AN EFFORT is under way to save a program that Richard Nixon introduced in 1971 to reduce the size and scope of federal government, and that Ronald Reagan now wants to kill for about the same reason. The program is general revenue sharing, now reduced to a little over $4 billion a year in lightly restricted federal aid spread across 39,000 units of local government. A House Government Operations subcommittee voted last month to extend the program through fiscal 1989 rather than let it expire this fall as it will otherwise do. The future of the resuscitative effort is unclear; Congress seemed to have decided last year to let revenue sharing die. We think that was the right decision.
The arguments for the program begin, as always, with need. The distribution formula reflects not just population but per-capita income and "tax effort." The lower your income and higher your local tax burden, the greater your aid. Among other things, this helps many cities, whose federal aid has already been much cut in the Reagan years, and whose needs are, as ever, enormous. Federal grants to state and local government were a seventh of the federal budget in 1981 and are now a tenth; they made up a fourth of state and local government revenues then and have fallen to a fifth. The cities' own populations are needy; in many costly ways each city is called upon to serve its suburbs as well. The mayors who are pushing for continuation of revenue sharing say the cities appear to be in good financial health only because they must. Their budgets have to be balanced by law, and the balance is often achieved at invisible cost, through cuts in services.
Those who would save the program also observe that it is an equalizing device in that it transfers more of the burden of government to the federal income tax, which is progressive, while state and local tax structures often are not. Conservatives like the program for the additional reason that the money has so few federal strings attached. That was what attracted Mr. Nixon. General revenue sharing and the block grants he proposed at the same time as part of his New American Revolution were alternatives to the narrower-purpose categorical grants of the Johnson era. State and local governments were to be freed.
The arguments against the program are a lot simpler. The first is that grants go to places that don't need them as well as to those that do. Some members of Congress would meet this objection by targeting grants, in effect inking wealthier jurisdictions out of the program. The other objection is that there is no longer enough federal revenue to share. The tax, defense and other decisions the president and Congress have made the last five years have put great pressure on domestic programs. There are other such programs -- those that directly support the poor, particularly -- that are a lot more important to save and strengthen than revenue sharing.
The president said in signing a bill in 1983 that "the federal government never spent money more wisely than by devoting it to general revenue sharing." His new budget says "the federal government can no longer afford general revenue sharing." Wrong the first time, right the second.