Shell Game

President Reagan long has professed great faith in the federal structure of American government. He is a particular fan of the 10th Amendment to the U.S. Constitution, which reserves for the states the powers not expressly delegated to the federal government. And he has spoken glowingly of a New Federalism in which the federal government and the states are full partners.

The New Federalism was the centerpiece of Reagan’s 1982 State of the Union address. He would slash through all that red tape ensnarling federal grant-in-aid programs and turn back to the states the functions that logically belong there. To assist in this transition Washington would give the states some federal taxing resources to pay for the programs.

If it all sounded too good to true, it was. In fact, the Administration’s lofty talk about federalism has been a shell game from the start. It was not a two-way street of partnership, but a dead-end alley for state and local governments. Admittedly, governors and mayors used to go to Washington hats in hand for goodies from the pot at the end of the rainbow, but often at Washington’s urging. Now, when they come back from the Potomac after merely pleading for equity, they are lucky to still have their hats, or the shirts on their backs.

So it should be no surprise that, for the fifth consecutive year, the nation’s governors went to the White House for some accommodation in Reagan’s budget policies Monday and were treated with the courtesy normally reserved for unwelcome in-laws. “The time has come for budget restraint,” the President told them.

Credit the governors with the utmost restraint in biting their tongues over that one. They have spent the past four years absorbing Reagan Administration cutbacks in federal aid programs at the same time that their own revenue sources plummeted because of the recession. Most governors faced the wrath of the voters by raising taxes at the same time that the President was enjoying the political windfall of his own 25% cut in federal income-tax rates. As for the federal taxing sources that they were supposed to get, that idea was stillborn back in 1982 when the Administration refused to negotiate in good faith with the states over the New Federalism.

Now the governors get lectured by the President for having budget surpluses, as some do, and having the temerity to protest still more cuts in state and local aid or to suggest that Reagan consider a real budget freeze that includes defense and Social Security. “There is simply no justification for the federal government, which is running a deficit, to be borrowing money to be spent by state and local governments--some of which are now running surpluses,” the President said.

There is a simple solution to that problem, but it has been suggested before and the President won’t hear of it: Just pretend that the federal government is borrowing the money to finance the hundreds of billions in Reagan tax cuts and defense increases, not for the $4.6 billion in general revenue sharing or the $4.1 billion in mass-transit aid that Reagan wants to dump back on the states, cities and counties.

The ultimate irony, of course, will come when the states lucky enough to have surpluses use them up to absorb still more cuts in federal aid, or just cut off services, and when transit districts have to raise fares still further to make up the assistance that the federal government no longer is willing to provide.

The Reaganites will take credit for being fiscally prudent. And guess who’ll get the blame.