Sharing Loaves and Fishes

I IKE many vacation-bound Americans, Richard Nixon had ambitious reading plans during his three-day rest in the Virgin Islands last week. He took along three books, each of them "dull," he said. It is not known how much reading he got done in all that sunshine, but one selection, Robert Blake's biography of Benjamin Disraeli,* was especially apt. The great Tory, who 100 years ago led his country into a memorable period of progressive reform, once wrote: "All power is a trust . . . we are accountable for its exercise; from the people, and for the people, all springs, and all must exist."

Nixon, too, is attempting to alter the course of recent decades with a radical innovation. When he returned to Washington last week, he sent Congress his detailed recommendations for "general" revenue sharing, which in its first full year of operation would give the states and municipalities $5 billion in new federal money--along with near-total freedom in spending it. The President faces strong opposition as he presses forward with what he has called a new American revolution. The original had a still-remembered fiscal catch phrase, "No taxation without representation"; Nixon framed an argument that might be summarized, less stirringly, as "No accountability without accessibility."

Unpassed Buck. Nixon addressed the critics' basic objection: that unless the officials who spend tax money are the ones who raise it, the funds will be used irresponsibly and with no regard for the taxpayers' pressure. Nixon's reply: "Giving states and localities the power to spend certain federal tax monies will increase the influence of each citizen on how those monies are used. It will enhance accountability. The reason for this is that accountability really depends, in the end, on accessibility--on how easily a given official can be held responsible for his spending decisions."

The President also dealt with a related objection: that government spending already lacks restraint and, under revenue sharing, would be entirely unchecked. Nixon's answer: "It will be harder for states and local officials to excuse their errors by pointing to empty treasuries or to pass the buck by blaming federal bureaucrats for misdirected spending."

Pauper's Bequest. Though Nixon did not name him, the man he was answering is Wilbur Mills; the House Ways and Means Committee chairman has made plain his implacable opposition to revenue sharing. Normally as cautious in manner as he is with federal spending, Mills has become increasingly bitter over the economic picture presented in Nixon's budget as well as the political potential in the revenue-sharing plan. Mills believes that Nixon's deliberately expansionary budget would produce not the announced $11.6 billion deficit, but one of at least $24 billion and possibly as high as $30 billion. He contends that Nixon both overestimated revenue and underestimated expenses.

Mills told a friend last week: "Revenue sharing isn't anything but a gratuity in a will signed by a pauper." The plan, he thinks, is actually a political ploy: the President supposedly would not mind if the Democratic Congress rejected revenue sharing. Then he would campaign in 1972 as the man who tried to finance the solution of local problems only to be thwarted by the Democratic opposition. "He's not going to outmaneuver me," said Mills.

The Arkansas Democrat will put together his own aid package--not only to block the political punch he sees coming but also to meet what he too acknowledges is a worsening financial outlook for the states and cities. But while Nixon would deliberately reverse the pattern of power and responsibility that has grown between Washington and the states, Mills would reinforce it. The chairman's proposal would involve federally determined programs with more stringent federal control, but he would substantially increase the U.S. share of those programs' cost. "We'll continue to hold the power over priorities," he said. "We're now paying 56% of all welfare. What if we made that 66% or 70%?" His plan would have the same net effect as revenue sharing; it would free some state and local funds for other, locally determined uses.

If Mills' analysis of revenue sharing as a political stratagem is correct, there is little evidence of it yet. Most congressional comment has been cautious. A principal ally of Mills' in opposition to Nixon is the ranking Republican on Ways and Means, John Byrnes of Wisconsin. Liberal Democratic Senator Adlai Stevenson III of Illinois also shares Mills' view, but liberal Republican Governor Nelson Rockefeller--desperately in need of more federal aid for New York--is a leader in the fight for Nixon's plan.

The President is counting on broad support from local officials throughout the country. In part to help rouse that sentiment, Treasury Department computers last week began preparing a list that would show what every municipality in the nation would receive. But so complicated are the formulas that the programmers erred and the first computer printout was wrong; officials hope that a new list will become available this week.

Pass-Through Problem. Under the plan, money distributed to the states each year would amount to 1.3% of federally taxable personal income, and thus would increase along with the tax base. State allotments would be determined not only by population, but also according to how much a state taxed its citizens. The more such "tax effort" a state made, the more help it would get under Nixon's plan. The big question is, what happens to the federal money after it gets to the state capitals? The problem of "pass-through," as it is known in bureaucratese, is one the Administration had hoped to avoid. It had originally sought to distribute funds to the states on the basis of population only. Then, in effect, the cities and counties would have had to fight it out with their statehouses. But urban leaders throughout the country demanded and won a change in the Administration proposal.

The plan now calls for a clearly defined split in the funds, with an average of 52% for the states and 48% for the cities. Where cities already collect heavily in taxes, they would get proportionately more than lower-taxing suburbs. The Administration proposal also contains an alternative to the 52-48 approach, an option designed to further local initiative. It offers a 10% aid bonus to any state where Governor, legislature and more than half the cities --containing at least half the state's population--agree on how to use the federal funds. Involved as they are, the formulas will seem simple compared with the details Nixon will soon be providing to explain the other aspect of his new federalism--a "special" revenue-sharing plan to turn many narrow-gauged federal programs into six broad ones. The $10 billion that now finances these restricted programs and $1 billion in new money will be used for special revenue sharing.

Though the fight will probably get rough later, the President last week was campaigning for general revenue sharing in the most apolitical manner possible. He invoked George Washington, Winston Churchill and the Old Testament. When King Solomon ascended the throne, the President told a prayer-meeting breakfast, he did not ask for wealth or power, but said, "Give thy servant an understanding heart." From Byrnes, the President got instead another biblical quotation to describe how Governors and mayors are lusting after federal money. "They see it as manna from heaven," Byrnes said, "as if it's the miracle of the loaves and fishes. I don't think we've been invested with the supernatural powers to work the miracle of the loaves and the fishes."

* The others: Lord David Cecil's Melbourne and Anatole France's The Crime of Sylvestre Bonnard.

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