New Federalism: Returning Power to the People

Ladies and gentlemen, good morning.
My name is Sandy Quinn and
I'm President of the Richard
Nixon Foundation, and it's my
honor and delight to welcome you.
This is our 13th Richard Nixon Legacy Forum.
But before we start, I
want to acknowledge the presence
of a long time
and good time friend of the
Foundation and of the
Nixon Library, an honorary citizen
of Orange County, Sir Elton Griffin.
Sir Elton?
Sir Elton Griffith comes
to us from England, Cambridge, and Yale.
He served in just about every
position in the British
government, including being a member of Parliament.
And he's very active
in world affairs council both locally and nationally.
He was head of
that here for years and years
and knighted by the
Queen in 1988.
Sir Elton, as always, it's great to have you here.
Our mission at
the Nixon foundation is one of education.
The illumination and the preservation
of the legacy of
Richard Nixon.
The world knows that particularly from
the standpoint and the viewpoint
of world affairs where he was
incredibly accomplished and what
he did in China and
what he did with the Soviet Union and elsewhere.
But we have embarked on a
series of events based
on our foundation mission
of education to draw
attention to the other
aspect of his great legacy
which is in the arena
of domestic affairs, and they're multiple.
So, to do that,
we have joined with the National Archives,
who are joint hosts of
this event and the
other Nixon legacy forums
that we do, to present
these forums where eye
witnesses, the people
who participated with President Nixon
in the Oval Office at the
time these initiatives in
so many areas of domestic
affairs were first created.
And they executed his vision
in so many areas and
we have in all
of these Nixon legacy forums tried
to illuminate those as
we're doing today in the
area of new federalism.
Now we've done these not
only here in Yorba Linda,
but we've done them in
Washington, we've done them at
AIE, we've done them
at George Washington University, at
the Navy Memorial, we've done
them at USC, we've done
them at Chapman, and we're
going to do them almost monthly
throughout next year,
which is the Pat Nixon
centennial year and certainly
during 2013, which is the Richard Nixon centennial.
These are great programs because
working with the National Archives, they become primary research.
And they're available on our website.
Did I mention that it's www.nixonfoundation.org?
And they're available through the...through
our colleagues at the National Archives.
So it's a rich
resource for the world
to hear from the people,
as you're going to in a
few minutes, who were there
and who came up with the
programs and executed them.
Our legacy programs are
coordinated by a former
member of the Domestic Council
staff, the Associate Director, former
White House fellow who has
volunteered to do this.
He's our good friend and a
great asset to the foundation
Please welcome Geoff Shepard.
Thank you, Sandy.
It's a pleasure to be here
and as you may know
it's my pleasure to help coordinate
these Nixon Legacy Forums.
It's a wonderful partnership that
we've put together. As Sandy
said, the National Archives
has the records and the Nixon
administration may be the most
completely documented administration in
history because of the
White House tapes and the
Nixon Foundation has access
to the people who produced those documents.
The purpose of the
forums is to get
the people who produced them to
talk about the what and
the why, and to
add texture and context
to the documentation for the
benefit of future scholars and researchers.
Today's Legacy panel is
particularly special and is
a great example of what we're
doing, it's a new federalism and
the key component of new
federalism that is known
as revenue sharing and we've
managed to find, 40 years
later, the people on
the White House staff who are
absolutely key in the
context of the idea,
the obtaining of the legislation
necessary to enact the
idea and the implementation of the idea.
The only individual that we
find this missing from today's
forum is Dr. Murray Weidenbaum,
who was Assistant Secretary of
the Treasury, and involved in throughout.
Murray is now eighty-five years
old and had planned to come,
and fell recently and wasn't able to join us.
But we have everyone else
that was on the White House
staff at the time and so
we're thrilled with the discussion that is about to occur.
And we're thrilled with our moderator.
Dr. Shirley Anne Warshaw
is a Professor of Political Science by us at Gettysburg College.
She's written seven books on
Presidential decision making and
she has a book coming out
next year on the evolution of the White House staff.
So we're thrilled to have
Dr. Warshaw to moderate
the panel, and let me introduce you to her now.
Thank you very much, Jeff.
Welcome.
Nice to have you with us.
Thank you very much.
I think our
panelists...why don't they come
out now and I'll introduce them
while you're here.
Thank you.
Thank you, Sandy, and especially
I want to thank Geoff Shepherd for putting this together.
He is really the genius behind
the Legacy forums and has
done such a magnificent job in
finding all of the people that were there.
And they started in 2010,
they'll go to 2012,
so I look forward
to seeing all of you at many of these.
They are just a wonderful historical
record that I as
a scholar am very grateful to be part of.
Let me begin here by introducing our distinguished panel.
And I'm going to start with Dr.
Richard Nathan here who is closest to me.
Dick Nathan led the transition team
in 1968 on intergovernmental affairs
and subsequently served as Associate
Director of the Bureau
of the Budget and its successor,
as all of you know, the Office of Management and Budget, in 1972.
Dr. Nathan (Dick)
holds a PhD from Harvard University.
He was named Deputy Under
Secretary for Welfare Planning at
the Department of Health, Education, and Welfare.
After leaving government, Dr. Nathan
served as a senior fellow
at the Brookings Institution and later
on the faculty of Princeton University's
Woodrow Wilson school.
Most recently, Dr. Nathan served
as Director of the Nelson A.
Rockefeller Institute of Government
at the State University of New York.
Next to Dick Nathan is Edwin Harper.
Ed Harper joined President Nixon's staff
as Special Assistant to the
President, working on planning and budgeting issues
after creation of the Domestic
Council in 1970. Dr. Harper,
Ed, holds a PhD from the University of Virginia.
I should note this is
a very distinguished, very educated,
very smart group of people.
Ed served as Director of Planning and Budgeting for the Domestic Council.
After leaving the Nixon administration in
January 1973, he joined
the private sector only to
be recalled to the Reagan
administration where he served
in the top job as Assistant
to the President for Domestic Affairs.
Among his many roles after leaving
the Reagan administration was serving
as CEO of the American Association of Railroads.
Our third panelist to Ed's
right is James Falk.
Jim oversaw state and local
government relations within the Domestic
Council, with the focus on general revenue sharing.
He remained in the White House
with the Domestic Council through the
Ford administration, serving as Associate Director of the Domestic Council.
Also while serving in the
Executive Office of the President, Mr.
Faulk served as President Nixon's
representative on the fourth
delegation to the People's Republic
of China in the summer of 1974.
Mr. Falk, a lawyer,
returned to private practice after
the Ford administration and served
in many, many other
distinguished activities: the Washington
D. C. Bar Judicial Evaluation Panel
and later has been an adjunct
professor at George Washington University School of Law.
He currently is a principle in
the Falk Law Firm in Virginia.
Let me give you a brief overview of our format.
I will provide a short discussion
of the new federalism, and then
each of our panelists will have
a few minutes to discuss their
role in the development of
and implementation of the new federalism.
We'll then have a broad
round table discussion in which
each of our panelists will talk
together and offer their
insights as different topics come up.
We will talk about not
only the inception of
the new federalism, but we'll focus
on moving it through Congress, and
especially Jim Falk will offer some
great insights into that.
So let me begin now with
our overview of the New Federalism.
The term, the New Federalism, was
first publicly used by
Richard Nixon on August 8th,
that's why we're here today, August 8th.
The August 8th, 1969 speech
to the nation which defined the
programs within his domestic initiative.
This speech, which many of
you know should have come earlier in
the administration, was late, seven months after the inauguration.
And late because of several reasons.
First, the early months of
the administration were focused
on foreign policy, particularly the
war in Vietnam and deployment of
the new safeguard sites for an expanded anti-ballistic missile system.
Only two days before the
New Federalism speech, the Senate,
by a one vote margin, voted
to deploy two of the
twelve ABM sites requested by the administration.
And days before the New
Federalism speech, President Nixon had
returned from a whirlwind, nine
day trip to eight countries.
And I quote as he said, "To
lay the basis for a
lasting peace once the war in Vietnam has ended."
Second, there was some
internal tension over the direction that
parts of the domestic agenda should take.
In particular, Arthur Burns and
Daniel Patrick Moynihan had different
visions for welfare reform and other parts of the domestic package.
Both thought they had been
tasked by Nixon with being
the lead player and ended
up offering conflicting material to Nixon.
There was little consensus within the staff.
Burns was finally moved to
the Federal Reserve and Moynihan promoted
out of a policy-making job.
It was John Ehrlichman and
members of our panel, who
finally framed the domestic
agenda with the lens of what became known as the New Federalism.
The August 8th speech not only
outlined the key legislative agendas
within the New Federalism, but
also provided a clear discussion
for the first time of why
a change of course was needed
from the Johnson years within the domestic agenda.
The term New Federalism was
new, in fact, to the Nixon lexicon.
It had not been used on
the campaign trail during the 1968
election, nor had it
been used at any point during the early months of the administration.
Rather, the term was
coined by White House staff
as they grappled with providing a
clearer focus for the Nixon
administration's domestic programs while
Nixon was focusing on foreign
policy issues with Henry Kissinger.
In fact, it was speech writer
Pat Buchanan who is
credited with actually coining the
term "the new federalism" after
the staff referred to Nixon as a new federalist
and, remember that, the new federalist
approach to domestic policy
during a number of staff meetings.
The term "new federalist" that the
White House staff used referred
to the discussions on federal-state relations
during the Constitutional Convention in 1787,
debates that tried to
find an appropriate equilibrium between
the federal government and the state governments.
New federalism under the administration's
domestic initiative was formally called,
was intended to strengthen the
Federal State relationship, evoking the
foundations of American democracy
from those original debates in 1787.
There were even internal memos with
the staff signed by the
names of Publius and Cato,
reminiscent of the back and
forth debates between Alexander Hamilton
and Governor George Clinton of New
York, as the states grappled
with giving up their sovereignty to a proposed national government.
The principal focus of
Nixon' s new federalism was
two key legislative initiatives that
the administration intended to pursue,
the Family Assistance Plan and revenue sharing.
The Family Assistance Plan would
reform the existing welfare system,
known as Aid to Families with
Dependent Children and, and
this is important, would provide a
guaranteed income to families of four of $1600 per year.
The revenue sharing program
was intended to change the method
of distribution of federal funds to state and local governments.
The existing categorical grant
programs provided targeted funding based
on things such as income levels and population size.
These categorical grant programs were
to be replaced by a new
grant process, revenue sharing,
that gave all governmental units funding,
regardless of financial need or size of population.
It is important to
note here that revenue sharing
did not attempt to reduce
federal funds that flowed to state and local governments.
I say that because we are
going to come back to this,
this is somewhat relevant in
today's political situation when you
look at different movements
within particularly the Republican Party of
ending the flow of federal funds.
So this is very important, understanding how Richard Nixon viewed this.
Nixon never sought to redo the federal outlay to the states.
It is the amount of money
flowing to Washington, from Washington
to the states. He simply wanted to alter the way it was done.
It was, in fact, Ronald Reagan
that ended revenue sharing in 1986.
Let me give you a quote
that he said, I think this is an important quote.
Richard Nixon said, when he
talked about revenue sharing, "It
is the power, the funds and
the authority are channeled increasingly to
those governments that are closest to the people."
That's how he viewed revenue sharing,
moving it closest to the people.
Why revenue sharing was
important to Nixon can be viewed
however from a number of perspectives.
One of the most
frequently discussed explanations involves Nixon's
strong concern that government had
become too large and too unwieldy.
In a speech to a governor's
conference in September 1969, he
criticized the federal government as,
and I quote,"over-centralized and over-bureaucratized."
And as we think back,
we hear that same phrase today
repeated throughout political circles:
"Over-centralized and over-bureaucratized."
And he added that the
federal government has become unresponsive as well as inefficient.
Nixon repeatedly said on the
campaign trail in 1968
that the federal bureaucracy was too
large and was too subject to too few controls.
His concerns about the lack
of management in the executive
branch led, in 1970, to the
creation of the Office of Management and Budget.
With the emphasis, and remember this,
the emphasis is not the
Office of "Budget Management," it's
"Management and Budget" because
the focus was on the
management of the Executive
branch and simultaneously the
creation of the Domestic Council within the White House.
Both OMB and the
Domestic Council enhanced presidential management
of the Executive branch, which was important to Richard Nixon.
The concept of revenue sharing, however, was not new.
Since the New Deal programs first
ushered in a new relationship between the
states and the federal government, questions
about the most appropriate financial arrangement
between the states and the federal government persisted.
Providing economic security to its
citizens, such as in Social
Security and welfare, was widely
recognized - this is
in 1969 - as an appropriate federal role.
So was producing electricity, such
as the Tennessee Valley Authority did,
requiring children to have
polio shots before the first
grade, such as the Department Of
Health, Education, and Welfare did,
and regulating securities, such
as the Securities and Exchange Commission did.
But providing funding to state
and local governments in some form
was a different debate which produced quite different perspectives.
By the time Richard Nixon ran
for President in 1968, the
nationalization of public policy had reached new highs.
The federal government had dramatically expanded
the scope of its assistance, for instance
both to individuals through Aid
to Family With Dependent Children, through
Medicaid, through Medicare, and
to state and local governments
through the categorical grant programs.
The nationalization of public policy had
some public officials and scholars
questioning the efficacy of
this evolution of federal-state relations.
Including Walter Heller, Lyndon
Johnson's Chairman of the Council
of Economic Advisers and Joseph
Peckman, a renowned economist and tax expert.
The two joined forces in the
late 1960s to support a
concept called tax sharing
which advocated using federal funds
for direct payment to
state, not local, to state
governments without the strings
attached to those categorical grant
programs that President Johnson had brought forth.
Heller proposed the idea to
Johnson, but not surprisingly,
he rejected it.
Johnson felt strongly that federal
money should be targeted to certain areas.
However, by the 1968 election
interestingly enough, both Hubert
Humphrey and Richard Nixon
embraced the concept of tax
sharing. It was,
for them, because it would
help in what was beginning
to be the downturn of the Vietnam War.
It was an economic stimulus plan.
Out of tax sharing of
the 1960s was born
the new federalism of the 1970s.
There were, of
course, and this is a
very interesting discussion, political dimensions
to revenue sharing in the Nixon administration.
Nixon believed that the grants
delivered by the federal government had
been targeted to Democratic strongholds, particularly
cities in northeastern states.
Revenue sharing would alter the
grant process by providing his
political base, such as southern
and western states, and more
rural and suburban states, with more federal funds.
Revenue sharing shifted political base,
reducing the amount of money
received by traditionally Democratic concentrations of voters.
Another political dimension of
revenue sharing involves Richard Nixon's view of the bureaucracy.
As he said in that speech to
governors in September 1969, he
believed that the bureaucracy had
become bloated and unresponsive.
This was not a new view
of the federal government articulated from
the Oval Office, it had
been made as early as Teddy
Roosevelt, Harry Truman made it, John F. Kennedy made it.
It was an often repeated
concern of Presidents.
Nixon was not only
concerned by the inefficiency of the federal bureaucracy.
Interestingly enough, he was also concerned
that the federal bureaucracy was overwhelmingly Democratic,
that the federal work force, which
had grown dramatically during the
Johnson years, had in
fact become Democratic.
And he was concerned that many
of his domestic initiatives would be
blocked by some of the Democrats within the federal government.
Interestingly, there are a
number of studies which actually show
that to be true. His
fears that the career work force
would destroy his administration led to
what Dick Nathan calls the "Administrative Presidency,"
a personnel process controlled
by the White House that placed
politically loyal Republicans in senior
positions across the administration,
but Richard Nixon was prescient.
I should note that this administrative
strategy has been used by
every single President since Richard Nixon.
Centralized personnel decisions are
always made in the White
House now, and that was created by Richard Nixon.
And there is another forum on that.
I won't get into that.
But it was Dick Nathan who spent a lot of time discussing that.
A quite different political dimension
of revenue sharing involved breaking the
iron triangle that controlled policymaking for the federal government.
That iron triangle involved congressional
committees, bureaucrats, and special
interest groups who often dictated
the course of legislation that provided
the labyrinth of many federal programs.
In a 1971 press conference,
President Nixon discussed the opposition
of the iron triangle to his revenue sharing programs.
He says, "They are very,
very reluctant to give up their power.
We expect," and I'm
sure Jim will be talking about
this, "a very difficult time
in moving this forward."
Dismantling existing power relationships
had been a central theme of
revenue sharing, but there
was also a piece of Nixon's
personal life that resonated in the revenue sharing proposal.
For Nixon, allowing state and
local governments to determine the
best use of these funds
promoted creativity, a quality
he valued from a childhood often
dependent on creativity with limited resources.
Speaking to the importance of
reallocating decision making away
from the national government, Nixon said,
and I quote, "If we put
more power in more places,
we can make government more creative in more places."
Creativity, he strongly believed,
would be nurtured by placing
power back in state and local governments.
So let me just say a
couple of words about the implementation of the new federalism.
The revenue sharing legislation took two
and a half years to gain acceptance
in the Democratically controlled Congress.
Not until 1972 did
the legislation finally pass, providing
$5.3 billion in the
first year to state and local governments.
By the time that President
Reagan terminated the program in
1986 as part of his
overall effort to cut government
expenditures, revenue sharing had
awarded more than
$83,000,000,000 to 37,000 governmental units.
The second key piece of the
new federalism was reforming
welfare through a guaranteed family income.
This program, as many of
you know, never moved anywhere.
It failed during the Nixon
Administration and it wasn't
until the Clinton Administration in
1996 that we actually saw
substantive welfare reform, and
much, if not most
of what President Clinton moved through
had its roots in the Nixon years.
One area of domestic
policy not tied to
the new federalism, and remember the
new federalism is the
keystone of his domestic agenda,
and this is really interesting today,
is environmental policy.
Environmentalism was a key part of the Nixon administration.
For those of you that that don't
know, President Nixon created
under his administration the Environmental
Protection Agency, the
Council on Environmental Quality and
led support for the Clean Air Act.
Perhaps had Watergate not consumed
the second term, more domestic
initiatives as outlined
in the August 8, 1969 speech may have moved forward.
We are in, as you
can see from our very
distinguished panel, for a very,
very lively discussion today.
This is a rare opportunity to
be with the people that made history.
It created the Nixon domestic platform.
And with that, I'm going to turn it over to Dick Nathan.
Very good Charlie.
It's a pleasure to be here
and I've been thinking about it
for months, had
a chance to be back
in touch with team members
who, we've reminisced about
what we did and things we
were part of as Shirley
so well described.
Getting ready for today's panel,
I spent a lot of
time reading the books that
people wrote, the papers
that I could find
from the period that we were in government together.
And I wrote a paper of
my own which I
called "The Anniversary of President
Nixon's National TV Address on the New Federalism."
It's twelve pages long, now
don't worry, I'm only
going to read the first sentence and
the last sentence and I'm
going to talk about my experiences
and our experiences together and
I begin the paper and
there are copies available and it
will be on the Nixon Foundation
website and it brings
back, as I said, for
me personally a lot of
memories most particularly about
the people who worked so
hard on serious, substantive,
bold and historic changes in domestic policy.
And we're going to begin by talking about the speech.
August 8, over forty
years ago, the President had
surely said he had come
back from his around the
world trip or his eight
country trip, John Erlichman
accompanied him and they
made the final decisions on what
would be in the address and
in the first sentence I say
the following, and you're gonna
be able to watch the President's
address in just a second,
a sum of parts of
the New Federalism program.
I began my paper by
saying that it's
an honor to be
here and of course it is
and to recall this occasion
long time ago and to
reflect on how it
looks today, the next
sentence is, it looks good to me.
What we did made a
mark and has importance
that's wonderful to talk about
and share with this audience and
as we next hear the
President returning from his
trip, no teleprompter reading
this speech, which he worked on so hard.
We all met with him often.
He was very involved in the process.
And so now I think that's
the cue to have the
President's speech as something we can watch.
"A third of the
century of centralizing power and
responsibility in Washington has produced
a bureaucratic monstrosity, cumbersome, unresponsive, ineffective.
A third of a
century of social experiment has
left us a legacy of entrenched
programs that have outlived
their time or outgrown their purposes.
A third of a
century of unprecedented growth and
change has strained our
institutions and raised serious
questions about whether they are
still adequate to the times.
It is no accident, therefore, that
we find increasing skepticism and
not only among our young
people, but among citizens everywhere,
about the continuing capacity of
government to master the challenges we face.
Nowhere, has the failure
of government been more tragically apparent
than in its efforts to help the poor.
And especially in its system of public welfare.
After a third of a
century of power flowing from
the people and the states to
Washington, it is time
for a new federalism in which
power, funds and responsibility
will flow from Washington to
the states and to the people.
During last year's election campaign,
I often made a point that
touched a responsive chord
wherever I traveled.
I said that this nation became
great, not because of what government did for people,
but because of what people did for themselves.
This new approach aims at helping
the American people do more for themselves.
It aims at getting everyone able
to work off welfare rolls and onto payrolls.
It aims at ending the unfairness
in the system that has
become unfair to the
welfare recipient, unfair to
the working poor and unfair to the taxpayer.
This new approach aims to make
it possible for people, wherever
in America they live, to receive
their fair share of opportunity.
It aims to ensure that people
receiving aid, and who
are able to work, contribute fair share of productivity.
We can no longer have effective
government at any level unless we have it at all levels.
There's too much to be
done for the cities
to do it alone, for Washington
to do it alone, or for the states to do it alone.
For a third of a century,
power and responsibility have flowed
toward Washington, and Washington has
taken for its own the best sources of revenue.
We intend to reverse this
tide, and to turn back
to the states a greater measure of responsibility,
not as a way of avoiding
problems, but as a
better way of solving problems.
Along with this, would go
a share of federal revenues.
I shall propose to the Congress
next week that a
set portion of the
revenues from federal income
taxes be remitted directly
to the states, with a
minimum of federal restrictions on how
those dollars are to be
used, and with a
requirement that a percentage of
them be channeled through for the use of local governments.
The funds provided by this program
will not be great in the first year,
but the principle will have
been established and the amounts
will increase as our budgetary situation improves.
This start on revenue sharing is
a step toward what I call the new federalism.
It is a gesture of faith
in America's states and local
governments and in the
principle of democratic self-government.
With this revenue sharing proposal, we
follow through on a commitment I made in the last campaign.
We follow through on a mandate
which the electorate gave us last November."
That gives us a chance to
see how he felt about
it, how he put it
in words that were, I
remind you, a national primetime
television address to the nation.
Now I'm going to tell...this is a slide that we developed.
These are the four parts of
the new federalism program, and I'm
going to recount some things
that happened as we worked
on it and as we began working on it.
I started, as Professor Warshore
said, before the inauguration.
I chaired, I had the
honor of chairing, two task forces of experts.
Bring all the people who
are best in the subject
matter and give us
the best advice that you
can for the new President and the new administration.
I chaired first a task force on revenue sharing.
I'm gonna talk about that.
Second, I also chaired
a task force on welfare
reform, which I followed
the work that we did on
the task force on revenue sharing.
I'll tell you a story to
give sort of a feeling of
what it was like, how exciting it was in those days.
When Pat Moynihan had the
first meeting of the Urban
Affairs Council, which he'd been asked to form by the new President,
it was a couple days after the inauguration
and the Cabinet came in and we were all in the cabinet room.
It's a pretty heady feeling to
be in the White House
and part of a national
administration and close to
and working with a President of the United States.
And the President walked into the
room and I was standing next to Pat Moynihan.
And Pat was a little nervous.
Pat was a character like
no one else I've ever known in my life.
And he said to
the President, and I had
no idea why, he said,
"Mr. President, you know Dick Nathan."
Well, I was an official, not
a high official, of the Budget Office.
And the President said, "I liked his two reports."
I didn't know...even know he read 'em.
And he said, "I
liked them, but Everett Dirksen didn't like them."
Dirksen had been the...was
then the minority leader of the Senate.
So that was a clue that
important things were going
to happen in those two
areas, and in fact, the speech covered all four.
Let me speak about the
welfare reform, and you
heard the President describe it and
Shirley discussed it in her excellent opening remarks.
There were two versions of
welfare reform; one was
our task force which proposed
a rather modest approach, it
wasn't big bucks, it would've
helped families with a minimum
benefit, and it would have
helped state governments with
the matching for the grants,
for the welfare program
and that was one plan.
Arthur Burns, who was head
of the task forces for
the President, said it was
too radical, told the President
I like all your reports reports,
but the Nathan Report on welfare,
throw it away and so
I knew we were
in for some exciting pulling
and hauling about welfare and
what welfare reform would be.
On the other hand, Pat Moynihan,
Secretary Finch, people around
Secretary Finch wanted a bolder program.
They wanted what Pat Moynihan
in his book called, "A
Guaranteed Income Plan," very ambitious.
And after the debates
that took the time that required
all of this to be sorted
out and worked out before the President made the speech.
Seven months into his administration,
the President chose to go with the bolder plan.
What happened reading that
literature, following all those
developments is, it was
so overbilled and ambitious
that in the United States Senate,
in dramatic hearings about how
it would work and how it
would effect people and how much it would cost,
it fell of its own weight and was not enacted.
At which point Arthur Burns,
who was still an adviser to
President Nixon, this is
how things work in government,
government a lot of
it is done by amateurs, people changing
their ideas all the time.
Arthur Burns called me in
with Alan Greenspan and another
adviser, Martin Anderson
and he said, "I need a
plan that will be
able to compete with
this bold plan that was selected."
And he said, "You have to take
your task force report, which
you want to throw away, and
you have to build it up,
because it's not big enough to compete
with the bold plan that in
my opinion it's unfortunate was actually selected."
But I tried, we tried, and it didn't work.
But anyway this is, this
is to suggest that the process of
working out the ideas
that became the program
the four parts.
You've seen the four parts.
Welfare reform was the big
surprise and overshadowed in
the newspaper what people said about the program.
But the reaction to the
Nixon program, and my
paper gives a lot of feeling
about this, was very positive,
almost fair to say effusive.
The Economist, which is a
respected weekly magazine, said,
"It is no exaggeration to
say that President Nixon's
television message," which you've
just seen part of, "on
welfare reform and revenue
sharing" -listen to
this - "may rank in importance
with President Roosevelt's first proposals
for Social Security in the 1930s."
This was an event,
a bold program, the
third part of the program
on job training and placement
was something you'll hear a little bit about today.
Time is short, which was
not general revenue sharing,
but special revenue sharing, to
take all the grants that,
as Shirley said, these narrow
grants, and put them together
and let governors and mayors
decide what they want to do,
not have Washington trying to decide everything.
And that was called a "block grant," and that was passed.
The fourth thing on the list,
the fourth item, was to
assign Don Rumsfeld, then a
congressman from Illinois, a Republican
congressman, to try and
revamp and focus on
the good things that could be
done by the Office
of Economic Opportunity,
which wasn't as big an item.
The first three items were all
subject of special
messages to the Congress
and were constantly key
subjects of attention
in a Nixon term, first
term, which was when I worked
there and we met with him often.
He knew the subject.
In fact, when he spoke
without a text, he said
it better than the text we wrote.
He knew it, he cared about
it, he talked about
it, it was something that
came together and had
continuity through the
period of his Presidency.
Eighteen months after he introduced
this program, he introduced
what was called the Family Health
Insurance Program, FHIP, F-H-I-P.
And all the reporters
had a field day calling for
FHIP, talking about FHIP and FAP.
FAP was the welfare plan, FHIP was the health plan.
And the health plan was equally ambitious.
It was too late to get
it really into serious
discussion, but I do
want to read what the
leading columnists of the
day, Scotty Restin of
the New York Times, said about
Nixon's program FHIP and
FAP and the New Federalism.
This is James Rushton
in the New York Times.
"For more than a year, Nixon has
sent to Capitol Hill one
innovative policy after another:
welfare reform, revenue sharing,
government reform, postal reform, manpower
reform, social security reform,
reform of grant and aid, and other programs."
And Rushton continues.
"It is not necessary
to agree with his proposals
in order to concede that,
taken together, Nixon's program
adds up to a serious
and impressive effort to
transform the domestic laws of government."
Let me have you put up that
next slide, which is...this
is the summary slide
- we'll leave it up maybe
for a few minutes - of the New Federalism.
This was one of the first
and I think key
synoptic statements about it
in the speech, August 8, 1969.
I want to say
one other thing really to
recognize my colleagues.
Revenue sharing was not an
easy sell, we thought
about it, we worked on it,
Murray Weidenbaum, who isn't here, we worked on the formula.
Cities, thirty-seven thousand governors
and mayors received payments over
a period of 11 years,
and what had to
be done next, and Ed
and Jim will tell you
that story, I was in
on it, but they were
really at it, was getting
a Congress that liked to
control money to say, okay,
we'll let the people control the money.
That was a big shift, I
wrote a paper, I wrote one
of the published papers on the
New Federalism under the heading of Johannes Althusius.
And I said that the
Great Society plowed under
the ideas of federalism and
state and local government and
people deciding for themselves, it
is so critical to our democracy.
And later I want to say more about how that idea endures.
Right now, with all the craziness
in Washington, state and local
governments are making hard choices.
So let me now just read you one sentence, Shirley's getting anxious.
This is my final
sentence in the
paper that I wrote and
I, now, I'm almost
there, Shirley, relax.
For me personally, to take
away from this experience is pride.
Pride to have been part
of the serious efforts by
talented and accomplished colleagues
who worked tirelessly in government,
as you have to in government,
to blend policy and
politics in the public service.
In particular, I want to say I worked for three years for George Schultz.
I've never had a better boss,
never respected anyone so much
and he was only one of
many wonderful people who made
all of this come to light.
Thank you so much.
Dick made a great
point in that government is
often government by amateurs
and a government of strangers.
And policy development is
extremely, extremely complicated, so
please keep that in mind as we progress.
I now have the great honor of introducing Ed Harper.
Well, it is an honor to
be on this platform
with such distinguished folks and that
we are honored that you all came this morning to hear this live.
I'd like to pick up on
a couple of things that Shirley
mentioned about the background, about
how all of this came about.
How many of you remember
when the capital of the United States was bombed?
Or New York was bombed?
Or Chicago was bombed?
All these things happened.
How many remember Otto Kerner, governor
of Illinois who headed the Kerner Commission?
One of the things that impressed
President Nixon and others of
us that had
been all kinds of commissions like
Governor Kern's and others who
had said, "This country is in terrible shape.
The cities are burning!
And what have we done to fix it?"
And the answer was, not much.
Because the diagnosis most
broadly talked about was welfare
and jobs were part of the reason that people were rioting.
There was the war issue.
That was very, very important.
But the problem of the cities was seen as tremendously important.
And so welfare reform, manpower
training were absolutely critical, I
think, as we saw to the future of the country.
And so these were very important
issues, and what we saw
was that state and local
governments had not been able to pick up.
They had not been able to really clean up after the riots.
It was years before even Washington
got cleaned up after the riots.
Well, anyway, we've talked about the
1969, August 8th, 1969
speech, which talked about revenue sharing.
I think the fact sheet that went
with that said that this
would be a nice little program,
$250 million, not
very much money.
So what happened between August
8th, 1969 and
October 1972 when the
President signed the General Revenue
Sharing Bill in a wonderful
ceremony at Independence Hall?
Well, a lot happened.
Shirley has foreshadowed this, as has Dick.
They were important institutional changes.
I was recently reading one of
the books about Nixon in the
White House, and I hadn't realized this before.
I kind of wondered what had
inspired the changes in personnel,
and according to a couple
of reporters who wrote this book,
they said one of the problems
was Arthur Burns kept fighting
the welfare fight after Nixon had already made up his mind
and that George Schultz offered a
very calm, reasonable, policy
analysis and President
Nixon essentially said I
want more George Schultz and less Arthur Burns.
And the other star
of the policymaking process at
the time was Pat Moynihan, and
basically the stars
migrated to other spheres and those
who took a kind of
systematic, methodical approach to
policy making, George Schultz
and John Ehrlichman took over
the policy making apparatus.
Part of that was a
big change in OMB, then the Bureau of the Budget.
That Bob Mayo had been Director of OMB.
President Nixon had not been comfortable with him.
That Bob's background was numbers,
he was an outstanding numbers man
but clearly what President Nixon wanted
was a George Schultz.
Somebody he could really be comfortable with in making policy.
So that was one important change.
The star system was gone.
And the second, we've heard
references to the mistrust
of professional staff as duly
true. In the Treasury
Department I remember Murry Weedenbaum
saying, somebody telling
Murray that everybody in
the Treasury Department who's gonna
work on the revenue sharing formula was a registered Democrat.
Probably true.
It did not engender great trust
necessarily, but to the
credit of Murray and Bob
Joss who worked closely with
him another White House fellow
and subsequently Dean of
the Stanford Business School with the formula,
I mean, Dick talked about the
formula and said, "Well
formula is a formula and
give a little bit to the cities and a little bit to the states."
It's a a little bit
more complicated than that because
I'm not going to bore you
with indices of central
tendency and statistics, but you come up with all kinds of surprises.
You say all these poor
cities in the south, you
know, but what we found
was that those poor
cities, some were
poor, some were very wealthy
and so, you had to tailor
a revenue sharing formula that
was very sophisticated that recognized
all of these variations so that
the distribution was fair to everybody.
So Maury, Bob Joss and
the Treasury staff deserved credit for that.
So I guess one of the other
things: we build bridges between
some of that political background such
as Nelson A. Rockefeller's ambassador to
the Bureau of the Budget, otherwise known as Dick Nathan.
And as in any case,
a strong personal
relationship developed between the
White House staff and the
Office of Management and Budget Bureau,
the budget staff, and so
that personal trust of
the professionals in OMB and
the White House was important in getting things done.
Because the work
involved in prepared revenue
sharing, not to mention welfare
reform, was overwhelming.
The block grants, the
special revenue sharing programs, there
were over 80 special revenue sharing
programs which we proposed
to meld into blocked grants
and they encompassed over ten billion dollars.
I mean, ten billion is a respectable number, even today,
but it's a lot of money.
And imagine how much detail
is involved in every single block grant program.
So the, the workload was overwhelming.
The other thing that is
part of trying to make
this a systematic process was
that the President said, I do
not want you to tell anybody what we're doing.
So, basically, it is
all a secret until I decide to announce it.
So, six hundred professional staff
in OMB and the White
House staff kept it a secret.
Truly amazing.
Well anyway, one of
the programs that was talked
about was the Appalachian
Regional Commission and in
fact this is how I got
hired in the first place. I'd done
some work on the Appalachian Regional
Commission issue when I was
a post fellowship in the Bureau of the Budget.
And the Appalachian Regional Commission was
created during President Kennedy's term
and and essentially it was
money for the 13
Democratic governors of Appalachia.
There was 1 Republican, Arch Moore of West Virginia.
And basically, as President
Nixon saw it, this was
a political slush fund to
fund the governors of Appalachia
to make sure that Democrats continued
to hold all political office
in Appalachia in perpetuity funded by federal government.
This was not President Nixon's idea of a good program.
There was another program called in
the Economic Development Administration called the Title V program.
Very similar to the Appalachian
Regional Commission, but there were more of them, they could be all over the country.
And so the question is, they,
they're both coming up for
renewal, what should we do?
Do we renew the programs or kill them off?
Let me say as you
may guess, they were extraordinarily
popular programs, as somebody might
say it was free money to
politicians and there are
few things that are more powerful
in motivating politicians than free money.
So those were a couple of things we looked at.
Action forcing events were driving
us forward, change the institutional structure,
change the interpersonal dynamics
of the people involved, get action
forcing events, budgets, expiration of legislation.
And we had a, a wholesome
debate within the White
House staff of important
things about the philosophy of federalism.
And then, in nineteen
seventy there were Urban and Rural Affairs Councils.
Add supervising those
as a part of the star
system and they were
tasked, with Don Rumsfeld
being named chairman, to evaluate
the title fives and
the Appalachian Regional Commission and
decide what should we do
with them in the
context of a new federalism.
So anyway, the Appalachian
governors knew that we
had them in our sights.
And President Nixon journeyed
to Kentucky where we...where
he met with the Appalachian regional
governors and we had
a program that Jim
Hodgsen, Secretary of Labor,
presented on the manpower programs because
getting jobs, getting people back
to work, was critical everywhere.
Critical to the welfare reform
program, which Counselor Moynihan
made a presentation on.
And then revenue sharing was
presented by Murray Weedenbaum.
So that was kind of the
first time we had kind
of presented the package to
important constituents who were
interested in New Federalism and revenue sharing.
Then a little bit
later in July of 1970,
in San Clemente meetings that
the President had on domestic policy and foreign policy,
the President decided that our
priorities would be very tightly
focused coming up for
the second half of the
administration, leading up to the re-election campaign.
We're only going to focus on six
things and nothing else.
And one of those was going
to be the New Federalism in revenue sharing.
Everything else could be important
and wonderful but we were
going to be entirely focused from there on out.
In August there was a Domestic
Council meeting on the Title Fives and economic planning.
Interestingly, one of the
cabinet secretaries thought Title
Fives were wonderful, we ought
to have Title Five regional commissions
wall to wall across the country.
President Nixon said he
didn't really think that fit his
idea of what new
federalism was about because there
was a lot of federal involvement.
Early in November, after the
congressional elections, the President
decided to go big with revenue sharing.
And the shift powered state and
local governments in a big way that hadn't been thought about before.
John Ehrlichman, Murray Weedenbaum
and Dick Cook and I
met and decided on
an approach to folding in the
categorical grant programs right before Thanksgiving.
President Nixon told the National
Association of Counties in
the cabinet meeting that he
plans to present a
greatly expanded revenue sharing
program, but he didn't tell them what it was.
He just said, "You're going to like this and it's going to be really big."
And meanwhile there was more staff work.
Lots of staff work.
And we came up
with the criteria for folding
in categorical grants and the
President approved these criteria.
Is there a need for national consistency?
If there's no need for national
consistency, you know, we don't need that program.
Is there an overriding necessity for federal participation?
If there's not an overriding necessity,
fold it in, get rid of it.
Is the federal government absolutely more
efficient in delivering the
service, is there
a need for a federal cutting hedge?
Those were the criteria that we examined.
There were a thousand, a
thousand categorical grant programs at the time,
each one with a political
constituency, each one a
part of the Iron Triangle and so
you evaluate the political
dimensions of it, as well
as the substantive dimensions of it, in great detail.
And it is really
complicated as someone, who
personally, one time put out
a fact sheet with the
decimal point in the wrong
place, you do not want to do that.
And so, we depended on the
amendment budget to make
sure that everything went out right.
In January 1971, the
President met with Nelson Rockefeller
and a couple of other governors and
Governor Rockefeller asked for a
ten billion dollar revenue sharing program.
Course he didn't know and Nixon
did not tell him what Nixon
had in mind.
But President Nixon said: "Be patient.
I think you're going to like what we're going to do
and I hope we'll have your support on it."
In February, the President briefed
the Cabinet on the detailed fields
of revenue sharing and immediately
a series of briefings began with
President Nixon going to Iowa
and the Vice President doing a
series of road shows where we
would go in, meet with
the governor, meet with his
cabinet, the Vice President would address the state legislature,
and all of this was
focused on the sixth great
goal, but especially, especially revenue sharing.
And there were programs
like this in Ohio, Minnesota, West
Virginia, Wisconsin, Maryland, and
then we did the ARC
Governors and also Governor Carter
, Governor Dunn and Governor
Scott in Georgia, Tennessee and South Carolina.
So we worked hard to
educate our key constituents
here as to what was going on.
And so we'd announce the program.
We'd be done laying the ground work.
And then on March 4th Wilbur
Mills announced he was
going to hold hearings to kill revenue sharing.
Well, there may be some
in the audience not familiar with
Wilbur Mills or the way things used to be.
Or, the only thing they
remember about Wilbur Mills is
an unfortunate dip in the tidal basin.
But, once upon a time,
if you were the chairman of a
committee in the House, you were big stuff.
You were tough.
You controlled your committee.
Wilbur Mills was one of those guys.
He controlled his committee, and
his committee was the Ways
and Means Committee which is probably
the first or second most powerful
committee in the House
of Representatives and he said he's going to kill the program.
So, that wasn't good news.
And we had
internal discussions in the
White House about what to
do about the upcoming election.
The President said revenue sharing, we have got bi-partisan support.
Keep it a bi-partisan issue.
Do not let partisanship get involved in this.
The new federalism is for the
good of the country, keep it on that basis.
And the President had concerns about the budget.
President Nixon never lost focus
on trying to achieve a
balanced budget; keep it as close to that as possible.
And, in fact, he
said, "As much as
I value the new Federalism,
as much as I value general
revenue sharing, if it's
going to wreck the budget or cause
us economic harm, I am
prepared to give it up."
And that was a
tough decision for those
of us who had spent 80
hours a week for months working on this.
And for him, who saw
this as one of
the great issues coming up
in the next election, one of
the great issues in the arena.
But, he did say,
"You know, revenue sharing is
going to restrain property taxes and
property taxes are a big
concern of citizens, so let's keep going on this."
And we were
able to get bi-partisan support from
Republicans and Democrats at state and local level.
We worked with leadership on
both sides of the aisle and
this to me, was a
fortuitous event, and President
Nixon followed it up with
terrific leadership in the Congress.
On the next slide
you will see the fortuitous event.
Maybe.
I may have to go back to the slide of Wilbur Mills.
Anyway, the point is that Wilbur
Mills succumbed to the idea
that he should run for President.
And ironically, Lucy and
I lived in a modest
apartment building in Washington.
And one of the other tenants
of this very modest apartment building
was Wilbur Mills, Chairman of the Ways and Means Committee.
We would see each other from time to time in the elevator.
He knew that I worked for the President.
One morning, we came
down on the elevator and I said, " Good morning, Mr. Chairman."
He said, "Well, I am going
up to New Hampshire to talk about revenue sharing."
I said, "Well, that is a good sign."
If Wilbur Mills is going
to incorporate this in his
Presidential campaign, that's good.
So anyway, we got the bipartisan support.
Mills ran for President.
But now, other aspects
of the Congress, and for
those of you who have observed
the Congress, you know, to get
a bill passed it needs to
come to the floor in the House,
and in the House it
comes to the floor with a
rule from the
Rules Committee and the Rules Committee
says this is a
closed rule which means you can't amend it.
What comes to the floor is
what we are going to vote on, up or down.
If it comes with an open rule, then you can amend it.
Well, of course, we wanted a closed rule.
We felt if we had
a closed rule, and there
was not going to be a lot of
shenanigans on the floor, we could get it passed.
The problem was there
was a Chairman of the Rules
Committee who, like Wilbur
Mills, was a very
powerful guy, Bill Colmer, of Mississippi.
He didn't like revenue sharing.
He was opposed to it.
How about the ranking member of the Republican Party on the Rules Committee?
He didn't like it either.
This did not order well.
So if you're President of the
United States, what do you do when
the people who control your access
to the floor with a closed rule are both against you?
You go to the Speaker of
the House who's a
Democrat and say, "Tip,
will you lead the fight for
a closed rule for my bill?"
That's what he did.
O'Neil, took it to the
floor, got a closed
rule and we won the vote.
It was passed 223 to 185.
The Republicans supported it 113 to 57.
The Democrats opposed,
but they were split.
The Southern Democrats opposed it 21 to 59.
The Northern Democrats, big city
Democrats, they supported it 89 to 69,
and that's what pushed the revenue
general sharing bill through the House.
So anyway, Wilbur Mills
did not do particularly well in
New Hampshire, he dropped out
of the race for the presidency.
But the important juxtaposition of
things in time had taken
place, and we won
the debate.
I think it was a great episode
of political leadership on President Nixon's part to get it done.
And, more or less,
at that point it was
time for me to leave, as it is now.
And so I left my friend
and colleague, Jim Falk, with a
lot of hard work to do,
following up and implementing revenue sharing.
Thank you so much. We've
heard now from, we're
moving slowly in time
with the formative years beginning
with the transition team to the
implementation process. You're in
now for another wonderful treat
with Jim Falk, who was
working as Director of Inter-Governmental
Affairs with the mayors,
with the governors in trying
to move this through Congress.
President Nixon needed to build
a base of support for this.
As Ed said he got the
Speaker Of the House, the Democratic
Speaker Of the House, and what's
so interesting about this, which
Ed is gonna talk about, is that
many, many of the
people that he dealt with
at the tax and local level, and
he needed to get these
people in favor of revenue sharing.
So with that I have the great honor of introducing Jim Falk.
Shirley, thank you very much.
It's indeed a pleasure
to follow my friends
and colleagues Dick Nathan and Ed Harper.
My only real complaint
with either of them is that they left.
Both preceded me at the White House.
Dick Nathan left along with
Pat Moynihan and left
welfare reform, which threatened
to overwhelm revenue sharing,
which was my first and primary responsibility.
But, notwithstanding
that they went on to
other things.
Ed Harper remained there and
Ed was the
envy of everybody else on the staff.
Ed had the best staff
you could possibly want, and he
attracted young men that
were, young men and
women, that were all, it
seemed, all going to
be future Secretary of
the Treasury, and in fact they were.
Hank Paulson. I made
the mistake early on of
thinking that Paul O'Neil
also worked for Ed Hunt.
Paul O'Neil was at OMB,
and after the succession
at OMB, a fine constitutional lawyer.
Cap Wineburger, became head of OMB.
So about the time that Dick
Nathan left, Ed Harper was moving on.
My interaction at OMB was with Cap Weinberger and Paul O'Neil.
But I was
asked, as a part
of this presentation, to talk about the view from the states.
The view from the states I
think is, is very important.
The state's view of
what Richard Nixon was
about, what Richard Nixon was
trying to do, was
conditioned by the fact
that they had just gotten used
to President Johnson's Great Society Program.
And the Great Society Program held great promise.
President Johnson, like President
Nixon, was a great political strategist.
Johnson created a systematic
approach, through these
categorical grants, which went
to state and local agencies:
both water and sewer authorities, transit
authorities, airport authorities, housing
authorities, all sorts of
new authorities, which were
populated by appointed public officials,
appointed public officials who were
largely appointed by largely Democratic governors.
Because at that time, 1971, we have
to remember that there
were 37 Democratic governors and only 13 Republicans.
It was overwhelmingly in
favor of Johnson's political
face to have the
governors of those many states
appointing the people who were
going to control spending of the money.
At the same time, they created agencies
at the federal level to work
hand in glove with the new agencies that
were being created at the state and local level.
And it was in
this context that the states
were just getting to the
point of being able to
figure out how to
make the Great Society programs work.
And they worked in
a way that was not really very fair.
They worked in a way that was competitive.
Every state and every city
had to compete with every other state and every other city.
If you were from a city
like mine, Tucson, Arizona, it was great.
San Diego, Tucson, Salt
Lake, Indianapolis, Houston, Tampa
were always going to win the grant competition.
Those cities had people.
They had mayors, they had
governmental staffs and
organizations that knew how to work the grant process.
There were many, many more winners
than just those.
But there were many more losers
than there were winners
because it was a whole competitive process.
And not only was it a
competitive process that created
a bunch of people who did not get anything,
it was a situation in
which these people
that were populating these new
state agencies were appointed
for terms that were very,
very long in some instances, and were
terms that did not
require that they ever go before the electorate.
So, they were a new unelected
level of government.
President Nixon, in the
revenue sharing system and in
the revenue sharing program, absolutely insisted
from the beginning, that we
remember that we had some
thirty-seven thousand units of government.
But, in America, we believe in self-government.
These self-government units were
largely elected governmental units
and what we wanted to do
was to continue to focus
on creating power in
the hands of elected public officials,
rather than in the hands of the appointed public officials.
So, that was really
the context in which
we're going to queue up our
first slide, which is
really a slide which talks
about... it's really
President Nixon and John Ehrlichman
having a meeting which I didn't know about at this point.
But in this meeting,
and we today have the
benefit of the tapes,
we have the benefit of the transcription
of the tapes and I think
we are going to be able queue up
an excerpt from a Richard
Nixon/John Ehrlicmann meeting in March of 1973.
"The real problem here is not how much money is there.
That's not the real issue.
The real problem is that there's
a hell of a lot of people that don't believe that that's true power.
They believe that Washington does know best.
And they may be right.
But now's the time to find out.
In any event, it's the wrong way to run a country."
I can't give you the date
or the citation, but I
can remember distinctly the President
saying, "Make no mistake
about it, this is
all about power and it's all about money
and it's who's going to control
the power and who's gonna control the money."
And he wanted to assure that
it was the elected public officials, not
the unelected government that had
been created as a part
of the funding mechanism for the Johnson program.
We also have to remember at
that point who the people
were that were populating the governorships.
They were extremely powerful people.
We had Republicans like Nelson
Rockefeller and Ronald Reagan.
We had Democrats like Bill
Clinton, and Jimmy Carter
and George Wallace.
You have to remember that
in 1968, George Wallace running
as an independent carried five or six states.
So we had extremely powerful
people running the states as governors.
We had extremely effective people
running big cities, as
mayor, like Pete Wilson
in San Diego, Jake Garn
in Salt Lake, it was and
Dick Lugar in Indianapolis and
Frank Rizzo in Philadelphia.
Frank Rizzo was a Democrat,
but Frank Rizzo becomes a very
important player later on.
Because he's very helpful to us
with other Democratic mayors and
he's very helpful, actually Frank
Rizzo became a daily phone call at the White House.
He would call the President so often.
The President's secretary would refer him directly to me.
But, Mayor Rizzo prevailed
upon us to actually have
the the signing ceremony for
the revenue sharing legislation
in Philadelphia, at Independence Hall.
But it's important in the
context of who
the mayors and governors were at
the time to remember that these were particularly powerful people.
And in addition to
the fact that they were
strong, their states were
strong, they all perceived
that the federal government had the
most effective tax collection
mechanism ever created.
The federal government was great
at collecting money, at collecting
revenue and imposing taxes.
The states were not that great.
The states had all sorts of sales tax issues.
The states had all sorts of property tax issues.
And every time a
state raised property
taxes, it ran the
risk of people moving to another state.
So there were great sensitivities
on the part of those running
state and local governments that federal
funding be distributed fairly,
and as both Dick Nathan
and Ed Harper have indicated, the
formulas for revenue sharing had to be very carefully crafted
and very carefully drafted so
that fairness prevailed.
And I believe we really did
get it right, and we had
tremendous bipartisan support which
resulted in the passage then
of revenue sharing legislation.
We almost got interfered
with by our own parallel program.
The welfare reform program, which
was a child with
problems from the beginning in
the White House, threatened to
get all the attention and to
push revenue sharing to the side essentially.
But frankly, when revenue
sharing passed, then we
were able to focus on welfare
reform, I think, more
effectively and came closer
to getting it passed than I
ever thought we would. But
the next slide I'd
like to show you, and I
think we have a slide on
this, is a slide that
is really one of
my favorites, it's a meeting
of President Nixon and the governors.
This is probably my
favorite slide because
my political patron is Governor
Jack Williams, who is sitting on the left.
Ken Cole was in the
left, Ken was the
director of the Domestic Council
at that point, Billy taking over for John Ehrlichman.
I'm seated on the right and to my right is George Bush.
And George Bush was at
the White House that day without a
portfolio, he had just come back from China.
He was, came by my
office and asked if he
could come to the meeting and
I said: certainly you can come
to the meeting. He was going
to... he volunteered to
be my staff person for the meeting.
Little did we know at that
point that he would later
become not only the President,
but the father of the President.
But in any event we have
in that meeting Governor Williams,
Governor Winfield Dunn of Tennessee,
Governor Sergeant of Massachusetts.
Seated next to the President is
Holton of Virginia, then on
the right is Arch Moore of West
Virgina, Bob Gray of Iowa
and John Love of Colorado, who
later recruited the energy czar.
These governors were particularly
hopeful in rounding the
bend in terms of
support for the Presidents revenue sharing program.
I think our next slide, and
I think we have a third
slide which is
a meeting of the
President and a group
of mayors in the cabinet room.
And in this meeting I
frankly can't tell you
everyone that's at the table,
but at the, this
end of the table is Ken
Cole and I'm to
the right, but seated next
to the President is governor, Mayor Jake
Garner of Salt Lake and
down then, down to the right
is Norm, the
Mayor of San Jose, who's a Democrat.
And Dick Grecco of Tampa who is a Democrat.
And Tom Hunter of Columbus, Ohio who was a Republican.
In this particular meeting
I've not seen the transcript
of the meeting so I
can't tell you precisely what
happened, but I know
that this was a meeting in
which I was
the staff person responsible
for creating the meeting and
I know I did the President's talking
points and I know
the point was to get their support for revenue sharing.
There's one more slide
we'd like to show you, which...
"And on behalf
of the people, all of the
American people I express
appreciation today to the
members of the House and
the Senate, the members
of the various organizations, civic
organizations that have worked
for this cause to the
governors of the states,
to the mayors, to the
county officials and to all
others who have supported this cause.
You will note from the program
today, it is a bi-partisan group.
Reference has already been made
to the fact that when this
proposal was made at the
federal level three and a
half years ago, there were
some who were quite pessimistic that
it would ever come into being and
at the first of
this year, an election year,
there were some who thought it had very little chance for success.
But as I sign this bill,
we will all be reminded of
another great truth and that
is when a great
national purpose is to
be solved, we act
not as Republicans, not as
Democrats, not as partisans but as Americans.
What America wants today at
the state level and at
the city level and at the
county level and I believe
at the federal level is not
bigger government, but better government
and that is what
this is about.
And so I would hope that
each mayor, each governor,
each county official would go
back to his community or his
state or hers with
this dedication in mind that
these funds will be used
for the needs of the people,
that they will mean better schools
and better hospitals and better police forces,
that they will mean, I would
certainly hope, that we
will stop the alarming escalation
in local and state
property taxes, income taxes
and sales taxes.
You will recall
those famous words
of Winston Churchill before the
United States entered World War
II, when Britain was
holding the fort almost alone
against the Nazi aggressors,
he said, "Give us the tools and we will do the job."
Today, through this
revenue sharing bill,
to the distinguished
people here, the mayors, the
governors, the county officials
and your colleagues all across this
country, we are giving
you the tools, now you do the job."
That, of course,
was his speech at the signing ceremony.
And this is a picture of
the signing, the actual
signing of the revenue
sharing bill in Philadelphia.
We have on the left, Governor Hurns of Missouri who was a Democrat.
Next to him is Pete Wilson
of San Diego who was then
a mayor, later became governor and later became senator.
Then next to Pete Wilson is
Mayor Louie Welch of Houston,
who is a Democrat and next
to him is Vice President Agnew
and then Governor Rockefeller and
the lady to the right
is Gladys Spellman who was a county official.
All of this was pretty
well-scripted to make
sure that we covered all the
political constituencies except for
the Indian tribes which unfortunately
were left out because the two
Indian tribes we contacted couldn't
agree on which one should come.
But that just about concludes what I
had prepared to do and
Shirley, if you like
I'll turn this podium back
to you and come
back to my seat and participate
in the discussion if you'd like.
Thank you.
I'm going to stay here
and in the remaining few
moments that we have, we
are going to partake of
a little give and take here
and each of our
panelists will have some thoughts on some key points.
We've been focusing the last
half of our discussion on
revenue sharing so for a
minute I'm going to take us
back to welfare reform and
ask our panelists, I'm going to start with Dick,
what doomed welfare reform?
What doomed welfare reform was
it was over ambitious.
It was a program that every
time a question came
up the answer was
well we can fix it if
we had more money and finally
they'd added so much money,
it was beyond what the
budget and the economy
could sustain. A quick anecdote:
it was a Republican senator from
Delaware, John Williams with
a scratchy throat like I
do right now, but really scratchy,
and he was a chicken farmer.
And he went and got all
the numbers on what's going
to happen under your plan,
this Family Assistance Plan, that
doomed it. In the most
frustrating hearings in the
Senate, this you can
read about, Pat Moynihan
has a long discussion about this in his book,
and later when I testified
before him, he was
the United States Senator that said
well, it was wrong, it wasn't gonna work.
Well, we found out too late.
My recollection is exactly as Dick's.
I remember a book
we were trying to find for this event.
And it was a book on
the welfare reform program and I
can see it clearly, it was
a little yellow covered booklet that
I worked on with Bill Safire,
and worked on with, I think,
Pat Buchanan and it was called Work Fair.
And it was breaking
the chain of welfare by
creating a system in which
people were assured that
welfare to the
point of getting employment, and
it was breaking
the chain of unemployment,
breaking the chain of welfare if I work there.
I can't find a copy of that book anywhere.
But I remember being one of
its authors, I worked
on it.
Similarly, there was a little
blue book on revenue sharing, I can't find that one either.
I've got it in my briefcase downstairs.
Ed's got it.
Ed, let me ask you a question since you've skirted this one a little bit.
The Nixon administration began with
Pat Moynihan's Urban Affairs Council,
and that ended about
August of 1969, coincidentally
with the August 8th speech.
And we saw John Ehrlichman
soon moving in 1970
into the position of, moving from
counselor to the President into the
newly created position of Assistant
to the President on Domestic Affairs,
positions which you later held.
What changed in your
internal work once John Ehrlichman
took over really changing the
dynamics of the domestic
agenda, if at all?
Well, I really as
a result of studying for
this panel realized I
was probably the first hire
in the new regime, because it was about October 15,
not long after the speech
that John invited me
to the White House. We had lunch,
we discussed the Appalachian Regional Commission,
we discussed federalism, my thoughts
on it and he said well that's
very nice and can you start on Friday?
And so that was
about it so I don't know
what was before and just kind of around.
Well how invested was John Ehrlichman
at this point in either welfare
reform or revenue sharing from your perspective?
A quick comment, Shirley, was
that what John did was pull things together.
The process was not
focused and well-managed and
John had a real
gift for working with
all the people in serious
ways on the serious
issues that we've talked
about today. My biggest
remorse in government was later
to find that John, who I
admired so much, was doing
other things too and it
really goes to what we're here today to say.
Serious people who care
very much did very
important work on a
program the President cared about,
knew about, advanced in his
own ways and while
I think on welfare reform we overreached,
I quoted things in my
paper, you can get copies
of my paper, which showed
that in the country this was
considered a bold program,
there was a lot of very
positive, effusive comments that
we were doing things in an
exciting new way.
It's great to hear your
comments about how hard it
was but, we pushed forward.
I would agree with
Dick's comments about John
and I think one of the other characters,
my sense was that John
was not that deeply involved in
welfare reform personally, but
a part of his approach,
his management style was to find somebody he trusted
and then say, okay, here's
what we want can you
go do this and report back to me?
I've come to
the party a little bit later
than either of these gentlemen,
so initially my
observation of John Ehrlichman was exactly what Dick said.
He had this great talent for
putting people together in a
room and at the end
of the meeting John Ehrlichman
could summarize in two
sentences what happened
in the two hours of discussion that occurred in the meeting.
He was very, very good about
organizing and thought processes
and about them coalescing the idea.
My problem was that that
all of a sudden we didn't
see much of John Ehrlichman anymore
and we didn't know what
was going on in
John's life and Ken
Cole became the new
John Ehrlichman, and Ken
Cole was the person that
I really interacted with during
most of the time that
I worked on all of this stuff.
Interesting. Well you, it, I'm
two steps behind Dick
Nathan and two steps behind
Ed Harper.
But it was, but it
downshifted to the
Cole level by then on
the domestic side and the
changes that affected me
were the changes in people
that we haven't talked about.
The resignation of the Vice President.
The nomination of a new Vice President.
Being the person responsible for state
and local government stuff I was
also then asked to be
responsible for constitutional amendments policies
and taking constitutional amendments
of... The first
constitutional amendment issue we
had was when the
President nominates a Vice
President to succeed
a resigned Vice President.
Under the constitution, the House
and the Senate now have
to confirm the Vice Presidential nominee.
Never before in the history
of the United States had the House confirmed anybody.
Confirmations had always occurred
in the Senate, there never had been a confirmation in the House.
But when President Nixon
nominated Gerald Ford to
be Vice President, he was
going to have to be confirmed both by the House and the Senate.
Then Ford becomes Vice President.
Then I'm all of
a sudden working for Ford and working for Nixon.
All of a sudden Ford becomes President.
I'm now working for Ford, and
Ford nominates Rockefeller to be Vice President.
And Rockefeller comes to
Washington and says, "Oh my God!
I'm going to have to be confirmed by the House and the Senate too,"
and wanted to figure
out how he could
handle the confirmation process.
It was a completely different kettle of fish.
Gerald Ford, when he became
the nominee for Vice President, had
very modest means and
very modest assets -a few
shares of stock in a paint company in Michigan.
Nelson Rockefeller had shares of
stock in companies in every
country in the world and had
more lawyers than he knew what to do with.
Gerald Ford didn't have
any assistance at all.
But, so it was
this rapid, to me,
succession of the
people who were responsible
for state and local government.
In the old days
the joke was that the
Vice President has two duties: first
duty is to provide over the Senate,
second duty is to go to the office every day and check on the health of the President.
But, the Vice President has a
third duty under President
Nixon and that third
duty was a duty created by
executive order in which
President designated the
Vice President as head
of the Office of Intergovernmental Relations.
After Vice President Agnew resigned,
that office by
executive order was transferred back to the Domestic Counsel.
And I went to work one
day and heard that they
had announced in the White House
press briefing that I was the new head of that office.
I didn't know anything
about it.
We are about to wrap up.
I have one short question and
maybe each of you can just give us a quick answer.
How would the new
federalism play in today's political environment?
Dick.
It, today with so
much grief with the
national decision process, how
they can't figure out what
to do, how everyone is
frustrated, governments call federal
government, national government dysfunctional.
What people forget and don't
pay enough attention to is
that state and local governments
have terrific economic and
fiscal problems and challenges
and the difference is they
are faced, they're making
hard decisions everyday to
change programs, to reduce
staff to cut budgets.
We don't respect our government
enough as anything except
what you read about, what some
hot shot, he's the
latest Washington "let's watch
him" character is about.
American government is not
skin deep, and Nixon's
commitment to warning people
to care about all the
governments of our country, people
we elect, people we know,
is something that is coming
back and ought to come
back cause they're doing the hard work.
And they're really doing the work now.
So it's kind of ironic that
we're talking here about state
and local government being relied on
and they're being pretty reliable, at
a time when you can't
say that about the whole governmental system.
Ed, what are your thoughts?
I think New Federalism
as a phrase would be nice
but I think it depends on the
vision and leadership of
a key guy, like the President of the United States.
I think if Richard Nixon
we're here today thinking about
New Federalism and the kind
of problems we face today he
was a person who thought strategically
thought nationally, thought, "What is
in the nation's interest, and how
can we best do it?"
And he saw government as a totality.
And that we need to build
and strengthen state government and local government.
And so I think we would
see a lot of strengthening
of state and local government through
means which we may not have even imagined.
Jim.
Yeah.
I'm concerned about what's
going on today and I'm concerned
I think, in many levels.
But, one of the
big concerns I had was
about the stimulus bill,
about the American Recovery and
Re-investment Act of 2009
in which 4.35 billion
dollars was set aside
as a fund for education,
for education really by
a competitive grant program
process, that is just
exactly like the old
great society programs.
It's a competitive program called
Race To The Top Fund.
And this Race To The
Top Fund of 4.35 billion
dollars, which is part of the
stimulus That's a demonstration demonstration program.
It's a demonstration program, funded
at 4.35 billion.
When you start funding at multiples
of billions, it's real money.
And what that does,
is again, create this competition,
competition between his state
in mind, his state in mind.
Somebody's gonna win, but more people are gonna lose.
Thank you.
Please join me in thanking
this wonderful panel and a
rare glimpse of inside the White House.