tionally been regarded to be, in the realm of the States. They do not aid the States, they use the States to carry out commands of the Federal Government. This reminds me of the story of the two boy scouts who came late to the troop meeting and when asked for an explanation said: "We helped an old lady to cross the street." "Did that take you a whole hour?" their leader inquired. "Yes, it did," they replied, "she did not want to go." Besides offering certain conveniences, grants are also the cheapest way for the Federal Government to implement its decisions on domestic public services. Through a contribution which sometimes exceeds 75 percent but more often equals one-half, one-third or less of the cost, the central authorities acquire as definite a control as if they bore the full cost: they establish the condition under which funds are made available and no State can afford to forego its allotment to which its residents must contribute a share through their Federal taxes. In Canada intergovernmental payments and tax allocations are negotiated and settled at periodic meetings of the Dominion Prime Minister with the provincial premiers because they are regarded to be matters between the Dominion and the provinces. In the United States general State authorities-governors, budget officers, legislatures are not part of the process that leads to new or expanded Federal grant programs. Federal grants, usually recommended by the President, are a matter between the pertinent Federal cabinet department, the functional committees of Congress and the affected nationally organized interest groups. State or local officials called in for consultation are the administrators of a particular program, never general State officials. Decisions by Congress, and later by the Federal bureaus, are decisions on the substance of education, public welfare, roads or urban affairs in which the State legislatures have little choice. Pending proposals would further restrict the limited discretion State legislatures still enjoy. The protagonists of governmental centralization have "wisely refrained from tampering with the Ark of the Covenant" as Rowland Egger so well phrased it. The symbols have been preserved and the rituals carefully respected. Lip service to local autonomy and home rule is as lavish as ever. But the substance of authority has passed into the hands of the National Government. The formality or facade of Federal grants is only used in order to maintain the fiction that we still have a federal system of government. At the General Assembly of the States in December 1948 Roscoe Drummond said, "The issue has been foreclosed by events. The federal system no longer exists. The trend toward centralized Federal Government is overwhelming, inevitable, irreversible, and to a degree, irresponsible. It is a part of American life." He added that the federal system can no more be restored than an apple pie can be put back on the apple tree. Some State officials felt at the time like replying with Mark Twain's famous telegram to a newspaper, "Notice of my death greatly exaggerated." But Mr. Drummond was at most slightly premature. In July 1965, David Brinkley, speaking to the assembled students of the University of Ohio said: The decline and fall of the 50 State governments will be completed within our lifetime. The movement of political power from state capitals to Washington is inevitable and unstoppable whether we like it or not. Mr. Brinkley, it seems, likes the trend while others may not. But his judgment of what is happening in our system of government, in my opinion, can hardly be questioned. As the number of Federal grants soars, from 100 a few years back to over 250 at the present time, and possibly 300 or 400 some years hence considering innumerable proposals to fill remaining "gaps". the system is turning so cumbersome as to become completely unworkable. A basic change is called for to prevent utter chaos. What purpose is served by maintaining the fiction of a State program aided by the National Government when the latter provides 100 or 90 or 75 to 80 percent of the cost as it does in unemployment administration, on interstate highways and in some segments of public welfare and education? As trends go, the National Government will in all likelihood eventually take over many or most of those services as the complications of maintaining the pretense of "intergovernmental cooperation" become unbearable, too obviously wasteful and useless. Why should the issue of the governance of public services not now be placed squarely on the table and before the American people? To pile dozen or hundreds of new "grants-in-aid" to States on over 250 current ones serves no purpose other than to confuse the public and make governmental authority and responsibility incomprehensible. To be sure: I am not proposing that the National Government now take over all or some of the various public services which are now provided in the name of State and local governments under Federal direction and with Federal financing. But I wonder whether we should continue to drift into the "end loesung" (final solution) or face the issue now of what kind of government Americans want to have: centralized power and chain-of-command or home rule. Grants-in-aid which were the lever of change may be as good a place as any to consider the alternative that faces us. GOVERNMENT FOR TOMORROW: A PROPOSAL FOR THE UNCONDITIONAL SHARING OF FEDERAL TAX REVENUES WITH STATE AND LOCAL GOVERNMENTS* BY THE REPUBLICAN GOVERNORS' ASSOCIATION AND THE RIPON SOCIETY FOREWORD The Republican Governors' Association is delighted to have a major part in the task of preparing this paper. The association believes that the proposals incorporated in this research paper open exciting new vistas for accomplishment in intergovernmental relationships. We stand ready to cooperate with the States, with the President, and with the Congress in working out a detailed plan for the accomplishment of this salutary objective. The proposal to share Federal tax revenues with the States is the first really workable suggestion for correcting a developing imbalance in the revenue structure of government at all levels to be advanced in many years. Since the final draft of the paper was agreed to, the Western Governors' conference has unanimously approved the proposal for unconditional sharing of Federal tax revenues with the States. This wide bipartisan base of support insures sympathetic consideration by the National Governors' conference. On June 8, 1965, the Illinois State Senate approved Senate Resolution No. 22 which added the support of that body to this proposal. Several other legislatures have endorsed the proposal. The once friendly attitude of the President would seem to indicate that the proposal to share might yet be considered in an affirmative frame of reference in the executive establishment of the Federal Government. The Republican Governors' Association desires to express its appreciation for the assistance of Dr. Carl McMurray of the association staff in the preparation of this paper and for the cooperation of the Ripon Society. It is our hope that this will be the first of a series of productive papers on State government problems and on the problem of relationships between the States and the Federal Government. The preservation of our uniquely excellent Federal system is important. Increasing emphasis on the important role of State government in that system will tend to strengthen the entire structure of government in its efforts to serve all of our people. Strong and effective State and local govern *A research paper issued jointly by the Republican Governors' Association and the Ripon Society, July 1965. ments are the surest defense against the Democratic drive toward increased centralism in Washington. ROBERT E. SMYLIE, Chairman, Republican Governors' Association. BOISE, IDAHO, July 6, 1965. FOREWORD We of the Ripon Society firmly believe that the Republican Governors and the new generation of Republican leaders in the States represent the real hope for the future of a new Republican Party. We believe that strengthening State and local governments will be one of the great challenges of a new and exciting era in our political history. And one of the first problem areas where Republicans must provide creative leadership is in finding adequate tax revenues for expanding State and local services. For these reasons we are happy to have worked with the Republican Governors' Association and its staff in the preparation and circulation of this research paper. It is our sincere hope that this paper will promote discussion and interest in one of the few really new major policy ideas that has been advanced in recent years. Both Republicans and Democrats have had a part in its inception. We now ask the President to welcome the efforts of the Nation's Governors of both political parties and to commit the full prestige, resources, and leadership of his office toward the achievement of a workable revenue-sharing program with the States. We feel that this study presents persuasive arguments for such a program. As young Americans vitally concerned with the future strength of our governments-Federal, State, and local-we ask for a vision which sees beyond the years. The poet has said that boldness has genius, power, and magic in it. Now is a time for such boldness. We dare to believe that we can find practical solutions to the problems of our Federal system, that we can build government for tomorrow. JOHN S. SALOMA III, President WASHINGTON, D.C., July 6, 1965. The Ripon Society wishes to thank Mr. Lee Heubner, member of the Ripon Executive Board and a graduate student in history at Harvard University, for his work in heading the Ripon research task force that prepared the working draft of this study. The society extends its appreciation to the Republican Governors' Association for its sponsorship of the research paper, and to Dr. Carl McMurray, of the association staff and Mr. Robert McCall, assistant to Gov. Robert Smylie, for their assistance in preparing the final draft. GOVERNMENT FOR TOMORROW For a while it seemed as though everyone was for it. President Johnson and Senator Goldwater endorsed the idea in the closing days. of the 1964 campaign. Both the Republican and Democratic platforms gave it favorable notice during the summer. The Conference of State Governors supported it enthusiastically. Liberal economists and conservative Congressmen joined editorial writers and columnists of all persuasions in backing the proposal. The most popular version of the idea bore the name of the President's chief economic adviser, Dr. Walter Heller. A special Presidential task force, headed by Dr. Joseph Pechman of the Brookings Institution, gave formal approval after a detailed study. The object of all this affection was the so-called Heller proposal to distribute some Federal income tax revenue to State governments on a "no strings" basis. Economist Robert Heilbroner described the plan as "that rarest of rarities-a really new idea in domestic economic policy." Edwin Dale, economics specialist for the New York Times wrote in the New Republic that it was "one of the most exciting ideas to hit Washington in years." Heller, then Chairman of the President's Council of Economic Advisers, began to publicize the idea in this country early in 1964. Republicans welcomed a plan which expressed the concern for State government which President Eisenhower and other leaders had urged for so many years. Support grew quickly and by December one editorial writer predicted that "it would seem to have at least a decent chance of winning congressional approval. ̈1 But the prediction was never tested. For in mid-December the President did a bristling about-face. He was irritated, he told reporters at a background conference, because the favorable recommendations of the Pechman task force had been leaked to certain newspapers. He was annoyed because the leak had generated criticism. Angrily, and without any reference to its merits, he shelved the proposal-its widespread support notwithstanding. But it did not stay shelved. Journalists reminded the President of his campaign promises. "It deserved a better fate," the New York Times lamented, "at least a thorough airing." Economists continued to plug for it." *** [I]t seems a good bet that soonor or later someone will discover its merits," wrote Heilbroner. Later in March, the Nation's Governors prodded the President one more time. Republican Gov. Robert Smylie of Idaho announced that the Governors had asked the President to permit a new study of the Heller plan. They were told that the idea was under review in the Bureau of Budget. There it languishes today." For reasons which are developed in this paper, the Republican Governors' Association and Ripon Society support the revenue-sharing proposal. We believe that the idea should be judged on its merits and not removed from the realm of public discussion because of personal peevishness on the part of the President. It is our hope that President Johnson will rise above his pique and permit the resources of the Executive Office and the Pechman task force, in full cooperation with the Nation's Governors, to begin fashioning a workable legislative proposal for revenue distribution to the States. GOVERNMENT FOR TOMORROW: OPPORTUNITY AND CRISIS We live in an era when events threaten to outrace our ability to respond to them. Too much of present-day politics is caught up in 1 Robert Heilbroner. "The Share-the-Tax-Revenue Plan." New York Times Magazine, Dec. 27, 1964, p. 8; Edwin L. Dale, Jr. "Subsidizing the States," the New Republic, Nor. 28, 1964. p. 11: Commonweal, Dec. 25, 1964, p. 437. 2 New York Times, Dec. 21, 1964, p. 28; Heilbroner, New York Times Magazine, p. 31: New York Times, Mar. 23, 1965, pp. 14 and 16. |