Money Matters

Whatever U.S. Governors do these days, money is on their minds--especially money to be squeezed out of Washington. Plagued by ever-increasing costs for education, poverty and Medicare, the executives of the 50 states have been encouraged by President Nixon's proposals that the Federal Government pay for part of the welfare program and share some of its tax intake with the states. So it was money that provided the major topic as the Governors convened for their 61st annual conference at the Broadmoor hotel in Colorado Springs, Colo. In particular, they discussed the money to be had in the nebulous kitty known as the "peace dividend," meaning savings from an end to the Viet Nam war that might be diverted to domestic ends.

No Illusion. People have been busily slicing up the still hypothetical peace dividend for a long time. Thus it was considerably dismaying when, on the eve of the conference, Daniel Moynihan, the executive secretary of the Urban Affairs Council, informed the nation that any peace dividend that accrued would quickly be soaked up by increased defense costs and burgeoning domestic programs such as welfare and aid to education. But Presidential Counsel Arthur Burns was an early guest of the Governors, and he had more hopeful news. There had been a "little misunderstanding" of Moynihan's remarks, he allowed, and in fact "there would be $8 billion if the war ended today" for use in new or expanded domestic areas.

Such cheer as Burns inspired was short-lived. In flew President Nixon to inform the Governors that "dreams of unlimited billions being released once the war in Viet Nam ends are just that--dreams. True, there will be additional money, but the claims on it already are enormous. There should be no illusion that what some call the 'peace and growth dividend' will automatically solve our national problems." Added the President: "In order to find the money for new programs, we will have to trim it out of old ones."

That was bleak news, and New York Governor Nelson Rockefeller, once again the dominant spokesman for the nation's Governors, refused to accept it. He changed the subject from the peace dividend to what is known as the "growth dividend," resulting from the normal expansion of the U.S. economy. Rockefeller reported that a study commissioned by the Governors Conference Committee on Human Resources, which he headed, had produced some interesting figures. Never mind whether any money comes from the slowdown in Viet Nam; the study projected that federal revenues would increase by $15 billion in 1970, $16 billion in 1971, $18 billion in 1972, on up to $20 billion in 1976. Cumulatively, these federal revenue increases would total $125 billion by the end of 1976. The money, said Rockefeller, could be channeled into new federal domestic programs or sent to the states through the President's revenue-sharing plan.

This federal revenue growth, argued Rockefeller, makes Nixon's scheme for revenue sharing too small. The objective of the President's plan is to turn $12 billion back to the states by 1976, asserted Rockefeller--only about 10% of the $125 billion additional revenues the Federal Government will receive during the same period. In view of the projected federal growth, Rockefeller asserted that 35% to 40% of the additional funds should go to the states. The study showed that if 35% were turned back to the states, it would represent $43.8 billion by 1976. Said the ebullient Rockefeller: "The money is going to be there, and it is not too early to begin thinking about how to use it."

Resounding Approval. Administration officials remained noncommittal. Burns said: "I don't like to quarrel with my old Governor." Vice President Agnew was similarly circumspect. Said he: "I don't think the [Rockefeller] estimates are fully accepted by the Administration." But the Governors, almost to a man, were solidly behind the New Yorker, preferring Rockefeller's optimism to the Administration's caveats. They resoundingly approved policy statements sponsored by Rockefeller's committee calling for the Federal Government to assume the full costs of welfare over the next five years, to establish a compulsory national health insurance program, and to bring social security payments up to a minimum of $100 per month.

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