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Senator Proposes Trust Fund for Children's Programs

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Washington--Arguing that the Congress has failed to match its "rhetorical support" for children's programs with adequate funding, Senator Christopher J. Dodd last week introduced legislation to establish a trust fund in the federal budget for programs targeted at children, youths, and families.

The Connecticut Democrat, who chairs the Senate Subcommittee on Children, Families, Drugs, and Alcoholism, conceded that enactment of the ''children's investment trust act"--which would be financed in large part through a new tax source--was unlikely to come in this Congress, and could be years away.

"I don't have any illusions about how long it will take," he said at a hearing on the measure held by his subcommittee last week. "But you have to start somewhere."

Mr. Dodd got an unexpected preview of the obstacles ahead when William H. Kolberg, president of the National Alliance of Business, departed from his prepared testimony to reveal that his group would not support the plan.

"As of today we couldn't support your proposal," Mr. Kolberg said. "It seems more like a silver-bullet approach to what is a long-term problem."

The measure is based on a proposal developed by Jule M. Sugarman, one of the founders of Head Start, who has argued that an earmarked trust fund is the only way to ensure a stable, sustainable funding source for some 200 children's programs that are now scattered under the jurisdiction of numerous agencies and committees.

'Politically Suicidal'?

Mr. Dodd's proposal would establish a "Children's Investment Trust" in the U.S. Treasury to fund federal education- and health-related programs serving children, youths, and families.

It would support programs addressing needs ranging from nutrition and immunization to child welfare and child care, giving priority to such "proven, cost-effective programs" as Head Start, the Special Supplemental Food Program for Women, Infants, and Children, and the Chapter 1 remedial-education program.

The trust fund could also be used to finance tax credits benefiting families with children, and a portion of the fund would be set aside each year for entitlement grants to states to expand and integrate children's programs at the state and local levels.

The trust would be funded through three sources: an automatic appropriation equal to the total fiscal 1991 appropriations for all federal programs for children, youths, and families, with annual inflation increases; earmarked revenue from a new tax source, to be identified by the Congressional tax-writing panels; and income from investment of trust money.

The appropriated amount plus 60 percent of the funds from the new tax would go toward federal programs and services, while 40 percent of the new tax revenues would be reserved for entitlement grants to states to bolster and coordinate state and local programs.

Mr. Sugarman has proposed that funding for the trust come from a progressive payroll tax with a base tax rate of one-tenth of 1 percent that would increase to three-tenths of 1 percent by 1996, raising some $25 billion. Workers with incomes of under $5 an hour and their employers would be exempt from the tax, while the rate would double for those earning more than $53,400 and their employers.

To ensure that funds go to the most effective programs, Mr. Dodd's bill calls for an independent panel, to be established by the National Academy of Sciences, to evaluate each program every six years and recommend which should be improved or eliminated.

Mr. Sugarman, who testified at last week's hearing, praised the panel for "considering legislation which some might consider politically suicidal."

"Never before has Congress addressed the condition of children in such a comprehensive and bold fashion," he added.

The plan also drew praise from other witnesses at the hearing, including Erling W. Clausen, past president of the American Association of School Administrators.

"I believe this hearing and this introduction will come to be known in our history books with all the importance and all the fervor that is given to the first legislative steps taken on behalf of the Social Security Act more than 50 years ago," he said.

Tax Hike Opposed

But Mr. Kolberg of the National Alliance of Business said he was "uncomfortable"' with the prospect of raising taxes during a recession and while pressure is mounting to trim the federal deficit. It would be better, he said, to increase spending on Head Start and other programs gradually through the appropriations process while garnering public support for a more stable funding source.

Going the trust-fund route, he argued, would focus debate on "a tax proposal rather than building the national will."

Senator Dodd, who admitted he was "somewhat stunned" by Mr. Kolberg's remarks, said he found it "disappointing" that the business community--which has been increasingly vocal in backing hikes in Head Start, wic, and other programs--has yet to "come forward and say how we would pay for it."

"Now we're saying here's how," Mr. Dodd added, noting that opinion polls suggest the public would support higher taxes if the money were directed at children's programs.

Responding to a jest by Mr. Kolberg that a "surcharge on Pampers and baby formula" could be used to fund the trust, Mr. Dodd instead proposed a surtax on high-income taxpayers and businesses.

He also displayed charts showing that the share of the federal budget devoted to children's programs fell by 15 percent between 1980 and 1990, and that funding for such programs increased at only one-fourth the rate of the budget as a whole.

"I've really sort of given up on the present process" for funding children's programs, said Mr. Dodd, who characterized the trust-fund proposal as "an act of exasperation."

Also testifying at last week's hearing was Gordon M. Ambach, executive director of the Council of Chief State School Officers, who voiced ''strong support for the heart of the concept" of a dedicated tax.

But revenues from the tax, he argued, should be directed mainly at education programs and "should be assigned solely for the use of specifically authorized federal programs" rather than left to states' discretion.

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