Mr. Chairman, thank you for the opportunity to discuss reform of the $30 billion 1994 crime bill. Throughout 1994 the Cato Institute was one of the major critics of this law which eventually was enacted by Congress last August. We were critical of virtually every provision of the bill: the pork-barrel nature of the $10 billion of "prevention" programs in the crime bill, the gun control provisions, which we regard as an affront to the second amendment, and the efforts to "federalize crime."

What we discovered in our campaign to educate America about the fraudulent nature of the crime bill, and what members of Congress regrettably discovered too late, is that the public fully understands that more spending on social welfare programs and more gun control are federal strategies doomed to failure. They will not get muggers, drug king pins, and sexual predators off of our street corners.

For American taxpayers, to know the crime bill, is to hate it.

I will focus my remarks on the spending provisions of the bill and the reform efforts before the House and Senate. I support the GOP Contract with America provisions to fix the crime bill and rid it of some of its most insidious and costliest features. But I would ask members of Congress the same question that large numbers of Americans are asking: what is the rationale for any federal crime bill at all? It is understandable that Congress wants to deal with the issue of crime--which is now rated by the public as the "number one problem in America." Congress feels compelled to "do something." But as every member of this Committee knows well, law enforcement has always been, and I would argue should continue to be, the exclusive domain of state and local governments. If there is any remaining respect for the principles of federalism left in this town, then it should be understood why the best service that Congress could perform in the area of crime prevention would be repeal the entire crime bill--every word in each of the 1,100 pages of it.

One of the most remarkable moments during the Senate debate over the crime bill occurred when Senator Russell Feingold, the Wisconsin Democrat, eloquently explained that he was voting against the bill because it was a violation of the federalist principles upon which our Constitution is founded. We at Cato applaud that view and wish that there were 99 other Senators who still believed in the enumerated powers provision of the Constitution.

I will summarize in five points the case against the spending in the crime bill:

1) The crime bill is packed with record amounts of pork barrel projects and social welfare spending.

The 1994 crime bill is irrelevant to the growing scourge of crime in America. From day one, the chief objective for this legislation was never so much to fight crime, as it was to serve as a back door method of channeling billions of federal tax dollars to states, big city mayors, and special interest groups. The crime bill was President Clinton's failed 1993 fiscal stimulus bill in drag. One has to go back at least twenty years and five presidencies, to the days when Richard Nixon invented revenue sharing and started passing out free money to states and cities, to find a more expensive federal slush fund. Why wouldn't big city Mayors and many governors thunderously applaud this free money?

Yes, Virginia, California, New York, and Ohio, there is a Santa Claus after all.

In the final version of the bill, roughly $8 - $10 billion of new social welfare spending has been earmarked as crime "prevention." Here is a brief list of what Congress thinks will "prevent" crime:

* $1.8 billion for the local partnership act. The money under this act is for education, self esteem programs, and social services. This is federal revenue sharing--one of the few major federal programs we've managed to rid ourselves of in the last fifteen years--resurrected. In truth, it is worse than federal revenue sharing, because part of the formula for distributing the cash is based on local tax burdens; the more oppressive the local tax regime, the more money the city gets from Uncle Sam. (This rewards cities for high taxes.)

* Six new federal job training programs. America already has over 60 job training programs with an average cost of $20,000 per client, or as much as it costs to send a student to Harvard.

* $100 million for John Conyer's "ounce of prevention program." This is free money for mayors to spend on virtually any purpose tangentially related to crime, including the building of swimming pools. Only in Washington is $100 million considered "an ounce."

* $630 million for "child-centered activities." This is money for arts and crafts, dance programs, recreational activities, nutrition training, and so forth.

* $10 million for public housing. HUD already spends some $10 billion a year on low-income housing assistance.

* $200 million for assorted inner city youth activity programs.

* $6 million for urban parks and recreation.

* $270 million for schools. The money is to be used "to improve the academic and social development of youths by instituting a collaborative structure that trains and coordinates efforts of social workers, teachers, and principles." Real per capital spending on schools is twice as high as it was in 1970 and three times higher than in 1950--when crime was much lower.

* $50 million for youth development for such activities as "providing youth with life skills."

* $40 million for the much-publicized midnight basketball leagues. For the basketball league, each team must have ten players (from areas with high percentage of kids in public housing and a high percentage of HIV positives in the population) and each league must have eight teams. I believe that midnight basketball is a promising private sector inner-city initiative--a recipient of George Bush's "1,000 points of light" award. I fear that a successful privately funded program will now be forever contaminated by the lure of government money.

* $450 million for drug treatment programs in prisons. Last summer, then congressman Tim Penny, the Minnesota Democrat, lamented: "It's amazing the ideas that found their way into the crime bill." We can only be thankful that Bill Clinton didn't have the foresight to put his health care reform in the crime bill, or no doubt that too would sail through Congress this week.

2) Social welfare spending is a proven failure at preventing crime.

No matter how many times nor how aggressively congressional supporters of the crime bill tried to justify this avalanche of new social welfare spending, their efforts have proved futile: the vast majority of Americans living outside of Washington, D.C. simply don't believe that dance classes, arts and crafts programs, more education spending, and olympic swimming-sized pools are going to do much to prevent crime.

And they are right. The crime bill is anything but a bold new federal direction in the war against crime. According to the Census Bureau, in 1992 government at all levels devoted $1.01 trillion to fight the crime problem via the "prevention" route. Table 1 shows that as federal domestic spending has soared, so has inner city lawlessness. Since 1965 the federal government has spent an estimated $2.5 trillion on the War on Poverty and urban aid. This is the equivalent of 20 Marshall Plans in real dollars. With $2.5 trillion Congress could purchase all of the farmland in the United States plus all of the assets of the Fortune 100 companies.

If social welfare spending deterred crime, American cities would have the safest streets in the world.

I am not a criminologist and I don't pretend to know what strategies are most effective in preventing crime. But as a budget analyst, I do know what doesn't prevent crime: more federal social programs.

3) Cities with high crime rates already far out-spend the rest of the nation.

A central premise of the crime bill is that cities are woefully underfunded in the war against crime and need more money from Washington. The premise is unarguably false. An expansion in a city's budget does not lead to less crime. Table 2 compares the level of per capita expenditures in the five cities with the highest violent crime rate and those with the five lowest crime rates out of a sample of the 75 largest cities in the United States. The five cities with the highest crime rates--Atlanta, Miami, Las Vegas, Newark, and Tampa--spend about $1,100 per resident. The five cities with the lowest crime rates-- Indianapolis, San Jose, Louisville, Omaha, and Anaheim--spend only $900 per resident.

In other words, the most dangerous cities already spend 22 percent more per person than do the least dangerous cities. Clearly, expanding city budgets is not a very promising way to fight crime.

Contrary to popular mythology, cities' budgets have not been shrinking, they have been rapidly expanding for decades. Figure 1 shows that real per capita city spending escalated from $435 in 1950 to $571 in 1965 to $1,004 in 1990. Yet violent crime rates doubled over this period of bulging budgets.

New York City is a case in point. No one was a louder cheerleader for the crime bill than New York Mayor Rudolph Giuliani. But New York City's budget in real dollars has tripled from $13 billion in 1965 to $37 billion in 1990. And yet the city has lost one-half million residents since then. New York already spends 120 percent more per resident than the average city. New York's main problem has been that the very high taxes that pay for the cities' bloated budget are chasing families and businesses out of the city. The crime bill, by rewarding cities like New York for raising taxes further, will do positive harm to urban America.

For more details on the true state of city finances are covered in detail in a Cato study by Dean Stansel and myself entitled: "The Myth of America's Underfunded Cities."

4) There is no justification for the federal government building prisons for states or paying for city police.

A case might be made that states need more prison cells and cities need more cops; but no constitutional or fiscal case can be made that the federal government needs to pay for them. After all, the money that Congress seems so eager to dole out to the residents of states and cities on their behalf comes from the taxpayers of states and cities in the first place. As New York Sen. Daniel Patrick Moynihan has argued correctly on many occasions, federal aid is a zero-sum game: some states win, some states lose. If every state could be a winner, why not pass a $300-billion crime bill?

Last Fall, the Cato Institute compared the state by state location of the earmarked spending in the crime bill, versus the tax payments that are made by residents of each state to finance that spending. We made an intriguing discovery: the biggest losers in the crime bill are the very states reporting the worst crime problems. The ten biggest fiscal losers from the crime bill were:

     1. New Jersey     $280 million

     2. New York       $203 million 

     3. Pennsylvania   $180 million 

     4. California     $151 million 

     5. Illinois       $122 million 

     6. Connecticut    $108 million 

     7. Massachusetts  $103 million 

     8. Virginia       $90 million 

     9. Ohio           $73 million 

    10. Washington     $70 million





     Other big fiscal losers from the crime bill included

Maryland, Michigan, and Wisconsin. 



    Why does the federal government need to be in the business of

spending $22 billion to build prisons for the states and pay for

cops in cities?  The states spent upwards of $600 billion in

1993.  Since 1980 most states have seen their budgets double and

even triple in size.  Many states have nearly doubled prison

capacity. If they need more cops and more prisons, they clearly

have the budgets to pay for them.



     The federal government does not have extra money to

generously share with state and local governments for crime

prevention.  The federal government is broke.  It should

vigorously pursue every conceivable avenue for saving money, not

spending it.  While the federal government ran a $200 billion

deficit last year, states and localities ran net surpluses.  The

idea of the feds giving money to states and cities for crime

prevention is as nonsensical as asking debt-ridden Mexico to make

economic-development loans to Japan.  



     For all these reasons, the nearly $30 billion of spending in

the crime bill should be repealed.  But if this cannot be

accomplished then the following steps should be taken:





     1) Eliminate all prevention programs.  Don't block grant

social spending, zero it out.  





     2) If prison and police spending is block granted, funding

should be cut in half, and no strings should be attached.  





     If America is going to win the war against violent crime, it

is going to be won in the trenches on the neighborhood level,

where citizens band together with police and prosecutors to

literally take back their streets, block by block.  The good news

is, this is already happening all over the nation through

initiatives such as neighborhood watch programs, community

policing, and the election of toughminded prosecutors. 

Washington is at best a distraction from these efforts.  





    The net effect of the 1994 crime bill is to make taxpayers

poorer, not safer.  









                            Table 1



                   SOCIAL SPENDING UP, CRIME UP



                 Crime Rate     Domestic Federal Spending

                (Per 10,000)      (Billions 1987 Dollars)



1960                189               $150 

1965                250               $210

1970                399               $290

1975                460               $470

1980                595               $570

1985                521               $605

1990                582               $680

1992                566               $720



Source: William Bennett, Index of Leading Cultural Indicators,

1994; and Budget of the United States Government, Fiscal 1995.











                             Table 2



                  BIG CITY BUDGETS, HIGH CRIME 



  

                   Crime Rate     Per Capita Spending



Five Highest Crime Cities



Atlanta               192                $1,410

Miami                 190                   867

Las Vegas             170                   806

Newark                162                 1,242 

Tampa                 159                 1,214 

-----------------------------------------------------

Average               175                $1,108

-----------------------------------------------------



Five Lowest Crime Cities



Indianapolis           45                 $1,019

San Jose               49                   $854

Louisville             64                   $849 

Omaha                  71                   $635

Anaheim                72                  1,136 

-------------------------------------------------------

Average                60                   $899

--------------------------------------------------------



Notes: Crime Data: Refers to number of offenses known to the

police per 1,000 residents; Per Capita City Spending: Excludes

spending on education, health, and welfare.



Source: U.S. Department of Justice and U.S. Census Bureau,

1990.