President Reagan's plan for turning federal programs back to the states is about to drop into public view again after a long metamorphosis that has left the "New Federalism" with a substantially different look.
The White House is still tinkering with details, but Reagan is expected to make a pitch for the latest version in a speech next week in Baltimore, and plans soon thereafter to send Congress a detailed outline of his proposals for swapping health and welfare programs with the states.
To make the federalism idea more appealing to the states, the White House has agreed to substantial revisions that will keep food stamps a federal responsibility but turn over welfare costs to the states.
Richard S. Williamson, assistant to the president for intergovernmental affairs, said yesterday that Reagan is determined not to give up on his "New Federalism" initiative, even though others have considered it a hopeless cause. "There are certain things Ronald Reagan feels very strongly about . . . . He is not going to let go of this," Williamson said.
The federalism proposal has been mired for several months in negotiations between the White House and the nation's governors, state legislators and county officials. Those talks led to a compromise that Williamson said is nearly finished.
Congress is not expected to take any action on federalism this year, however. The proposal has already generated some opposition in the Democratic-controlled House, where it is seen as a device for loading new responsibilities on the states and cities. "We're not totally unrealistic about it," Williamson said. "What we hope to do is get good hearings and deliberations."
Even so, Williamson could not say when Reagan might actually send a bill encompassing his proposals to Capitol Hill. He acknowledged the administration will have difficulty getting the organizations that represent governors, state legislators and county officials to formally endorse the plan.
As it now stands, the president is suggesting an eight-year phased swap of $38.7 billion in programs with the states. But the version Reagan will outline to the annual convention of the National Association of Counties in Baltimore next week is significantly different from the original proposal he made in his State of the Union address last January.
In the original program, Reagan envisioned the federal government taking over responsibility for Medicaid while the states assumed the burden of food stamps and welfare.
But the president has retreated on food stamps, and agreed to keep them a federal responsibility. The revised plan would have the federal government assume $18.3 billion in additional Medicaid costs from the states. The states would assume $8.1 billion in the cost of federal aid to families with dependent children.
Under the compromise, the federal government would also spin off to the states more than 35 other programs with annual cost of $30.6 billion, and provide a special $19 billion fund to help the states cope with these new responsibilities.
While Reagan originally said the fund would be supported by money from the windfall profits tax, that idea was scrapped in favor of using excise taxes and general revenues from the Treasury.
Williamson said one of the final issues still to be worked out is the question of whether welfare and food stamp benefits should be calculated together as they are now. This practice means that in states where welfare benefits are low, food stamps take up the slack.
The governors say this offers no incentive to the states to increase welfare benefits, since the federally-financed food stamps act as a cushion. Williamson said "unhitching" welfare and food stamp benefits will result in a national level for food stamps that would add $3.8 billion to federal costs.