Over the first two years of Donald Trump’s presidency, there have been few ideals that outgoing Speaker of the House Paul Ryan (R-Wisconsin) has been able to hang onto.
After the anemically attended inauguration, Ryan — who had decried Trump’s statements as the “textbook definition of racism” and claimed that he was “sickened” by the Republican candidate’s statements on the infamous Access Hollywood tape — has opted for silence. Bound by the expectations of party leaders, he’s tried doggedly to avoid criticizing the leader of the GOP.
Instead, he seems singularly focused on execution of his own political agenda — which includes tax cuts for wealthy people and reductions in an already stingy social safety net.
To that end, Ryan has been consistent and effective.
His tax cuts succeeded in blowing a $1.5 trillion hole in the country’s deficit, which Republicans now say must be filled by cuts to Medicare and Medicaid, socialized health plans for the elderly and poor; and Social Security, a program that every working American contributes to in order to receive benefits later in life.
Ryan has an answer, though: Block grants.
Generally speaking, block grants are cash transfers from the federal government to the states that come with parameters. Each grant can be deployed in a range of ways, so long as they stay within prescribed categories, such as housing for Native Americans or economic development.
But exact details vary; federal departments and agencies including the U.S. Census Bureau, the Government Accountability Office and the U.S. Office of Management and Budget all operate with different definitions. Because of course.
Proponents argue that block granting — which use formulas to determine how much money states will receive and leaves them to craft their own programs around its use — allows for flexibility, promoting the “laboratory of democracy” and providing for local differentiation.
Opponents, however, consider block grants a misdirection that end in constraints to the social safety net that hurts low-income people. They also charge that the system allows too much control by individuals at the state level.
The reality falls somewhere in between.
A Quick History
The concept of the block grant evolved over time as the relationship between the federal government and the states changed. In an exhaustive history of federal transfers to local government, Robert Jay Dilger, the senior specialist in American National Government with the Congressional Research Service, documents three phases that took place in the 20th century.
Grants exploded under President Franklin Delano Roosevelt as the Democrat tried to drag the country out of the Great Recession by the scruff of the neck, fighting judicial and Republican opposition all the way. This Dilger refers to as the period of “cooperative federalism,” where states took the money and ran.
Cooperative federalism gave way to “coercive federalism,” in which government began putting additional parameters on the way that state and local governments used the money in part to push states into new policy areas. These new kinds of grants — now called categorical grants — had extremely specific uses, and government granting showed a new focus on urban areas with 70 percent of all federal grant-in-aid funding targeted toward cities, a 15 percent jump.
But the government also consolidated nine categorical grants into the first block grant, now called the Preventive Health and Health Services Block Grant. Two years later, Congress approved the Law Enforcement Assistance Administration’s Grants for Law Enforcement program.
The rise of the categorical grant increased the complexity of the system, causing President Richard Nixon and President Gerald Ford to consolidate more into block grants that offered local government more flexibility in how they deployed the cash.
It was under President Ronald Reagan and his “devolution revolution” that block grants really took off — and the potential weaknesses of the model became apparent.
In 1981, Congress approved a plan to consolidate 77 categorical grants and two block grants into just nine new block grants. In addition to streamlining the process, the move also cut $1 billion from the social service programs in a year, or 12 percent of the value of the grants.
That kind of cut is, to so-called fiscal hawks, a feature, not a bug.
According to the Center on Budget and Policy Priorities (CBPP), combining revenue for programs that help low-income people has the tendency to lead to large declines in funding over time. Money loses value and, if a block grant isn’t designed to keep up with inflation, the grant loses value as well. On top of that, the country’s population continues to grow, meaning a potential growth in the number of beneficiaries from these grants particularly in the event of economic downturns when people access government assistance more.
“Since 2000, overall funding for 13 major housing, health and social services block grant programs in the federal budget has fallen by 27 percent after adjusting for inflation, and by 37 percent after adjusting for inflation and population growth,” CBPP authors wrote in early 2017 as the first budget discussions in the Trump administration began to roar.
And the flexibility of the cash that is so touted by proponents? Its value is in the eye of the beholder.
CBPP authors point to the Social Services Block Grant, designed to pay for child care, foster care and special services for people with disabilities. It went from “a flexible source of funds” to “a no-strings-attached slush fund for states with no accountability” between its creation in 1982 and attacks by the GOP in 2016.
The “slush fund” charge can hold weight, however.
Temporary Assistance for Needy Families (TANF) was a block grant that replaced Aid to Families with Dependent Children as part of President Bill Clinton’s “welfare reform.” According to the Washington State Budget & Policy Center, Washington’s version of the program helps fewer families now than in 2011, in part because the state implemented stricter policies that forced families out of the program.
The “savings” were used to plug budget holes elsewhere.
The history of federal cash transfers, particularly during and after the Reagan administration, has been one of increased devolution of responsibility to state and local government without the attendant resources from the federal government. Still, there are aspects of the system that work well.
Block grants in WA
Kaaren Roe is the section manager for the Washington State Community Development Block Grant (CDBG) program, grants that the state doles out to 200 small local governments for public infrastructure, community facilities and economic development projects.
A good deal of CDBG money flows directly from the federal Housing and Urban Development department to urban areas, and the remainder is facilitated by states to disburse among smaller governments that may not have the technical or fiscal capacity to run independent programs of their own.
“Seattle has its own CDBG program, King County has its own CDBG program,” Roe said. “With smaller administrative capacity local governments, then the money is blocked up at the state level and then we distribute those funds to local governments.”
The state conducts five-year strategic plans, while each year, communities come up with annual action plans, Roe said. It allows them to tailor their requests to the explicit needs of their towns, something that an administrator in Washington, D.C. could never do.
Roe works with many of the smaller communities in rural areas of eastern Washington and is on a first-name basis with their mayors.
“If it was a federal program, that kind of relationship would be more difficult to develop,” Roe said. “The decentralization of block granting means more awareness.”
These towns may not have enough rate payers to replace aging sewer systems. CDBG money can fill in that gap. Wildfires are putting new tolls on rural communities. CDBG funds can repair or replace fire stations and fire engines.
CDBG runs afoul of the same tendencies as other block grants, however. At the height of the program in 2003, the state received $18.9 million, or $25.8 million in today’s dollars, according to the CPI calculator from the Bureau of Labor Statistics.
This year’s allocation, meanwhile, is $12.4 million — down 25 percent since 2010, Roe said. The reduction is partially due to population shifts out of rural areas, which the funding formula takes into account, but only partially.
All this is to say that block grants aren’t inherently bad policy; they can provide needed flexibility that serves communities while imposing parameters that move assistance toward low-income people and marginalized groups. But often, they’re a kind of sleight of hand — now you have money, now you don’t.
“I think block grants are attractive to some policymakers, as a way over a long period of time to squeeze funding for some of the big low-income programs, relative to what it would be under the current entitlement funding structures and it enables it to do it without looking heartless by proposing to throw X-numbers of people over the side in program A, B, or C,” said Robert Greenstein at a Brookings Institution forum, as cited by Dilger.
And that’s the problem that leftists have with Paul Ryan’s proposals to block grant programs like Medicaid or food benefits. They assume it is an act of bad faith, that the man with no spine may also have no heart.
Ashley Archibald is a Staff Reporter covering local government, policy and equity. Have a story idea? She can be can reached at ashleya (at) realchangenews (dot) org. Follow Ashley on Twitter @AshleyA_RC
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