No More Credit Cards, but a Big Bill to Pay

A Democratic governor discusses `Contract' items such as a balanced-budget amendment, unfunded mandates, and welfare reform

GOV. Howard Dean of Vermont, a Democrat, didn't know he would soon be in the minority when he became chairman last summer of the National Governors Association. The association now has 30 Republican members, 19 Democrats, and one independent. Nonetheless, Governor Dean has taken an active role in the national debate over such ``Contract With America'' planks as welfare reform. Interviewed recently by Monitor writer Keith Henderson, the governor shared views on that and other state and federal concerns.

Vermont has had a version of welfare reform, which includes mandatory work provisions, in place since last June. What does its experience have to say to the rest of the nation?

So far what we're saying is time-limited benefits and required work are good things. But don't expect to save money. You need child care, transportation, and you probably have to create jobs. You can't force people to work if there are no jobs.

What about the idea of federal block grants to cover state welfare costs? This is favored by some governors and by some Republicans in Congress, but I understand you have objections.

Interestingly enough, you get the Democrats allied with the conservative Republicans on the principle [involved here]. The conservative Republicans want to mandate time limits and work requirements for everybody. Some [other] Republicans just want to turn the whole thing over to the states. Democrats like the idea of work and time limits, but they also want to make sure there's what I call a minimum standard of decency. No state is able to totally neglect those who are unable to provide for themselves.

Block granting in general is a good idea, but pure block granting without some national standard I think is a mistake.

You said earlier, don't expect savings. So ``workfare'' can't be equated with lower welfare budgets?

Right. In some cases, in times when the economies are not good, you may have to create jobs - in libraries, in schools, in nursing homes - for these folks to be able to work.

Who develops these jobs, local governments or the state?

Generally, the state does it, mostly through nonprofits. The unions have sign-off power. You can't create jobs and displace unionized workers. They can block us from creating certain jobs, which I think is reasonable.

How relevant are states' balanced-budget requirements to the current debate over a national balanced-budget amendment?

The problem with it in the country as a whole is that it's like trying to pay your credit card bill all at once. You need a plan to do it.

I think governors generally like a balanced-budget amendment, and many of them would like to see protection against federal mandates in the amendment itself. And, secondly, I think most governors dislike - although some are reluctant to say so - the notion that the federal government is going to leave us with all the hard decisions and is going to take Social Security and defense off the table, then force us to make very deep cuts and raise taxes.

That's really not acceptable. My view is that ... first of all, we have to put every federal program on the table, except interest on the national debt.

If you don't do that, then passing a balanced-budget amendment in Congress is just a hollow political game because your [state] legislatures will never adopt it, because they'll see 30 percent cuts coming down and big tax increases that they'll have to vote for.

You have been pointing out some figures recently about how much a balanced-budget amendment could cost the states.

Sure. The study by the Treasury Department. The big three states will lose $11 billion in New York, $10 billion in California, and $5 billion in Texas. Those are pretty big numbers.... Furthermore, the federal so-called middle-class tax cut is actually a tax increase. What they're promising to do is cut taxes, most of which - 50 percent of the cut taxes - would go to the taxpayers that earn $100,000 a year or more. But when we have to raise taxes at the state level to pay for this tax cut and ``balanced budget,'' those taxes are going to come out of people who make $100,000 a year or less because most of those taxes will come in sales taxes and gas taxes.

The idea of renewed federalism has been bouncing around for a number of years, most prominently during Ronald Reagan's term in office.

Yeah, but Reagan's [federalism] was a farce. All he did was cut taxes and run up a gigantic [debt] - you know, use a credit card. The federal deficit quadrupled under Reagan and Bush.

Do you see the same danger lurking again, with the Republicans in power in Congress?

No, what I think I see now is that they're at least willing to put away the credit card. The problem is, they're going to present us the bill and we're going to have to pay. It'll be tough, and I think they ought to be paying some of the bills.... Newt Gingrich was in Congress when Reagan was running up his deficits, and I think they ought to be making some of the hard decisions as well - and those happen to be in Social Security, Medicare.

I know the Republicans would like to be increasing defense spending, but, guess what, you can't do everything you want to do now.

So you have some hope, at least, that Congress will be able to face those hard decisions this year?

Oh, I think they will. There's going to be a lot of talk ... and they're all pooh-poohing the Treasury study, but the fact of the matter is there have got to be a lot of big-state governors, and most of them are Republicans, looking at those numbers.

And unfunded mandates. People understand the concept of federal money accompanying federal mandates, but is it really that simple at a time of pinched federal spending?

A compromise has already been struck, and I think it's a reasonable one: no unfunded mandates moving forward from this time on. So we're not going to have to go backwards and, say, redo the Clean Air Act. But I think it's reasonable.

What's your reading of what the public currently wants from government?

I think what the public wants is accountability and truthfulness. I think what the public is probably sick of is a government that says one thing and does something else. I don't think the public, necessarily, wants a lot less service and a lot less government - maybe some, but not a lot.

What's an example of government saying one thing and doing the other?

Well, for example, Congress exempting itself from its own laws. Or politicians talking the need for an open, fair, accountable system, and then having campaign finance laws that aren't exactly open, fair, and accountable.

As a leader in the governors' association, and as a physician, you've been active in the discussion of health-care reform. But I understand you've had to scale back your health-care reform plans here in Vermont.

The reason for that is we couldn't get a bill through the legislature last year, and as a result nothing happened at all. So what I'm going to try to do this year is cover about a quarter of the uninsured population [in Vermont].

That sounds a lot like what happened in Washington. What do you hope for at the federal level on health care?

I hope they'll do some of the things that we did [here] in '92. I hope they'll insure children. I hope they'll have insurance reform and malpractice reform.

At this point, then, you have no objection to seeing health-care reform come in piece by piece?

Nope. I'm a pragmatist. I'll take it anyway I can get it.

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