Block That Grant

The White House can't wait to sell off federal programs. The states might want to look before buying.
September 2003
By Jonathan Walters  |  Senior Editor
A Senior Editor of Governing, Jonathan has been covering state and local public policy and administration for more than 30 years.

President Clinton may have won himself a reputation as a devolutionist--mostly on the strength of welfare reform and a relatively generous approach to granting waivers in other program areas--but no president in history has been so aggressive in trying to combine and offload federal grant programs as the man currently in office. Not even the great devolver himself, Ronald Reagan, could match George W. Bush in his zeal for handing over lump sums of money to states. And, not incidentally, for holding the states accountable as part of the transaction. Critics of the Reagan approach gave us the term "shift and shaft;" Bush's devolutionary detractors might call it "shift, shaft and show me."

While Bush is trying to persuade Congress to offload major programs by block grant, such as Medicaid and unemployment insurance, he's also pushing to combine state and local law enforcement grants, on the one hand, and workforce investment and training grants on the other. All this while seeking to create a new Delinquency Prevention Block Grant, which would consolidate five delinquency programs into one, and turn the money over to the states in a lump sum.

Congress, which has never been very inclined to give up control, isn't especially inclined to do so now. Two huge hand-it-down initiatives that would have block-granted Head Start and Section 8 housing vouchers were recently sidetracked, with lawmakers apparently ignoring the White House argument that such a move would lead to more coordination.

But if Congress doesn't want to go along, there are other ways to achieve the same goal. For example, Bush has proposed a "super waiver" for states interested in overhauling the way they deliver the Food Stamp program--a side-door tactic for block-granting what has long been a vexingly over-regulated program in the eyes of most state officials.

Why would a president with a full menu of serious and pressing concerns--economic recovery, homeland security, health care costs and governing Iraq, to name just a few--devote himself so sedulously to reorganizing federal programs?

There's an easy and cynical explanation, of course. It can be argued that the most effective strategy for killing off those pesky liberal social programs is to give them to state governments that can't afford to pay for them. Some of this squeeze is already taking place. For example, the Social Services Block Grant--aimed at prevention and reduction of exploitation and abuse of both children and adults--is being downsized, from $2.4 billion to $1.7 billion so far on Bush's watch. The states will have to make up the difference--if they can find the money somewhere.

A more charitable explanation--and a superficially plausible one-- might be that Bush is an ex-governor, and that governors-turned- presidents are naturally inclined to hand over more control to states. Bush definitely had his problems with Washington when he was chief executive of Texas, having received an embarrassing high-level federal rebuke when he attempted to privatize his state's welfare administration.

But what may matter more than Bush's six years as governor of Texas is his management style, one that emphasizes consolidation and delegation. That's the way Bush runs the White House; it's only a small stretch to apply it to the federal system through a policy of delegating power and then holding the newly empowered governments accountable for results. Bush has made clear his belief that the federal government's organizational chart--if not its budget--should be smaller, and what better way to shrink it than to give whole chunks of it away.

But it's doubtful whether some of the moves toward block-granting make much sense even from the standpoint of efficiency. Clearly there are some areas, such as homeland security, in which states are the obvious choice as primary pass-through for federal cash, inasmuch as states need to be the guarantors of collaboration among local first responders. But other programs, like Head Start and Section 8, are by all accounts being served rather well by the current arrangement. Both Head Start money and Section 8 vouchers go directly from the feds to the local entities involved in the work of the programs. Both have operated relatively smoothly, in large part because of this direct, no-middle-man administrative and funding structure.

Strategists for local government can be forgiven for wondering what they stand to gain from the proposed reshuffling of money and power. Larry Naake, executive director of the National Association of Counties, doesn't think the Bush devolution wave has anything to do with a desire for increased efficiency. "This is an administration that has a clear interest in reducing federal participation in domestic policy," Naake says. He is worried about both a reduction in funding and a loss of local control in areas where locals are currently the providers of last resort, including education, criminal justice and housing.

And given those concerns, the current devolution wave--for all its potential--should give pause even to the states that are its ostensible beneficiaries. Flexibility is a good thing, but not if it comes at too high a price.