Local reaction was lukewarm to the "new federalism" outlined in President Reagan's first State of the Union address last night, a program he said would involve turning over more than 40 federal programs costing almost $50 billion annually to state government.
The president called for an eight-year transition period under which the states would assume full control over such progams as food stamps and Aid to Families with Dependent Children. The federal government would assume sole responsibility for the Medicaid program, and would maintain a $28-billion-a-year trust fund for the first four years of the transition to help the states with the additional economic burden.
Under the president's plan, states could eventually decide to cancel any of the programs that they no longer wanted to pay for Francis M. Bator, professor of Political Economics, said last night that the new state responsibilities may not be accompanied by enough federal funds to pay for them. "I would guess that by and large state governments will think it is a bum deal," he added.
John Lintner, professor of Economics and Business Administration, said the new federalism may make the presently high budget deficits look somewhat better in the future, but that the president's plan does not deal with the problems of inflation, unemployment and high interest rates.
Bator agreed, saying deceleration of inflation and rapid reduction in unemployment are not compatible goals unless the president introduces some of type wage-price policy, which he has not done.
The president's plan will lessen the money Cambridge gets from the federal government, city councilor David Sullivan said, "I'm disheartened to say the least at the notion of dismantling the federal government's role," he said, adding that the city's community development grants have been cut 15 per cent this year, and that funding for the neighborhood health centers has just been cut, putting the centers' futures in jeopardy.
The Harvard/Radcliffe Democratic Club released a statement last night calling "new federalism" a "fiscal sleight of hand" that plays "a cruel shell game with vital social programs."
The president will submit his full budget plan to the Congress February 8. Reagan said the plan will include no taxes, but he will propose the dismanting of both the energy and education departments, thus fulfilling a campaign promise.
The president's speech lasted just more than a half hour, and was interrupted 11 times by applause.