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The Dynamics of Growth, V.1: a Crisis of Confidence and Competence

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THE I FEDERAL ROLE IN THE FEDERAL SYSTEMu THE DYNAMICS OF GROWTH A Crisis of Confidence and Competence GIFT RECO MAY 28m1 ADVISORV COMMISSION ON INTCROOVCRNMLWTAL RlLATlONS Wl+hington, D.C. 2W75 July 1980 A Crisis of Confidence and Competence ADVISORY COMMISSIOM OM INTIRQOVIRNMRMTAL RIUTIOMS Washington, D.C. 20575 July 1980 PREFACE TheAdvisory Commission on inter- tiveness of the federal system. The 1976 re- governmental Relations was established by P.L. newal legislation for General Revenue Sharing, 380, which was passed by the first session of P.L. 94-488, mandated in Section 145 that the the 86th Congress and approved by the Presi- Commission: dent on September 24, 1959. Section 2 of the study and evaluate the American act sets forth the following declaration of pur- . federal fiscal system in terms of the pose and specific responsibilities for the Com- allocation and coordination of public mission: resources among federal, state, and Sec. 2. Because the complexity of local governments including, but not modern life intensifies the need in a limited to, a study and evaluation of: federal form of government for the (I) the allocation and coordination of fullest cooperation and coordination of taxing and spending authorities be- activities between the levels of gov- tween levels of government, including ernment, and because population a comparison of other federal govern- growth and scientific developments ment systems. (5) forces likely to portend an increasingly complex soci- affect the nature of the American fed- ety in future years, it is essential that eral system in the short-term and an appropriate agency be established long-term future and possible adjust- to give continuing attention to inter- ments to such system, if any, which governmental problems. may be desirable, in light of future de- It is intended that the Commission, velopments. in the performance of its duties, will: The study, The Federal Role in the Federal 1)bring together representatives of System: The Dynamics of Growth, of which the the federal, state, and local govern- present volume is one component, is part of the ments for the consideration of common Commission's response to this mandate. Staff problems. ; were directed to: (a) examine the present role of 5) encourage discussion and study at the federal government in the American federal an early stage of emerging public system; (b) review theoretical perspectives on problems that are likely to require in- American federalism, the assignment of func- tergovernmental cooperation; tions, and governmental growth; and (c) iden- 6) recommend, within the framework tify historical and political patterns in the de- of the Constitution, the most desirable velopment and expansion of national gov- allocation of governmental functions, ernmental domestic activities. This volume in- responsibilities, and revenues among troduces the subject of the federal govern- the several levels of government. ment's growth. It is one of ten volumes pre- pared by Commission staff pursuant to this as- Pursuant to its statutory responsibilities, the signment. Commission, from time to time, has been re- quested by Congress or the President to exam- Abraham D. Beame ine particular problems impeding the effec- Chairman ACKNOWLEDGMENTS This study was prepared by the gov- ernmental structure and functions section of the Commission staff under the general direc- tian of Assist. Dir. David B. Walker. David R. Beam prepared Chapters I and 111. Bruce D. McDowell prepared Chapter II and edited the volume. Frank Tippett and Kathleen Behringer assisted in updating many of the statistical ta- bles. Kathleen Behringer, Delores Dawson, and Lynn Schwalje provided secretarial support. Chapter I was critiqued on December 13, 1978, at a meeting with the following partici- pants: William G. Colman, Ross D. Davis, Paul R. Dommel, Delphis C. Goldberg, William Gorham, Patrick Henry, Edward K. Hamilton, Everett C. Ladd Jr., Richard H. Leach, Robert Levine, Guy Peters, and Deil S. Wright. Com- ments were received on Chapter I1 from George F. Break, William G. Colman, Laszlo Ecker- Racz, Roger A. Freeman, Richard R. Hite, Law- rence W. Hush, Herbert Kaufman, I.M. Labovitz, Catherine Lovell, and Lee Schoenecker. The Commission gratefully ac- knowledges the assistance of all those named above. Full responsibility for content and accuracy, of course, rests with the Commission staff. Wayne Anderson Executive Director David B. Walker Assistant Director Contents Introduction ....................................................... 3 Chapter I . The Question of Federalism: Key Problems ............... 3 The Changing Context .......................................... 3 Four Problems ...................... .......................... 5 Red Tape. Confusion. and Administrative Tension: "The Implementation Gap" ................................. 5 Inadequate Results: Evaluation Issues ....................... 9 Excessive Cost and Fiscal Inefficiency ...................... 13 Responsiveness and Accountability ......................... 19 The Federal Role in the Federal System: The Need for Reassessment ..................................................25 Four Problems and the Status of Federalism ................. 25 What Can Be Done? ........................................ 28 Chapter I1 . Indicators of Federal Growth ............................ 35 Historical Perspective .......................................... 36 The Size of the Federal Government ............................ 39 Unrefined Indicators of Federal Growth ..................... 40 The Scope of Federal Activities ................................. 64 Recent Periods of Programmatic Expansion ...................... 65 Shifting Federal Budget Priorities ........................... 65 Shifts in the Composition of Federal Aid .................... 69 The Significance of Federal Aid in Major Functions ......... 69 Functional Shifts in Federal Employment ................... 74 Expansion in the Scope of Federal Regulation ............... 74 Implications of the Expanding Scope of Federal Activities ... 80 The Depth of Federal Influence .................................80 Incidence of Federal Influence .............................. 82 vii The Nature of Federal Influence ............................ 88 Summary: Bigger. Broader. and Deeper .........................102 Chapter 111 . The Scope of the Federal Role Report ................... 107 Appendix TabIes .................................................111 viii In 1976 Congress directed the Advisory Commission on jntergovernmental elations (ACIR) to prepare a major, multipart study of the American federal system. Consideration was to be given to the relative roles of the vari- ous levels of government, fiscal relationships among them in good and bad times, citizen participation practices, and the future well- being of the system. The present ten-volume report on the na- tional government's role in the system-of which this is Volume I-is part of ACIR's re- sponse to the broader study mandated'by Con- gress in 1976. Other parts of the study are: Citizen Participation in the American Fedeml System (adopted by the Commis- sion on March 23, 1979, with recommen- dations). Stabilization Policy (Countercyclical Aid and Economic Stabilization, adopted in December 1978, with recommendations, Report A-69; and State-Local Finances in Recession and Inflation, completed in May 1979, no recommendations, Report A-70). Comparative Fiscal Federalism: An Overview and case studies of Australia, Canada, West Germany, .and the United States (in process, no recommendations). The Roles of State and Local Govern- power centers. This centralization tendency ments, Assignments of Functions (in has placed the national government: (a) di- process, recommendations expected). rectly in charge of an increased proportion of The Future of Federalism in the United the nation's gross national product, (b) in a po- States (in process, no recommendations sition to affect an even larger proportion of the expected). economy indirectly, and (c) at the center of a complex intergovernmental system that now makes almost all of the nation's 80,000 units of Perhaps the most noted characteristics about government interdependent. the federal government are: (1) its great growth This portion of the Congressionally man- since the 1930s; (2) its assumption of new roles dated study-dealing with the national gov- for providing social benefits, managing the ernment's role in the federal system-measures economy, protecting the environment, and pur- these growth trends, probes some of the major suing other innovative goals-so that now it is reasons for the growth, examines the inter- involved in virtually every function of govern- governmental problems caused, and recom- ment; (3) the dramatic growth of the federal aid mends policies to help overcome such prob- system in the past two decades; and (4) the 1ems. mounting burden of federal regulations, pa- This introductory volume is organized into perwork, and intrusion into the activities of three chapters. The first poses a set of key virtually every individual, business, nonprofit questions to be explored. The second presents a corporation, and state and local government. reasonably comprehensive set of indicators de- These trends add up to a very real shift of scribing the various ways in which the growth governmental responsibilities in the United of the federal government is manifested. Fi- States-toward national government and away nally, the third delineates
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