The Streets Were Paved with Gold - Ken Auletta [80]
Did he favor federal aid formulas which took into account differences in the cost of living? “In some categories of assistance, yes,” he said softly. “Welfare would be one example.”
Q. The Northeast is in a sort of depression, with unemployment rates 2 percent above the national average and the growth rate lagging behind the nation’s. In terms of federal aid formulas, you’ve talked about having some national criteria, such as poverty or unemployment levels, to give extra aid to areas that need it most. Would you also favor special federal aid to depressed regions, such as the federal government gave to Appalachia during the sixties?
A. I would rather allot special federal aid to much narrower targets than the entire eleven or twelve or fifteen state regions of the country, as was the case with Appalachia. We also need, under existing federal programs regarding pollution control, housing, law enforcement, and so forth, to concentrate those allocations of funds where they are most needed, which would fall within the inner-city areas. In the past, when we passed a housing program, quite often it was the Congress’s intention that that money go to the people who needed it the most. But because of the intelligence and educational level and the political influence and good organizations, say, in the suburbs, they sapped away a great deal of the available federal assistance for housing and other programs, to the detriment of the inner cities, where the concerted grantsmanship was not so well developed. Those two forces would be what I would pursue: immediately to let existing aid go where it is needed the most; and, secondly, to have regional aid designed but focused on much narrower targets than the one you described.
Q. Could you define a narrower target?
A. A city, or it might even be a particular industry, or it might be a particular age group. But let me add one thing. My own economic advisers say that if we do this targeting of job opportunities, we can reach at least one-half percent lower unemployment without increasing the inflationary pressures by targeting. If you do something nationwide, you get high inflation pressures. If you target it, the inflation pressures are much less for a given level of unemployment.
New York also suffers the accident of geography, something Carter and the federal government have chosen to ignore. The Northeast region is forced to import roughly 85 percent of its oil from foreign sources; the rest of the country relies on only 65 percent foreign oil. Thus the 1973 OPEC oil embargo was much more devastating to New York and the Northeast. According to Neal R. Peirce, a contributing editor of the National Journal and now a syndicated columnist who covers government, not politics, for the Washington Post, in 1972 the Northeast states expended $7 billion on imported fuel; by 1975, that sum tripled to $20.7 billion. This drove up New York’s costs and reduced its ability to compete economically. In 1975, for instance, the average New York resident paid $37.33 for 500 kilowatt-hours of electricity; the Boston resident, $24.86; the Chicago resident, $20.60; the Seattle resident, $6.97; the Houston resident, $15.02. Admittedly, New York’s steep utility taxes drove up these costs, but its fuel costs are still higher. As are its natural gas costs. Because of the accident of geography, the Sunbelt is blessed with ample natural gas resources. A Southern industry can rely on less expensive natural gas for 50 to 70 percent of its energy supply; an industry in the Northeast uses on the average about 20 percent natural gas—and it’s twice as expensive here.
Most federal grant programs benefit New York, but some do not. Section 5 of the Urban Mass Transportation Act, for example. Under this act, transit aid is pegged to population rather than riders. And as Senator Moynihan and others have complained, by ignoring transit ridership and transit vehicle miles covered, New York City—with over 30 percent of the nation’s mass transit riders—receives just over 10 percent