Reform of the 1994 Crime Bill

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Mr. Chairman, thank you for the opportunity to discuss reform ofthe $30 billion 1994 crime bill. Throughout 1994 the Cato Institutewas one of the major critics of this law which eventually wasenacted by Congress last August. We were critical of virtuallyevery provision of the bill: the pork-barrel nature of the $10billion of "prevention" programs in the crime bill, the gun controlprovisions, 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 thefraudulent nature of the crime bill, and what members of Congressregrettably discovered too late, is that the public fullyunderstands that more spending on social welfare programs and moregun control are federal strategies doomed to failure. They will notget muggers, drug king pins, and sexual predators off of our streetcorners.

For American taxpayers, to know the crime bill, is to hateit.

I will focus my remarks on the spending provisions of the bill andthe reform efforts before the House and Senate. I support the GOPContract with America provisions to fix the crime bill and rid itof some of its most insidious and costliest features. But I wouldask members of Congress the same question that large numbers ofAmericans are asking: what is the rationale for any federal crimebill at all? It is understandable that Congress wants to deal withthe issue of crime--which is now rated by the public as the "numberone problem in America." Congress feels compelled to "dosomething." But as every member of this Committee knows well, lawenforcement has always been, and I would argue should continue tobe, the exclusive domain of state and local governments. If thereis any remaining respect for the principles of federalism left inthis town, then it should be understood why the best service thatCongress could perform in the area of crime prevention would berepeal the entire crime bill--every word in each of the 1,100 pagesof it.

One of the most remarkable moments during the Senate debate overthe crime bill occurred when Senator Russell Feingold, theWisconsin Democrat, eloquently explained that he was voting againstthe bill because it was a violation of the federalist principlesupon which our Constitution is founded. We at Cato applaud thatview and wish that there were 99 other Senators who still believedin the enumerated powers provision of the Constitution.

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

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

The 1994 crime bill is irrelevant to the growing scourge of crimein America. From day one, the chief objective for this legislationwas never so much to fight crime, as it was to serve as a back doormethod of channeling billions of federal tax dollars to states, bigcity mayors, and special interest groups. The crime bill wasPresident Clinton's failed 1993 fiscal stimulus bill in drag. Onehas to go back at least twenty years and five presidencies, to thedays when Richard Nixon invented revenue sharing and startedpassing out free money to states and cities, to find a moreexpensive federal slush fund. Why wouldn't big city Mayors and manygovernors thunderously applaud this free money?

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

In the final version of the bill, roughly $8 - $10 billion of newsocial 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 thisact is for education, self esteem programs, and social services.This is federal revenue sharing--one of the few major federalprograms we've managed to rid ourselves of in the last fifteenyears--resurrected. In truth, it is worse than federal revenuesharing, because part of the formula for distributing the cash isbased on local tax burdens; the more oppressive the local taxregime, the more money the city gets from Uncle Sam. (This rewardscities for high taxes.)

* Six new federal job training programs. America already has over60 job training programs with an average cost of $20,000 perclient, 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 purposetangentially related to crime, including the building of swimmingpools. Only in Washington is $100 million considered "anounce."

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

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

* $200 million for assorted inner city youth activityprograms.

* $6 million for urban parks and recreation.

* $270 million for schools. The money is to be used "to improve theacademic and social development of youths by instituting acollaborative structure that trains and coordinates efforts ofsocial workers, teachers, and principles." Real per capitalspending on schools is twice as high as it was in 1970 and threetimes 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 (fromareas with high percentage of kids in public housing and a highpercentage of HIV positives in the population) and each league musthave eight teams. I believe that midnight basketball is a promisingprivate sector inner-city initiative--a recipient of George Bush's"1,000 points of light" award. I fear that a successful privatelyfunded program will now be forever contaminated by the lure ofgovernment money.

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

2) Social welfare spending is a proven failure at preventingcrime.

No matter how many times nor how aggressively congressionalsupporters of the crime bill tried to justify this avalanche of newsocial welfare spending, their efforts have proved futile: the vastmajority of Americans living outside of Washington, D.C. simplydon't believe that dance classes, arts and crafts programs, moreeducation spending, and olympic swimming-sized pools are going todo much to prevent crime.

And they are right. The crime bill is anything but a bold newfederal direction in the war against crime. According to the CensusBureau, in 1992 government at all levels devoted $1.01 trillion tofight the crime problem via the "prevention" route. Table 1 showsthat as federal domestic spending has soared, so has inner citylawlessness. Since 1965 the federal government has spent anestimated $2.5 trillion on the War on Poverty and urban aid. Thisis the equivalent of 20 Marshall Plans in real dollars. With $2.5trillion Congress could purchase all of the farmland in the UnitedStates plus all of the assets of the Fortune 100 companies.

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

I am not a criminologist and I don't pretend to know whatstrategies are most effective in preventing crime. But as a budgetanalyst, I do know what doesn't prevent crime: more federal socialprograms.

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

A central premise of the crime bill is that cities are woefullyunderfunded in the war against crime and need more money fromWashington. The premise is unarguably false. An expansion in acity's budget does not lead to less crime. Table 2 compares thelevel of per capita expenditures in the five cities with thehighest violent crime rate and those with the five lowest crimerates out of a sample of the 75 largest cities in the UnitedStates. The five cities with the highest crime rates--Atlanta,Miami, Las Vegas, Newark, and Tampa--spend about $1,100 perresident. 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 percentmore per person than do the least dangerous cities. Clearly,expanding city budgets is not a very promising way to fightcrime.

Contrary to popular mythology, cities' budgets have not beenshrinking, they have been rapidly expanding for decades. Figure 1shows that real per capita city spending escalated from $435 in1950 to $571 in 1965 to $1,004 in 1990. Yet violent crime ratesdoubled over this period of bulging budgets.

New York City is a case in point. No one was a louder cheerleaderfor the crime bill than New York Mayor Rudolph Giuliani. But NewYork City's budget in real dollars has tripled from $13 billion in1965 to $37 billion in 1990. And yet the city has lost one-halfmillion residents since then. New York already spends 120 percentmore per resident than the average city. New York's main problemhas been that the very high taxes that pay for the cities' bloatedbudget are chasing families and businesses out of the city. Thecrime bill, by rewarding cities like New York for raising taxesfurther, will do positive harm to urban America.

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

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

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

Last Fall, the Cato Institute compared the state by state locationof the earmarked spending in the crime bill, versus the taxpayments that are made by residents of each state to finance thatspending. We made an intriguing discovery: the biggest losers inthe crime bill are the very states reporting the worst crimeproblems. The ten biggest fiscal losers from the crime billwere:

     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 includedMaryland, Michigan, and Wisconsin.     Why does the federal government need to be in the business ofspending $22 billion to build prisons for the states and pay forcops in cities?  The states spent upwards of $600 billion in1993.  Since 1980 most states have seen their budgets double andeven triple in size.  Many states have nearly doubled prisoncapacity. If they need more cops and more prisons, they clearlyhave the budgets to pay for them.     The federal government does not have extra money togenerously share with state and local governments for crimeprevention.  The federal government is broke.  It shouldvigorously pursue every conceivable avenue for saving money, notspending it.  While the federal government ran a $200 billiondeficit last year, states and localities ran net surpluses.  Theidea of the feds giving money to states and cities for crimeprevention is as nonsensical as asking debt-ridden Mexico to makeeconomic-development loans to Japan.       For all these reasons, the nearly $30 billion of spending inthe crime bill should be repealed.  But if this cannot beaccomplished then the following steps should be taken:     1) Eliminate all prevention programs.  Don't block grantsocial spending, zero it out.       2) If prison and police spending is block granted, fundingshould be cut in half, and no strings should be attached.       If America is going to win the war against violent crime, itis going to be won in the trenches on the neighborhood level,where citizens band together with police and prosecutors toliterally take back their streets, block by block.  The good newsis, this is already happening all over the nation throughinitiatives such as neighborhood watch programs, communitypolicing, 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 taxpayerspoorer, 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               $2101970                399               $2901975                460               $4701980                595               $5701985                521               $6051990                582               $6801992                566               $720Source: 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 SpendingFive Highest Crime CitiesAtlanta               192                $1,410Miami                 190                   867Las Vegas             170                   806Newark                162                 1,242 Tampa                 159                 1,214 -----------------------------------------------------Average               175                $1,108-----------------------------------------------------Five Lowest Crime CitiesIndianapolis           45                 $1,019San Jose               49                   $854Louisville             64                   $849 Omaha                  71                   $635Anaheim                72                  1,136 -------------------------------------------------------Average                60                   $899--------------------------------------------------------Notes: Crime Data: Refers to number of offenses known to thepolice per 1,000 residents; Per Capita City Spending: Excludesspending on education, health, and welfare.Source: U.S. Department of Justice and U.S. Census Bureau,1990.

Stephen Moore

Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives