Our proposal reflects the comments and advice which we've received over the course of the past year from State and local officials all across the country, including the comments we've received from county officials. I remember meeting with your president, Richard Condor, last September when he urged me to retain full funding for general revenue sharing. Well, revenue sharing is protected in the fiscal 1983 budget that we have submitted. In addition, knowing of local officials' strong support for the revenue sharing concept, we've proposed a super revenue sharing fund in the federalism initiative. Now, this mandate-free trust fund would give you the flexibility to determine your own communities' priorities and to best meet the needs of your citizens.

Let me say in connection with that that among some of the questions that have been raised -- and that we honestly want to find answers for -- has been one that harks back to a day when -- there are those and who, with good reason from history, worry that a full mandate back to the States could result in discrimination in the conduct or the management of some of these programs. Well, here, I believe one of the things that has to be inherent in this program is the Federal Government setting some minimum standards in which there cannot be such discrimination anywhere or at any time.

I think that -- and our own approach in this modern day and our belief in civil rights -- makes this just inherent in any such program. And that protection we will insist is there, because I believe this is one responsibility the Federal Government cannot pass on, and that is the constitutional rights of every individual in this country are the responsibility of the Federal Government, to see that no one's rights are violated.

The proposal contains also, as you probably have been told by Rich, a hundred-percent pass-through provision to local units of government for programs which have traditionally been direct Federal local programs, and a 15-percent pass-through for other programs in the trust fund. Now, I am unalterably committed to a mandatory pass-through of funds to local units of government. The proposal will also not be effective until fiscal year 1984 and contains an 8-year transition period, provides sufficient lead time to State and local officials to implement this program with the least dislocation possible.

While we've tried to incorporate your views into this package, we don't want your input to end there. And this is why I was so pleased to learn that you've established a special task force on federalism, which I met with in the White House on February 11th. As I've emphasized on many occasions, this initiative is a conceptual framework. It is not presented as a finished plan that we're seeking now to impose on all of our colleagues there in the various echelons of government. It's a statement of principles, and we seek your help in fleshing out the details.

Many of the technical questions which must be addressed are complex, but the issue is simple. Do we defend the status quo of a big, centralized Federal Government which costs too much and produces too little, or do we show progress, change, and new solutions by moving forward and returning programs and resources -- and resources -- to the people? The opportunity to make government work again is much bigger than an accounting program. We must seize this opportunity to reverse a trend that has begun to choke State and local initiative and overload the Federal Government.

We recognize that there are opponents; some can't be won over. And those who don't want the forum for public policymaking shifted -- because it'll be disadvantageous to their special interests -- are being heard from. They are the ones who have fed off the present system, and I don't mean recipients. I mean various representatives of bureaucracies and particular special-interest groups. Other opponents perhaps genuinely believe that the farther representatives are from the people they serve, the better democracy will function. Well, that's an assumption I reject, as I know you do. Democracy depends on government being close to the people.

I have a quote that's kind of a favorite of mine that I came across one day by an individual who is known more for his silence than for his profound utterances. But this individual said, ``No method of procedure has ever been devised by which liberty could be divorced from local government. No plan of centralization has ever been adopted which did not result in bureaucracy, tyranny, inflexibility, reaction, and decline. Of all forms of government those administered by bureaucrats are about the least satisfactory to an enlightened and progressive people. Being irresponsible, they become autocratic, and becoming autrocratic they resist all development. Unless bureaucracy is constantly resisted, it breaks down representative government and overwhelms democracy. It is one element that our institution sets up under the pretense of having authority over everybody and being responsible to nobody.'' And that was stated on May 15, 1926, at William and Mary College by President Calvin Coolidge. Well, I think that's what county government is all about.

And I would now like to call on your president, Richard Condor.

Mr. Condor. Thank you very much, Mr. President.

I bring you greetings from county government in America, and we certainly thank you for this tremendous, bold proposal that you have made and undertaken on behalf of America.

First of all let me tell you that this morning I was watching the news at 7 o'clock -- because we had a long day today -- and the news at the time stated that county government had rejected the new federalism program. The truth of the matter is we did not begin our meeting to discuss it until 7:30, so the word that got out was not correct. I want to dispel that rumor.

But we in county government have been looking for this day, this bold proposal I'm talking about, where we can return responsibility back to the local level and decentralize the Federal Government. We feel very strongly that the responsibility should be performed by the level of government that's closest to the people and is most capable of performing that service. And in so doing, we feel like with that responsibility should come the appropriate revenues. And we feel very strongly about this new federalism program.

The American County platform has been preaching this for some 20, 25 years. It's exactly what we've been saying. And we commend your bold efforts and hopefully that between us and our sister organizations, we can get together and work with you and your administration to find a positive solution to the problem that we've been seeking to iron out for many, many years.

Again I'd like to thank you too on behalf of NACO, because you and your staff have been tremendously responsive to NACO, our staff people. And the communication, the dialog that we have with you is just excellent. We thank you for it and commend you and look forward to our continued dialog as we go forward.

And at this time, Mr. President, I would like to recognize our first vice president, Bill Murphy.

Mr. Murphy. Mr. President, it's nice to be with you again. I was there on February 11th, when we kicked around some of the ideas for the new federalism. Since that time, we've gone back home and done our homework, and your staff has been working along with us -- Rich Williamson and Steve Rhodes and Eve Baskowitz. We have aired and voiced a number of concerns that we have about the program. And I'm happy to say to you that many of those things have already been answered by earlier statements that you've made or by clarifications that Rich has made.

It's a distinct honor for us to be here today, and I know that all the members of our board of directors appreciate it. And I know we have about 1,400 disappointed people left over at the Washington Hilton who couldn't be here.

Specifically, Mr. President, one of the things that concerns us greatly about the new federalism proposal is in the area of the swap, the Medicaid for AFDC and food stamps. And the item of most concern is which of the optional services under Medicaid will, in fact, be picked up. As you know, there is the basic Medicaid program that the Federal Government enforces throughout the United States. And then there are a series of about 14 optional programs -- and you range all the way from Arizona, exercising none of those optional programs, all the way up to New York which exercises all of them.

Under the swap, how many of those programs and which ones, if you could be specific, would the Federal Government federalize?

The President. Well, here again, you have me -- and this is one of the reasons for meetings of this kind and for us getting and working together. That's a very complex problem, we know. And it's one that we don't have an answer that we are imposing on you in this trade -- that we want to work out the details of that kind of an answer in company with yourselves and the others and State entities to find out how it can fairly be done.

The reason that we chose that one for the trade to ourselves was because, as you know, the increase in cost of that program is several times greater per year than the increase in cost for the program that we're willing to trade. So, we believe that that would help when the day comes for final independence, that by that time we would have discovered how much more of your own tax assets you had available from not having to meet that increased cost for that program that could then be applied to the other programs. But this we want to meet with you on and to find out how extensive and how diverse are those problems, those options that you spoke of, and how they can be handled in this transfer program.

Mr. Condor. Mr. President, we met this morning -- the board of directors of the National Association of Counties -- and after many, many hours of deliberation and real hard work, our board of directors by an overwhelming majority approved a resolution setting forth our approval of the new federalism with the key issues that go with it. And at this time, I'd like to present to you our copy of a final draft of this resolution where our support for the new federalism initiative is in effect and hopefully that we will continue to discuss this with you a bit later on.

The President. Oh, well you will be, and I thank you very much for this. I appreciate it. I felt a sympathy for you when you said that you woke up this morning and heard on the news the decision you'd supposedly made, and you hadn't met yet -- [laughter] -- they've been treating my economic program that way too -- [laughter] -- said it had failed and it hadn't started yet. [Laughter]

Mr. Condor. Let me please ask you -- this $30.2 billion funding level that we're talking about, these 43 turnback programs -- and this is under the assumption now that your budget cuts are successful from your administration. In the event now that these budget cuts are not enacted by Congress and that some greater amount is approved by Congress, will these adjustments be made upward in this trust fund?

The President. Yes, they have to be. There's one thing for certain. The whole idea of this -- when we say no winners and no losers -- is we have no intention of dumping responsibilities on other levels of government without providing the resources to pay for them.

Mr. Condor. That's the best statement I've heard in a long time, Mr. President, and we certainly appreciate that.

The President. That's it? Well, you're a lot easier to handle in this room than the press is. [Laughter] No, but thank you all very much, and I hope you do realize that we mean by this -- this has to be a joint undertaking. And I'm glad for this -- grateful for it and the emphasis that you put on the importance of the program, because I think in effect we are restoring the 10th amendment to the Constitution, which says that the Federal Government shall do only those things provided in the Constitution and all others shall remain with the States and with the people.

Note: The President spoke at 3:10 p.m. in Room 450 of the Old Executive Office Building.