Budget Director David A. Stockman took President Reagan's New Federalism to Congress for the first time yesterday and met a chilly reception, with hostile Democrats and nervous Republicans both worrying that some states would lose money on the deal.
Stockman failed to dispel fears that particularly some industrial states with high welfare benefits eventually would come up short under the major shifting of social programs prescribed in the Reagan plan.
Stockman, who testified before the Senate Governmental Affairs Committee, was making his own first formal appearance in Congress since the furor last fall over his remarks in an Atlantic Monthly interview and he took some lumps about that episode during the questioning.
Sen. John Glenn (D-Ohio) cited the Atlantic article, by Washington Post assistant managing editor William Greider, which said that an Office of Management and Budget computer had been rigged to present a more favorable view of the impact of Reagan's first budget. "We found out in the article that we were willfully misled," Glenn said.
Stockman said Greider had misunderstood that part of the interviews with him. "There is no central computer at OMB that I could tinker with," he said. "It would take a bureaucratic Houdini to do that. The notion that anyone was misled or deceived or that anything was rigged is utterly without foundation."
Though Stockman's New Federalism testimony came only a week after Reagan laid out his plan, it appeared the administration is in no great hurry to send a specific proposal for the complex reordering of federal-state responsiblities to Capitol Hill. Administration sources said the full legislative program probably will be proposed to Congress in April or May.
Judging from yesterday's reaction in a committee not notably hostile to the White House, it will run into substantial opposition and there is widespread doubt it could pass this year.
Democrats were uniformly critical. Sen. Thomas F. Eagleton (D-Mo.) called it a "radical change, namely the dismantling of the federal government," and a program which assumes that "everything the federal government has done is evil, incompetent and self-serving."
Sen. Henry M. Jackson (D-Wash.) said that when he mentions New Federalism in his state where unemployment runs to 11 percent the response often is, "How do you eat it?"
Their main charge--echoed in milder terms by skittish Republicans--was that the shift in programs will cost some states money and that poor people eventually could be left worse off if states refused to maintain federal benefit levels for welfare and food stamps.
The key element calls for the federal government to assume full costs of the expanding Medicaid program while the states take over food stamps and Aid to Families with Dependent Children (AFDC).
In addition the administration would gradually transfer some 40 other programs to the states. These would be supported during a transition period by a special trust fund financed by excise taxes and a portion of the windfall profits tax on oil; then it would be up to the states to levy the necessary taxes or drop the programs.
The temporary trust fund also would be used while it lasted to offset any losses states might suffer in the Medicaid-food stamps-AFDC swap. Stockman called the fund "the great equalizer, the balancer in the system."
But under questioning, he acknowledged that the equalization could start diminishing with the trust fund after the first four years--1984 to 1987--and would be nonexistent after eight years. There could be no assurances after that that there would be "no winners or losers," he said.
The committee chairman, Rep. William V. Roth Jr. (R-Del.) called the program "imaginative" but questioned Stockman on what might happen to a state such as his when the trust fund, with its revenues from oil profits, expires. "We don't have any oil in our state," Roth said, "so what would we tax? Chickens?"
Stockman's main defense was a claim that all states could benefit from the swap because Medicaid --the fastest growing program involved--would be taken over completely by the federal government. In the long run, states would come out ahead simply by being relieved of spiralling Medicaid costs he said.
Meanwhile, an analysis by the Congressional Budget Office offered support for the Democrats' conten tion that some states would suffer in the swap. The Jan. 29 report prepared for the House Ways and Means committee said that, based on 1981 figures, the states would lost about $4.4 billion by giving up Medicaid and assuming AFDC and food stamps.