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September 19, 2003

Block Grants as Anti-Urban Policy

A conservative blogger has complained that my describing block grants as just some way to undermine urban districts in favor of suburban spending doesn't deal with the real purpose of moving away from direct federal funding to cities.

Block Grant Funding Falls Over Time: That's true. The real purpose is to undermine spending overall on social programs, since there's well documented history that block grant programs are easier to cut. As this report by the Center on Budget and Policy Priorities (CBPP) notes:

History has shown that funding for block grants often erodes over time, in part because the human impacts of cuts can be difficult to see. An analysis of 11 block grants that serve low-income people in housing, health, and social services shows that, when adjusted for inflation, funding fell by an average of 11 percent from 1982 (or the first year the program was funded as a block grant, if later) through 2003. Two of the 11 block grants fund child care assistance and received large funding increases in the late 1990s to respond to the growing need for child care under new welfare-to-work requirements. When these two block grants are excluded, the drop in inflation-adjusted funding for the remaining grants was even greater: 22 percent.

Bush is proposing a wide range of new block grant programs, from replacing housing vouchers that go to urban communites to block grants to the state, replacing Head Start grants with education block grants to the states, replacing Food Stamp programs that go directly to individuals, and replacing entitlement funding for Medicaid with block grants that would no longer have a federal match to give states incentives to spend their own money on health care.

In the name of "state control", the idea is to dump new responsibilities on state governments just as they are all in a budget crisis. The result, with little accountability to the urban districts most effected, will predictably be a slashing of spending on such programs.

The key advantage of block grants is that it allows Bush to escape responsibility for failure to help adults and children out of poverty and ill-health. A bit of money dumped on the states means that blame can be dumped on them as well-- of course, so will unfunded mandates such as special education and No Child Left Behind and Homeland Security, so if aid for the poor gets squeezed out in the ensuing budget crush on the states-- well, that's just part of the plan.

The Plan: Please read this talk by Bob Brownstein of CPPB where he argues that Bush's block grant program is initimately tied to his massive deficit-creating deficits:

[E]xplicit [on this point] is one of the administration’s closest allies, Grover Norquist, head of Americans for Tax Reform. Grover essentially says, ‘Look, one side of this is the tax cuts and the other side is that over 20-25 years we’re going to try to cut the domestic side of the federal government in half.’

Now, this administration is not dumb. They are very savvy. They know very well that if they propose alongside these tax cuts deep gouges in specific programs where you can identify the families that would be hurt, it would not go over well. The administration has clearly understood from day one that if it publishes deep cuts in specific programs in its budget — with the potential to harm identifiable groups of families, children, elderly, and people with disabilities — this would reduce its ability to get its tax cuts enacted.

It has pursued a different strategy. I think the block grants are a fundamental part of that strategy. It is a strategy to reduce very gradually, over time, the federal government’s financing role in an array of programs as the tax cuts are fully phasing in and are draining more and more revenue from the federal treasury.

Fighting State Funding: And conservatives such as Norquist are clear that they will fight tooth-and-nail to prevent state governments from raising taxes to make up for budget shortfalls if responsibilities are pushed to the states. As Norquist told the Washington Post after conservatives defeated the recent Alabama tax referendum, “Every Republican governor who thinks of raising taxes next year will walk past Traitor’s Gate and see Bob Riley’s head on a pike. The voters of Alabama have saved taxpayers from California to Maine billions of dollars.”

The goal of conservative activists is, in Norquist's words, to shrink government to the size where he can “drag it into the bathroom and drown it in the bathtub.”

That is what block grants are all about.

See also this post on how present funding formulas for state grants for Medicaid already distort aid to the poor.

Posted by Nathan at September 19, 2003 08:22 AM