Proponents of block grants believe that funds can be administered more effectively at the state and local level, and that block grants allow for greater flexibility and innovation.
In fact, these were exactly the same arguments that were made in 1974 when President Gerald Ford signed the Housing and Community Development Act. That legislation aimed to provide decent housing, a suitable living environment and expanded economic opportunity for low and moderate income people.
To achieve those goals, the law consolidated eight federal programs into something called Community Development Block Grants or CDBG’s, and passed on the responsibility to cities and states to decide how best to revitalize neighborhoods and provide affordable housing.
But from the beginning, unanticipated problems have plagued the CDBG initiative, beginning with the fact, that cities and states have sometimes used the funds for projects that didn’t benefit low income families and low income communities. For example, in 2008 Community Development Block Grant money was spent on a marina in Alexandria, Louisiana, a canopy walk at the Atlanta Botanical Gardens and expanding the Calvin Coolidge State historic site in our own state of Vermont. Worthwhile projects, perhaps, but having little, if anything, to do with affordable housing and economic opportunity for low and moderate income people.
A much bigger problem with the CDBG block grant program is that the funding has been inadequate and easily cut. According to the Urban Institute in inflation adjusted dollars, funding for Community Development Block Grants has declined between 1979 and 2016 by 80%. And President Trump has proposed cutting CDBG funding to zero next year.
It seems disingenuous for Senators to propose funding healthcare with block grants while simultaneously reducing or eliminating the block grant program for housing. As the Urban Institute points out, when there’s pressure to trim the Federal budget, there’s less political risk in cutting block grants to the states than to cut programs that directly benefit individuals who would lose their homes or their healthcare.
It would be up to Congress to decide annually how large this healthcare block grant should be and that strikes me as a very bad idea, given our experience with Community Development Block Grants.