Clinton Unveils GOP-Style Plan for State Block Grants

Unveiling a style of government cuts favored by Republicans, President Clinton told the nation’s governors Tuesday that he plans to consolidate 271 federal housing, transportation, training and health programs into 27 broad grants to be administered by the states.

The White House plan, a central element of the 1996 budget that Clinton will deliver to Congress next week, is clearly designed to compete with proposals in the GOP’s “contract with America” that also are backed by many Republican governors. Those proposals would convert several highly regimented federal spending programs into block grants awarded to states with broad discretion on how the money should be spent.

While it is unclear which approach ultimately will prevail, Clinton’s initiative gives new momentum to a growing movement to cut bureaucracy in Washington and pass authority back to the states.

“The federal government has worked in one way for decades; now it is time to try a new way,” Clinton said at the annual meeting of the National Governors Assn.

His proposal targets programs ranging from homeless assistance to transportation grants that account for about $65 billion of the $250 billion in domestic discretionary spending in Clinton’s budget, according to Lawrence J. Haas, spokesman for the White House Office of Management and Budget.

Haas described the effort as a “major thrust” of the budget and said that it would save “hundreds and hundreds of millions of dollars” in administrative costs.

Additional proposals to make government more performance-oriented and to shift authority to the states will follow later in the year, Haas said.

The President made his announcement as he and House Speaker Newt Gingrich (R-Ga.) jockeyed to appear responsive to the governors’ calls for a transfer of power from Washington to the states.

In a speech to the governors, Gingrich pledged: “I want to liberate every one of you” to experiment with welfare reform.

“We know the current system is failing, and we know that in failing it is destroying Americans,” Gingrich said.

House Republicans, led by Gingrich, are pushing a proposal to convert many federal programs for the poor into lump-sum payments given to states with broad discretion on how to serve needy residents.

The President’s version differs from Republican proposals because it sets up a system of accountability by requiring performance standards. States that perform well would be rewarded with increases in funding, and states that do poorly would see their funds reduced, Haas said.

“This new concept is in essence designed to strike a bargain with states, localities and the private sector,” Haas said. “The bargain is this: We will offer more flexibility to allow these providers to address problems that they know best. In exchange, we are going to work with them on insuring accountability for the way the money is spent.”

Later in the day, the governors agreed to disagree on welfare reform. They agreed, however, that states should have more leeway to pursue their own welfare reform strategies.

But they failed to reach consensus on whether Aid to Families With Dependent Children, the main cash welfare program for families, should remain an entitlement or become a state block grant program.

Under an entitlement program, every family qualifying for the aid receives it. Under the proposed state block grants, federal money would be split among states based on a formula--and the federal government no longer would guarantee assistance to all needy Americans.

Perhaps the loudest proponent of the block grant approach has been Michigan Gov. John Engler. During a news conference Saturday with leading governors, members of Congress and Administration officials, Engler unrolled a massive scroll containing the names of hundreds of programs. All should be combined into a few block grants to the states, he said.

Clinton referred to those theatrics in his speech to the governors.

Next week the Administration intends “to announce plans that we’ve worked on for months to consolidate 271 programs into 27 performance partnerships, and a lot of those were on Gov. Engler’s list,” Clinton said. “I’d like to help him cut it shorter.”

In an interview later in the day, Engler called the President’s initiative a “step in the right direction.”

“He jumped into the caboose today, and we want to get him up to first class,” Engler said. “It’s a beginning. I certainly hope he does not stop there.”

The federal government must go further in passing authority to the states, he said, because under current federal management the states are “choking on regulations.”

Engler and conservative analysts said the new environment in Congress was clearly the impetus for the President’s initiative.

Administration officials, however, said that the block grant strategy predated the election and sprang from their “reinventing government” efforts, which were launched long before the election.

“I think it is fair to say that the election crystallized the anger across the country to the way government was or was not working,” Haas said. “But it’s a bold new direction, and it would be unfair to take it out of context and see it as ‘me too-ism.’ You could say we were here first.”

Some Administration officials who watched Engler roll out his list on television said they were elated to see it because they knew the President’s proposal was along the same lines.

“We all said, ‘Ha, ha, ha. We’re way ahead of you,’ ” recalled Elaine Kamarck, a senior White House official who worked on the reinventing government proposals.