A whole lot of folks want to cut government to size

For the first time in many years -- perhaps since the Civil War and Reconstruction -- American federalism is coming under intense scrutiny in Washington.

A bipartisan, multigovernmental commission has recommended fundamental and potentially disruptive changes in the way federal, state, and local governments relate. Congress is focusing on the issue through public hearings. And the Reagan administration has just announced its own special group to formulate federalism policy.

The issue is being raised at a particularly opportune time. Questions of government spending, bureaucratic efficiency, growth in regulation, and judicial activism were top campaign concerns. They are at the core of the philosophical sea change that the Reagan administration has brought to Washington.

Following a three-year study on the subject, the Advisory Commission on Intergovernmental Relations (ACIR) recently concluded that "the federal government's role in the federal system has become more pervasive, more unmanageable, more ineffective, more costly, and more unaccountable. . . ."

If that sounds like Reagan rhetoric, it comes from a studiously bipartisan group of state, local, and federal officials whose professional staff for many years has been well regarded by government-watchers.

Testifying on Capitol Hill last week, ACIR assistant director David Walker said, "Federal-state-local relations have become more entangled, more enervating , and more undermining of the system's overall functional effectiveness over the past two decades."

Speaking to the same committee, Congressional Budget Office director Alice Rivlin noted that federal grants to state and local governments have about doubled as a portion of local budgets and federal outlays since 1960.

In that year, there were 132 federal aid programs, 80 percent of which had to do with transportation and income security. Today, there are nearly 500 intergovernmental grant-in-aid programs touching just about every aspect of state and local government operation. The total cost of such programs has rocketed from $7 billion to nearly $89 billion.

One example: 20 years ago there was one small program involving the US Forest Service that had to do with local fire protection. Today, there are 52 federal programs related to fire protection, handled by 24 separate Washington agencies (including every federal department except State and Defense).

"Categorical grants have gotten out of hand," admitted Robert Wood who initiated and dispensed much aid as Housing and Urban Development secretary under President Lyndon Johnson.

The number of federal employees has remained fairly steady (about 2.5 million) during this period -- and actually decreased as a portion of the population. State and local public jobholders, however, have mushroomed and now include 5 million "indirect federal employees" whose paychecks originate in Washington.

The ACIR reports that "the federal role has not just grown bigger, it has changed . . . from regulator and promoter of the economy and modest provider of intergovernmental aid to big banker, energetic but only modestly effective equalizer, pervasive regulator, and mobilizer of shared functions."

An "iron triangle" of congressional subcommittees, program administrators, and interest groups, the commission finds, has weakened the influence of "generalist" officials and political parties themselves.

Among the ACIR's recommendations:

* "Decongest" the federal grant system by having Washington take over major social welfare programs, terminating many other smaller programs (420 account for only 10 percent of all federal grants), and consolidating the rest into block grants.

* Have Congress and executive agencies attach "fiscal notes" and "impact analyses" to federal laws and regulations so that the cost to state and local government can be detailed. Allow the President to temporarily suspend (for up to 180 days) "potentially disruptive or very costly national policy requirements" having to do with such things as discrimination, privacy, environmental quality, prevailing wages, and merit employment.

* Strengthen the party system by holding midterm conventions, and more local and state conferences. The commission also advocates a smaller number of presidential primary elections and the elimination of open primaries.

* Make it easier for the states to petition Congress to hold a constitutional convention.

These issues -- now being scrutinized for possible legislative remedies by a House government operations subcommittee -- obviously are highly controversial and will be the subject of intense debate for many months.

They also are right up the Reagan administration's alley, and the President last week named his own "federalism advisory committee" to report on the subject before the end of next year.