New Federalism: Returning Power to the People
Articles,  Blog

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 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.

One Comment

  • apope06

    He cries toward the end because he helped craft a bill that became such a fundamental change in our country. You can tell how powerful the experience was for him.

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