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Find the right mix for the 'new federalism'

In seeking to define a "new federalism" within the United States -- that is, the relationship between the federal government, the states, and municipalities -- the Reagan administration faces the unique opportunity of bringing about what could well be one of the most far-reaching political and social realignments since the New Deal some five decades ago.

But questions must be asked as to whether anyone within the administration grasps the full import of the changes that are being sought, as well as whether the right steps are being taken to ensure a successful shifting of federal responsibilities to the states and local government, should that occur.

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There is much evidence to suggest that the administration -- in its zeal to reduce the size and cost of the federal apparatus -- may be inadvertently going about its approach in the same "cart-before-the-horse" way that it is shaping its defense posture; that is, establishing spending targets and setting up an agenda for a devolution of federal programs first, before inviting Congress and the American public to carefully determine exactly what the federal and state roles should be.

A more orderly approach would seem to involve two separate issues: first, defining which programs should be dealt with at the federal level and at the state level; second, taking a hard look at how state governments could financially absorb such programs.

The administration would shift responsibilty over federal programs by moving from categorical grants (with congressional restrictions on the monies), to block grants, thus allowing decision-making authority over spending to be exercised by the states. But such a transfer of responsibility raises the probability of undoing the mix of social and urban-related programs now in place in the United States.

This week two congressional committees took actions to sharply restrict block grants. Congress would be wise in retaining the categorical approach, since the responsibility over raising taxpayer dollars should not be separated from the responsibility over spending those same dollars. Mayors of large cities, moreover, oppose block grants since states could divert monies to non-urban projects.

It must be remembered that most federal programs were set up in the first place precisely because the states were either unable or unwilling to finance such initiatives.

In preparing for the new federalism, Mr. Reagan has established an advisory commission, headed up by Nevada Republican Senator Paul Laxalt, one of the President's closest friends. It is unfortunate that the chairmanship could not have gone to someone outside the administration circle. Mr. Reagan has also set up several task forces. These bodies should not become partisan in nature and should be broadened to include constitutional specialists representing a diverse spectrum of public thought regarding federalism.

One important issue that should be quickly addressed is the extent to which states and municipalities are able to absorb management of federal programs. Many municipalities are financially pinched; some are on the verge of bankruptcy. Most states are currently in a better financial position. Yet new legislative and court restrictions on the ability of cities to rely on property taxes as their main revenue source will make it harder for the states to absorb national programs since they will often be forced to divert their own revenues to tax-pinched cities.

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The American public need not fear -- and indeed, should welcome -- a vigorous national debate over how best to define the proper degree of federalism necessary to meet the problems of space-age, end-of-the-20th-century America. The ultimate goal should be to ensure that government at all levels is well managed, efficient, and responsive. But at the same time, programs that are essentially federal in nature must be kept at the federal level, along with responsibility over t he use of taxpayer funds underwriting those programs.

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