THE MARBLE-CAKE GOVERNMENT Washington's New Partnership with the States

TIME ESSAY

NOT long ago, Washington used to offer simple, straightforward directions to any state or city that received federal aid. The directions went something like this: "Take as directed. Do not shake. Do not stir. Swallow hard." The states were not very fond of the directions, but they wanted the funds that came with them--and they swallowed their objections. Now something new and interesting is happening to the often strained relations between the Federal Government and the nation's states and cities. To a degree that few people could have anticipated only a short time ago, Washington is actively seeking the help, cooperation and counsel of the states, the cities and a vast array of volunteer groups and private industries. It is forging new partnerships that have wide-ranging implications.

The effort goes by the name of creative federalism, a term suggested by New York's Governor Nelson Rockefeller in his 1962 Godkin Lectures at Harvard and picked up by Lyndon Johnson in his "Great Society" speech at Ann Arbor, Mich., in 1964. Far from seeking a stronger role for the Federal Government--as it sometimes has been thought to do--creative federalism not only asks states and cities to do more on their own, but challenges the concept that governmental power is a one-level reservoir from which every cup drawn by Washington means a loss for someone else. Instead, as Max Ways wrote in FORTUNE, "creative federalism starts from the contrary belief that total power --private and public, individual and organizational--is expanding very rapidly."

It is expanding because the burdens of governing are growing too big and too complex for any branch of government to handle efficiently alone. There are dozens of areas, from housing to highways, that the states do not have the money to handle themselves, and hundreds more in which the Federal Government must take the initiative if anything is ever to be done. Though cries are still heard about the freedom-encroaching growth of government--most frequently from the extreme right wing--most Americans have come to accept the fact that big problems require big government. What they are apt to resent is the Federal Government's playing too pervasive and domineering a role in decisions that are better made at the state or local level. On the other hand, Washington is recognizing that many of its programs need local focus and effort to make them work efficiently. The result, in the best pragmatic tradition of American politics, is that Washington is busy changing the shape and context of its aid and influence.

Temptation Resisted

There has been a great deal of talk about creative federalism, but there has also been a surprising amount of action. Some of the action involves creativity, but most of it could more accurately be called administrative federalism. It gives the states and localities options about how they run and implement federal programs. Perhaps the best example is the $1.3 billion Elementary and Secondary Education Act, which Congress passed last year despite dire forecasts of the inevitable erosion of local control of U.S. education. Far from trying to undercut local educators, Washington has taken great pains to ensure that the functions of planning and decision making remain in their hands. Roughly $1 billion of the money goes to local boards of education to spend as they see fit on children of the poor, and millions more are aimed at strengthening state boards of education so that they can frame their own programs in the future.

The Administration has also resisted the temptation to turn its medicare program into a wholly Washington-run operation, even though 22 states had made no use of the earlier Kerr-Mills Act and 28 others frequently offered indigent patients payments that were far too stingy. Despite this record, Washington has left the job of administration to such diverse groups as state agencies, insurance companies and group health plans, marking what John Gardner, Secretary of Health, Education and Welfare, calls "the beginning of a partnership of great promise." Nearly half of the $1.75 billion requested by the Administration to fight its war on poverty is earmarked for programs at the local level. Though this has stirred some resentment among bypassed Governors and mayors, officials consider it the most important of the poverty war's weapons because it is designed to spur initiative and independence at the community level.

In a more important and fundamental field--voting rights --the Federal Government has acted to stimulate individual action by eliminating state-imposed restraints. When Washington abolished literacy tests for voting last year, thus making it practically imperative for Southern states to register Negroes, it also breached with a powerful precedent the traditional division between state and federal law. The states, shamed and intimidated by the federal fiat, had little choice but to ignore any of their own laws that differed from it. In the same area, the Supreme Court's one-man-one-vote decision freed state legislatures from the hard and ancient grip of rural domination. But for all that, in a nation that embraces a bewildering diversity of sects and sections, there are a great many national problems that do not lend themselves to a single, unbending national solution.

Schizophrenia in the Statehouse

In Lyndon Johnson's Washington, there is a growing awareness that such problems can be solved only by fostering more creative interplay among the different levels of government. Usually, government is compared to a neatly tiered three-layer cake--composed of national, state and local levels. In fact, as the late University of Chicago Professor Morton Grodzins put it in a 1960 report of the President's Commission on National Goals, it is more like a marble cake, full of unexpected whorls and inseparable blendings. "As colors are mixed in the marble cake, so functions are mixed in the American federal system," said Grodzins. "From abattoirs and accounting through zoning and zoo administration, any governmental activity is almost certain to involve the influence, if not the formal administration, of all three planes of government."

The Administration seems to realize that all the bold plans now cascading from Congress--last year alone it expanded nine existing grant-in-aid programs and launched 17 new ones--may not accomplish much unless the Government is willing to bend to this diversity. "Many of our critical new programs involve the Federal Government in joint ventures with states and local governments," said the President in his Budget Message. "We must give more freedom of action and judgment to the people on the firing line." Johnson is planning a full-dress speech on creative federalism before long. Last week, in a kind of foretaste, White House Aide Joe Califano said in a Washington speech: "Now that we acknowledge national responsibility in every sphere, we find that federal power cannot be applied in any sphere except as it works through states, cities, local institutions and private citizens."

While the era is welcomed by every level, it is just beginning; there is still plenty for the Government to do before it becomes a really flexible partner. Many federal programs, framed by bureaucrats who often scorn as incompetent their brethren at the lower levels, still come with more strings than a troupe of marionettes, leaving no room for needed diversity and thereby threatening both the initiative and independence of the states. "The Federal Government earmarks grants for specific purposes," says James Q. Wilson, director of the Harvard-M.I.T. Joint Center for Urban Studies. "In many cases, those purposes are irrelevant to the real needs of the cities and states." Washington's insistence that the states set up a separate agency to administer each of its grant-in-aid programs--of which there are now 233, compared with only 18 in 1934--has produced a wild proliferation of state bureaucracies.

Washington's generosity on the one hand and its many strictures on the other have driven some states to near schizophrenia: holding one hand outstretched to collect the federal loot and the other clenched to punch the federal snoot. The fact is that the Federal Government needs to do many things that the states cannot--or will not--do by themselves and that the states and localities badly need the money that comes from Washington. Since 1946, state and local spending has soared sixfold, to nearly $100 billion a year--twice what Washington spends on domestic affairs. But the Federal Government gets the lion's share of the nation's most lucrative source of revenue--the personal income tax--and leaves the dregs to the states. Thus, for all the complaints, it is a rare Governor indeed who will turn his back on Government aid. "Just let us have the money," says Iowa's Democratic Governor Harold Hughes, "and we'll provide all the programs that are needed."

Jealousy & Absurdity

Of course, the states cannot provide everything. Foreign affairs, national defense and interstate commerce are the obvious business of the Federal Government, and numerous other jobs would simply go undone without Washington's ideas, money and authority. Civil rights is one. While at least half of the states have fair-employment, public accommodations and housing statutes that are fully as progressive as the national Government's, resistance to such laws in the South makes a national program essential. Without federal funds, the $47 billion interstate highway system would be beyond the states' resources. Without federal regulatory laws, railroads and airlines, radio and television, interstate business and national labor unions would be subject to 50 separate state codes. And as long as crop quotas and price supports exist, a uniform federal program for agriculture is the only bar to total chaos.

Still, the new federalism implies not only that Washington will be more flexible with its aid but that the states will not besiege Washington to do jobs that they can do themselves. There are plenty of such jobs, and many of them are being attacked by a flock of progressive Governors such as Rockefeller, Michigan's George Romney, Pennsylvania's William Scranton, Vermont's Philip Hoff, Oregon's Mark Hatfield, California's Pat Brown. New York has just enacted its own program for rehabilitating narcotics addicts, and last fall launched a $1 billion water-pollution-control program. Pennsylvania and New Jersey have launched ambitious programs for urban parks. California encourages communities to organize local mental-health facilities, now has centers in half its counties. But by far the most important role for the states under the new federalism is to serve, in the words of Thomas Jefferson, as "the most competent administrations for our domestic concerns." Washington may provide the cash and the broad concept, but after that it is the states' job to fashion effective programs in such critical areas as welfare, housing, air and water pollution and commuter transit.

Because creative federalism involves relationships among all three levels of government, the states could certainly get help with some of their problems by tapping the abundant resources of the lower-level governments within their borders. The nation's 3,049 counties, for example, could play an important role in coordinating the overlapping needs of city and suburb in such areas as sanitation and law enforcement, but most of them are restricted to routine housekeeping chores by jealous state legislatures. Local governments should be feeding ideas to their state capitals on urban-renewal and welfare programs, but city halls have been ignored for so long that few bother to do so. Half of the states go so far as to deny home rule to their cities, an absurdity that forces Chicago to ask Springfield for everything down to the right to license peanut vendors. That absurdity is also forcing Mayor John Lindsay of New York City--whose $4.6 billion budget is larger than any state's--to go hat in hand to Albany to beg for the new taxes that he believes the city needs. No wonder that, after years of neglect by rural-dominated state legislatures, city after city has learned to bypass the state capital and go directly to Washington for help.

Bringing the idea of federal aid a step further, Walter Heller, former chief of the Council of Economic Advisers, has suggested filling the states' chief need--money--by rebating a percentage of federal income taxes under a formula that would give the poorer states a bigger share. Many experts challenge this plan, insisting that it would be better to cut federal taxes and let the states do their own collecting. Says former Commerce Secretary Luther Hodges, a onetime governor of North Carolina: "A plan like Heller's would come nearer to sapping the remaining initiative of the states than anything else I know of." In any case, no plan to redistribute or cut federal income taxes stands much chance of surviving so long as the war in Viet Nam lasts.

How, then, are the states to raise the cash? Already nearly 95% of all U.S. consumers pay state sales taxes, so that lode is just about exhausted. Most state governments could probably squeeze out several million dollars a year in additional revenue by making their real estate assessments, now generally unrealistic, conform to true values. The 17 states that still have no income tax have an obvious source of added funds. In 15 states, changes could be made in constitutions that prohibit local communities from investing their idle cash, an archaism that costs them as much as $100 million a year in lost interest. And, of course, there are less conventional sources of cash: New Hampshire pans more than $2,500,000 a year from its sweepstakes.

No Violence

Whatever the states may do, the Federal Government is almost certain to continue extending its influence through the national life. The trend to big government in the U.S. has taken place without violence to the Constitution; the Supreme Court, for example, has sanctioned the Federal Government's expansion into such controversial fields as public accommodations and voter qualifications in state elections. The big problems of the age do not recognize artificial boundaries and local customs--for all that these may be welcomed and treasured as the source of much of America's diversity. It is therefore possible to foresee a time when the states, through locally elected governments, will serve chiefly to give a regional accent and interpretation to programs initiated by Washington for the nation as a whole. Accordingly, Pennsylvania's Governor Scranton has urged the Republican Party to "embrace a program whereby the federal Congress outlines in broad terms a national goal in meeting a national domestic problem, appropriates the money to meet it, but gives maximum authority for implementation to strong, effective state governments."

This is not to say that the states and localities ever can or should settle for a passive role. After all, the theory of creative federalism was not consciously formulated by Washington, the states or the cities; it grew pragmatically, as officials on every level realized that they need one another's help in wrestling with the problems spawned by urbanization and industrialization. While cooperating with Washington, the states can regain initiative by formulating and carrying out more programs themselves--with Washington's help when necessary, without it when possible. Though the Federal Government certainly has its aggressive apostles of power and centralism, it has largely been moved by necessity in expanding its role in American life. By beginning to put into action the principle of creative federalism, it is simply trying to find the most effective way possible to solve the problems and share the burdens. The future of the federal compact depends on the willingness and ability of the states and cities to help it find that way.

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