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5 The Distributive Politics of the New Federal System: Who Wins? Who Loses? Dale Rogers Marshall and John I. Kirlin INTRODUCTION President Reagan's domestic policies seek to promote economic growth, to cut federal domestic expenditures, especially on welfare, and to reduce the policymaking role of the national government while increasing that of states. In Reagan's view: Government is not the solution to our problems. Government is the problem. (Reeves, 1984:26-29). Reagan argues that the Taxing power of government must . . . not be used to regulate the economy or bring about social change. (U.S. Congres- sional Record, 1981:H510-H514). This traditional con- servative view suggests that Reagan's goal is not just to trim expenditures, but to redefine the role of the national government. Among those policies being revised are urban policies adopted in the past two decades to help disadvantaged places and persons. Some would argue that the objective is to dismantle the Welfare state,. an attack encompassing not only specific programs but the premises (theories) that have dominated recent policymaking. While definitions of the welfare state differ, a com- mon element is redistribution of society's resources through public policy. For example, Janowitz (1966:10) argues that The welfare state rests on the availability of some form of economic surplus . . . that can be real- located in terms of a set of principles.. Perceptions of both economic surplus and principles by which it should be reallocated are not immutable laws of nature. They are instead theories, social constructions contain- ing both descriptions of what is occurring and valua- tions. For example, does an economic surplus exist after subsistence needs are met or after investment in 127

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128 capital goods for future production? Similarly, should reallocation of any surplus be on the basis of income, class, merit, or some other criterion? Policy choice requires closure that is inevitably political, although empirical evidence and analyses may intrude. While most discussions of the welfare state focus on redistribution, the concept of Distributive goods. is also useful. An activity of government provides dis- tributive goods whenever benefits of the activity are received by some individuals to the exclusion of oth- ers. Some theorists call these ~private. goods, noting that such goods can be produced by governments as well as by private firms. This is in distinction to goods whose benefits may not be appropriated by any individ- ual, but are instead ~public. goods. Among examples of the latter are legal systems or national defense: All members of society benefit from expectations of the security of contractual arrangements and from physical security and no one can be excluded. Few governmentally produced goods or services are pure public goods; most are distributive or private goods or ~mixed. goods with elements of general and individual benefits. Two examples of mixed goods are publicly funded education and urban redevelopment. Recipients of schooling and users of renewed physical structures and owners of adjacent property benefit in- dividually, but general or public benefits are also ac- crued in the form of a better-educated citizenry and labor force and in increased economic activity and gov- ernment revenues. Government action, thus, almost always has distribu- tive impacts: Some individuals are assisted more than others. While the total of benefits received from all governmental activities may balance out among individ- uals, it is more likely to be the case that some indi- viduals come out comparative winners and others compara- tive losers as a result of government's activities. This is ~redistribution. in the technical sense. How- ever, in common language and in most policy debates and policy evaluations, the term redistribution is defined more narrowly as the incidence of benefits received ver- sus costs borne in terms of an individual's income. One of the anomalies of politics in this nation is that income-related redistribution has come to be iden- tified almost exclusively with transfers to those of lower incomes. In the dominant theory, redistribution is equated with welfare. Governmental activities pro-

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129 viding net benefits to individuals of higher than aver- age incomes are not perceived as Redistribution and certainly do not carry the negative label of ~welfare.. The dominant language of politics and policymaking em- phasizes two types of programs: welfare and public goods. If a program is targeted on the poor, it is wel- fare; if not, it is discussed as if it were a public good. This limitation of language is powerful polit- ically. It masks the reality that almost all govern- mental activities are distributive; they affect individ- uals differentially because they are mixed or private goods. Moreover, it blinds citizens and policymakers alike to the substantial redistribution to individuals of higher incomes that occurs as a result of many gov- ernmental activities. These limitations on common perceptions of govern- mental activities, joined with demographic factors (the poor are a minority) and differential rates of political participation and organization (which favor the better off), make it difficult to adopt and maintain programs that benefit the poor. This was true both before and after the election of Ronald Reagan. In this paper we examine distributive impacts of Reagan's domestic policies, particularly the effects on affluent and less affluent people and places and on changes in the dominant theory of domestic policies. To provide a baseline and context for comparison, we first review the distributive impacts and dominant theory of national policies in the 20 years prior to Reagan's presidency. This review reveals that economic growth made the major contribution to rising standards of liv- ing. Expanding social programs also contributed to a modest redistribution of society's resources toward the poor. However, the largest and most rapidly growing federal domestic programs were not pro-poor in opera- tion. In the same two decades, federal tax and expen- diture patterns encouraged equalization of incomes among cities, states, and regions. In that period, social policies were justified both as benefiting the general public and promoting redistribution to the poor, but there was little recognition that virtually all policies are mixed goods with major distributive effects, few of which help the poor. With the context established, we turn to an examina- tion of changes made during the Reagan presidency. We review current evidence on the distributive impacts of Reagan's cuts in entitlement and operating grants, and

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130 the net effects of those plus changes in defense spend- ing and in taxes. Overall, the evidence confirms ex- pectations that Reagan has somewhat decreased redistri- bution from affluent to less affluent people and places (Palmer and Sawhill, 1982). Moreover, improving per- formance in the economy may not pull up the bottom of the income distribution. In part this is because the cuts that have been made have focused on pro-poor, re- distributive, welfare programs, while leaving relatively unscathed those programs whose distributive effects favor the more affluent. The political power of those with middle-class and better incomes has protected their programs. Reagan's policies have been pursued in the name of protecting a general interest in a public good, namely economic performance. Redistribution to the poor is attacked as undermining the work ethic. An expansive public sector is attacked as diverting for investment and reducing incentives ation. This represents an important shift in the domi- nant theory underlying domestic policy in the Reagan administration. We argue that the theory base of social policy has shifted more than the distributive impacts. Next, we consider variations in state and local re- sponses to Reagan's programs. They depended on the type of program, amount of fiscal pressure, and political ideology. Finally, we examine special problems of mi- norities and cities and close with a discussion of key issues that emerge from the analysis. The evidence of policy effects considered in this paper is limited to that which is available in previous analyses, a not uncommon limitation. But we have also sought self-consciously to include available evidence on the impacts of the full range of governmental activi- ties, not just ~urban. policies. Some of the conflict over the design and effects of redistributive policy results from varying definitions of the relevant poli- cies. If the focus is simply on pro-poor or urban pro- grams, much of the richness of policymaking in the Amer- ican political system is missed. Pro-poor programs make a modest contribution to improving life situations of the poor, so this focus is not sufficient if that is one's goal. To understand the effects of the Reagan policies, a broader net is mandatory, as those policies have emphasized the contributions that general economic growth, subnational policies, and nongovernmental efforts can make to reducing poverty and to improving the quality of life in cities. . . . , _ resources needed for income gener-

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131 DISTRIBUTIVE POLITICS IN THE PRE-REAGAN PERIOD In the 20 years prior to the Reagan administration, federal expenditures increased rapidly. How much redis- tribution from the affluent to the nonaffluent took place in this era of growth? Distributive impacts are complex and controversial, varying by program and over time under different admin- istrations. Assessments also change, as illustrated by the fact that some of those who were most critical of the earlier programs now criticize the Reagan adminis- tration for attempting to change them (Piven and Cloward, 1982; Auletta, 1983:296). Yet retrospective evaluations of the domestic programs from the Kennedy- Johnson administrations through Carter reveal some gen- eral patterns. This pre-Reagan period was a time of expanding fed- eral benefits for individuals and cities. The largest entitlement programs, Social Security and Medicare, were not means-tested and benefited the middle class without much of a downward tilt. But some of the smaller enti- tlement programs, such as Aid to Families with Dependent Children (AFDC) and Medicaid, were redistributive. Op- erating grants for state and local governments consti- tuted a much smaller proportion of federal domestic spending than entitlement grants. Distributive impacts were mixed, depending on the type of program and char- acteristics of the entities implementing federal initia- tives. Operating programs as well as entitlement pro- grams that provide services, such as Medicare and Medi- caid, provide benefits to provider groups and not just to the eventual recipients of services. Yet, modest levels of redistribution did occur and social programs contributed to those trends. There was a decline in absolute poverty and a move toward more equality of income (Plotnick and Skidmore, 1975). The federal government also played an income-equalizing role among cities, states, and regions and stimulated local jurisdictions to assume responsibilities for new pro- grams, some of which were oriented to disadvantaged groups. In this era, redistribution gained prominence on the political agenda. But the amount of redistribu- tion that actually occurred was more modest than com- monly recognized because the biggest programs were not pro-poor. The underlying theory in this era justified policies in terms of promoting both general public interests and

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132 redistribution to the poor. The thrust was toward an expansion of the public sector without much knowledge of, nor concern for, the long-term costs. Despite a few explicitly distributive policies for poor people and places, the distributive impacts of the other policies, which were not pro-poor, were rarely acknowledged. Sup- port for the redistributive policies was quite fragile because they were often instituted Won the cheap. polit- ically and fiscally. Entitlement Grants Many people believe that most government spending has been for programs that benefit the poor, but they are wrong. The largest and fastest-growing portions of the domestic budget in the pre-Reagan era were entitlement grants providing cash or in-kind transfers to families and individuals. They constituted approximately 48 percent of federal budget outlays in 1976 (Palmer and Mills, 1982:65). The largest of these programs--Social Security and Medicare--represented 38 percent of the federal budget in 1978 and chiefly benefited the middle class (Page, 1983:88). Means-tested transfers--AFDC, Supplemental Security Income (SSI), Medicaid, and Food Stamps--were a much smaller share (10 percent in 1976) of the federal budget (Palmer and Mills, 1982:65). So, low-income assistance with a downward tilt was not the largest proportion of government spending on transfers; expenditures for the other programs were almost four times larger. Social Security involves regressive taxes and pro- poor benefits, but overall it Gives back to each income class roughly the same amount it takes away . . . there is not much net redistribution of lifetime incomes. (Page, 1983:29). Medicare, like Social Security, covers the elderly population and is directed mainly at the middle class. Like Social Security, it is financed by a regressive payroll tax, and the value of the insurance the average person receives from the program is roughly equivalent to the money paid in during his or her work- ing years (Page, 1983:75). Means-tested assistance programs expanded more rap- idly than did Social Security in the 1971-1979 period (232 percent versus 192 percent), though by the late 1970s their growth had slowed and benefit levels were not keeping up with inflation (Page, 1983:70). To-

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133 gether, AFDC and SSI constitute only about one-tenth of federal expenditures on retirement and disability pro- grams or about 3 percent of federal expenditures (Page, 1983:70). Food Stamps, Medicaid, and housing assis- tance, being in-kind transfers, help provider groups as well as recipients. Medicaid, which provides a large transfer from high-income people to low-income people, may not have helped the poor as much as its costs would indicate because the rising fees went to doctors and hospitals (Page, 1983:76). Rent supplements, like AFDC and Food Stamps, helped mostly those with the lowest incomes, but they constituted a very small program and most of those who were eligible could not get supple- ments. The largest program of housing assistance, namely, homeowners' deductions of mortgage interest and property taxes (estimated at $33 billion in 1982), con- stitutes a subsidy to higher income individuals. Operating Grants In the highly decentralized U.S. federal system, the central government attempts to achieve some of its goals by providing operating grants to state and local govern- ments for many services, including employment, economic development, health, education, housing and community development, transportation, and social services. These grants are a much smaller proportion of the federal bud- get than entitlements (10 percent compared with 48 per- cent in 1976; Palmer and Mills, 1982:65). Each admin- istration in this period had its own version of New Fed- eralism, using different types of grants that varied the targeting on national goals versus discretion for local officials (Wright, 1982). Johnson's New Federalism spurred a rapid expansion of categoric grants for poverty and depressed areas, in- cluding cities. These grants involved high federal con- trol and a dual strategy of funding both city govern- ments and special entities, such as community-based organizations. The grants were oriented not just toward reducing poverty but also toward redistributing politi- cal resources and improving local capacity to plan, coordinate, and deliver services to the poor, goals that often were in conflict (Marris and Rein, 1967). Over- all, the grants did stimulate local spending and re- sulted in some redistribution of resources to needy people within cities and some redirection of federal

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134 money to the poorer cities and regions of the country (U.S. Advisory Commission on Intergovernmental Rela- tions, 1978a, 1978b; hereinafter USACIR; Whitman and Cline, 1978). Block grants and general revenue sharing instituted in the Nixon and Ford era of ~decentralist. New Federal- ism decreased federal control and relied on formulas rather than project applications to determine the dis- tribution of funds. Block grants placed fewer restric- tions on local discretion than general revenue sharing, but more than categorical grants. Both kinds of grants spread resources to less needy people and cities (USACIR, 1977; Nathan and Adams, 1977; Nathan et al., 1977). A major consequence of general revenue sharing and formula-allocated block grants was that virtually all local governments received federal aid and became subject to both program-specific and cross-cutting federal regulations. Carter's ~economic. New Federalism continued the tripartite mix of grants, but emphasized programs to counteract structural and cyclical economic distress, including Urban Development Action Grants and Public Service Employment (Kirlin, 1982). Federal controls over Community Development Block Grants (CDBG) and the Comprehensive Employment and Training Act (CETA) were gradually increased in response to criticism for fraud and waste and resulted in more social and geographic targeting (Nathan et al., 1977; Dommel, 1982). Even though operating grants to state and local governments were a much smaller portion of the federal budget than transfer payments in the pre-Reagan era, interest groups (including program constituencies) focused intense political controversy on these discre- tionary funds. Evaluations of the programs continue to reflect those controversies. Proponents argue that operating grants supplement benefits from entitlement grants and help raise living standards of low-income groups. In this view, health (Davis and Schoen, 1978), education (Mazmanian and Sabatier, 1983), and community development (Dommel, 1982) programs have all benefited the poor. Even em- ployment programs, which have been harshly criticized, are seen as providing some assistance to low-income par- ticipants (Baumer and Van Horn, 1984). Critics hold that operating grants are an inefficient method of redistributing resources, i.e., that the costs are too large for the benefits received. They argue

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135 that provider groups, which constitute the political base for the programs, benefit more than the actual clients. Defenders of operating grants point out that such grants also increase the capacity of local jurisdictions to respond to low-resource groups and redistribute po- litical resources to the poor. They add new services for the poor in education, health, housing, social ser- vices, and so on (Browning et al., 1984), though in many cases those services are kept separate from a jurisdic- tion's core activities, not supported by general funds, and not viewed as local programs. They also engender various kinds of citizen-participation structures and procedures that, however weak, contribute to subtle but not insignificant shifts in local political dynamics. The programs are seen as qualified successes because they promoted political change, stimulating local governments to provide new services for the poor and increasing the ability of the poor to organize and to promote local government responsiveness (Levitan, 1969; Haveman, 1977). Local governments became strong part- ners with the national government in an intergovern- mental system characterized by mutual dependence, an Uneasy partnership,. but one in which both the national and local governments were both individually strong and interdependent (Reagan and Sanzone, 1980; Williams, 1980; Leonard and Marshall, 1982; Fossett, 1983). The impacts of grants depend partly on the character- istics of the local entities implementing them. It is extremely difficult to force local entities to target their programs on the poor when their leaders oppose such redistr ibution . Grants facilitate changes in local organizations willing to move in the direction desired by the national government, but they cannot directly force that change on resistant recipients (Ingram, 1977; Browning et al., 1980; Williams, 1980; Mazmanian and Sabatier, 1981). The grants, however, do provide addi- tional resources to some local groups favoring redis- tributive programs, thereby helping them gain more poli- tical influence (Peterson and Greenstone, 1977; Browning et al., 1984). Impact on People and Places In the pre-Reagan period, economic growth was a major factor in the rising standard of living, the decline in

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136 absolute poverty, and the overall movement toward rela- tive equality of income, but social programs, especially entitlements, also contributed to these results (Bawden and Levy, 1982:460). Thus. those who sav the ore- Reagan programs did ~ ~ not work are judging them too harshly; they did promote redistribution toward the poor. The economy grew steadily in the early 1960s to the early 1970s, the living standard of the average family improved, and the percentage of the population below the poverty level declined by almost half. During the 1970s, the standard of living increased only slightly, while the percentage of the population below the poverty line stayed rather stable, due particularly to growth of female-headed households (Bawden and Levy, 1982:461). Studies show that at the end of the 1970s government income transfers reduced the number of poor people below the official poverty line from about 20 percent in 1965 to 11 percent, or to 4.1 percent if income underreport- ing, taxes, and the value of in-kind benefits are con- sidered. However, relative poverty was the same as it was in 1965 (Page, 1983:89). Depending on their values, analysts reach conflicting conclusions about these impacts. Wilensky (1983) sees the achievements as substantial. Page does not. He says that the large sums spent on entitlement grants have contributed to redistribution, but have done Much less than most people imagine to increase the equality of incomes ~ . . they raised many people out of misery and guaranteed a minimum level of food, money and medi- cal care for most of the population. But . . . [they] have not brought about substantial increase in income equality. (Page, 1983:91). This picture of the distributive impact of programs on individuals is not changed by a consideration of taxes. Taxes have little if any effect on income redis- tribution: While federal taxes are somewhat progressive with a regressive social security payroll tax diluting the moderately progressive individual income tax (effec- tive rates as contrasted with the nominal scheduled rate), this progressivity is nullified by regressive state and local taxes (Page, 1983:22-34). The impact of pre-Reagan programs on regions, cities, and states was more clearly redistributive. Until 1980, federal tax collections were somewhat higher in the North than in the West and South. Nondefense federal

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137 outlays during the 1970s were above the national average in the Northeast and the West. Defense outlays were highest in the South and West. Muller (1982:444) con- cludes that The combined effect of large tax contribu- tions by northern industrial states, the more regionally equal distribution of nondefense federal funds, and the concentration of defense outlays in the South and West resulted in a steady flow of federal dollars from north- ern regions to other areas.. Federal tax and expend) ture patterns helped to equalize incomes between the higher income industrial states and low-income states with large rural populations (Anton, 1980:33-35: U.S. Department of Housing and Urban Development, 1982:26; hereinafter USHUD; Muller, 1982:446). Federal operating grants also contributed to redistribution by targeting needy jurisdictions (Anton, 1980:100; Owens and Wade, 1984). In sum, the dominant theory of the pre-Reagan era emphasized centrally initiated social policy, which was justified primarily in terms of providing generalized benefits but also in terms of promoting redistribution, with the latter being equated with pro-poor activities. Program expansion was seen as good and little attention was given to the long-term program costs. Some policies were discussed in explicitly redistributive language (e.g., policies for needy cities and populations), but there was little recognition that virtually all programs and policies were mixed goods with major distributive effects, few of which helped the poor. Redistributive policies were often initiated by a few key individuals, which when combined with a weak fiscal base, made the policies very fragile. Financing came from increased revenues obtained not through a direct tax increase, but through an inflation-induced creep of personal income tax brackets, reductions in defense spending, or increased Social Security taxes. Political support was also weak because the full costs of social programs were not recognized, and because the programs' initiation preceded development of interest groups pow- erful enough to defend them. Goals were vague, con- flicting, and changing (for example, CETA-Public Service Employment was launched as an anticyclical economic stimulus program, but it was redefined as an income redistribution-training program). When economic perfor- mance faltered and fiscal strain increased, the politi- cal coalitions that had supported the policies and domi- nant theory of the pre-Reagan era were defeated.

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152 received by black clientele. Even small cuts in big programs for the poor, like AFDC, can have substantial impact on minorities. The people who lose benefits, receive reduced benefits, or are out of work put new demands on city services and pressure on city officials whether the services in question are provided by the city or not. Mayor Schaeffer of Baltimore reports that soup kitchens in his city used to serve 70 meals a day and now serve 700 a day. He says that even though he tells people to complain to the federal government or the state, they come right to his office (U.S. Congress, Joint Economic Committee, 1983:402 and 408). Worries about a permanent underclass are particularly acute in cities. Opinions differ on the size of the problem, but even if there is more movement into and out of the ranks of the poor than commonly believed, a seg- ment of the population is persistently poor. And this phenomenon is particularly acute among blacks and among families headed by black women (Gershman, 1980; Auletta, 1983; Hanson, 1983:16; Duncan, 1984:50). If you also consider those who have recently become poor due to loss of jobs and add the overlay of race, gender, and age, the situation in cities can be explosive. It may be true that a rising tide lifts all boats, but many ser- vice providers point out that not everyone has a boat, not all boats are afloat, and more boats are sinking all the time. A second impact of Reagan's programs on minorities results from changes in public sector employment, which have a disproportionate impact on minorities, particu- larly blacks. In the pre-Reagan period, expansion of operating grants to state and local governments created public sector employment for many blacks. This was im- portant for their mobility, moving them into the middle class. Between 1960 and 1976 black employment in the public sector increased from 15 to 27 percent compared with an increase for whites of from 13 to 16 percent. While 55 percent of the net employment increase for blacks since 1960 occurred in the public sector, for whites it was only 26 percent. And the figures undoubt- edly underestimate the employment effects of programs because they exclude indirectly generated employment in community-based organizations receiving public funds thrown and Erie, 1981:305-306). The exact impact of Reagan's programs on public sec- tor employment are hard to determine, but since 1980 the cuts and the recession have led to modest declines _

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1S3 at the federal, state, and local levels (total public sector employment declined 1.7 percent between 1980 and 1982). Employment cutbacks in social programs have a heavy impact on blacks because they often were the last hired and thus are the first to be fired. At the fed- eral level in 1981, minorities were laid off at a rate that was 50 percent higher than for nonminorities (Brown, 1982:21-22). A third aspect of minority experience with the public sector has been in electoral politics. During the past 20 years, the number of minority council members and mayors (and women as well) has grown dramatically (Bu- reau of the Census, 1984). Blacks and, to a lesser extent, Hispanics have been winning city elections in increasing numbers (Joint Center for Political Studies, 1981). Cynics would note that the new groups entered the governing elite just when city problems were becom- ing more acute, but the question remains as to what dif- ference Reagan's policies have made for minority offi- cials and vice versa. Minority elected officials are typically Democrats who support redistribution to the less affluent (Conyer and Wallace, 1976). And since political ideology has been important in shaping local responses to Reagan's programs, it seems likely that local black elected of- ficials will attempt to mitigate negative effects on low-income groups by maintaining targeted services even if that requires increased revenues (Peterson, 1982:196; Glazer, 1984). A recent study of 10 large northern California cities allows some inferences about the impacts of Reagan's cuts even though it does not directly examine them. The study finds that in the pre-Reagan period social pro- grams facilitated the electoral success of minorities and that minority elected officials made a difference for policy (Browning et al., 1984). National programs generated demand-protest activity and electoral mobili- zation, which helped liberal coalitions of minorities and whites successfully challenge more conservative, white-dominant coalitions on councils. Dominant liberal coalitions used the programs to promote policy respon- siveness to minorities, commonly defined as redistribu- tion. As an example, they tended to target federal pro- grams even when targeting was not required by the fed- eral government. It appears that despite external eco- nomic and political limits on cities, minority officials make a difference for policy and that cities with high

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154 minority control will be more likely to continue redis- tributive policies when it is feasible. Since increases in minority influence were partly stimulated by federal programs, it is interesting to speculate whether minor- ity control has been sufficiently institutionalized to withstand the shift in federal policy. The growing pro- portion of minorities in cities suggests that there will not be a complete reversal of minority influence in local politics, but the absence of supportive federal activities certainly makes the environment more hostile, as do other contemporary political and economic develop- ments (Brown and Erie, 1981:323). In addition to the three impacts on minorities, Reagan's programs have diminished the position of cities in the intergovernmental system. While urban policy had been a high national priority in the 1960s and 1970s, that is not the case in the Reagan administration. Cities become, in effect, a residual category; urban policy is, even more, the inadvertent result of a vari- ety of other policies not primarily concerned with cit- ies. Distressed cities can no longer expect compensa- In addi- tion, New Federalism, by funneling aid to cities through states, increased the cities' dependence on states, thus accelerating the trend resulting from tax-limitation measures (Kirlin, 1982; Gold, 1983). City officials do not believe that savings due to efficiency will compen- sate for the cuts, that the private sector can provide the best services, nor that states will pursue redis- tributive policies responsive to the mismatch between problems and resources in cities (U.S. Congress, Joint Economic Committee, 1983:404; USACIR, 1984b:10-13; Marshall, 1984). tory attention from the federal government. KEY ISSUES This review of distributive politics serves to under- score the difficulty of redistributing resources to the poor even in periods of economic growth. Reagan's New Federalism has, in a period of economic stress, somewhat decreased this kind of redistribution while protecting programs that redistribute upwards, reflecting both Reagan's ideology and the realities of American politics in the l980s. Early in the Reagan administration supporters said that his domestic policies would quickly improve the

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155 economic position of citizens, including those with low incomes. Opponents said that Reagan would dismantle all the gains of the welfare state. The extreme predictions of both sides--overstated for understandable political reasons--have been proven wrong. What lessons can be learned from this review of dis- tributive politics? What issues emerge from the analy- sis? We suggest three: e The need for variegated policy objectives. Dis- tributive programs benefiting the middle class will con- tinue, but the middle class, along with other affluent groups, should be willing to bear a fairer share of the sacrifices. Perhaps distributive programs for these groups should be limited to socializing risk (e.g., major medical or minimal retirement incomes) rather than major subsidies (e.g., homeownership). Some pro-poor redistribution should, and probably will, continue. The importance of economic growth and expenditure limita- tions should be recognized and balanced against distrib- utive goals. o The need for variegated policy means and strat- egies. The national government should be a partner in efforts to promote economic performance, redistribution, and the socialization of major risks. Recognizing the deleterious effects of centralizing all issues, it should promote state and local capacity to undertake political, service delivery, and economic development activity. Similarly, it should explicitly provide for the use of private (individual, group, firm) energies in achieving public ob jectives. However, the federal gov- ernment has responsibilities that cannot be abdicated. If the pre-Reagan dominant theory went too far in seeing the national government as the solution, the Reagan the- ory has gone too far in seeing the federal government as the problem. It is neither the solution nor the prob- lem, but it is one partner in the enterprise. The need to straighten out the language used to discuss distributive impacts. More explicit language concerning the distributive effects of public policies, redistribution, and the value of diverse objectives and strategies would serve to educate the public and dimin- ish the political risk in discussing the beneficiaries of public policy. The old, narrow ways of talking about redistribution have just led to frustration and danger- ous dichotomies--redistribution versus growth, affluent versus nonaffluent, national versus subnational govern-

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156 meets. Distributive issues must be thought about in more comprehensive, sophisticated ways that increase awareness of the multiple direct and indirect benefits and costs associated with all government activities over time and that promote a willingness to explore various mixes of objectives and strategies. Addressing such issues will be difficult and the temptation to be narrowly partisan may be irresistible, but 20 years of experience should enable the country to see the strengths and limitations of policies in both the pre-Reagan and Reagan eras. Different theories of social policy have been pursued, however incompletely, and the impacts are there to be examined. Just as the pre-Reagan social pa licies were judged against their lofty goals, Reagan's initiatives must be subjected to similar analysis. The challenge is to learn from these experiences and adjust goals, strategies, and language so as to make better policy choices and translate them into practices that help or at least do not harm disad- vantaged persons and places. REFERENCE LI S T AND B IB LI OGRAPHY Anton, J., Cawley, J., and Kramer, K. 1980 Moving Money. Cambridge, Mass.: Gunn and Hain . Oelgeschlager, Auletta, K. 1983 The Underclass. New York: Random House. Baumer, D., and Van Horn, C. 1984 The Politics of Unemployment. D.C.: Congressional Quarterly. Washington, Bawden, L., and Levy, F. 1982 The economic well-being of families and indiv- iduals. Pp. 459-483 in J. Palmer and I. Sawhill, eds., The Reagan Experiment. Washing- ton, D.C.: Urban Institute Press. Bellavita, C. 1983 California's health policy reform and the poor. Public Affairs Report 24(5). Institute of Governmental Studies. Berkeley: University of California. Blum, H., Butler, L., Brown, E., Roemer, R., Couseneau, M., and Price, W. 1983 Medi-Cal Legislation Report. Institute of Gov- ernmenta' Studies. Berkeley: University of California.

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