Box 22, Folder 2, Document 21

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Summary Statement

It is recommended that the concept and criteria underlying
Federal urban policy move from program to flow: and that the Task
Force use its time and equity to mark this historical divide and te
begin detailing what it means and by what policies and procedures

it might be expressed.


The last generation of Federal activity in urban affairs has
developed along two lines that lead to growing frustration in a
pluralistic society of increasing mass and private initiative:

(1) the notion that for every urban problem there should be a specific
program which is to be executed principally through a public bureaucracy;:
(2) the definition of urban problems and policies in static (mainly
geographic) terms.

This urban world is two universes apart from the kind of suaipats
on which the economic policies of the U.S. during this same period have
been conceived and enacted. The latter have derived from dynamic
analysis expressed in terms of national aggregates. This economic

model has had at least some semblance of internal consistency, and levers

have been designed which make it possible to effect changes in
national economic behavior at relevant scale.

The urban model has not even the pretense of internal consistency,
and with its tiny levers exerts a force on urban development so small
that even its local effects are barely visible. What is worse, it
involves such a massive input of political and administrative talent
that the nation's energies and equities are dissipated.

Despite some lingering prejudice, it is becoming evident to many
of us that the simple multiplication of present efforts and redoubling
of budgets will not produce equivalent results. In the use of the
existing urban model, we have already reached the point of diminishing
returns. Ten times the present urban renewal, welfare and other programs
will more likely produce ten times the present frustrations rather than
some multiple of the desired urban outcome.

To say that the present urban model has been inadequate is not to
say that the more dynamic model of national economic policy has been
ideal. From many points of view -- not least the urban -- the national
economic model has produced some indifferent and sometimes disastrous
results. For one, it has been tied to a single-entry bookkeeping of
national benefit; a tally of Gross National Produce which registers
presumed social gains without offsetting measures of social cost.

More important, the recorders and engineers of aggregate economic change

have omitted any consideration of area - except for an cccasional bow

to economic regions when a stray member of the peer group or a dramatic

accident of history (like the TVA) have made it respectable.

In an age of urban concentration, the failure to include area
as one dimension of national economic policy has been folly. And
with the prospect of peace being declared, and urban development
becoming the object of increased public and private spending, the
need for a major policy shift is all the more urgent.

Consider four examples:

1. The flow of effective consumer demand into areas of

"social deficit" - Bedford-Stuyvesant; North Philadelphia, the ghettoes

of our metropolitan areas; the abandoning small towns of the Jersey
Pines, the Appalachian chain, etc. In these areas it is becoming
painfully obvious that present public programs (renewal; welfare;

job training and development) are not producing much of an effective
demand, and that until there is such a demand, there won't be induced
an adequate economic base. Thus the growing cry for the negative
income tax, the guaranteed minimum income, the family allowance, and
the "welfare dollar" (of Lloyd's Bank Review, ca. October 1966) which
gives the poor a chaice of expenditures among essential services.

The Task Force will not have to invent proposals of this sort;

but we can (a) show how they fit into a more dynamic urban model;

(b) do badly-needed digging into their probable effects, relative

advantages, and administrative feasibility.

2. The flow of investment and enterprise into areas of social
deficit. Public programs of renewal, housing, and economic opportunity
have had discouragingly weak leverage in stimulating thé economic
development of ghettoed and other declining communities. It may be
that tax policy offers a more promising lead: declaring areas of social
deficit eligible sites for Federal, state and local tax incentives of
various sorts for specified kinds of investment and enterprise.

The proposal is not new; but again, the Task Force can develop
its rationale and explore its feasibility.

3. The flow of national tax resources to states and municipalities,
(and to other quasi-public instrumentalities for community action).

The readiest example is the Heller Plan, which -- along with other
proposals like the shared-tax -- badly needs reshaping to fit a declared
schedule of urban needs and reforms. It seems clear the present
structure of Federal grants produces a flow of revenues to the lesser
jurisdictions which is too small, £60 categorical, too incoherent, and
too much in the control of specialized technicians. It also pipsedewated:
on the art of grantsmanship rather than on performances; and it exacts
small changes in behavior from the bureaucracies rather than major
changes and concessions from governors and legislatures, mayors and
councils (e.g., to be eligible for a major block grant from the Federal
government, a State might be asked to expand and reshape its own

revenue system, and make some fundamental changes in its administrative

structure and procedures).

The Task Force might declare for an increased flow of Federal
revenues to the States and local governments through more generalized
grants, and begin to detail some of the more promising ways, means
and conditions. (And now that the "growth sector" of central cities
seems to be public and non-profit in character (education, health,
government, etc.), we might explore the possibility of expanding in
lien payments to those municipalities as a major revenue source.)

4. The flow of national resources into housing in declared areas.

This flow has been too small, too erratic, and off the geographical
targets of need. The Task Force might review in the perspective of
thirty years the efficacy of current devices and (e.g. FHA's)
conventional wisdom: mortgage insurance; below-market-interest-rates;3
subsidies; etc. There may be more powerful levers than these, with

more consistent effects and geographical accuracy.

There are other flows to consider: most important, the flows of
people to and within the eouatania metropolitan areas, with a special
eye to the forces, incentives, etc., which stimulate and shape those |
flows. For example, a low airline fare from Puerto Rico to other

metropolitan areas than New York might have lessened "The Puerto Rican


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