haven’t thought it out fully, to 

be honest with vou. If the state has gone through 

the exercise of laying down a fairly well-thoughtout plan, and been required to go through the CNcible of negotiating with its federal partners and 

showing how that plan is consistent with the 

state’s own funding and priorities, the state would 

then be in a better position to deal with the local 

governments, talking to them about what their 

priorities are in their particular localities. The objective of such negotiations would be less duplication of effort than exists in the picket-fence federalism, multiple categorical program approach. 

But I haven’t thought it out more fully than that. 

CHMRMAN BEAME: Mayor Moody. 

MAYOR MOODY: I’m sure you have scune 

awarsness that the “negotiated investment strategy” is at work in three American cities. While 

it’s too early to draw any conclusions about that 

process, with the single exception that it’s a very 

difficult process, it does offer some of the hope 

that you suggest. And it also offers the opportunity for all local governments to negotiate with 

the state, with the federal government, and with 

each other. 

I would indicate that I’m mildly optimistic that 

the process offers some of the things that you 

think it might. One of the difficulties, however, 

is that the negotiators at the federal and state levels are seldom in a position to keep their commitments. They must always trot back and get approval. I don’t know yet what all this means. hit 

certainly indicates, however, that the process 

would be a difficult one, simply becausf of the 

great number of jurisdictions in which the federal 

government would have to negotiate, unless they 

give a greater authority farther down the line. 

That brings up the question then of whether 

national purpose is maintained. It’s a comment, 

only, and I don’t have any conclusions to draw 

from it or any point to make, except that it’s happened. 

MR. PEIRCE: I find the negotiated investment 

strategy a most interesting development, and I’ve 

been writing about it. It seems to me that it is 

quite different from all of the more grandiose proposals that anyone might make here, including 

mv own convocation idea. 

Instead, the negotiated investment strategy 

moves quietly, surreptitiously. and potentially or 

hopefully effectively. It seeks to undermine all of 

the categoric& and all the federal rules and regulations by burrowing in at the local level, if possible, without Congress or other major national 

interest groups noticing until it’s gone a long a 

little ways, creating some rationality in terms of 

priorities and where the funds flow at the local 

level, and hoping that gradually that would create 

43 
a beachhead of rational negotiation that would 

not be overturned. I’m afraid, however, that the 

negotiated investment strategy may also prove 

politically vulnerable when those who are the 

guardians of specific federal categorical aid programs realize that what the federal negotiator is 

being requested to do is to wash out the effective 

intent of one or more federal programs in order to 

let something larger and more important go forward at the local level. 

MAYOR MOODY: The Feds have rather quickly 

recognized that, that’s right. 

MR. PBIRCE: But that raises the other interesting questions. Are those laws real, and can those 

regulations and all those programs really be effectively applied? 

CSURMAN BEAM& Any other questions? Ms. 

Wall. 

MS. WALL: A brief comment. The call for public education reminds me of 20 years ago at the 

close of Eisenhower’s Presidency, when we went 

through a program at the local level called “Goals 

for Americans.” This was what everybody was to 

do in their local community. Now, I don’t know 

if that was the beginning of this disastrous turn 

that we have taken since or just what, but it was 

a broad-based educational effort. Kind of interesting to think about in terms of what you were getting at. 

MR. PEIRCE: Was it related to overall governmental systems or overall goals of society? I must 

confess I had forgotten about it. 

MS. WALL: Well, it’s really long ago. I don’t 

think I could be very specific except to say that 

experience at the local level involved much of the 

community. 

SEN. ANDERSON: It produced a major chapter 

on federalism. 

SUPBRVISOR CUTLER: I just have to say, Neal, 

that I really did not anticipate such harassing as 

for you to walk in here and suggest that the National League of Cities and the Governors’ association and the county officials and the Mayors 

wean themselves away from federal funds. 

CHAIRMAN BEAME: I want to thank you very 

much for your ideas and suggestions. I again want 

to thank all of you. 

We will break until tomorrow. 

(Whereupon, at 5:00 p.m., the meeting was adjourned, to reconvene on Friday, March 14,198O.) 

. 

44 
Appendix A 

The Federal Role in the Federal System: 

Analysis of Basic Finbings, 

Key Questions Raised, 

and Recommendations* 

FINDINGS 

In this study, “The Federal Role in the Federal 

System,” the Commission has identified drastic 

changes in the system that have OCCUIIXXI during 

the past two decades. These changes, when combined with some key standpat political attitudes 

and practices, have produced neither a dual nor 

cooperative brand of federalism but an increasingly dysfunctional form of federalism. Contemporary intergovernmental relations, our research 

shows, have become more pervasive, more i&usive, more unmanageable, more ineffective, more 

costly, and above all, more unaccountable. 

The Signs 

The prime symptom of this deepening dysfunctionalism is the continuing tendency to “intergovernmental&e” seemingly everything that becomes 

a public issue-and, increasingly, everything becomes a public issue. Its signs are everywhere, as 

* The following draft version appears BF it did in the “Docket 

Book to the Witnesses” prior to the hearing on March 13, 

1980. and to Commission members on March 14. When it 

has been revised in light of Commission deliberations, it 

will be the final chapter in Volume X of this study--An 

Agenda For American Federalism: Restoring Confidence 

and Competence. 

45 
previous chapters have documented; hence, there 

is no need to detail the degree to which: 

. the old line between private and public concerns has been obliterated, 

. the very real distinctions between federal and 

state-local matters of the early 1960s have 

been lost; 

. state and local budgets have become ever 

more fiscally dependent on grant revenues: 

. state and local programs are involved in intergovernmental fiscal transfers, conditions, 

and court orders; 

. state and local regulatory processes are circumscribed by federal statutory and courtsanctioned constraints; 

. state and local policies and administrative 

processes have been affected by the Supreme 

Court’s extraordinary expansion of what is 

“absorbed” within the orbit of the Fourteenth 

Amendment; 

. federal grants-in-aid have been “used” during the 1970s to serve national regulatorynot promotional, supportive, or additive 

purposes: 

l state and local governments have been “used” 

to implement wholly national policies; and 

l the federal government has been “used” to 

further what not so long ago would have been 

a wholly local or, at best, a state concern, 

The details of these manifestations of incessant 

intergovernmentalization are variously chronicled in the 11 volumes that comprise this ACIR 

study. 

Some Underlying Causes 

The underlying reasons for them are highlighted throughout the seven case studies and &e 

two background volumes, and they are analyzed 

in son18 depth in the two previous chapters. To 

recapitulate briefly, it has been the collapse of certain basic constraints in the Constitutional, fiscal, 

and political areas that have nurtured these troublesome trends, along with the rise of relatively 

unfettered individual policy entrepreneurs-usually but not always in Congress, each pushing his 

or her own favorite program initiative from conception to enactment-that has spurred greater 

federal involvement, but most always in a regulatory or grant assistance role, not in a direct servicing capacity. 

Judicially, the Supreme Court has ceased to be 

the “umpire” of the federal system, and is more 

accurately described as either spectator or player. 

From an intergovernmental perspective, this is 

reflected in its fairly steady adherence to the old 

New Deal Court’s passivity regarding Congress’ 

seemingly unbridled right to regulate commerce, 

even for mandating purposes, and Congress’ willingness to use it in areas undreamed of before 

1960. Only a few decisions of the ZO-year period 

suggest some sensitivity regarding the states’ police power and only the National League of Cities 

case suggests an actual judicial willingness to 

curb the commerce power. 

This absence of an umpiring role is even more 

dramatically reflected in the federal judiciary’s 

unwillingness to check Congress’ power to spend 

for the general welfare, even when some of the 

conditions attached to grants in the 1970s have 

amounted to coercion or arbitrary intrusion into 

the administrative and decisionmaking processes 

of state and local governments.’ The Tenth 

Amendment’s basic protection in the grant-in-aid 

area, the judicial theory still holds, is the presumed capacity of the state and localities to say 

“no” to a grant. 

The third major manifestation of a nonjudicious 

approach to federalism is reflected in the activist 

stance of the High Court in its extraordinary expansion of what is subsumed under the Fourteenth Amendment. This includes not only broad 

interpretations of the “equal protection” and “due 

process” clauses, but also the steady “absorption” 

within the amendment of most of the federal Bill 

of Rights.* 

Fiscally, the federal government began the period with a much stronger revenue system than 

that of the states and the localities. Buttressing 

the federal fiscal strength in the 1960s were its 

broad-based income tax, the responsiveness of 

this levy to conditions of growth and inflation, 

the growing acceptance of deficit spending, the 

separate system for financing social insurance, 

and the ability to shift funds from defense to the 

domestic sector. These combined to produce the 

notion in the 1960s that “the resources are there, 

if only we have the political will to tap them.” 

The myth of the federal cornucopia thus was born. 

Politically, the changes in attitudes, in the 

46 
mode and extent of participation, and in the process itself over the past two decades probably 

have been the most dramatic. American political 

history suggests that the major parties either singly or in combination have provided their own 

self-serving cluster of constraints on the expansion of the federal role in the federal system. Political forces and factors, after all, made questions 

of federalism a perennial source of campaign and 

Congressional debate from Washington to Kennedy, and they combined to keep the federal intergovernmental role a comparatively modest one 

clear through to the mid-1960s. The Constitutional constraints, after all, had collapsed by the 

late 193Os, and the fiscal were largely conditioned 

by the political. Yet, over the past decade and a 

half, most of these political curbs have disintegrated. Witness the: 

l steady decline in the strength of local and 

territorial interests in the governmental and 

political processes; 

l rapid rise recently of a host of newer types of 

interest groups based on socio-mgralistic 

(anti-abortion, etc.) and demographic [black, 

Hispanic, Indian, women, youth, and senior 

citizen) causes, alongside the traditional economic (business, labor, farmers, doctors) and 

programmatic [highways, welfare, public 

health, etc.) groups; 

. increased efforts on the part of state and local 

governments to lobby Washington, even as 

their own traditional strength at the national 

level was growing weaker, thanks to this 

growing array of programmatic, socio-moralistic, and demographic groups that are vertically organized and usually aligned against 

them; 

. steady erosion in the capacity of the two major parties to “absorb” and “reconcile” all of 

these interests in primaries and in national 

conventions assembled; 

l steady deterioration of the capacity of the political branches of the national government to 

“pacify” this plethora of pressure groups, especially in a period of ostensibly “democratic” and “open access” Congressional “reforms” and of a populist Presidency; 

l steady decline since the early 1960s in the 

voting differences between Democrats and 

Republicans in the Congress on federal role 

and grant-in-aid issues; and 

l the slow, but clear change in the manner that 

Congress handles grant and grant-related legislation-from a largely partisan and ideologically dominated, usually executive branch 

initiated, yet geared to reaching a rough consensus process in the 196Os, to a functionally 

oriented, Congressionally dominated, cooptive process in the 1970s.” 

Some explain all this in terms of the Goldwater 

candidacy in 1964 and the resultant Johnson landslide victory and the overwhelming Democratic 

margins in the 69th Congress. For the first time, 

an activist Democratic President could rely, if 

need be, solely cm northern party members. The 

product by 1968 was over 240 new aid programs 

and the concomitant piercing of dozens of heretofore impregnable program “legitimacy” barriers. 

The causes of these developments, we find, are 

morevaried and more complex. Preeminent among 

the forces shaping these developments has been 

the most complex of all our national institutions: 

the Congress. As Table 1 shows, only Congress 

played a consistently crucial role in each of the 

seven program areas reviewed in the Coplmission’s case studies. The Congressional role was 

particularly significant in the originating phase of 

the policy process, for in the initiation of programs, no other actor eclipses the individual 

Congressional entrepreneur or issue activist. Our 

findings belie the notion that Congress acts as a 

great rubber stamp for Presidential, bureaucratic, 

or interest group initiatives. In fact, in many instances the opposite would be far closer to the 

truth. 

Hence, increasingly over the past 15 years, legislation encompassing every conceivable subject 

matter has spewed forth from Capitol Hill. Because of this hyper-responsiveness, everything 

reaches the national agenda: there is little ordering of priorities (the SALT debate rages side by 

side with debate over federal funds for the repair 

of local potholes, and jellyfish control succeeds 

while welfare reform fails), and there is little time 

or capacity for understanding the consequences 

of legislation. Policy is made in a “pass now, pay 

later” atmosphere. 

Other key contributing factors include the basic 

shifts in popular attitudes regarding what is a 

47 
Table 1 

MAJOR ACTORS AND FORCES IN POLICY DEVELOPMENT AND GROWTH 

Functional Fields-ACIR Case Studlea 

Elementary 

and 

Public !sw¶mdary Higher unempky FlW 

Assistance Education Education Envlmnmem merit LIbraties ProtectIon 

Internal Policy Actors 

Congress x x x x x x x 

President x x 

Interest Groups x x x x2 

Bureaucracy x x x 

courts x x 

External Policy Actors 

Public Opinion x’ x 

Elections 

Political Parties x 

Press x’ x 

Environmental Influences 

Demographic & Social 

Trends x x x x 

Dislocations (War, 

Depression) x x x 

1 Food stamps only. 

2 IntereSt groups were crudal in the creation of the U.S. Fire Administration only. ‘ 

Source: Advisory Commission on Intergovernmental Relations. 

public issue and the need for an activist governmental role, especially on the part of the federal 

government;” the progressive narrowing of partisan differences in the Congress on federal role 

questions (even as the political rhetoric on the 

campaign trail seems to get even more polemical 

and punitively anti-Washington): the ease with 

which almost every interest group in the 1970s 

could establish a Washington office and the equal 

relative ease with which many of them “get a 

hearing” before Congressional committees and 

administrators; the pulverizing in the 1970s of the 

already heavily pluralistic power structure of the 

Congress, thanks to reforms and a soaring rate of 

retirements; and the emergence of a totally demythologized Presidency, especially in his roles 

as policy initiator and program manager. All of 

these have combined to erode most of the older 

political constraints that kept the bulk of domestic 

governmental issues and programs completely 

out of the Washington arena and to reinforce Con48 

gress’ role as the master architect of the current 

anarchic pattern of intergovernmental relations. 

What flows from this, of course, is a national 

party system that no longer can perform its twin 

historic missio -f serving as an interest group 

broker and of building (or preserving) national 

consensus. It leads to the quip that, “The Democratic Party is no party, but merely a collection of 

antagonistic interests held together for election 

purposes by categorical grants and their conditions.” It leads to a total confusion in official roleplaying. Presidents act almost as frequently in a 

mayoral or a gubernatorial role as in a national 

Presidential one, and Congress plays municipal 

and county council, not to mention the state legislative role, as often as it acts as a national deliberative body. All these political changes have 

combined to produce a process wherein incessant 

and intrusive intergovernmentalization is the inevitable result. 
The Crucial “No Change” Area 

Even with the drastic changes in the Constitutional, fiscal, and political areas, the dysfonctional traits of contemporary American federalism 

would not be as pervasive and as potentially dangerous as they are if continuing elements of 

“standpatism” also were not present. Where then 

have there been no basic changes, when seemingly all there has been throughout the 20 years 

is incessant, if not mindless, change--and always, 

of course, under the banner of progress? The critical cluster of static attitudes and practices include: 

l no basic change in the size of the federal bureaucracy and in the Presidential and 

Congressional desires (regardless of party or 

ideological persuasion) to keep it relatively 

small, despite an ever mounting number of 

assignments given to it: 

l no basic change in relying almost exclusively 

on grants-in-aid as the primary instrumentality for carrying out the national government’s 

prime domestic servicing responsibilities;5 

l no basic change, as the above would suggest, 

in the national government’s direct servicing 

role from that of 1960 (or of 1940, for that 

matter); 

. no basic change in the Congressional and 

Presidential view that relying on state and local governments and administrators even for 

the most “national” of programs is “administratively convenient,” cheap, a curb on federal bureaucratic growth, and clever politically; 

. no basic change in the dominance of the old 

public administration approach to intergovernmental program management-that with 

adequate conditions and sanctions, state and 

local administrators can be rendered properly 

accountable, hence a part of a “chain of command” whose pyramidal peaks are in Washington: 

. no change in the belief of liberals that with 

the right formula or the right administrator 

[depending on the form of the grant), equity 

and “targeting” can be achieved: and 

. finally, no basic change in the belief of most 

state and local officials and their representational groups in Washington that federal aid 

is a first-rate way of alleviating their fiscal 

pressures and that with a few more “push 

ups” and “jogs around the track,” especially 

if a President or a key committee chairman is 

exercising with them, federal aid can be had 

without federal conditions. 

These continuing attitudes and conditions, 

along with their very real policy and political implications, have complemented extreme individual Congressional activism, the passivity/activity 

dichotomy of the federal judiciary, the earlier 

comfortable condition of the federal Treasury, and 

the almost blinding flowering of fragmenting interests in “explaining” the critical contemporary 

state of the system. In their own way, these attitudes and practices have permitted the impression that the system still functions pretty much as 

it did in the Eisenhower and Kennedy years. But 

anyone who can count the number of state and 

local bureaucrats, of federal programs, of federal 

mandates and across-the-board conditions attached to federal grants, and of instances where 

the federal courts are actually running certain 

state and local operations, knows better. 

Where Stands the System? 

1 

In combination, these attitudes along with the 

changed political and earlier economic conditions, noted above, have led to an overloading of 

the intergovernmental system. The most national 

of concerns (income maintenance, health insurance, and welfare] are still intergovernmentalized 

and the most local of matters (potholes, rat control, libraries, police officer’s pensions, jellyfish 

control, and the like) have become intergovernmentalized. The most major as well as the clearly 

minor are all part of what cooperative federalism 

now encompasses. Yet, in truth, there is precious 

little cooperation and a lot of inevitable conflict. 

Cooperation after all rests on shared goals and 

mutual trust-rare commodities in this period of 

controversial and conflicting program goals, 

creeping conditionalism, and chronic buckpassing. 

A rather fanciful form of federalism, then, has 

emerged. Basic policies in most program areas 

appear to be made in Washington, either by the 

Supreme Court or the Congress, and their implementation is achieved through decisions, orders, 

mandates, conditions, regulations, and the lure of 

49 
federal loot to 12 million state and local civil servants, All this is fanciful, of course, because the 

subnational governments, their elected officials, 

and bureaucracies are capable of a highly differentiated response to all this-in terms of compliance, cooperation, participation, and conflict. 

Equally fanciful is any notion that the federal 

aid system as a whole protects the interests of the 

needy or equalizes levels of public service. The 

logrolling style-whether explicit or, more often, 

implicit-through which most grant programs are 

adopted simply precludes any careful “targeting” 

of fiscal resources. “What’s in it for me?” is the 

watchword for Congressmen (and their folks back 

home], for special interest lobbies, and for bureaucrats as well. Questions of equity are largely 

ignored in the scramble for benefits. If they were 

a genuine concern, direct federal performance of 

the function at least would be raised as a serious 

issue, but the last time this occurred was in the 

mid-1950s. 

Matters of operational efficiency also are seldom brought into focus, either before or after the 

fact. Potential benefits are usually dramatized; 

potential costs are frequently ignored. Not only 

are many intergovernmental programs poorly designed to accomplish their stated objectives, most 

are not “designed” at all; their objectives are seldom specified in operationally meaningful terms. 

Furthermore, few programs are evaluated onca 

they are in place, and fewer still are modified or 

scrapped in consequence. Above all, perhaps, no 

real debate has occurred regarding the questionable administrative assumptions on which grants 

management rests. 

But where does this leave the electorate? Confused and alienated! The system has become 

largely incomprehensible even to those whose job 

it is to have an overview understanding of it. No 

wonder the average citizen, who is skeptical of 

politics and politicians but who still trusts CJUT 

basic governmental institutions, is endlessly frustrated by the complexity, confusion, and not-sooccasional corruption of the system. If in a democratic federal republic, the citizensnot to mention its key administrators and prime politicians-are unable to comprehend the most basic 

aspects of policy formulation and implementation 

[other than in terms of personality appeals, “pork,” 

and rhetoric relating to leadership), where stands 

the system? If all of the norms relating to a functioning system--again, effectiveness, efficiency, 

equity, accountablility, and any operational notion of national prioritie-e lost from sight, the 

same question arises: Where stands the system? 

Summary Commission Findings 

In light of these various findings and our interpretation of them: 

. The Commission concludes that the current 

network of intergovernmental relations has 

become dangerously overloaded, to the point 

that American federalism’s most trumpeted 

traditional traits-flexibility and workability-are critically endangered. 

l The Commission further concludes that this 

threatening condition largely has coma about 

as a consequence of a rapid expansion in the 

overall scope, range of specific concerns, and 

coercive character of the federal role in the 

federal system, thanks to the collapse of various political, judicial, and fiscal factors that 

formerly disciplined the national political 

process. 

l The Commission obviously recognizes that 

while certain governmental activities necessitate an intergovernmental approach, it believes that the almost unbridled tenc$mcy on 

the part of the national government and the 

political process that sustains it to thrust 

nearly all of the nation’s most national domestic concerns, as well as an ever-multiplying number of parochial and even private 

concerns, into the intergovernmental arena 

reflects a feeble faith in the problem-solving 

capacity of the various partners in the federal 

system. 

. The Commission believes further that this 

permits the national government to avoid 

some of its most basic domestic governmental 

responsibilities, while cluttering up its agenda 

with issues that nmre properly belong on that 

of a municipal or county council, a school 

board, or a state legislature. 

l Finally, the Commission concludes that neither equity (in the sense of giving due attention to jurisdictions or people in need], nor 

administrative effectiveness, nor economic 

efficiency, nor above all political, electoral, 

or administrative accountability are furthered 

by this tendency to intergovermnentalize 

50 
practically all domestic questions, nearly all 

subnational governmental functions, and the 

bulk of the national government’s own civil 

governmental obligations. 

KEY QUESTl~M&SED BY THE 

How then is the system to be rendered more 

functional, more accountable, and more comprehensible? Both the distant and the immediate 

past, as well as the present, provide fairly clear 

reasons as to why this now is the prime issue facing American federalism. We think we understand the dynamics of contemporary change, the 

prime actors, and the consequences of our recent 

actions. Yet, we see the future no more clearly 

than anyone else. The foreign policy imponderables, the domestic political and economic uncertainties, the course of the Supreme Court [and perhaps a possible switch in time to save far more 

than nine, to revise the old saying] are all problematic. But the present condition of American 

federalism is clear to us. Our diagnosis is that it 

is seriously ill. 

Sensible prescriptions, however, are not easy to 

come by, but the following probe of seven of the 

basic problems generated by these developments 

can facilitate and focus the effort to identify the 

proper cures. In this probe, Commission members 

are urged not only to weigh the merits of the specific proposals advanced under each of the topical 

areas, but also to add your own recommendations. 

Empty blanks are left at appropriate places for 

your additions. 

Problem 1: 

The Federal Grant System 

Is Overloaded 

The national government offers state and local 

governments nearly 500 separate grant programs. 

These range in size from nearly a dozen large 

multibillion dollar programs to nearly three dozen 

small programs of less than one million dollars, 

each at the national level. 

It is estimated that approximately 63,000 of the 

nation’s 80,000 state and local governments receive one or more such grants. Many states and 

large local governments receive so many different 

federal grants that they have hired specialists simply to apply for them and keep required records. 

Grantsmanship has become a recognized profession. Many private consultants make a living at 

it. 

Federal grant programs are available for a very 

wide range of programs. They encompass such 

fields as agriculture, community and economic 

development, education, employment and training, fire safety, food and nutrition, health, housing, law enforcement, occupational safety, social 

services, transportation, and welfare. Many of 

these fields are traditional provinces of the state 

and local governments. Federal entry has occurred primarily in recent decades. Now, the federal government simply is into everything. 

Although federal grants are voluntarily accepted by state and local governments, as a legal 

matter, the practical reality is that many must 

have the federal funds to make ends meet. This 

necessity for state and local participation in the 

federal aid system has been used by the federal 

government to multiply the effects of its policies 

throughout the nation fm out of proportion to the 

amount of federal funds and personnel committed. 

As a practical matter, the federal government 

has taken over policy leadership in virtually every 

functional field in which it offers aid, despite the 

fact that its funding is predominant only in the 

income maintenance and housing fields. General 

national policies on matters such as civil rights, 

opportunities for the handicapped, and protection 

of the environment-to cite only a few of 30-odd 

such requirements-are attached to most grants, 

along with each grant’s own program requirements. Thus, even when a grant is small, the national policy component is large. For example, the 

federal government provides only about 8% of 

public primary and secondary education funds in 

the nation, but has heavy influence over nearly 

every public school. 

Administratively, federal grants too often frustrate effective and efficient public service by the 

state and local governments. Some are so narrawly drawn that what needs to be done is ineligible for funding. Most bear so much red tape as 

to waste time and resources that should be spent 

on program objectives. Many are spread so thinly 

and targeted so poorly that they do not meet their 

objectives. 

Political accountability often is confused when 

program dollars, policymaking, and administra51 
tion are shared so widely. Under these conditions, 

no one is sure exactly who should be held responsible when the aided program falters. In fact, 

no single body or official can be tagged or expected to remedy the difficulty single-handedly. 

In short, the seemingly endless proliferation of 

aid programs into areas wholly national (like social insurance programs] and wholly local and 

even private, as well as to activities that inevitably 

are of an intergovernmental nature; the expansion 

of eligibility to reach directly practically all of the 

categories of subnational government: the advent 

of more conditions and more national policy requirements; the mounting difficulty of any level 

or unit within a level to keep track of, not to mention oversee, this system; and the public’s growing disenchantment with a system that seems out 

of control--all suggest an overloaded condition. 

Some feel this can be corrected by strengthening the processes in the Congress and executive 

branch that bear directly on the enactment and 

reenactment of grant programs and regulations. 

Others focus on the need for a strong, pervasive, 

persistent, and popularly as well as public interest group-supported drive for grant consolidations. A third group argues strongly that incremental procedures and even grant mergers are 

inadequate and call for a dramatic decongestion 

of the intergovernmental arena. In ita view, the 

functional assignment pattern has become almost 

totally botched up by the federal aid system, and 

some sorting out of programs and activities is 

mandatory if any semblance of an authoritative, 

sensible, national government and of state and local governments with some genuine discretion is 

to be resurracted. 

To still other observers, the forces that have created the present federal aid system seem irreversible. Increasingly, the nation’s economy, sense of 

community, and debates on public policy issues 

have been coalescing at the national level, they 

contend. Airplanes. the national press, television, 

mass marketing, influential books, the ascendency of national interest groups of all types, plus 

other technological and social factors, they feel, 

are unifying the nation and pushing increasing 

numbers of public policy issues to the national 

level where they receive greater attention. This 

attention comes from the national media, entrepreneurial members of Congress, national interest 

groups, and the national Administration which is 

backed up by a professional and well-paid bureaucracy. This array of potential support for national programs, they point out, often is more effective than that found at the state or local levels. 

It is not likely, then, in the view of these observers. that the grant system could be made less pervasive. Perhaps its growth may be slowed somewhat, as the new federal fiscal constraints now on 

the horizon become stronger and as the potential 

range of federal aid fields is filled, but actual decreases in money amounts or the range of program 

concerns would not be expected. 

Middle-range reformers, however, are less passimistic about change and claim that real opportunities for improving the grant system could be 

expected in the realms of program simplification 

and consolidation. These would reduce some of 

the administrative burdens now associated with 

federal grants, and allow greater policy discretion 

to be exercised by state and local grant recipients. 

Critics of these incrementalist and consolidationist approaches believe that, as difficult as it 

may be to accomplish, considerably more is 

needed. The simplification and consolidation approach, even with a heavy dose of federal consultation with grant recipients, they assert, will 

not be enough to convert the present array of 

grants into a smoothly functioning, manageable 

system of federal aid. They propose, thergfore, a 

major reassignment of functions, in which the 

federal government would take full responsibility 

for certain functions now aided (like welfare, 

health insurance, and other social insurance pmgrams), while eliminating the federal role and aid 

in a range of petty grants where the federal contribution is minor, in those programs where the 

administrative costs are disproportionately high, 

an&or in those that are funded at $100 million or 

less. Such actions not only would reduce the 

scope of the federal aid, but also would substantially increase the size of the federal budget and 

bureaucracy, as beneficiary payments are brought 

up to equitable and reasonable levels and as federal “administration” becomes something more 

than checkwriting. At the same time, state and 

some local bureaucracies could be reduced. Moreover, the funds freed up at the state and local levels would be available for the range of activities 

now aided by hundreds of project and small formula grants. On balance, proponents of such 

functional trade-offs believe than that the grant 

system and the nation would be well served by 

this decongesting strategy. 

52 
Despite these differing views about what is realistic and what is necessary, the present overload 

on the grant system cannot be ignored. The following proposals have been suggested for consideration by, and counsel from, Commission members: 

For the Congress 

. Full federal assumption of financial’ and administrative responsibility for public assistance through the creation of an adequate, 

uniform, national income support system; 

l Creation of a nationally financed and administered system for health, unemployment, 

and other social insurance: 

. A substantial reduction through termination 

in the number and range of other federally 

aided activities, with the prime candidates 

coming from approximately 466 programs 

that account for less than one-fifth of all federal grant outlays, from those functional fields 

in which the federal share of governmental 

expenditures at all levels is less than [5%] 

[lo%], from those programs that lack appropriations, from those whose annual appropriation amounts to $100 million or less, and/or 

from those whose authorizations bear no relationship to their stated objectives; 

. A drastic decrease in the number of separate 

authorizations for federal grants through 

large-scale consolidation;’ 

. A “sunset” review process providing for the 

automatic termination of grant-in-aid programs at regularly scheduled intervals unless 

their performance evaluations indicate that 

reauthorization is warranted:* 

. 

For the Executive Branch 

. More conscious use of the executive budget 

process to reshape and restrain grant programs and to propose appropriate consolidations: 

. Use of Presidential reorganization powers 

and of grant consolidation authority that Congress should provide to help streamline tbe 

grant system; 

. 

For the Parties 

. Address the problem of overload in tbe federal grant system in their platforms; 

. 

For the State and Local Governments 

and 

Their National Associations 

. Participate in developing grant merger proposals; 

. Participate in developing grant tradeoff proposals through identification of low-priority 

programs; 

l Working out on a state-by-state basis ail equitable formula for allocating any funds freed 

up as a consequence of a significant functional tradeoff with the federal government;. 

. 

Problem 2: 

Future Congestion of 

The Intergovernmental System 

The accomplishment of certain fundamental 

program trade-offs or decongestive strategies, as 

described above, does not preclude future recongestion. Indeed, the undisciplined state (or 

perhaps more accurately, the lack of parameters) 

of the national policy process itself is, in large 

part, responsible for that congestion. Hence, since 

the 1960% and continuing at a vastly accelerated 

pace through the 197Os, the federal role in the 

federal system has grown not only financially bigger, but also functionally broader and systemically deeper. As was illuminated in the case studies, much, if not most, of this “growth” has been 

accomplished through legislative and administrative processes that result in generally incoherent 

intergovemmentalized aid systems. 

A major cause of this incoherence has been the 

increasing prevalence of individual policy entrepreneurs, particularly in Congress, and their fragmenting effect upon the policy process. Relatively 

unencumbered by any procedural or political constraints at this point, this sort of policy entrepreneurship tends to produce reams of unrelated 

53 
piecemeal legislation-responsive in the short 

run to particular interests or constituencies but 

often oblivious in the longer run to the broader 

national interest. Large policies and, even more 

significantly, small programs are increasingly 

born in a “pass now, pay later” atmosphere. Moreover. such piecemeal legislating tends to spawn 

expedient, “quick fix,” and seemingly “cheap” 

implementing solutions. Ostensibly, grants-in-aid 

are both easy answers and proven methods of garnering political support. 

Yet, these implementing “solutions,” involved 

as they are in an almost unfathomable array of 

“national” undertakings-large and small, important and trivial, of national significance and of 

local interest-have done less to solve problems 

than to create the over-intergovernmentalized, 

unaccountable, inequitable, and inefficient condition that faces today’s increasingly alienated 

American public. 

Whether or not any procedural or structural 

remedies can be devised is, of course, highly uncertain. Process and organization are, by no means, 

mere sterile managerial problems. Quite the contrary, they are the most political of issues. Procedural strictures, some allege, make even the 

most genuinely compelling and coherent policies 

difficult to enact. And, individual policy entrepreneurship-attached as it increasingly is to unprecedented numbers of near-autonomous subcommittee chairmanships-is power not readily 

relinquished. 

Nonetheless, the need for such remedies is 

clear. Hence, to stem future intergovernmental 

congestion, legislators need mechanisms through 

which they may formally appraise the real national purpose and future intergovernmental impact of laws before enactment. Furthermore, they 

need processes that assure fuller consideration of 

alternative implementation techniques, and they 

desperately need ways and means of identifying 

related preexisting legislation, the altering or expansion of which might achieve the same purpose 

as proposed new legislation. 

Moreover, inasmuch as institutional fiagmentation, legislative overextension, and lack of internal discipline have contributed to the intergovernmental policy morass, the structure of 

Congressional committees requires some functional rationalization and jurisdictional coordination, while the number of subcommittees and 

subcommittee assignments requires some absolute numerical reduction. 

Nor are Congressional processes and structures 

alone in need of reform. Policy development and 

procedures for reviewing the national policy “fit” 

of proposed legislation in the executive branch 

have also lacked discipline and effectiveness. Finally, the governments and interests who lobby 

for additional small programs and the public and 

party system that condones them all have contributed to the current state of disarray. 

Hence, to help prevent future congestion of the 

intergovernmental system, the following reform 

proposals, addressed to the institutions and actors 

in tire policy process, are advanced for Commission consideration and debate: 

For the Congress 

l “Sunrise” legislation which would require 

formal Congressional consideration of: (a] the 

“national purpose” or “national objective” of 

new legislation, (b) alternative implementation mechanisms for achieving that purpose, 

and (c) the possibility of altering or expanding related preexisting legislation when it 

may be used to achieve the same purposes; 

l Prohibition against enactment of any program or policy (except research), the federal 

funding of which would amount to less than 

($100 million); 

l Adoption of binding rules of germaneness 

with reference to committee and floor amendments; 

l Reduction of the number and autonomy of 

Congressional subcommittees in related functional fields: 

l Reorganization of functionally related subcommittees together under appropriate functional committees; 

l Reduction in the number of subcommittee 

and committee assignments per member of 

tbe Senate and House; 

. 

For the Executive Branch 

l Strengthened “foresight” procedures for reviewing legislation proposed by the Congress 

or agencies; 

54 
l Extension, by Constitutional amendment, of 

the President’s veto authority to apply to specific items within legislation; 

. 

For the Courts 

l In relevant cases coming before it, more balanced Court consideration of the terms and 

conditions of federal grants-in-aid in light of 

the “inducement” vs. “coercion” test; 

. 

For the Political Parties 

l Adoption of measures that would strengthen 

the parties as forums for the regular consideration of major policy issues; 

. 

Problem 3: 

Excessive Federal Expenditures, 

Taxes, and Debt 

The post-Proposition 13 “tax revolt” has focused nationwide attention on the growing fiscal 

role of governments at all levels. Many believe 

that current levels of federal expenditures, taxation, and debt are too high. Federal spending has 

increased sharply since the mid-1950s. even in 

constant dollar terms, with most of the increase 

involving payments to individuals and grants-inaid. As expenditures have risen, tax and debt levels necessarily have increased as well. 

The normal process for the control of federal 

outlays is the annual budget. In recent years, efforts have been made with some degree of success 

to improve budgeting in the executive branch 

(PPBS, zero-base budgeting] and on Capitol Hill 

(the Congressional budget process). Some believe 

that these innovations have considerable promise, 

particularly in the view of popular demands for 

federal fiscal restraint. Yet to others, the budget 

process seems wholly inadequate, especially for 

my restructuring of intergovernmental programs 

and of the federal role in the system. 

Hence, several proposals have been advanced 

for Constitutional or statutory restraints on federal 

tax levels, expenditures, or deficits. Most of these 

would tie spending or tax levels to some measure 

of national income or would enforce budgetary 

balances, and thus impose external discipline on 

the nation’s political actors. A more modest reform strategy calls for the “indexation” of the federal income tax. As matters stand, the progressive 

structure of the income tax forces taxpayers into 

steadily higher brackets automatically, without 

overt Congressional action. 

Others contend that the real problem is not the 

overall size of the federal fiscal role, but poor federal performance. What angers voters, they believe, is not so much that government costs too 

much as that it provides too little for the money. 

They note that public opinion polls have sup 

ported high and rising levels of expenditure in 

most major functional fields for many years, and 

that American government is a low-cost operation 

compared to that in many other nations. Furthermore, they argue, artificial restraints would thwart 

efforts to stabilize employment and price levels 

through macroeconomic policy. 

What is more generally conceded is that outlays 

in many program areas have grown unexpectedly 

and perhaps excessively, regardless of budgetary 

priorities. Indeed, three-quarters of federal spending is now beyond effective control through the 

annual budget and appropriations process. Entitlement programs, including federal payments to 

individuals (among them Social Securfty and 

Medicare) and open-ended grants to states (including Aid for Families with Dependent Cbildren and Medicaid) make large tax cuts, a balanced budget, or the creation of major new federal 

spending programs difficult, if not impossible. 

Although uncontrollable spending has risen as 

a proportion of federal outlays with each passing 

year, the problem is not a new one. Traditional 

reform efforts have focused on reducing outlays 

by reducing the number of beneficiaries or controlling factor costs in the principal fields of concorn. Thus, there have been continuing efforts to 

reduce the welfare rolls through tighter management, social services, education and training, 

work requirements, and public service jobs-all 

largely unsuccessfully. In health, cost control has 

been sought through regulation, planning, and 

the encouragement of new forms of medical pmctice-again, to this date, largely unsuccessfully. 

Some now view welfare reform and a unified system of national health insurance as essential tools 

in the cost control struggle. 

More recent proposals attack the entitlement 

55 
problem in toto, rather than on a function-byfunction basis. The Congressional BudgetAct provided some procedural restrictions on the creation of new entitlement programs, but has not limited outlays for those already in place. Other 

possibilities include making most entitlement 

programs subject to the annual appropriations 

process; the elimination of automatic cost-of-living adjustments; and a movement toward multiyear, rather than annual, budgeting. 

All of these proposals face common political 

difficulties. Entitlement programs are very popular in Congress and among the large number of 

people who benefit from them. Efforts at control 

have been, and will be resisted. Especially during 

a period of general budgetary constraint, entitlement programs have strong appeal because they 

assure continued funding. Finally, the design of 

payment programs for individuals that do not 

utilize the entitlement approach is conceptually 

difficult. 

If entitlement spending is not contained, however, federal tax increases may be more likely than 

cutbacks. In recognition of the increasing number 

of elderly, the Congress presently is exploring additional revenue measures, including a valueadded tax. 

Hence, to control excessive federal expenditures, taxes, and debt, the following reform proposals have been advanced for Commission consideration: 

For the Congress 

. A strengthening of the Congressional budget 

process; 

l Constitutional or statutory tax, expenditure, 

or debt limitaticn& 

. Indexation of the federal income tax? 

. Control of health and welfare spending 

through programmatic reforms; 

l A fully federally financed welfare program” 

and national social insurance; 

. Further controls on the creation and funding 

of entitlement programs; 

. 

For the Executive Branch 

. A strengthening of the zero-base budget process; 

l Improving multiyear budgeting efforts; 

. 

For the State and Local Governments 

and 

Their National Associations 

. More effective control of costs in open-ended 

federal aid programs; 

. 

Problem 4: 

Imposition of Excessive Costs on 

State and Local Governments 

The “pass now, pay later” atmosphere referred 

to in the description of Problem 2 above means 

that other levels of government, unexpectedly, do 

much of the “paying.” The continual and even increasing use of seemingly “cheap and easy” grant 

and regulatory mechanisms may, in fact, impose 

very “expensive and difficult,” though initially 

hidden, costs upon state and local governments. 

Nor are these hidden, often massive, costs part 

of some insidious plot on the part of the,Washington establishment td weaken or financially overburden the nation’s Governors, county officials, 

and Mayors. Rather, the very lack of planning and 

analysis, which expedites the consideration and 

passage of national policies and in which broad 

idyllic goal statements pass for solutions, is to 

blame. Indeed, it might be said that the political 

process provides considerable incentives for exaggerating the potential benefits of new programs 

while minimizing their potential costs. And, if 

this is true throughout the policy process, it is 

particularly true in the development of regulations and particularly true of the 1970s. 

Hence, Congress often seems to view regulatory 

proposals and unilateral moral issues as opportunities for “position taking.” Yet, as the case 

studies have revealed, from such symbolic rhetorical commitments flow major enactments--enactments imbued with profound economic implications. Further, while this tendency to ignore 

potential costs is most visible in overt regulatory 

law, it is equally as true of the myriad of national 

policy objectives and conditions now attached to 

grant programs-all of indisputable moral, social, 

56 
and physical worth; some imposing ill-considered costs on recipient jurisdictions. 

Whether or not such hidden costs can be identified and mitigated is less than certain. Skeptics 

argue that preenactment procedures that truly reflected future costs would mean the virtual end 

of social and environmental progress or, at the 

very least, reduce the pace of that progress, while 

lengthy cost-benefit analyses ensued. Others contend that the current state of the forecasting art is 

simply incapable of accurately or even closely 

predicting future costs and needs. 

Nonetheless, the need for some method or set 

of methods to ensure more thoughtful prior and 

current consideration of regulatory costs, particularly as those costs are imposed by federal mandate upon other levels of governments, seems eminently clear. Thus, Congress might institute some 

prelegislative mechanism for assessing the costs 

to state and local governments of legislation that 

affects those jurisdictions and. thereafter, require 

appropriate agencies to estimate and publish projected costs, benefits, and other impacts of proposed and ongoing regulations. 

In addition, to ease their own fiscal burdens, 

the states and localities might engage in more aggressive legal actions against “coercive” conditions attached to federal grants. And, finally, in 

such cases. the Supreme Court might attempt a 

more balanced consideration of the degree to 

which ostensible inducements actually amount to 

coercion. 

Thus, to ensure that excessive and unforeseen 

costs are not imposed on state and local governments by federal regulations and grant conditions, the following reform proposals, addressed 

to the institutions and actors in the policy process, are advanced for Commission consideration 

and counsel: 

For the Congress 

. Require an assessment of initial, as well as 

projected, ongoing costs to state and local 

governments of legislation affecting such jurisdictions when reported by House and Senate committees: 

. Require regular reports by Congressional staff 

agencies on current costs of ongoing grants 

and regulations; 

. 

For the Executive Branch 

Agency estimation and publication of projected and current costs, benefits, and other 

impacts of proposed and ongoing regulations: 

For the Courts 

More balanced consideration in relevant cases 

of the degree to which inducement amounts 

to coercion when judging the required terms 

and conditions of federal grants to be met by 

their recipients: 

More careful weighing of the claims of national necessity and of the counterarguments 

that state sovereign interests have been impaired by national mandates; 

For the State and local Governments 

Assess &e short and long-term fiscal costs 

and benefits of participating in each of the 

federal aid programs wherein they are actual 

or potential recipients and establish f&al 

guidelines on when participation is not sufficiently in the recipient’s interest: 

Establish a joint state-local legal defense unit 

to monitor and institute legal actions involving “coercive” conditions attached to federal 

grants and intrusive exercise of the commerce 

power; 

Problem 5: 

Neglect of State and Local 

Interests in the Political Process 

Paralleling the shift in governmental authority 

toward Washington over the past 20 years has 

been a shift in political power. The traditional, 

strongly decentralized political system has become a heavily pluralistic, more national one, 

with power organized more on a vertical and 

functional, rather than on a territorial basis. The 

result is that state and ~local governments play a 

57 
far less authoritative role in national policy decisions than formerly. Although their capacity to 

say “yes” to federal dollars may have increased, 

their capacity to say “no” to federal intrusions has 

sharply declined. And this, despite or perhaps 

because of their expanded representational efforts. 

Until comparatively recently, full consideration 

of the interests of state and local governments and 

their officials within the councils of the federal 

government was assured by the territorial organization of campaign politics. All candidates for 

national ofice depended for their election on 

state or local constituencies, and a strongly decentralized party system. Consequently, for many 

purposes, U.S. Representatives could be and were 

regarded as local rather than national officials, 

and U.S. Senators, as spokesmen for their states. 

Presidential nominees were selected in national 

party conventions in which state and local officials were well represented, and of course Presidential campaigns have always been conducted 

on a state-by-state basis because of the nature of 

the electoral college system. 

No longer does the party system serve as an 

informal bulwark of federalism, however. Over 

the past 20 years, the political parties have become weaker functionally and more centralized 

organizationally. Candidates for national office 

have coma to rely upon personal followings, the 

media, and campaign contributors in their drive 

for election. The old coalitions of state and local 

officials and power brokers are not necessary and, 

indeed, barely exist. 

Formal processes of intergovernmental consultation have been established in the interim. The 

Executive Office of the President has offered a 

contact point for state or local officials for some 

15 years, and intergovernmental liaison units 

have been created within most federal departments as well. The ten federal regional councils 

(FRCs) also have a firm mandate to improve intergovernmental communication. Unfortunately, 

none of these mechanisms is linked directly to the 

national policy process, and their record over the 

years has been mixed at best. 

During the past 20 years, all of the major associations of state and local governments have eraated or strengthened their Washington offices. 

More than half of the states, and several hundred 

other jurisdictions, have established their own 

lobbying units as well. But for several reasons, 

they have not been effective in interjecting the 

full range of state and local concerns into the federal legislative, regulatory, and administrative 

processes. First, they lack the firm electoral power 

base which the party system formerly provided. 

Second, the Washington representatives of state 

and local governments often seem more concerned with obtaining additional funds than with 

protecting the autonomy of the jurisdictions they 

represent. While deploring federal mismanagement and the diminution of state-local autonomy, 

they eagerly support the creation and expansion 

of federal aid programs. Finally, the associations 

themselves have not devised any unified view of 

the proper operation of American federalism and 

the role of the national, state, and local governments within it. Agreement on priorities-aside 

from the renewal of General Revenue Sharinghas been difficult to attain. 

Proposals to strengthen the political process 

face in two directions simultaneously. One approach seeks to bolster the role of the political 

parties and the position of state and local governments within them. For example, a reduction in 

the number and duration of Presidential primaries 

might refocus attention on the national convantions, and changes in convention rules could increase the role of state and local party officials 

and elected officeholders. The maintenance of the 

electoral college is an essential component of this 

strategy, since direct popular election of the President would undercut a major remaining element 

of political federalism. Yet, all such proposals 

have but an indirect connection to the condition 

of federalism and seem dubious in light of public 

attitudes about the parties and politicians. 

Other proposals are intended to increase the 

autonomy and influence of the organizations that 

represent state and local governments in Washington. Critics call for improvements in their policy processes, a redoubling of efforts to monitor 

federal regulations and program implementation, 

and less dependence on federal grants and contracts to support their own research and training 

activities. One innovative idea, aimed directly at 

the growing use of federal aid as an instrument of 

federal regulation, calls for the creation of a permanent state-local legal defense committee, following the tactic employed so successfully by 

civil rights and environmental groups, and by 

state and local governments for a few specific le58 
gal suits. Since the mid-197Os, many individual 

state and local governments have instituted suits 

against federal policies that encroach on their 

sphere of authority. Yet the legal battle has been 

pursued primarily on an ad hoc basis, and some 

cases have not been pushed for lack of financial 

support or necessary expertise. 

Whether or not any of these measures would be 

effective is open to doubt, however. None would 

be easily implemented. More importantly, the 

heavy fiscal dependency of state and local governments on external funds makes it less likely 

that they will reassert themselves. This is especially true in a period of fiscal constraint and popular demands for state and local tax reductions. 

In summary, the following reform proposals are 

geared to assuring fuller consideration of fimdamental state and local interests within the national political system. Commission consideration of and counsel on them is crucial to their 

proper presentation in the final report. 

For the State and Local Govemmmts 

and 

Their National Associations 

. Creation of a state-local legal defense unit to 

monitor cases that have serious intergovernmental implications and to initiate suits in 

instances where the commerce or conditional 

spending powers are exercised in a way that 

compromises the integrity of state-local policymaking: 

l Aggressive efforts to monitor and report on 

the impact of federal regulations and programs: 

. A better sorting out of the basic program 

priorities of state and local governments and 

a better reflection of these in their representational efforts; 

. Reduced reliance on federal funding sources 

to support association activities; 

. 

For the Executive Branch 

l Improved opportunities for consultation with 

state and local governments; 

. Strengthening the federal regional council 

system by expanding its inputs into the national budgetary and regulatory processes, by 

depoliticizing its leadership, and by placing 

it on a statutory basis; 

l Maintenance of the electoral college system 

for Presidential elections, but scrapping the 

one-state-one-vote formula in the House for 

breaking any impasse in the electoral college; 

. 

For the Political Parties 

. A reduction in the number and duration of 

Presidential primaries and a strengthening of 

party conventions: 

. Increased opportunities for participation by 

state and local officials in party conventions; 

l Fuller debate and consideration of nationalstate-local priorities at party conventions; 

. 

Problem 6: 

The Excessive Power of 

Special Interest Groups 

1 

“Atomization, ” “overload,” and “alienation”- 

these are the terms that describe coritemporary 

American politics. Over the past 20 years, power 

has been fragmented among a host of contending 

interests; policymakers have come to be beleaguered by more numerous and strident demands 

for federal action on every front; and the publicat-large has grown increasingly dissatisfied with 

the outcome and disenchanted with the process 

that produces it. Inside the halls of government, 

as well as outside them, fears of “special interest” 

domination have replaced the earlier view that 

most lobbying was simply a healthy expression of 

the nation’s social pluralism. 

Evidence of this dramatic change may be found 

in the manner in which the public’s business is 

conducted in the Capitol, the White House, and 

on the campaign trail. The two major political 

parties-always weak by European standardshave become pale shadows, commanding little 

loyalty anywhere, unable to organize either the 

government or the electorate. The stature of the 

old triumvirate of organized interests-business, 

labor, and agriculture-representing major eco59 
nomic classes also has diminished. But new single and multiple-interest lobbies, proclaiming 

themselves to speak for almost every occupational, social, and demographic sector of the nation’s population, have blossomed everywhere. 

Most now have direct ties to specific federal aid 

or regulatory programs. 

The case study findings suggest that the role of 

interest groups in the creation of new federal programs is frequently overstated. While groups 

sometimes do play leading roles in policy initiation, more often they are simply secondary and 

supportive actors, with entrepreneurs in Congress 

or elsewhere in government occupying center 

stage. Yet, the power of interest groups during the 

“second generation” of policymaking, when programs are renewed and expanded, is incontestable. Regardless of their origin, programs quickly 

become encrusted in “iron triangles” of beneficiary groups and their allies in the bureaucracy 

and Congress (and their counterparts at the state 

and local level). These tripartite alliances usually 

are able to mobilize effective opposition to proposals, jeopardizing the programs that aid them. 

What interest groups do, then, is “rigidify” the 

system, making it unresponsive to political leadership and the prevailing political climate, and 

resistant to policy reforms. 

It is by no means clear that the tight grip of 

organized interests can be effectively reduced. 

The process of political fragmentation is now well 

advanced, and may well be irreversible. “More of 

the same” does seem the most likely scenario 

throughout the coming decade. 

On the other hand, a variety of institutional and 

procedural constraints on group activities has 

been proposed. Aimed most directly at interest 

group lobbying are calls for tougher registration 

and disclosure standards and measures limiting 

campaign contributions from group sources. The 

latter objective might be most readily advanced 

by extending the system of public campaign financing for Presidential candidates to members 

of the Congress. 

Another very traditional approach urges the 

consolidation of decisionmaking authority into 

larger ~aggregates: the reorganization of Congressional committees and subcommittees and of executive departments. Reorganization is intended 

to shift effective authority into broader arenasarenas which presumably are more responsive to 

the general public interest. 

Another strategy calls for the refurbishing of the 

political parties as a counterforce to special interests. Only political parties, it is argued, can provide meaningful policy alternatives for electoral 

choice and assure their execution through the 

machinery of government. To this end, an extensive range of measures to strengthen the consideration of policy issues within and between the 

parties and to bolster their role in the conduct of 

political campaigns have been called for. Alternately, the opportunities for political participation by individual citizens might be increased directly. A range of techniques for greater citizen 

involvement in the legislative, budgetary, regulatory, and electoral processes have been advanced. Characteristic of these are calls for a national initiative and referendum process to circumvent or overturn the actions of national 

legislators. 

These latter two sets of proposals frequently 

conflict. Indeed, the “responsible party” advocates often regard the proponents of further “direct democracy” as their most serious opponents. 

Past efforts to strengthen individual participation 

in party affairs, they believe, have contributed to 

the demise of party government. On the other 

hand, the advocates of “citizen power” fear a return of the smoke-filled rooms and backroom 

deals that too often characterized party prbcesses 

in the past. Furthermore, all of these sorts of proposals may be expected to be opposed by those 

groups which think their status would be threatened. The record of similar populist reforms of 

the past inspires little confidence. 

For this reason, then, it may be that the principal responsibility rests with the public and an 

aroused electorate. So long as apathy--or a “what’s 

in it for me” mentality-prevails, curbing the 

power of special interests may be impossible. 

After all, one person’s “special interest” is another’s “favorite cause.” A shift of attitudes and 

priorities by the people themselves may be the 

basic prerequisite to a restructuring of political 

pOWIT. 

In summary, the following reform proposals 

directed toward reducing the excessive power of 

special interest groups in federal policymaking 

have been advanced for consideration: 

For the Congress 

. A reorganization of Congressional committees and subcommittees; 

60 
. Public campaign financing for Congressional 

candidates; 

. Tougher lobbying registration and disclosure 

laws; 

. 

For the Executive Branch 

l A further reorganization of executive departments by major functions; 

l Increased periods of service for political executives; 

l 

For the Political Parties 

l A reduction in the number and duration of 

party primaries; 

. More frequent policy conventions and conferences; 

l A reinvigoration of party caucuses in Congress; 

. Enhanced opportunities for participation by 

individual party members and small contributors; 

. 

For the General Public 

. A national initiative and referendum process; 

l Opportunities to indicate their budgetary 

preferences on income tax returns; 

. Direct national election of the President by 

popular vote; 

l Financial support to citizen advocates appearing in regulatory proceedings; 

. Standardized and simplified voting registmtion procedures; 

. A reordering of public priorities in support 

of primary national needs; 

. 

Problem 7: 

Bureaucracy, Red Tape, and 

The Dispersion of Accountability 

A common description of current intergovernmental relations asserts that it is an overbureaucratized, grossly mismanaged “system” tangled 

together by a maze of red tape. No longer am federal programs thought to be well-oiled tools of 

efficiency or effective mechanisms for a congenial 

partnership among levels of government. On the 

contrary, in field after field, implementation and 

evaluation studies reveal serious shortcomings in 

program execution. Increasingly, programs fail to 

meet their objectives; waste and fraud have become commonplace; regulatory detail has escalated sharply: and relationships between grant recipients and Washington have deteriorated, 

frequently taking on an adversarial character. 

Traditional solutions to these problems have 

concentrated on improvements within the executive branch. Proposals for departmental reorganization, civil service reform, and tighter management are the stock-in-trade of administrative 

reformers. Many of these have been advanced in 

recent years, some adopted. 

Although the bureaucracy bears the brunt of 

criticism for federal mismanagement, the purely 

bureaucratic “solutions” mentioned above have 

done little to mitigate the problem, perhaps because the origins of the problem lie elsewhere. 

Hence, many of the case studies reveal that programs were poorly designed to accomplish their 

purposes and, indeed, many can hardly be paid to 

have been “designed” at all. Administrative features were often inserted almost incidently, with 

little regard for ease of implementation either in 

Washington or at the recipient level. 

In the realm of regulatory law particularly, the 

Congressional tendency has long been to write 

and pass broad, symbolic legislation devoid of 

much substantive content. It is, after all, difficult 

to vote against good intentions. Yet, in recent 

years regulatory law, like all legislation, has proliferated at a greatly accelerated pace and with 

that proliferation the problems of such legislation 

are magnified tremendously. Thus, it falls increasingly to administrative agencies to define the 

intent and scope of more and more regulatory law. 

Such broad delegation of Congressional authority has been called by political scientist Theodore 

J. Lowi, “policy without law.” It is the institutional, often systemic, dispersion of legal responsibility and accountability-dispersion resulting, 

more often that not, in irresponsible policy and 

unaccountable administration. Indeed, in a number of cases studied, the substantive results of 

61 
nonsubstantive regulatory language “horrified” 

even the authors of the legislation. 

Nor is the problem merely one of Congressional 

“foresight” or preimplementation specificity. If 

the prelegislative policy process has become fragmented, so too has the post-legislative oversight 

process. In Congress, oversight responsibility has 

become diffused with the proliferation of subcommittees, and agency implementors, for their part, 

have failed to formally identify implementation 

difficulties. 

Whether or not any concrete remedies can be 

devised to correct these problems of regulatory 

responsibility and accountability is uncertain. 

Needless to say, Congress cannot implement its 

own laws, nor foresee every potential consequence of its legislation, nor specify every single 

administrative detail. It is properly in the nature 

of legislative bodies to delegate. Yet, clearly, that 

delegation must be surrounded by parameters, by 

some explicit and understandable set of standards 

that Congress itself sets forth in the legislation. 

Moreover, and in the absence of such Congressional self-discipline, there exists a need for more 

thorough court consideration of the possible invalidity of excessively broad delegations of legislative power. 

A number of institutional and procedural remedies have been proposed. One approach urged 

by advocates of “sunrise” legislation would require the fuller advance specification of the precise objectives of every program, which after all 

provide the standards by which their performance 

is to be evaluated, and identification of possible 

alternative implementation mechanisms. An alternative strategy would assure consistency with 

legislative intent by strengthening and formalizing Congressional review of agency program regulations, perhaps through the “legislative veto” 

process. Opponents of these proposals, on the 

other hand, regard them as inappropriate and unnecessary legislative “meddling” in administrative affairs, even as Constitutional violations of 

the separation of powers-“violations” whose efficacy has not yet been demonstrated. 

An alternative approach concentrates attention 

on after-the-fact program improvements. In Congress, some feel oversight of existing programs 

should be strengthened through organizational 

reforms which would assure complete legislative 

oversight of a particular policy by a single committee and through procedural reforms such as 

sunset legislation. To aid Congress in its massive 

oversight responsibilities, they contend, its own 

staff agencies, as well as those of the executive 

branch, should assess costs, benefits, and other 

impacts of regulations under their jurisdictions 

and should report regularly to Congress on implementation difficulties and proposals for legislative clarification of regulatory directives. Critics 

of these approaches, however, note that the obstacles are numerous. Oversight has never been popular with members of Congress, and resources 

aimed at this objective often are turned to other 

ends. Moreover, they emphasize, major programmatic overhauls are politically difficult once the 

“players and rules of the game” have been established. 

Finally, some argue that state and local governments bear important responsibilities for improving the management of intergovernmental programs. First, despite significant improvements 

over the past two decades, some are still poorly 

organized and staffed. Second, only state and local governments are aware of many implementation problems, and only they may be in a position 

to identify potential solutions. Finally, too many 

state and local governments have regarded federal 

dollars as “funny money,” to be handled with less 

care than locally raised revenues. 

Hence, to ensure more effective managefoent of 

intergovernmental grant and regulatory programs, to help assure the administrative fulfillment of Congressional intent, and to guard against 

the overly broad dispersion of responsibility and 

accountability, the following reform proposals are 

advanced for Commission consideration and debate: 

For the Congress 

l Enactment of “sunrise” legislation: 

. Setting of clear standards of implementation 

in each new piece of aid and regulatory leg 

islation; 

. Enactment of “sunset” legislation;” 

. Reorganization of functionally related subcommittees under appropriate functional 

committees; 

. Oversight by full committee of programs and 

regulations stemming from separate pieces of 

legislation; 

. Congressional veto of administrative regulations based upon the intent of Congress; 

62 
. Greater coordination of oversight among the 

standing committees; 

. 

For the Executive Branch 

l Periodic Presidential or agency reporting to 

Congress on the costs, benefits, and other impacts of regulations, as well as on the difficulties in implementing regulations and proposalsforlegislativeclsrificationof directives: 

. 

For the Courts 

l A greater willingness to declare invalid and 

unconstitutional Congressional delegations 

of power to administrative agencies which 

are not accompanied by clear standards for 

implementation; 

. 

For the State and Local Governments 

and 

Their National Associations 

. Assessing costs and benefits and potential 

management problems in each of the federal 

aid programs wherein they are actual or potential recipients. 

l Establishing joint state-local legal defense 

committees to monitor and institute legal actions involving “intrusive” exercise of the 

commerce power and coercive use of the conditional spending power; 

. Achieving full fiscal support of the national 

associations: 

. 

TENTATIVE RECOMMENDATIONS 

The Commission’s fundamental finding that the 

system is overloaded and increasingly dysfunctional suggests the need for changes, even drastic 

changes. The concomitant finding that the ever 

widening scope of the federal role in the federal 

system has been the prime creator of increasing 

intrusion, greater unmanageability, mounting 

program ineffectiveness, costliness, and the essential unaccountability of current intergovernmental relations suggests that sanguine standpatism is an untenable position to assume. Yet, what 

should and can be reformed? 

The probe of seven basic problems generated by 

the sad state of contemporary intergovernmental 

sffairs highlighted specific proposals for possible 

remedial action in each of the saven. It also indicated that a range of viewpoints exists regerding what should be the focus of reform efforts; 

what specific implementing actions are desirable 

and possible; and what degree of optimism is realistic with reference to each of these proposals. 

For all of these reasons, the following must be 

considered, at this stage, to be merely tentative 

recommendation strategies and proposals. The 

Commission’s consideration of the previous seven 

problem areas no doubt will modify some, if not 

all, of them and might even produce a recasting 

of the scenarios. 

On the basis of a careful reading of the recent 

intergovernmental record, however, and a confronting of the critical questions raised by it, three 

basic reformist strategies do seem to emerge: an 

incrementalist approach, a more surgical school 

of thought that calls for fairly drastic change in 

five basic areas, and a full-scale reform of our 

basic charter view. I 

At the two extremes, then, stand the “system is 

already responding” and the “system requires 

drastic Constitutional change” schools of thought. 

The former is based on a reading of recent events 

that suggests the hyper-responsiveness of the system in the 1970s to the immediate concerns of a 

plethora of pressure groups also applies to the 

basic concerns of the majority of the electorate 

that now seems opposed to such public sector 

growth. Advocates note the emergence of some 

elements of fiscal and political constraint. The 

early 1970s witnessed the disappearance of the 

“fiscal dividend” that the prosperity of the 1960s 

had generated and which fueled the expansion of 

the public sector. Growing pressures for budget 

balancing as a means of curbing inflation have 

arisen and inflation is now deemed the number 

one public finance agenda item. In addition, defense outlays are slated to rise and the Social Security system appears to be in need of alternative 

sources of funding, both probably at some cost to 

domestic programs. The Carter budgets for FY 

1981 and 1982, Congress’ handling of its own reformed budget procedures this past year, and talk 

63 
of a revamped Congressional power structure this 

year are cited in evidence of a new behavioral 

pattern. These incrementalists also warn that no 

drastic reform proposals are really necessary and 

that continuing political pressures will correct the 

imbalances, inefficiencies, and ineffectiveness of 

the present system-thus rendering it more accountable and simpler to the electorate. 

Opponents counter with the argument that fiscal retrenchment in domestic program areas need 

not involve intergovernmental program and reg- 

&tory reform, but merely a cutback in aid dollars. On the basis of current and projected experience, it only adds up to as many (if not more) 

aid programs, and more conditions attached 

thereto, but less money in constant dollar terms. 

From the state and local perspective, as well as 

that of the system as a whole, this would be the 

worst of all possible worlds except for sudden, 

massive cutbacks. To accept the “system is already responsive” thesis, they claim, is to ignore 

the dynamics of interest group lobbying and Congress’ recurring tendency when confronted with 

fiscal constraints to adopt “the parity of pain principle.” This leads to no real assessment of intergovernmental programs and regulations, to avoiding the choice between those grants that make 

sense and those that are nonsense, of ignoring the 

differences between those that are fat and these 

that are lean, of separating those that are genuinely intergovernmental from those that We patently parochial and political. 

At the other extreme, the Constitutional reformers contend that the political pressures are too 

great, that the system’s responsiveness continues 

to be excessive, and that only Constitutional curbs 

can foster an environment in which national decisionmakers can say, “No!” The curbs range from 

the less dramatic, like a Presidential item veto; to 

the more drastic, like Constitutional limitations 

on taxing or spending and the changing of the 

terms of House members (and sometimes of the 

President); to the most drastic, which involve the 

instituting of a quasi-parliamentary system, and 

the redrawing of state boundaries and clarification of state powers. 

Opponents argue that none of these is feasible 

or even desirable, that they depart drastically 

from the American tradition, and that reformsshort of the Constitutional varietydan do the 

job. Before any one of these Constitutional reform 

approaches could muster significant strength, 

they contend, the existing system would already 

have responded without having to tinker with our 

basic charter. 

Between these two extreme schools stands the 

“basic reform short of Constitutional change” 

school of thought. Five approaches, however, are 

encompassed within this school (which raises a 

number of questions about which approaches are 

compatible and reinforcing). Each approach rests 

on a rejection of the extremes and on the acceptance of a particular view of how the system got 

to where it is. Some of the specific proposals advanced ace clearly rooted in the Commission’s research; others rest on the work of others; and still 

others have no foundation in research or in actual 

experience because they never have been tried or 

tested and rest on faith alone. 

One of these middle perspectives on how to carrect the system’s present deficiencies concentrates on surgical ways of decongesting today’s 

overloaded intergovernmental network. Advocates of this approach reject incremental methods 

of reform, contending that these miss the mark. 

Improved Congressional oversight and procedures, better OMB circulars, effective departmental inspector generals, and more pointed General 

Accounting Office (GAO) audit reports in no way 

can cope with a system whose dynamics lead to 

more government programs, more conditions and 

mandates, more interest groups,‘3 more political 

posturing on the part of all the players-federal 

as well as state and local- but at the same time 

to fewer dollars. 

What is needed, this group urges, is a sorting 

out of roles and of sane of the functions that unwisely have become intergovernmentalized. This 

is no return to the old-style dual federalism, they 

caution. Instead, this strategy seeks to place 

squarely on the federal government’s shoulders 

the full fiscal and administrative responsibility 

for key national functions (like public welfare and 

health insurance) and to recognize the ineffectiveness, the inequities, the inefficiencies, and the 

unaccountability that the present patchwork approach to these two multibillion dollar programs 

has produced. This is no call for retreat for the 

federal government then, but rather is a facing, 

for the first time really, of its full responsibilities 

in these areas of clear national concern and obligation. The myths of managerial convenience, of 

bargain basement administration, of intergoverumental equity must be identified for what they 

64 
are, so this group maintains, as myths, just myths. 

At the same time and as a trade-off, these surgical reformers also call for a devolution of a range 

of activities the federal government now is aiding 

and pretending to “run.” But the details at this 

point become somewhat blurred. Some argue for 

grant consolidation (and, in effect, the elimination of certain narrow categoricals). Others call 

for a trade-off: consolidations for a cut in their 

funding. Still others focus on the 440 grants that 

account for 10% of the federal aid total and urge 

their elimination through mergers 01 devolution 

to state and local governments. 

Using the percentage of state-local outlays that 

specific federal aids provide is yet another approach, advocated by some. If it constitutes less 

than 10% say, of the total of state and local expenditures in the affected program area, this 

group would say “scrap it.” The subnational governments already are the dominant providers and 

all the federal aid provides is marginal fiscal help 

with controls and major administrative headaches.” 

Advocates also point out that several functions 

by their very nature would remain intergovemmental-transportation, the environment, energy, 

natural resources, and community development, 

to mention only the more obvious. The goal of 

this partial sorting-out strategy, they insist, is to 

decongest the system, to reduce the focus on 

Washington for a range of secondary public policies and programs, to enhance the discretion of 

subnational governments, and, above all, to inject 

greater accountability into the system. 

Critics of this approach contend that is totally 

infeasible, untraditional, and undesirable. Once 

an issue gets to Washington or an aid program 

gets started there, it is nigh impossible to push it 

back into the state and local realm, they warn. 

Only the elimination in the early 1940s of the 

public works and relief programs of the Depression years can be cited as the major example of 

closing down federal aid programs. The effort of 

the Eisenhower Administration with the Joint Action Committee to devolve certain program responsibilities along with funding sources was 

a waste of time, they remind us. Moreover, the 

number of programs and especially the large 

number of puny aid programs is a small price to 

pay for political accommodation, for pressure 

group pacification, for achieving a rough appmximation of some consensus. The old theory that 

whatever passes muster in the chambers and carriders of Capitol Hill and is signed by a F’resident 

is still a good test of what is in the national interest, they believe, and arbitrary, across-the-board 

efforts to reduce the pressures on the national legislative and administrative processes, especially 

as they are presently conditioned, will come to 

naught. 

Another of these “middle” scenarios focuses on 

the collapse of internal governmental constraints. 

Hence, it calls, among other things, for “sunset 

legislation,” income tax index&ion, grant consolidation, fiscal notes, a regulatory budget, statutory 

taxing and spending limits, Congressional veto of 

administrative regulations, and committee rearganization on the Hill, as ways of building greater 

discipline into the operations of the political 

branches of the national government. In essence, 

all of these are geared in one way or another to 

making it easier, or at least possible, for national 

decisionmakers to say “no.” 

Opponents of this approach contend that pmcedural changes without basic attitudinal and political ones will accomplish nothing but more end 

runs and charades, more complex and unfathomable national governmental operations, and 

more intergovernmental uncertainties. 

A third reform approach centers on the role of 

the federal judiciary and emphasizes that its authoritative power should be utilized to render the 

system more accountable, more balanced, and 

more effective. The present system, they note, is 

in large part a byproduct of Supreme Court decisions relating to the commerce and the conditional spending powers. More balanced and realistic future decisions in these twin Constitutional areas could establish a new climate for, and 

some enforceable means of curbing the seemingly 

uncontrollable assertion of national authority. 

Critics of this strategy claim that it would lead 

to even greater judicial intrusion into essentially 

political matters than prevails now and that it 

rests on the hope that the Supreme Court can be 

a neutral arbiter of intergovernmental conflicts 

rather than a national body which, with only a 

few historical lapses, has favored national power 

and growth over its nearly ZOO-year history. 

A second mid-range scenario assumes that the 

problems are basically political and that if they 

are corrected, the other difficulties will be resolved fairly easily. One group here focuses on 

party reform and advocates restiictions on the po65 
litical action committees of pressure groups, closed 

primaries, a reduction in the number of Presidential primaries, enhancing the role of officeholders 

in all conventions, mid-term conventions, public 

financing of Congressional candidates but with 

funds donated to the parties, and retention of the 

electoral college with minor changes. 

A very different group within this political pmcess group centers its attention on the sovereign 

citizen, not the major parties. For it, a few of the 

above proposals are appropriate, but the direct 

election of the President, public financing of 

Congressional and other campaigns, a national initiative and referendum process, easier and simpler voter registration, the easy creation of new 

political parties, and public financing of citizen 

witnesses before regulatory agencies are central 

points in the reform agenda. 

Opponents of the strengthened parties alternative argue that procedural props are no substitute 

for the performance of needed functions and that 

the national parties perform no functions presently that other mechanisms and groups could not 

provide. To call for a more responsible, accountable two-party system at this point in history, they 

claim, is to ignore the reality of contemporary 

American politics and the attitudes of the electorate toward the parties and the system they pretend to constitute. 

Critics of any further focusing on the voter *s 

sovereign policymaker in the system point to recent efforts to enhance his or her direct role in the 

system and their disappointing results. To project 

Jefferson’s image of the commonsensical, rational 

yeoman farmer into today’s hyper-complex governmental system without at least Madison’s supporting concept of factions (interest groups) is, to 

this group, the essence of a romantic, hence unreal democracy. Recent experience with citizen 

participation requirements in federal programs 

(over 150 of them), the decline in voter participation (even among the well-educated), opinion 

polls on voter awareness, and basic sociological 

studies on the collapse of intermediate and formerly buttressing social institutions (which permitted the myth of the discerning, dependable, 

and independent citizen voter to arise in the first 

place) combine, in the minds of these critics, to 

suggest that placing any more burdens and reliance on the individual voter is asking the impossible, if not beating a very dead democratic horse. 

Periodic pushes for more populism and more participatory democracy, they point out, from Jackson to General Weaver and from Theodore Roosevelt and Hiram Johnson to John Gardner, have 

done little but to enthrone a new breed of special 

interest group politics, not the politics of the people. If any contemporary case study is needed to 

verify this generalization here, California inevitably is dragged out as exhibit number one. 

A final middle-range reform strategy concentrates on state and local governments and their 

representatives and national associations in 

Washington. Its underlying thrust is to challenge 

the subnational governments to find ways and 

means of saying “no” (where appropriate) to federal programs, dollars, and conditions. Decongestion should be as much, if not more, a part of the 

agenda of state and local governments as it should 

be uppermost with the national government. A 

somewhat changed role for the national associations is envisaged--one that is conscious of, and 

vigilant about, the long-term consequences of an 

ever-accelerating federal role, of the need for tradeoffs and bargaining, of the costs as well as the benefits of federal subventions. Moreover, a greater 

capacity and willingness to resort to the courts, 

when unjustified or excessively burdensome conditions are attached to grants and when Congress 

exercises its commerce power in a m&dating 

fashion, is sought. 

Critics of this approach claim that the real problem is with the array of interest group-conomic, program, social, and single issue-that 

have no hesitancy in undercutting and undermining state and local governments and their role in 

the system if doing so will advance their own 

causes. The excessive responsiveness of federal 

policymakers to such pressures, they maintain, 

has pushed the states and the localities to mount 

greater representational efforts over the past decade and a half. Moreover, some within this group 

argue forcibly that the rivalries between and 

among the subnational governments and their national associations and the differing needs and fiscal positions of some states and many localities 

assure a continuing focus on Washington-its 

programs, moneys, and politicians. By now, they 

argue, it is plausible to believe that state and esp&ially local reliance on federal moneys and policy dictation has become so habitual that no turnabout is feasible. 

66 
Alternative Strat 

Incrementally Improve Y t

y A: 

e Present 

Intergovernmental System 

The Commission concludes that both the national interest and the need to enhance the capacity of state and local governments to meet their 

responsibilities require the national government’s 

involvement in a broad range of domestic matters. 

The Commission concludes, further, that the present intergovernmental system represents a realistic and workable response to the nation’s needs, 

despite serious acknowledged difficulties in interlevel coordination, administration, and accountability. The present system does incorporate 

processes for addressing these difficulties, which 

over time and with persistent effort cm produce 

a more manageable and accountable intergovernmental system. Hence, 

The Commission recommends that the federal 

mle in the American intergovernmental system 

he maintained essentially in its present forelying upon General Revenue Sharing, block 

grants, categorical grants, and other forms of federal aid, plus federal regulatory activities, and 

other means to address national, state, and local 

interests in relation to one another. The Commiesion recommends, further, that present efforts at 

Congressional oversight, executive and Congressional budgeting, program evaluation and simplification, program consolidation, agency reorganization, federal consultation with national 

and subnational interests in developing new pmposds, impact analysis of such pmposals (addressing fiscal, intergovemmerltai, envtmllmerltal, urban, and mml policy considerations), and 

regulatory reform be pursued vigomusly in order 

to accelerate improvement in the intergovemmental system, thus making it mom effective, efficient, and responsive to the needs of the nation 

and of all levels of government. 

Alternative Strategy B: 

Systemic Reforms, 

Short of Total Overhaul 

Some sense the urgent need for some sharp and 

substantial, not just slow and incremental, shifts 

in our political system and the federal role in the 

intergovernmental system-short of basic Constitutional change. But this group divides over 

which of the critical conditions is most responsible for the system overload, on approaches to an 

appropriate and feasible reform strategy, and on 

whether more than one strategy should be pursued simultaneously during the 1980s. The following scenarios, which may be treated as compatible, incompatible, or perhaps mutually 

dependent strategies, attempt to reflect these differences in diagnosis, in focal points of reform, 

and in their political feasibility. 

Recommendation 1: 

Some Sorting Out of 

The Grant S stem 

By Trade- 8ffS 

The Commission concludes that the federal 

government has overused the grant-in-aid mechanism, sometimes giving state and local governments roles in certain programs which would be 

handled best by the federal government itself, 

while at other times establishing a federal role in 

programs better left to state and local governments themselves. In these cases, the grant mechanism unnecessarily complicates the administration of the programs, confuses political and 

program accountability, reduces effectiveness, interferes with economic efficiency, and rarely 

achieves equity goals. Hence, 

The Commission recommends that the Rderal 

government assume full f+mncial apd administrative responsibility for programs which are of 

paramoImt national importance, are national in 

scope, and which require uniform levels of benefits and [/or1 consistent nationwide administrstion by federal employees, including public assistance, health benefit payments, and other 

appropriate social insurance programs. At the 

same time, the number of remaintng federal assistance pmgrams should be reduced very substantially, with the primary candidates for termination to include: (a) the approximately MO 

small federal categorical grant pmgrams which 

account for only ten percent of all grant funds 

(excluding programs supporting research and 

demonstrationl, (b) programs in functional fields 

in which the federal share amounts to less than 

[five] [ten) percent of the combined nationalstate-local outlays; (c) pmgraiu which do not 

embody essential and clearly stated national objectives, or which are too small to significantly 

address the need to which they relate; (d) pmgrams, especially small ($100 million or lees) 

67 
ones, which have high administrative costs relative to the federal financial contribution; (e) programs which obtain-or could obtain-most of 

their funding fmm state and/or local govemmerits, or fees for service, or which could be 

shifted to the private sect~r.‘~ The Commission 

urges that this strategy of full national msponsibility for certain pregrems combined with devolution of responsibilities for others to the state 

and local levels, or to the private sector, be accomplished by Congress and the President 

through one or mere of the following approaches: 

unilateral federal legislative enactments; 

enactment of legislation after full consultation with tbe effected subnational governments and with a view toward arriving at a 

meaningful bargaining ever the trade-offs; or 

enactment of legislation providing for a process in which state and local officials from 

each state, es a unit, would be [allowed to) 

[encouraged to] negotiate a trade-off package. 

Recommendation 2: 

Strengthening the Internal Processes 

Of the National Government 

In the past, the Commission has recommended 

certain basic improvements in the operations of 

tbe national government. The following recommendations, if anything, are more relevant now 

than when they were initially advanced and the 

Commission reaffirms its strong support for them. 

Hence, in order to rationalize and simplify an intergovernmental system which spawns too many 

separate and narrowly drawn federal grant programs and is heavily burdened with excessive paperwork requirements, regulations, and controls: 

The Commission recommends that Congress 

enact legislation authorizing the President to 

submit plans for consolidating categorical grant 

programs to Congress, that Congress be required 

to approve or disapprove such plans within 90 

days of submission, and that if approved, such 

plans go into effect upon approval by the President of the Joint Resolution. The Commission further recommends that the legislation authorize 

the President to make moditications or revisions 

of plans submitted to Congress any time within 

30 days after such submission.‘6 

Furthermore, in order that tbe Congress may 

more adequately perform its vital oversight function: 

The Commission recommends that Congress 

enact “sunset” legislation providing, at regularly 

scheduled intervals, for the termination, thorough reassessment prior to tbe slated expiration 

dates, and reauthorization, where warranted, of 

all grant-in-aid programs by functional area. . . .I7 

Finally, in order that personal income tax rates 

should only be increased by overt Congressional 

action and should not be an automatic consequence of inflation, and so as to make the national 

income tax system more equitable and accountable to the nation’s taxpayers: 

The Commission. . . recommends that the Congress give early and favorable consideration to 

index&ion--the annual adjustment of the personal exemptions, the low-income allowance, 

and the maximum limit of the standard deductions, and per capita credits, and the tax rate 

brackets of the federal individual income tax by 

tbe rate of increase in the general price level.‘* 

At the same time, the Commission now concludes that additional major improvements in tbe 

national legislative and regulatory processes are 

essential to the development of more effective, rational, and publicly accountable national policies 

and to the restoration of a mme balanced and 

functional federalism. Hence, 

The Commission recommends that Congress or 

the executive branch, as appropriate, adopt pmcedural and organizational reforms which will 

instill greater discipline in the policy development and renewal pmcesses of tbe Congressional 

and executive branches, strengthen the internal 

organization of Congress, end provide for more 

adequate assessments of the costs. imposed by 

federal legislation OIL state and local govemmerits end the private sector. 

[To instill greater discipline in tbe policy development and renewal processes of the Congressional and executive branches of the national 

66 
government, tbe Commission urges that consideration be given to tbe following spoctfic proposals: 

a. When drafting new legislation or reautborizing existing legislation tbe effect of 

which is to expand the federal role in the 

federal system, tbe Congress and its appropriate committees and subcommittees 

should be required to give fuller consideration to the “nationad purpose” or “lmtional objective” to be attained by the legislation; all alternative mechanisms for 

achieving the best balance of equity, efficiency, effectiveness, and public accountability in the implementation phase of 

policy including, but not limited to, direct 

federal servicing, grants-in-aid, taxes or 

tax expenditures, loans or loan guarantees, and regulations; and the possibility 

of altering or expanding related, pmexisting programs when they may be used 

to achieve tbe same purposes. 

6. 

c. 

d. 

e. 

With reference to committee and floor 

amendments to pending legislation, tbe 

Senate and the House of Representatives 

should adopt binding rules of “germaneneas.” 

In order to provide for the continual improvement of Congressional operating 

procedures, tbe Senate and the House of 

Representatives should institute permanent mechanisms of procedural review. 

Extend, by Constitutional amendment, tbe 

President’s veto authority to specific items 

within legislation. 

In order to provide for greater executive 

branch “foresight,” executive branch procedures for reviewing legislation proposed by the Congress and the agencies 

should be strengthened.1 

(To curb tbe further fragmentation of the Congress and to strengthen generally its internal organization, the Commission urges that consideration be given to tbe following specific pmposals: 

a. Reduce tbe number and autonomy of 

Congressional subcommittees in related 

functional fields; 

b. Reduce the number of committee and subcommittee assignments per member of tbe 

Senate and House: and 

c. Reexamine and provide for tbe greater 

coordination of the general oversight role 

of four sets of standing committees (operations, budgetary, appropriations, and 

revenue raising) in the Senate and House.1 

(To pmvtde for mom adequate assessments of 

costs imposed by federal regulations and by other 

legislation on state and local governments and 

the private sector, tbe Commission urges that 

consideration be given to the following spectfic 

proposals: 

a. when reporting legislation which will affect state and local governments, tbe ap 

pmpriate committees of the Senate and 

House should be required to evaluate the 

costs which will accrue to tbe affected jurtsdictions; and 

b. tbe regulatory arms of the national government--the independent regulatory 

agencies and tbe executive line agenciesshould report to Congress, on a regular 

basis, regarding the costs, benefits, and 

other impacts of regulations under their 

jurisdictions, as well as difficulties in implementing regulations and proposals for 

legislative clarification of regulatory direl3lves.l 

Recommendation 3: 

The Supreme Court 

As a Neutral Arbiter 

The Commission finds that the federal judiciary, though to a somewhat lesser extent than the 

political branches of the national government, has 

exerted both directly and indirectly a profound 

influence on contemporary intergovernmental relations and has contributed to their growing imbalance and dysfunctionality by its interpretation 

of the commerce and conditional spending powers. Hence, 

The Commission recommends that tbe Supreme Court assume tbe role of arbiter of the fodera1 system. In pertinent cases and controversies 

coming before it, which involve Congress’ power 

to spend for tbe general welfare, the Commission 

urges balanced Court consideration of the “reasonably related” doctrtne and of the degree to 

69 
which inducement amounts to coercion when 

judging the required terms and conditions of federal grants to be met by their recipients. In those 

cases involving the commerce power as a basis 

for national mandates on state and local governments, the Commission urges careful Court 

weighing of the claims of national necessity and 

of the counterarguments that state sovereign interests have been impaired, with a view toward 

protecting tbe integrity and discretion of tbe 

states’ (and localities’) political processes while 

not unduly restricting the ability of tbe national 

political pmcess to produce national policies and 

programs that are genuinely national. 

Recommendation 4(a): 

Strengthening the Party System 

The Commission finds that the current philosophical and organizational disarray of both of the 

major political parties minimizes their contribution to the appropriate consideration of the size 

of the public sector and national-state-local responsibilities within it, has weakened the accountability of officeholders at all levels to citizens, and has undercut the traditional position of 

states and localities as strong political partners 

within the American federal system. Hence, 

The Commission recommends that the two major political parties, the Congress, or state legislatures, as appropriate, adopt measures which 

will strengthen the parties as forums for the regular consideration of major policy issues by public officials at all levels of government and citizen 

party members; protect and enhance the status of 

the political parties as essential bonds between 

the governors and the governed in a healthy rep 

resantative democracy; and maintain the historic 

role of tbe states in the Presidential selection process tbmunh the electoral college. 

consideration be given to the following proposals, among others: (a) mid-term party convantions in both political parties, with procedures 

assuring adequate representation of those in the 

non-Presidential wing of the incumbent party, as 

wall as more frequent party issue conferences at 

the state and local levels: (b) the facilitation of 

greater participation by national, state, and local 

elected officeholders in party conventions; (c) tbe 

reinvigoration of party caucuses in Congress as 

instruments for disciplining party members and 

for tbe votinn on budnet ceilings umvided for in 

in the number and duration of %~idential primaries either by state actions or by creation of a 

national primary day, a series of multistate regional primaries, or a single national primary for 

both parties, while requiring that all primaries 

be closed; (e) enhanced status and participation 

of individual party contributors in party affairs 

by providing, in exchange for a modest dues payment, the right to vote on the selection of a pmtion of each state’s delegates to mid-term conferences and a proportion of the members of the 

national committees, as well as specifically designed informational services; (f) a system of public financing for Congressional candidates which 

channels funds through the two major political 

parties while sharply limiting contributions fmm 

interest group sources; (g) the elimination of the 

electors as such from the electoral college, and 

the replacement by Constitutional amendment of 

tbe present one-state-one-vote formula for breaking electoral college impasses in the House of 

Representatives with a runoff national election 

between the two major candidates or with a majority vote of Congress in joint session on a onemember-one-vote basis.] 

Recommendation 4(b): ii 

Increasing Public Participation in 

National Policymaking 

The Commission finds that the present national 

representational process generally and the political parties particularly have failed to hold national policymakers closely accountable to the 

electorate, and that they provide insufficient opportunities for citizens, in contrast to organized 

interests, to express their views on major issues 

of national policy. Hence, the Commission recommends that the Congress adopt measures that 

will provide the general public with more direct 

and more meaningful opportunities for participation in the federal legislative, budgetary, regulatory, and electoral processes. 

[gpecifxally, the Commission recommends that 

consideration be given to the following pmposals, among others: (a) (an advisory) (by Constitutional amendment. a bindi& national initia- 

(b) federal financial support to a&ocates 

participating in executive branch and judicial 

70 
regulatory decision wocesses: (13 direct election 

of the electoral college; (d] a single national primary to replace state Presidential primaries; (e] 

standardized and simplified voting registration 

processes for all national, state, and local elections; (fJ public financing for Congressional candidates; and (g) allowing taxpayers to indicate 

their own budgetary priorities among major program areas on their annual income tax returns. 

Recommendation 5: 

A More Assertive Response on 

The Part of States and Localities to 

The Overloading of the System 

The Commission believes that the states and localities also have contributed, both by acts of 

omission and commission, to the incessant “intergovernmentalizing” of their own processes, 

programs, personnel, and budgets. Despite their 

increased representational efforts in Washington, 

and thanks to the growing strength of vertical 

functional and single issue interest groups, the 

Commission finds that the sensitivity of national 

policymakers to the role and needs of subnational 

governments is less now than it was a generation 

ago, when there were few sustained representational undertakings. Hence, 

The Commission recommends that the states 

and their localities adopt policies and procedures that will strengthen the autonomy of their 

decisionmaking processes and that will protect 

and enhance their authoritativeness as governments witbin tbe American federal system. 

Specifically, the Commission urges the states 

and their localities to give serious consideration 

to: (1) assessing tbe short and long-term fiscal 

costs and benefits of participating in each of the 

federal aid programs under which they are actual or potential recipients and establishing fiscal guidelines with a view to withdrawing from 

those that am cost-benefit negative: (2) establishing jointly on a permanent basis a state-local legal defense organization, with adequate funding, 

professional staffing, and appropriate assistance 

from the states’ attorneys general and local legal 

officers, to monitor and to institute legal actions 

opposing “coercive” conditions attached to federal grants and “intrusive” Congressional exercise of the commerce power; (3) joining through 

their national associations during the next two 

years in identifying at least [teal I251 federal 

grant programs based on surveys of the memberships of their associations that they will recommend terminating; (41 participating with appropriate federal officers in identifying those aid 

programs and conditions that are most appropriate for (a) fall federal assumption, or (b) fall 

devolution to state or local governments or the 

private sector; (5) (authorizing) (requiring] their 

respective chief executive officers to review and 

approve all presentations by their line agency 

spokesmen before Congressional committees and 

federal agencies and requiring their respective 

legislative bodies to give specific approval for 

governmental contributions to national associations of line agency officials: and (6) revising tbe 

objectives and policies of their respective national organizations in Washington to give priority to protecting and enhancing the status of state 

and local gbvemments within our federal system 

and to “decongesting” tbe federal aid system and 

associated regulations, as detailed in (1) through 

(5), and providing that their national organizations shall accept no federal grants where there 

may be a conflict with these objectives. 

Alternative Strategy C: p 

Toward a Second 

Constitutional Convention 

The Commission finds that the present pattern 

of intergovernmental relations is inefficient, ineffective, inequitable, and essentially unaccountable, and this is the inevitable byproduct of the 

growing inability to apply successfully .the traditional Constitutional principles of a partial separation of powers, checks and balances, and a geographic division of authority in a post-industrial, 

interdependent, media-conditioned, mass society. 

The Commission believes that the Constitution in 

its formal and informal operations does not meet 

present day needs or reflect contemporary realities. Hence, 

The Commission recommends that tbe Congress or the reaoisite number of states call for the 

to consider amendments to our basic charter 

that, among other things, would (I) eliminate the 

separate, fixed, and overlapping terms of the 

Presidency, the Senate, and tbe House of Representatives; (2) provide for a fusion of political ex71 
ecutive end legislative authority; (3) redefine the 

boundaries of the states to reflect current human 

settlement patterns, common regional interests, 

and a rough numerical parity; (4) (incorporate a 

doctrtne of national reserved powers, while setting forth a list of expressed powers of the states) 

(update the list of Congress’ expressed powers, 

while including a “necessary end proper” clause 

end a listing of tbe basic powers reserved to the 

FOOTNOTES 

’ This judicial “passivity” in the ~mnmerce and conditional 

spending areas has had the practical effect of accelerating 

the activism of the federal political branches, and in the 

latter it reflects a sustained effort to ignore the great changes 

in the grant system since the early 1960s. 

‘Some slight backing off from the expansionist tendencies of 

the Warren court, it should be noted. can be detected in 

some of the procedural due process cases decided by its 

S”CCeS*DI. 

3 Most of this has escaped the notice of even the closest 

Chgressional observers. since much of the legislation of the 

19708 appears to he merely a renewal of the legislation 

launched in the 1960s. Yet the dramatic shifts, the major 

expansions. the much greater role of narrowly based functional interests, the lesser role of federal adminisimton, and 

the greater tendency to insert constraining conditions in 

these renewals, make the process of the 1970s a very different, a less difficult. a more cooptive, and to many. a far less 

constrained one than its predecessor of the past and all earlier decades. When totally new grant or other novel proposals come up, however, the older “veto group politics” still 

emerges. 

’ This continued throughout the period, although the majority 

now wants the programs at less cost and with less inefficiencies, 

’ Medicare and the SSI program are the only basic exceptions 

to this generalization. 

‘Adopted by the Commission, April 1969. 

states and their locelities); (5) stipulate a Bill of 

Rights that would be binding on both the national 

and state governments; and (6) establish a Supreme Court, half of whose membership would 

be appointed from lists submitted to the President 

by the Association of State Supreme Court Joetices and whose power of judicial review of cases 

and controversies arising out of interlevel jutsdictional contlicts is detailed in full. 

‘Adopted by the Commission, October 1967, and reaffirmed 

in May 1977. 

‘Adopted by the Commission, day 1977. 

‘Rejected by the Commission, December 19%. 

‘oRecommended by the Commission, August 1976. 

” Recommended by the Commission. April 196~. 

“The Commission previously endorsed “sunset” legislation 

on Ma” 6.197,. 

‘* Many of the aid programs of 1960s and the 19708, we have 

found, were not generated by outside interest groups, but 

rather by administrative or Congressional entrepreneurs and 

the so-called “iron triangle” was established after enactment, not before. 

“Yet, if this approach were adopted, federal aid to education 

and the Law Enforcement Assistance Administration would 

be dropped. 

I5 Adoption and successful pursuit of Recommendation 2 under this Alternative Strategy B also would be expected to 

reduce the number of federal grant programs significantly 

through consolidation, sunset, and reduced rates of new 

program creation. In that case, this recommendation simply 

would apply to a smaller set of programs. 

I6 Advisory Commission on Intergovernmental &elations 

(ACIR), Categorical Gmnts: Their Role and Design. A-52, 

Washington, DC, U.S. Government Printing Office, 1977, p. 

303. 

“Ibid.. p. 305, 

‘* ACIR, Inflotian and Federal and State Income Taxes, A-63, 

Washington, DC, U.S. Government Printing Office. 1976, p. 

9. 

72 
Appendix 6 

Reshaping the National Government’s 

Role in the Federal System 

Formal Statement of William G. Colman, 

Consultant 

F or the record, my name is William G. Colman, 

residing at 9605 Logan Drive, Potomac, MD. 

For ten years I had the privilege of serving as 

the executive director of ACIR-from its activation in early 1960 until my retirement from the 

federal service in early 1970. Since leaving the 

Commission I have been a consultant in governmental management, growth policy, and urban 

problems, working mostly with state and local 

governments and organizations thereof-interspersed with visiting professorships at the universities qf Virginia (Charlottesville) and Maryland (College Park) and with service as an elected 

local government official, first as a member for 

four years of the Montgomery County, MD, Board 

of Education and more recently as a member of 

the County Council, filling out an unexpired term 

of one of the Democratic seats. The opinions and 

recommendations that follow are reflective of inevitable biases and other influences growing out 

of these various experiences in national, state, and 

local government and in academia. 

in this statement I will try to provide some reactions to, and counter-recommendations for, the 

draft chapter before you, particularly with respect 

to (1) the organization and manageability of the 

report, including deletion of certain fields of inquiry that seem marginal to intergovernmental relations: (2) additional treatment of some key intergovernmental issues that are omitted or treated 

lightly in the report, including private sector interface, skewing of economic and public finance 

statistics to accommodate political pressures, and 

73 
intergovernmental regulatory reform; (3) augmented criteria for sorting out grants; and (4) need 

for Constitutional and statutory change to redress 

growing imbalances in the structure of federalism 

and to provide a framework for strengthened fiscal discipline within the national government. 

Let me emphasize here that my statement concentrates upon perceived sins of omission and 

commission in the draft in the belief that specific 

criticisms and suggestions would be of most help 

to the Commission and staff. A great deal of very 

good work obviously has gone into the material 

before you; the writing is clear, and for the most 

part goes to the heart of the federal role in the 

federal system. Now for a few friendly brickbats. 

IMPROVING MANAGEABILITY, 

ORGANIZATION, AND CONSISTENCY 

OF REPORT 

Problem areas No. 5, “Neglect of State and Local Interests in the Political Process;” No. 6, “Fxcessive Power of Special Interest Groups:” and 

No. 7, “Bureaucracy, Red Tape, and the Dispersion of Accountability,” deal with subjects of 

keen interest in the reorganizing and strengthening of national governmental institutions and processes and for the entire governmental system, but 

for the most part are not uniquely intergovernmental. This is the case especially for changes in 

the structure of political parties and their conventions, the consolidation of Congressional subcommittees, the deploring of single-issue politics, and 

various proposals for direct as contrasted to representative democracy. The particular aspects of 

these broad areas that are of major significance to 

intergovernmental relations (e.g., electoral college, clear standards of implementation in new 

intergovernmental legislation, sunset provisions) 

could be pulled out and treated under other existing or modified headings, and all other material 

in the three broad areas deleted. This would keep 

the Commission from getting bogged down in the 

far ranging fields of political and general governmental reform; it would also create room for 

added treatment of other issues more central to 

federalism. 

The grouping of alternate “strategies” is a mistake, in my opinion. First, the options of status 

quo slightly improved, incremental change, and 

drastic change are not applicable to such a broad 

subject as the federal role in our governmental 

system: one might favor small change on the judicial side and drastic change in the administration of crosscutting grant requirements. Options 

for the degree of change are better reflected in 

alternative recommendations addressed to particular issues (e.g., the Presidential veto: status quo, 

item veto on appropriation bills only, on all legislation). Second, “strategies” invite retreats into 

generalities so broad as to be meaningless to those 

concerned with translating recommendations into 

draft legislation or other implementing instromerits. 

Finally, there is a serious inconsistency between the rhetoric used to describe some of the 

problems and the sharpness and fundamentality 

of several of the alternate recommendations; occasionally, fundamental changes are set up as 

straw men, couched in such extreme and provocative language as to invite early dismissal from 

consideration [e.g., Constitutional change essentially confined to a transparently unacceptable 

wide-open Constitutional convention). Several of 

the recommendations to the courts could better 

be stated as Constitutional changes. (How could 

a recommendation for a different interpretative 

stance on the part of the courts be translated into 

an implementary instrument?) In any event, either 

the range of alternate specific recommendations 

should be broadened or the descriptive material 

should be revised to a less sweeping and crisisladen content and tone. I happen to believe that 

the problems are indeed serious, warranting a 

more specific and fundamental attack and focused 

sharply upon the significantly intergovernmental. 

The suggestions that follow are directed toward 

that objective. 

ADDITIONAL TREATMENT OF 

PRIVATE SECTOR INTERFACE, 

SKEWING OF STATISTICS FOR 

INTERGOVERNMENTAL PURPOSES, 

AND REGULATORY REFORM 

Through the deletion of material related to campaign finance, primary election and political 

party reform, and most aspects of Congressional 

reorganization, room can be created for further 

treatment of certain issues more basic to federalism, keeping within bounds the “digestibility 

scope” for both the Commission and future readers. 

74 
Public Sector Interface 

A major part of the functional sorting-out process set forth in the report is the consideration of 

alternatives to governmental service delivery 

through direct performance or grants-in-aid. These 

additional alternatives include: 

l Reliance upon the private sector to provide 

services or perform functions through the 

play of the market place, augmented in some 

cases by governmentally provided economic 

incentives or penalties (e.g., day care, hospitals, police protection in commercial and industrial sreas, health insurance, mental health 

services). 

l Use of indirect governmental assistance (tax 

credits, loan guarantees, pollution taxes, etc.) 

with performance and service delivery resting on private profit or nonprofit institutions, 

l Increased use of volunteers. 

l Self-financing through user charges and 

greater use of special taxing districts. 

Among the criteria for grant initiation or retention at the national level might be a required 

showing that private sector use or stimulus cannot achieve adequate (not necessarily optimal or 

maximum) results toward the national objective 

involved. Such a criterion would be a crucial additive toward the highly commendable and urgent goal of decongesting the intergovernmental 

fiscal transfer system. 

A related aspect of potential decongestion is the 

substitution of transfer payments to individuals, 

firms, or nongovernmental institutions for certain 

existing or yet to be proposed intergovernmental 

transfers. Such substitutions are especially relevant to training, placement, and employment of 

the hard-to-employ (especially as the emphasis 

shifts from public service to private sector employment), to housing assistance, and to certain 

kinds of education assistance. Experience has 

shown the consistent inability of the Congress to 

target assistance to places without unconscionable waste in spreading the funds around to practically every unit of government, regardless of 

need; on the other hand, Congress has shown a 

much greater ability to target funds to disadvantaged people-poor, handicapped, etc. 

Corruption and Politicization of 

Economic and Fiscal Indices 

Revenue sharing, countercyclical fiscal assistance, governmental pay scales based on “comparability,” cost of living adjustments to Social 

Security, civil service, and military retirement all 

are marked by dependence upon increasingly dubious economic and fiscal indices and consequent 

cumulative unnecessary spending running into 

the billions. Federal measures of poverty do not 

count public assistance in kind-only cash. Comparability data on which federal pay is fixed cannot include state and local employment, pay 

scales of smaller firms, or private industry fringe 

benefits (because such inclusions would make the 

statistical result less favorable to the employees). 

Unemployment data, especially substate, are 

highly questionable, and pension benefits are tied 

to the Consumer Price Index instead of to the 

Gross National Product deflator. The usual but 

unspoken reasons for all of these kinds of intentional skewing is to achieve a higher level of payout. An important criterion that might well be tied 

to grant initiation or continuance is the existence 

or ready availability of statistically reliable date 

for each formula factor. 

Regulatory Reform * 

Regulatory conflict and overlapping is fully as 

contributory to intergovernmental imbalance as 

the increasing “marbelization” of service delivery 

responsibility and financing and should be accorded something approaching equivalent treatment in the Commission’s report. For example: 

l Concurrent regulatory jurisdiction of national 

and state governments increases costs for 

those regulated, which in turn raises consumer prices. 

l Especially critical is state regulation of product manufacture and product specifications 

with respect to goods moving in interstate 

commerce. Several federal regulatory statutes 

not only permit but encourage states to impose equal or higher standards, thus breaking 

up economies of scale involved in the mass 

production for a national market. 

l Mistaken striving by regulators for a risk-free 

society or for incremental levels of protec75 
tion, the economic costs of which far exceed 

the demonstrable social benefits. 

. The virtual absence of any machinery at national or state levels for an impartial cost-benefit analysis~ and decisionmaking to which 

proposed new regulations or changes are subjected. 

. On not infreqknt occasions, regulatory fields 

occupied by state governments ‘are preempted-not by act of Congress, preceded by 

careful deliberation, but sometimes casually 

and often cavalierly by adminisimtive regulation. (For example, Federal Trade Commission activities concerning the funeral, eye 

glass, and hearing aid industries and a pending action by Secretary Golds&mitt of the 

Department of Transportation concerning the 

movement of atomic wastes are recent cases 

in point.) 

. As pointed out previously by ACIR, several 

national regulatory objectives are linked to 

the intergovernmental bansfar system, often 

with consequent friction, excessive administrative costs, and lowered productivity. Delegation of enforcement powers to each granting agency for governmentwide statutory environmental, civil rights, affirmative action, 

planning, and other requirements presents 

recipient state and local governments with 

administrative chaos defying description. 

Among remedial measures that the staff should 

develop for Commission consideration are the following: 

. A Constitutional amendment providing that 

national preemption of any regulatory field 

pursuant to the power of the Congress to regulate commerce among the states shall be accomplished by a statute. stating explicitly the 

intent to preempt and the reasons therefor. 

. A sorting-out process (comparable to that 

prbposed in the draft chapter for functions 

and service delivery grants) to be established 

by statute for recommendations by the President to the Congress as to respective regulatory fields that should be preempted or vacated by the national government (possible 

criteria set forth subsequently in this statement). The statute, in addition to substantive 

criteria, also should include an intergovernmental consultative process to precede or accompany the Presidential recommendations. 

. Enactment of those parts of the Ribicoff-Mathias bill (S. 262) imposing economic cost 

benefit analyses by regulatory agencies and 

review by the Congressional Budget Office 

amended to include an appropriate review 

and recommendation role by the Council of 

Economic Advisors (CEA) and any other appropriate unit of the Executive Office of the 

President.* 

l Enactment of legislation authorizing the Prasident to formulate and submit to the Congress 

grant simplification proposals covering regulatory and other Congressionally enacted requirements applicable to two or more agencies, whereunder varying statutory language 

is ,rendered internally consistent and more 

conducive to effective administration and 

compliance by recipient state and local governments; any such simplification proposal 

to become effective within a specified period; 

unless disapproved by a vote of either house 

of the Congress. 

AUGMENTED CRITERIA FOR 

SORTING OUT GRANTS + 

The draft chapter includes proposals for decongesting the grant system by a more clear-cut 

assignment of functions to either the national or 

state-local lavel-a relaywing, if you will, of the 

federalism cake. Unfortunately, in my opinion, 

ACIR in its numerous reports in recent years has 

not tackled head on the problem of realignment 

of functional responsibilities except in terms of 

structure and process. Some earlier functional 

studies-welfare, medicaid, poverty programs, 

education finance, law enfokement, and mass 

’ Pert cd the bill is highly cnntioversiel, barring any direct or 

indirect involvement of the President in cost-benefit analyses by the independent regolatory commissions. I believe 

CEA end office of Management and Budget concern with 

economic affairs should be gove~entwide end not fenced 

off from the “indapendent commissions.” For useful cornmentery on both sides of this question, see Ribicoff, A., “For 

RffectIveness end Effidency: S. 262,” Regolation, Weshingto,,, DC, American Entmprise Institute, May-June 1979, pp. 

17-20: end De Moth, Christopher C., “Conetining Regoletory Caste-The White House Programs.” Regulation, Jem 

wry-February 1980. pp. X-26. 

76 
transportation-looked at functional substance 

and characteristics, but most of these are more or 

less outdated. 

Some functional “case studies” are a part of the 

present report, but the functions involved are not 

mentioned in the recommendations. Instead, more 

general criteria are submitted for someone to apply to the existing grant spectrum, These criteria, 

as far as they go, are well stated and mostly defensible, but I would suggest substantial augmentation. The agency or official charged with identifying specific functions, subfunctions, and grant 

or regulatory programs associated therewith for 

which the federal role should be eliminated, raduced, or redirected must have criteria and other 

policy guidance sufficiently specific as to make 

the identification and frame the rationale therefor. 

The criteria and other guidelines are of at least 

three levels or kinds: 

1. Situations warranting national government entry into a new activity (grant, regulatory, or other): 

2. For existing programs, general considerations of a fiscal/administrative character 

calling for elimination, retention, or other 

change in the federal role; and 

3. For each existing program, question if one 

or more of the initial rationales still exist 

and to what degree, and see what other 

functional and programmatic characteristics call for withdrawal, retention, or redirection of the federal role. 

As presently constructed, Recommendation 1 

encompasses primarily the second group, relates 

exclusively to grants, concerns mostly existing 

programs, and provides no guidelines of a functional-specific character. If the recommendation 

were adopted, who would be responsible for taking the next step and what would it be? By ACIR, 

in a future report, finally getting down to brass 

tacks on a few specific functions? By OMB, in 

assembling a catalog of grants broken down by 

the quantitative measures proposed? Or by the 

governmental affairs committees of the Congress, 

in holding hearings to ask interested parties what 

they think? 

I would urge strongly [a) the development of 

some additional guidelines relating to national 

activities [some suggestions are resurrected below), and (b) the evaluation of the respective program areas covered by the case studies in light of 

‘the first two sets of criteria and additional factors 

peculiar to the function and subfunction and indicating the direction of the proposed actionelimination, reduction, retention, or other change. 

The staff members concerned are no doubt rather 

thoroughly versed in the program characteristics. 

already having reviewed the history and written 

up the descriptive detail. (Later in this section, an 

illustrative rough cut is taken on three elementary 

and secondary education programs.] The resulting recommendations would constitute a sizeable 

running start for the implementors and would be 

sufficiently specific for the drafting of proposed 

White House recommendations to the Congress 

and the attendant pieces of proposed legislation. 

NATIONAL ACTIVITY ENTRY 

Here are some beginning criteria related to appropriate national government activity (grant, 

regulatory, or other); these are lifted from the 1955 

report of the (Kestnbaum] Commission on Intergovernmental Relations. 

. the following conditions justify national action within the national govemmerit’s delegated powers, when the lower 

levels of government cannot or wil\ not 

act: 

(a) When the national government is the 

only agency that can summon the resources needed for an activity. For this 

reason the Constitution entrusts defense 

to the national governmeni. Similarly. 

primary responsibility is given to the national government because it alone can 

command the main resources for the 

task. 

(b) When the activity cannot be handled 

within the geographic and jurisdictional 

limits of smaller governmental units, including those that could be created by 

compact. Regulation of radio and television is an extreme example. 

(c) When the activity requires a nationwide uniformity of policy that cannot be 

achieved by interstate action. Sometimes 

there must be an undeviating standard 

and hence an exclusively national policy; as in immigration and naturalization, the currency, and foreign relations. 

77 
(d] When a state through action or inaction does injury to the people of other 

states. One of the main purposes of the 

commerce clause was to eliminate state 

practices that hindered the flow of goods 

across state lines. On this ground also, 

national action is justified to prevent unrestrained exploitation of an essential 

natural resource. 

(e) When states fail to respect or to protect basic political and civil rights that 

apply throughout the United States. 

The foregoing need to be amended and updated, but they represent the hind of qualitative 

characteristics that need to be used in addition to 

fiscal and administrative guides included in the 

draft recommendations and to individual program characteristics and considerations, as well 

as comprising benchmarks for the vacation or 

preemption of regulatory activity. 

illustrative Factors in 

Three Education Programs 

Three of the “larger ticket” grants in the ele 

mentary and secondary education field are: Title 

I of the Elementary and Secondary Education Act 

(ESEA) (P.L. 96-561); impact aid (P.L. 815 for construction and P.L. 874 for operations); and assistance to education for the handicapped (P.L. 94- 

1421. 

ESEA TITLE I 

Factors justifying initial enactment of this program included (a) pervasive positive and negative 

benefit spillover of the elementary and secondary 

function; [b) large and growing number of “poverty children” in the public,schools, especially in 

inner cities and depressed rural areas; (c) wide 

intrastate and intrametropolitan tax base and per 

pupil expenditure disparities: and (d) wide interstate disparities in financial resources available 

for, and devoted to, public elementary and secondary education. 

Factor (a) is still present to some degree; (b) is 

present but somewhat abated in magnitude along 

with declining enrollment; (c) is substantially 

lessened due to a wave of school finance reform 

in many states, often accompanied by weighted 

pupil formulas and shifts in financing from primarily local to substantial and in some cases to 

predominantly state level; (d] shows a substantial 

78 

and continuing decrease, per capita income ratio 

between Connecticut (high) and Mississippi (low), 

down to 1.6 to 1 and dropping, as the Sun Belt 

continues to economically outstrip the Frost Belt. 

In light of substantial decrease in rationale, reduction in magnitude and diversion of much of 

remainder from direct distribution to districts to 

incentives for intensified state assumption of fiscal responsibility or other forms of intrastate resource, equalization would be among the promising options. 

IMPACT AID 

Rationales for construction aid have all but disappeared because of enrollment declines, as have 

justifications for Category B of P.L. 674. Phasing 

out or redirecting the money has been recommended repeatedly. Some phasing out of Category B in wealthier jurisdictions already has been 

voted: perhaps the present budget crunch will kill 

it off completely. 

ASSISTANCE FOR EDUCATION OF THE 

HANDICAPPED 

This is part mandate and part assistance. Federal court decisions, in addition to Congress, are 

requiring large increases in outlays. Spillover and 

humanitarian justifications are very strong. These 

and other factors weigh heavily toward continuance and possible increase when fiscal conditions 

permit or perhaps drawing from Title I and impact aid in the interim. 

The foregoing am illustrative of the kind of additional criteria, specifically related to the function or program, that must be included if the sorting-out proposal is to have any utility other than 

rather sparse fodder for further study or hearings. 

CONSTiTUTiONAL AND STATUTORY 

CHANGES FOR REDRESSING 

FEDERALISM IMBALANCES AND 

STRENGTHENING FISCAL DISCIPLINE 

AT NATIONAL LEVEL 

“Let’s get back to the basics!” This call to action 

that resounds through many school districts across 

the country is equally applicable in another context: to the growing concern about the severe erosion of the American federal system that has been 

taking place over the past two decades. Here we 

are talking about the key Constitutional and other 
structural principles that distinguish the federal 

from the unitary form of domestic governance. 

In the Constitution, of course, we have (1) state 

control of election machinery (Art. I, Sec. 4); (2) 

Congressional power to regulate commerce among 

the states (Art. I, Sec. 6): (3) prohibition of state 

boundary changes by national action without consent of the state or states concerned (Art. N, Sec. 

3): (4) authorization for two-thirds of the state legislatures to initiate amendments to the U.S. Constitution via a convention mandatory upon the 

Congress (Art. V); (5) providing that the U.S. Constitution and laws pursuant thereto are supreme, 

the constitution or laws of any stete to the contrary notwithstanding (Art. VI); and (6) powers 

not delegated to the national government by the 

Constitution sre reserved to the states or to the 

people (Tenth Amendment).* Additionally, and 

especially pertinent to the draft report before the 

Commission, is [a) the power of the Congress to 

provide for the general welfare, any spending for 

such purpose having been given an unlimited 

green light by Supreme Court decisions, and (b) 

the uniformity clause in Art. I, Sec. 6, as it may 

apply to national taxation. 

If the foregoing and other provisions of the Constitution are the substantive and legal bases of 

American federalism. and if federalism is in the 

dire simits depicted in the draft report, why are 

not some alternatives provided for strengthening 

or updating the Constitutional parameters of the 

federal system? Aside from changes in the electoral college and mention of a Presidential item 

veto, there are no alternatives provided for Constitutional changes addressed to the problem 

areas other than a transparently unacceptable proposal for a wideopen Constitutional convention. 

(The convention would consider such things as 

a “fusion of political executive and legislative authOIity,” a thoroughly discredited idea of the 

Council of State Governments in the early 1960s 

for what it termed a “Court of the Union” to de- 

* Rank Bane, the tkst chairman of ACIR, has often smphasized that from B substantive and political standpoint. four 

powera and functions of state gov-ant constitute the pil. 

lms of American federalism: Con current taxhlg powen, (except for customs) with national *overmnent; primary re 

sponsibility for public primary, secondary. and higher 

education; control of ehtion machinery; and. except for a 

handful of fdeml crimes and for US. Co~MItutional safe 

guards as to due pmcess. control of the criminal justice systern. 

tide cases and controversies of an intergovernmental character; and in general, an attempted 

overhaul of the complete governmental system, 

not just the intergovernmental aspects thereof.) 

Following are some additional alternatives that 

might merit the Commission’s consideration. 

Question of State Responsibility for 

Initiating U.S. Constitutional Change 

In Article V the founding fathers endeavored to 

provide protection against undue national government encroachment upon the spheres of activity reserved for the states and their local governments in two ways: first, by requiring legislative 

ratification by three-fourths of the states of Constitutionel amendments put forth by the Congress, 

and second, state initiation of Constitutional 

change through the petitionfconventiotiatification process. with Congress impliedly in a ministerial rather than a substantive role. Several 

questions of a key intergovernmental character 

are involved; these are not theoretical-they are 

here and now. On three occasions during the past 

two decades, the number of petitioning states has 

come within shouting distance of the required 

two-thirds (reapportionment, revenue sharing, 

and balanced federal budget). 

. Should the states continue to have the initiating power? If not, repeal of the relevant portion of Article V would be called for. 

. Should the initiating power be strengthened 

[e.g., making the ministerial, nonsubstantive 

role of Congress explicit; eliminating the convention step, with Congress perfecting the 

proposed amendment and sending it back for 

ratification)? 

l Should the initiating power be weakened 

(e.g., explicitly giving Congress a substantive 

role)? 

l Unless repeal is called for, ACIR in this report 

should reaffirm the urgency of enacting the 

Fxvin bill. 

Greater Inter overnmental 

Revenue B lexlblllty 

One of the Constitutional propellants for an unnecessarily wasteful grant system has been the 

taxation uniformity clause that many argue pw79 
eludes any form of regional taxation earmarked 

for federal projects of a strictly regional (metropolitan or multistate) character. The local piggy 

back upon state income and sales taxes has been 

an outstandingly successful aspect of fiscal federalism. In its absence many more state aid programs would have become necessary, wit71 consequent inequities and complicated administration. 

. Amendment providing an exception to the 

uniformity clause by authorizing Congress to 

create opportunities for state, interstate, or 

metropolitan piggy backing cm the federal 

personal income and other taxes in order to 

finance projects and activities of a regional 

nature. 

Such an amendment would permit special taxation to fund various multistate programs such as 

Appalachia. [When Appalachia was established, 

part of the justification for subsequent expansion 

of regional commissions was that if some states 

could get money for regional programs, all other 

states should be in some kind of regional program 

too! Hence, Four Corners, Ozarka, Upper Great 

Lakes, etc.) 

Strengthening Fiscal Discipline in 

National Government 

One of the major reasons for the growing overload upon the federal aid system has been the 

ease with which members of Congress can persuade one another to support the launching of 

new programs, very often concealing the true annual cost under deceptively low first-year startup 

funding. New programs are easy to launch in Congress, because there is no final point, after the 

appropriations committees have done their work, 

at which expenditures must be brought into line 

with revenues, with the attendant painful review 

and readjustment of priorities that nearly all state 

and local governments must undergo. Not since 

1969, despite a number of intervening years of 

economic growth and essentially full employment, has the federal budget been balanced. Only 

with new Constitutional and statutory fiscal safeguards can the runaway growth in federal grants 

be slowed, real priority setting among competing 

needs effected, and current financial waste and 

fraud in the intergovernmental transfer system reduced. The following alternatives should be included in the draft report and given serious consideration by the Commission. 

. A Constitutional amendment providing for 

sn item veto of appropriation and appropriation-authorization bills. The item veto has 

proven to be an effective fiscal management 

tool at the state level and is contained in 

many state constitutions. 

l A Constitutional amendment prohibiting appropriations in excess of estimated revenue, 

unless the Congress by a [three-fifths) (twothirds) vote of each house finds a deficit to be 

necessary to assure national economic stability. Most states require a balanced budget in 

their constitutions; to say that such a “detail” 

does not belong in the national Constitution 

or would hamstring the government in time 

of emergency overlooks [a) the contrasting 

state and local experiences where such a 

stricture is in effect, (b) that requirements for 

an extraordinary legislative majority are as 

old as the Republic (any demonstrable emergency condition can be met through such a 

majority), and (cl the record of the Congress 

since 1940, proving beyond a shadow of a 

doubt that statutory enactments and resolutions of good intentions are inaderfuate for 

fiscal self-discipline, because of the ready 

availability of the printing press. 

l A Constitutional amendment or statutory 

amendment to the Congressional Budget Act 

to (a] require inclusion of projected obligational authority for future years in appropdation and authorization bills carrying initial 

funds for multiyear programs; (b) authorizing 

pro rata reductions in supplemental funding 

of entitlement programs if found necessary by 

each house in order to avoid a deficit; or (c) 

some comparable provision that would assure appropriation control over entitlement 

programs and back-door financing unless 

waived specifically in a particular year for a 

particular program by a vote of each house. 

The foregoing are neither original nor new. Deficit spending has brought the nation to the very 

brink of fiscal and economic disaster: more than 

half the states have called for a budget balancing 

amendment. The several meritorious suggestions 

80 
in the draft report for decongestion of the transfer sional invitation to all and sundry to the proversystem become largely empty rhetoric unless bial free lunch. 

placed in a fiscal framework that is conducive to Thank you for this opportunity to comment on 

careful choice rather than a continuing Congres- the draft report now, before the Commission. 

81 

Is the 

Appendix C 

Federal System Still There? 

Formal Statement of Professor Daniel J. Elazar, 

Director, Center for the Study of Federalism, 

Temple University 

I have been asked to appear before you today to 

discuss the admirable ACIR report on “The Federal Role in the Federal System.” So much of the 

basic analysis in that report squares with my own 

studies and observations that I must carefully 

avoid mere repetition of them in my remarks. I 

have decided to restate some of that analysis in 

even more emphatic terms, because I strongly believe that the cardinal question before u$ tram 

scends the specifics of the massive effort before 

you and goes to the very heart of whether or not 

the federal system in the United States still exists 

as such. 

Those of you who know me, or know my work, 

know that during the 25 years that I have devoted 

to the study of the American federal system, I 

have consistently struck an optimistic note with 

regard to developments within it. Indeed, with 

my mentor, the late Morton Grodzins, I was active 

in promoting the idea that the cooperative approach to federal-state relations, including the involvement of local governments as partners, was 

as viable a form of federalism as the older dualistic approach, calling for maximum separation of 

governments and their functions. When President 

Lyndon Johnson stated that the “creative fedmalism” of the Great Society was to be seen not as 

redividing the same pie but expanding the pie for 

federal, state, and local governments alike, I appreciated his confirmation of the cooperative 

view. However, certain very drastic changes occurred along the way-most of which are admirably summarized in the draft report before you. 

83 
When I wrote in The American Partnership 

about the way in which cooperative federalism 

was in fact the standard pattern of behavior during the era when the theory of dual federalism 

was dominant, apparently I did not sufficiently 

appreciate the importance of the theory functioning as a restraint upon behavior. As long as there 

was a pervasive and unchallenged sense of the 

Constitutional division of powers between federal 

and state governments, of Constitutional limits on 

federal action, and of the federal role as supportive rather than domineering-as long as the relatively powerful federal government in all its 

branches had to be somewhat apologetic about 

getting involved in any particular function, it was 

possible for Washington to work with the states 

and localities on a partnership basis. Somewhere 

along the line, however-perhaps with the death 

of the dualistic doctrinethe sense that the federal government was Constitutionally limited essentially dIsappeared. In great part this was a result of decisions of the U.S. Supreme Court, of its 

becoming too active a partisan and abdicating its 

umpire role, as the report suggests. But, beyond 

that, it was also an abdication on the part of the 

executive and legislative branches of the federal 

government, who refused to accept their role as 

interpreters of the Constitution. Instead, they 

demonstrated a willingness to reflect any interest 

that could move them, leaving it entirely to the 

Court to determine questions of Constitutionality. 

The natural history of this change is easily 

traced. In the 1950s the federal government became actively involved in a supportive role in virtually every field of governmental endeavor, other 

than the most utterly local. The 1960s witnessed 

a shift in that involvement-from supporting state 

and local initiatives to taking the initiative and 

requiring the states and localities to conform to 

federally established directions. This led, in turn, 

in the early 1970s to increasing federal preemption of state and local powers, and in the mid1970s to the notion that the federal government 

was the policymaker by right, while the states and 

localities were merely convenient administrative 

arms to be subjected to all kinds of federal regulations, whether authorized by Congress 01‘ not. 

Even Governors came to believe that the states 

could not initiate programs on their own but had 

to wait for, or seek, Washington’s lead. 

By the end of the decade, we had reached the 

point at which the states increasingly were being 

excluded by federal preemption from fields that 

until relatively recently were considered their exclusive prerogative. In recent years Congress has 

acted with no restraint and the Court with virtually none, despite the efforts of some justices to 

revive the idea that there are indeed Constitutional questions to be faced. 

There were those of us who raised the issues 

contained in the report at the beginning of the 

decade, but our words apparently fell on the deaf 

ears of a Congress whose members no longer seem 

to know or care what federalism is all about. This 

occurred despite the fact that every President 

since Lyndon Baines Johnson has paid obeisance 

to the federal principle and has claimed to stand 

four square on the side of a healthy and vital federal system in all its parts. Our warning then, 

which I would suggest is even more correct now, 

is that what the Presidents were advocating was 

decentralization, not federalism. 

Once upon a time we had a Constitutional sharing of powers in which each partner was given 

due respect-%11 faith and credit” in a real 

sense-by every other partner and in which the 

federal government, as the strongest partner (if 

only because it has always had an easier time raising revenues, and since 1862, the exclusive power 

to print money), was prepared to exercise self-restraint in dealing with the states. More retxntly 

we have moved to a system whereby it is taken as 

axiomatic tbat the federal government shall initiate policies and programs, shall determine their 

character, shall delegate their administration to 

the states and localities according to terms that it 

alone determines, and shall provide for whatever 

intervention on the part of its administrative 

agencies as it deems necessary to secure compliance with those terms. 

Elsewhere I have suggested that the proper 

model of a federal system is a matrix of governments serving larger and smaller arenas, with the 

federal government as the framing institution 

serving the largest arena, but with no greater legitimacy outside the spheres of its principal responsibility than the other governments serving 

smaller arenas in the spheres of their principal responsibility. It is most emphatically not a power 

pyramid consisting of higher and lower levels, 

with the federal government presumably on top 

and the states and localities tiered below it (and 

the people presumably underneath tbe entire 

structure). The operative ideology today begins 

84 
with the pyramid model and leads to the effort to 

substitute decentralization for federalism. Even 

our language reflects it. The American people 

have drawn the right conclusions--coming to 

look upon all government as simply a pyramid 

weighted down upon them; one to be milked for 

whatever a person or group can get; the lesser of 

evils or the path of least resistance since there is 

no way to get it off our backs. 

Not only has the Constitutional theory of federalism been replaced by a half-baked theory of 

decentralization, but it is a vulgar and, at times, 

vicious theoryas well. What it has meant is that 

Presidents and Congresses have done exactly 

what common sense would have suggested they 

would do: namely, used decentralization in an 

effort to keep the political “goods” for themselves 

and pass the tough problems on to the states and 

localities. President Nixon even articulated this 

approach, indicating that he would keep those responsibilities that brought his Presidency credit 

but pass on the other ones, tbe difficult ones, to 

the Governors and Mayors. Subsequent Presidents 

and Congresses have done the same thing without 

saying so. 

Witness the sorry spectacle of summer 1979, 

during the height of the gasoline shortage when 

the President tried to force the Governors to establish and enforce unpopular control mechanisms, 

and the Governors refused to accept the political 

liability of doing so. The President self-righteously proclaimed his devotion to federalism in 

order to “stick” the Governors with this unenviable task, while the Governors self-righteously 

evoked the idea of federal responsibility to pass 

the buck back to Washington. 

During the past year, this trend has reached a 

new high. Indeed, in the first few weeks of 1980 

alone we have seen the advancement or enactment of legislation substituting national for state 

standards for highway truck weight-most assuredly not for tb.e benefit of the highways so 

much as for tbe benefit of the truckers; expanding 

the federal “right” to intervene in the management of state institutions, presumably to protect 

tbe rights of U.S. citizens incarcerated within 

them; providing for federal override of state legislation and local ordinances in certain energyrelated matters; and requiring each state to establish a commission to study ways to improve state 

and local government operations as a condition 

of receiving its share of federal revenue sharing. 

This latter represents another effort in a growing series of attempts to influence the very strutture of state and local governments-not merely 

their functions but touching matters that were 

sacrosanct even in the heyday of New Deal interventionism. And this is only what has happened 

since Congress reconvened in January of this year. 

As PUBLRJS’ Annual Review of the State of 

American Federalism has indicated for the past 

two years and will again this year, the list of similar examples is growing longer all the time. 

Moreover the state and local response to all this 

seems to be merely acquiescent. Thus, the National Governors’ Association (NGA) Governors’ 

Bulletin of February 29, 1980, reporting on the 

NGA winter meeting, reports that the Governors 

indicated their willingness to accept the Carter 

Administration proposal requiring states to establish commissions to encourage structural change, 

“but only if such commissions did not hamstring 

the states with unreasonable and unnecessary 

controls.” The most they could do is criticize the 

Administration’s draft proposal, which authorizes 

the Secretary of the Treasury to intervene in, and 

approve state procedures and decisions, and the 

requirement that the commissions be dominated 

by representatives of the localities. 

The Governors were on tbe defensive in almost 

every respect. They bad to publicly oppos2. federal efforts to circumvent substantive provisions 

of state water law and urged that the President, 

not the Administrator of the Environmental Protection Agency, have the authority over laws issued by Governors to facilitate the use of coal. 

And so it went. The plaintive cry of the Governors 

to be included as partners at a time when all 

knowledgeable observers agree that most states 

are functioning as well as, if not better than, the 

federal government itself reflects the present state 

of affairs all too clearly. 

If all of this centralization had led to the desired 

improvements, perhaps even those of us who are 

committed federalists-who believe that tbe federal system is one of the fundamental bulwarks of 

liberty, which for us remains a principal goal of 

the American experiment-might be prepared to 

pay the price. Alas, the true record is now emerging. 

Again, looking only at the most immediate examples, The New York Times of March 8, 1980, 

includes an article on the increase in traffic deaths 

in 1979 which quotes Howard L. Anderson, the 

85 
recently retired Federal Highway Administration 

associate administrator for safety: “Much of our 

present highway design criteria is [sic] based on 

what is now an obsolete design vehicle concrete median barriers which safely redirect the 

two-ton and larger vehicles have shown a disturbing tendency to cause the sub-compact car to roll 

over.” Those of us who were witness to the defacing of miles and miles of highway with ugly concrete barriers, destroying green median strips, at 

untold cost, because the federal government required that change if the states were to continue 

to receive highway funds, are now faced with the 

spectacle of those barriers serving as killers rather 

than the safety purposes for which they were presumably designed. It is important to recollect that 

those barriers were being erected during the mid197Os--after the energy crisis of 1973-74, and precisely when the country was being pushed by 

other federal agencies (quite properly, if not sufficiently) to shift to smaller cars. 

Similarly, The New York Times has printed a 

series of articles on the untoward consequences 

of deinstitutionalization, another major federal 

effort, revealing case after case of people wandering the streets or being left to shift for themselves 

without proper care. Two colleagues at the University of Southern California, Arthur J. Naparstek 

and David E. Biegel, have written as follows: 

Federal mental health planners envisioned the flowering of a network of support services to care for deinstitutionalized patients at the community level 

through the stimulus of federal seed 

money. But 1,300 of the 2,000 ccmununity mental health centers projected for 

1980 have failed to materialize and many 

that did have failed to service this chronically ill population. Deinstitutionalization, an ostensibly humane treatment 

program, has degenerated into a tragic 

crisis. Public scrutiny of the situation 

needs to begin now. 

Planners, without real consultation, assumed that strong communities would 

accept the chronically ill. When few welcomed large numbers of these troubled 

people, patients were steered to transitional neighborhoods that would not put 

up a fuss, but the strong community support factor essential for successful aftercare was absent. The result was that city 

streets became wards of mental hospitals, 

and it was out of the snakepits and into 

the gutter for victims of the deinstitutionalization policy. 

In more than a few cases, those deinstitutionalized include people who have committed violent 

criminal acts. But even if that is merely random, 

we are left with the sadness of the nonviolent suffering from a process that never took into consideration the fact that, given the human condition, 

perfection was not obtainable either inside or outside of institutions. 

The list of federally generated mistakes grows 

longer and longer every day. One can forgive all 

the well-meaning people who are involved for 

making those mistakes. None of us are immune 

from the laws of overly high hopes and unanticipated consequences. One cannot forgive them, 

however, for arrogating to themselves and the federal government a presumed omniscience that 

they did not have at the expense of the federal 

system. 

So here we have ita federal government unrestrained in all three branches, one in which the 

Constitutional issues are never raised and are considered irrelevant by those who presumably have 

taken an oath to “preserve, protect, aLdefend 

the Constitution.” Where does that leave us? If we 

are to accept Alexander Hamilton’s minimalist 

definition of a federal polity in Fedemlist No. 9: 

Simply an assemblage of societies or 

an association of two 01‘ more states into 

one state. The extent, modifications, and 

objects of the federal authority, are mere 

matters of discretion. So long as the separate organization of the members be not 

abolished; so long as it exists, by a constitutional necessity, for local purposes; 

though it should be in perfect subordination to the general authority of the 

union, it would still be, in fact and in 

theory, an association of states, or a confederacy. 

then we can be content that we still have a federal 

system. If, however, we modify that definition 

with Madison’s in Federalist No. 14, which describes what the framers expected the American 

federal system to be: 

86 
The general government is not to be 

charged with the whole power of making 

and administering laws. Its jurisdiction 

is limited to certain enumerated objects, 

which concern all the members of the republic, but which are not to be attained 

by the separate provisions of any. The 

subordinate governments extend their 

care to all those~ other objects which can 

be separately provided for, but retain 

their due authority and activity. 

then we have much to worry about indeed. 

We have long since encroached on the Madisonian definition, which if one notes carefully, 

limits national intervention to those objects that 

concern all the members of the Republic but 

which are not to be obtained by the separate provisions of any. (Education, for example, concerns 

all the members of the Republic, but was held by 

the founding fathers to be separately attainable by 

each state-yea, each locality--acting separately.) 

The fact is that we are now even encroaching on 

the Hamiltonian definition by indirect means, 

with federally mandated commissions to implement the latest federally supported fads in governmental structural reform, which are likely to 

become the concrete barriers and deinstitutionalization prograins of tomorrow, and federal executive overrides of legitimate state laws to expedite this project or that. 

I like to think of myself as a perennial optimist 

and am even on record as such. In that spirit, I 

would suggest that if this great federal republic 

ha.5 not lost its way, then at the very least we are 

in the position of Daniel Boone who, when asked 

if he had ever been lost in the woods, retorted, 

“Nope, but once I was bewildered for three days.” 

We have been bewildered for longer than that. We 

are so bewildered that with all their importance, 

specific palliatives will no longer save the federal 

system. Only a clear restoring of a sense of Constitutionalism and Constitutional priorities can 

possibly do so. 

Here ACIR and I begin to diverge in our prescriptions. The~range of options offered in the report, in my opinion, is incomplete. Indeed, the 

most important option is missing. I repeat, the 

most important point to be made is that the old 

palliatives will not work. Nor will transferring 

welfare, health insurance, and social insurance 

programs to exclusive federal control with the 

concomitant expansion of a bureaucr acy already 

too big at specific points, even if its total size is 

no greater than it was 30 years ago. From the perspective of federalism, that will only provide further reason for turning public attention to Washington. Even the case for transfer still rests on 

unproven assumptions. Moreover, in today’s climate, such a transfer will simply strengthen the 

centralizing tendencies, the report has presented 

so well, by knocking out the last prop maintaining 

a semblance of the old federalism-namely, the 

idea that domestic social functions are primarily 

the province of the states, and if no longer theirs 

exclusively, are at least intergovernmental. 

The real problem is clear. It is not a question of 

structures, nor of procedures, but of people-people in government who in certain respects are too 

activist, too eager to do more; people in and out 

of government who have too many vested interests; and people everywhere who are too unrestrained in their demands. It is the problem of people who have lost their public-mindedness, who 

may no longer even sea themselves as part of an 

American public, not to speak of state publics or 

civic communities. At one point the report refers 

to proposals to strengthen the rights of the “sovereign citizen.” It is a telling phrase and one very 

much of om- times. In the basic documents of the 

American founding fathers and their commentaries, there was never any discussion of the sovereign citizen as an individual, although there was 

full and emphatic discussion of the sovereign 

people. The American tradition of popular sovereignty, however interpreted, is just that-a tradition that the people as a community, as a public, 

not as individuals, are sovereign. 

Our problem today is precisely that every citizen believes he or she is sovereign to do what he 

or she wishes. How did this come about? There 

is no single cause, but no doubt the diminution 

of local loyalties has played its role. The American people is a people precisely because it is compounded of the several state and local publics. 

John Dewey, who in so many respects was a precursor of contemporary notions, noted this well 

in his now neglected classic, The Public and Its 

Problems. When that compounding was lost, we 

became too diffuse as a people, which is now 

leading us to become a nonpeople. 

This report implicitly recognizes that the issue 

is no longer simply one of intergovernmental rel&ions. In fact, one of its heartening aspects is 

87 
that it concerns itself with the federal system as 

a whole, moving away from an earlier stage in the 

Commission’s life when it joined in the general 

trend of trying to reduce federalism to intergovernmental relations. This report helps restore the 

original Constitutional intentions of the American 

founders, who understood federalism to be the 

form of the American polity (John Adams’ terminology) pervading virtually all, if not all, its aspects. That is another reason why the recommendations seem so pale in comparison with the 

problem. 

In my considered judgment, the possibility of 

continuing the governmental system in its present 

form for day-to-day governance is far greater than 

the report suggests. If we compare the problems 

of governing in the United States to those of other 

countries, one sees immediately that the nuisance 

problems to which most of the proposals in the 

report are addressed are hardly more than that. 

People on all planes of government and in all 

branches can live with those nuisance elements. 

They can even live with the waste and inefficiencies. They make life less pleasant and have their 

costs, but they do not prevent governing. They 

simply elevate to positions of power those people 

who are best able to cope with the conditions 

around them and exclude those who are not, 

strengthening one class of entrepreneurs as distinct from another. What is missing in such a situation. however, is effective government and, 

most important, government that serves the ends 

for which government was instituted in the United 

States. That is the nub of the problem. 

The missing option in the report is that of restoring Constitutional barriers. In my opinion it is 

the most important option of all. Reference was 

made in the report to the way in which some quarters strongly believed that the political parties 

were sufficient barriers to centralization and how 

this has proven inaccurate, at the very least because of recent changes in the party system. I am 

reminded of an exchange between Martin Diamond and Morton Grodzins in the mid-1950s, 

subsequently published in part in Cooperation 

and Conflict [which I and my colleagues of the 

University of Chicago Workshop in American 

Federalism edited some 15 years ago]. Grodzins 

was a foremost proponent of this view of the parties’ role and seemed to denigrate the importance 

of Constitutional barriers. Diamond took him to 

task, pointing out that even the role of the parties 

was contingent upon the existence of those Constitutional barriers. Grodzins, who was always 

wise in such matters, conceded the point, although perhaps never to the extent that Diamond 

or I would have wished. 

Diamond understood what the founding fathers 

understood-namely, that people will be people 

and that the only way to make them live up to 

their better natures in matters governmental is 

through proper Constitutional structures properly 

maintained. Only a restoration of Constitutional 

good sense can save the situation. Nothing less 

will do. Most of the conditions described in the 

report-such as the prevalence of individual policy entrepreneurs, state and local lobbies, and interest group pressures-are endemic to American 

political life and are not likely to be altered where 

or when they should, to be restrained, or to be 

redirected by Constitutional barriers as in the 

past. 

In that connection, my recommendations are: 

1. Undertake a major political education campaign to advance the understanding of Constitutional federalism. Such a campaign should be directed principally toward those involved in public 

life who hold or will hold public office, will be 

employed in the public service, or will be active 

in the various public institutions and organizations of American civil society. These are the people who are most involved in the consideration of 

public issues and whose opinions [not in the 

sense of polling but in the original sense of opining) have been crucial in bringing the old system to its present state. They will be equally crucial in making any changes in the future. Thus, 

public education in this case is not a television 

blitz prepared by the Advertising Council to sell 

a candidate or a slogan, but a process of opinion 

formation that does not attempt to suggest a doctrine of federalism so much as to revive a sense 

of the place of federalism in the American political tradition, to help increase the public-mindedness necessary to make that tradition and the 

system linked with it work toward the achievement of its proper ends. 

2. Write or rewrite federal legislation to restore 

the possibility of a more state-centered political 

party system. There are many steps that can be 

taken in that connection, some of which are mentioned in the report. They do not include moving 
toward what has been defined as a more responsible party system based upon nationally set policy guidelines. Indeed, those recommendations 

out of the grab bag of the past do a disservice to 

the cause of federalism, because they would only 

enhance centralization. All the historical and 

comparative evidence at our command, without 

exception, leads to the conclusion that the more 

policy-oriented (read ideological) a political party 

is, the less open it is not only to new ideas but 

even to new people. 

It is possible, and may even be desirable, to foster responsible state political parties. That is 

where they have worked best in the United States, 

precisely because they are part of a larger federal 

framework that acts as a countervailing force to 

the centralizing tendencies already noted in the 

report. Given such state parties, the iron law of 

oligarchy would tend to work along with them. 

Responsible state parties can achieve the goals 

that advocates of responsible parties seek to promote in the realm of policy formulation and citizen involvement. Responsible national parties 

will defeat the purposes toward which every other 

recommendation is directed. 

So, too, would more federal funding of campaigns. Indeed, them should be less. We are rapidly becoming aware of how the present federal 

laws providing for the financing of Presidential 

campaigns discourage party organizations and 

the activity of individuals, and encourage the 

power of single-interest political action committees (not to speak of the problems they have created with regard to the length and rigidity of the 

Presidential races themselves). Short of abandoning any federal oversight over public funds, there 

is little that can be done about this under present 

conditions except to make the regulations even 

more complex and thus entangle Presidential 

campaigns in the same thicket that ensnares the 

administration of programs in the federal system. 

This Commission could hardly recommend that 

and be true to the findings of its own research. 

Again, the presumed evils of private financing 

pale into insignificance before the actual evils of 

public financing. If anything, we should be moving in the other direction. 

I would be so bold as to suggest that there 

should be greater encouragement of political patronage in certain circumstances. As a native of 

Minnesota, I know that in some states political 

parties not only function, but also become great 

without any touch of patronage. But as a political 

scientist, I also know that there are cultural and 

historic reasons why that is so. III other states the 

same cultural and historic reasons not only do not 

exist, but also have little chance of developing, 

given strongly rooted political cultures and traditions of their own. It is no crime to recognize 

the existence of those cultures and traditions and 

to take them into account. 

3. Restrict the scope of the conditions attached 

to federal grants-in-aid. Here I refer particularly 

to those general provisions attached to all grantsin-aid that have nothing directly to do with the 

implementation of programs but which utilize the 

grant mechanism to advance other goals. These 

other goals may indeed be laudible. I tend to identify with virtually every one myself, but there is 

a time and a place for everything. The grant system is a convenient but inappropriate mechanism 

for advancing those purposes, given the other 

purposes that it abuses in the process. 

4. Cull federal grant programs and drop those 

that do not deal with any substantial federal question or are explicitly directed toward the institutions of state and local government. Here, Madison’s definition of a proper federal role becomes 

very important. Together with some of theconcrate recommendations presented in this report 

regarding program size, it is possible to fashion 

a basis for doing just that. 

5. It would be counterproductive to make any 

current intergovernmental domestic programs into 

wholly national ones. On the contrary, for any 

national health insurance program that emerges 

out of Congress, efforts should be made to vest 

primary responsibility in the states, with appropriate federal funding. This is done in Canada, 

which has one of the most successful national 

health programs in the world. Past experience has 

shown that any effort to separate functions by 

governmental plane is more likely to lead to 

greater decentralization. All the evidence indicates that it is easier to transfer functions to the 

federal government than to return them to the 

states. The draft report alludes to this when it sug 

gests that there is general agreement about transferring income maintenance, health insurance, 

and welfare programs to the federal government, 

but no agreement as to what should be returned 

to the states. I venture to predict that were the 

89 
first transfer to take place, nothing would happen 

with regard to the second. The states would simply lose another and perhaps the final prop in 

supporting whatever semblance of federalism 

now exists. 

6. All three branches of government, but particularly the U.S. Supreme Court, must be encouraged to reassume their responsibilities as interpreters of the Constitution from a federalist 

perspective. Although it is possible to narrow 

broad interpretations developed over the past 

generation or two (and this should be encouraged) 

in other ways, we cannot go back to earlier times. 

It seems unlikely that dual federalism in the 19th 

Century style could become even a predominant 

theory, much less a predominant form of practice, 

which it was not then either. Thus, it is necessary 

to develop new doctrines or expand old ones. 

I would suggest two: First, following Madison’s 

definition from Fedemlist No. 14, we can once 

again begin to ask of a particular piece of legislation, regulation, requirement, or procedure 

whether a substantial federal question is involved. Thus, in the right way-one that recognizes the inevitability and logic of intergovernmental sharing in a dynamic civil society located 

in an increasingly complex environment-new 

limits can be established with regard to the expansion of federal powers, and real Constitutional 

barriers can be developed once again. 

Second, I also would suggest the development 

of a new doctrine based upon a new interpretation 

of the principle of full faith and credit. This principle, which is included in the Constitution with 

regard to interstate relations, also could become 

very important with regard to federal-state and 

even federal-state-local relations. If the federal 

government serving the larger arena would, as a 

matter of Constitutional comity, extend full faith 

and credit to the actions of the state and local 

governments, serving the smaller arenas, the 

problem of federal encroachment would be reduced substantially. 

This idea of full faith and credit is something 

on the order of the principle of bundesfreundlichkeit, which the German federal constitutional 

court has developed into a constitutional doctrine 

to foster better intergovernmental relations. It is 

the kind of comity based upon constitutional obligation that prevents overly *arrow, self-serving 

interpretations of constitutional matters by the 

parties involved. It is another way in which to 

demonstrate Chief Justice John Marshall’s great 

dictim that, “it is a Constitution we are expounding.” Just as that means bmad powers of interpretation to keep the Constitution from becoming too 

narrow a contract, so too should it mean broad 

willingness to be considerate of one’s partners in 

the federal system. 

90 
COMMISSION MEMBERS 

Private Citizens 

Abraham D. Beame, ACIR Chairman, New York. New York 

Bill G. King, Alabama 

Mary Eleanor Wall, Illinois 

Members of the United States Senate 

Lawton Chiles. Florida 

William V. Roth, Jr., Delaware 

James R. Sasser, Tennessee 

Members of the U.S. House of Representatives 

Clarence 1. Brown, ]r., Ohio 

L. H. Fountain, North Carolina 

Charles B. Rangel. New York 

Officers of the Executive Branch, Federal Government 

Moon Landrieu. Secretary, Department of Housing and Urban Development 

James T. McIntyre. Director, Office of Management and Budget 

G. William Miller, Secretary. Department of the Treasury 

Bruce Babbitt, Arizona 

John N. Dalton. Virginia 

Richard W. Riley, South Carolina 

Richard A. Snelling. Vermont 

Mayors 

Thomas Bradley, Los Angeles, California 

Richard E. Carver, Peoria, Illinois 

Tom Moody, Columbus, Ohio 

John P. Rousakis, Savannah, Georgia 

State Legislative Leaders 

Fred E. Anderson, Pfesident. Colorado State Senate 

Jason Bee. President. Oregon State Senate 

Leo McCarthy, Speaker, California Assembly 

Elected County Officials 

William 0. Beach, County Executive, Montgomery County, Tennessee 

Lynn G. Cutler. ACIR Vice-Chair. Board of Supervisors. Black Hawk County, Iowa 

Doris W. De&man, Freeholder Director, Somerset County. New Jersey