    [Budget Supplement]
    [Creating Opportunity and Encouraging Responsibility]
    [5. Restoring the American Community]
    [From the U.S. Government Printing Office, www.gpo.gov]

    [[Page 55]]
      Opportunity and responsibility--they are the twin pillars of American
    citizenship. They define who we are as a people and a society.
      The opportunity for Americans to live safe, secure, healthy, and
    prosperous lives comes through their families, neighborhoods and
    communities, schools, churches and synagogues, civic associations and
    clubs, and, when necessary, the Federal, State, and local governments.
      Americans expect one another to fulfill the responsibilities of
    citizenship--to obey the law, raise their children, support their
    families, and participate as full-fledged members of society.
      The President proposes to deploy the Federal Government appropriately
    to create opportunity for all Americans while encouraging
    responsibility. To meet these goals, the budget would restore
    communities, strengthen the health care system, make work pay, invest in
    education and training, protect the environment, promote science and
    technology, enforce the law, and cut taxes for middle-income Americans
    and small businesses while making the tax system fairer.
      Restoring the American Community: The budget proposes to
              expand the President's national service program, which
              encourages Americans of all ages to help solve the problems of
              communities and earn money to help pay for postsecondary
              education. It also proposes to designate more Empowerment
              Zones and Enterprise Communities to spur community
              revitalization; expand the Community Development Financial
              Institutions Fund to provide investment in distressed areas;
              and maintain the Government-to-government commitment to Native
              Americans.
      Strengthening Health Care: The budget proposes to improve
              Medicare and Medicaid in ways that reflect the President's
              commitment to expand access to coverage while making the
              system more efficient. These changes would give Medicare's 37
              million beneficiaries more plans to choose from, higher
              quality care, and a more cost-effective program. And they
              would maintain and strengthen Medicaid's guarantee of coverage
              for 36 million vulnerable Americans.
      Making Work Pay: Building on the Administration's efforts to
              date, the budget would repeal the current welfare system,
              replacing it with one that requires work and provides child
              care so people can leave welfare for work. Although its
              efforts are having an impact in making work pay and moving
              people from welfare to work, the Administration is committed
              to the necessary next step: to work with Congress on
              bipartisan welfare legislation that reflects the basic values
              all Americans share--work, responsibility, and family.
      Investing in Education and Training: Today's most successful
              workers are those with the best-quality education who continue
              learning throughout their careers to compete successfully. The
              Federal Government plays a crucial, if limited, role in
              providing the necessary education and training. The budget
              continues to invest in education and training, and also builds
              on previous legislative and management reforms in key Federal
              programs.
      Protecting the Environment: The President wants a Government
              that helps protect the environment and our natural resources
              without burdening business, choking innovation, or wasting
              taxpayer dollars. To meet these objectives, the Administration
              continues to reinvent the regulatory process to cut excessive
              regulation and invest in programs that will have the biggest
              impact in improving the environment, protecting public health,
              and enhancing natural resources.
    [[Page 56]]
      Promoting Science and Technology: Because Federal investments
              in science and technology (S&T) have paid rich dividends in
              economic growth, national security, and environmental
              protection, the President is committed to sustaining U.S.
              leadership in S&T. The budget maintains key investments by
              adding funds for health research at the National Institutes of
              Health, for basic research and education at the National
              Science Foundation, for research at agencies that depend on
              S&T for their missions, and for cooperative projects with
              industry and universities.
      Enforcing the Law: The budget continues Administration efforts
              to make the streets safer for all Americans and to secure the
              Nation's borders. Among its important features, it empowers
              States and communities to fight crime locally by hiring more
              police while it funds innovative prevention programs; commits
              resources to ensure that violent criminals and serious drug
              traffickers remain behind bars; and targets resources on
              combating illegal immigration through deterrence, enforcement,
              and swift deportation.
      Promoting Tax Fairness: The budget proposes tax reforms that
              would promote tax fairness and encourage activities that
              foster economic growth. The President's tax plan calls for tax
              cuts that would benefit middle-class families with children,
              make higher education more accessible, and spur long-term
              saving. The plan helps small business with more favorable
              treatment of investment, estate tax relief, pension
              simplification, and health insurance for the self-employed.
              And it contains targeted tax relief to promote urban renewal.

    [[Page 57]]

                      5.  RESTORING THE AMERICAN COMMUNITY

      ----------------------------------------------------------------------

      We cannot go on as a Nation of strangers, mistrusting one another because we've never had the chance to work
    side by side or had the chance to walk in one another's shoes. If we just stand only on our own ground, we will
    never find common ground .... We are all part of the American family, joined by a national purpose, bound by a
    common sense of responsibility, challenged by common possibilities that know no limits.
                                          President Clinton
                                          September 1994

      ----------------------------------------------------------------------
      Communities are the heart of the American experience, the boundaries
    of much of our lives. They are where we live, where we work, where we
    worship, where we shop, and where we raise our children and send them to
    school.
      Despite their commonality as the center of American life, communities
    vary greatly in their financial and social health, with some prospering
    while others continue to decay. More and more, communities face the
    problems of crime, violence, drugs, homelessness, unemployment, and
    poverty. In both urban and rural areas across the country, communities
    need help in attracting the kind and amount of private investment that
    could spur their revitalization.
      With its wide-ranging proposals that address community needs, the
    budget is designed to use Federal dollars wisely--not to impose answers
    from above, but to encourage solutions at the community level. These
    proposals would create incentives for Americans of all ages to
    participate directly in addressing local problems, and for financial
    institutions to invest, create jobs, lend to would-be homeowners and
    entrepreneurs, and rehabilitate rental housing. And they would maintain
    the Federal Government's special relationship with Native Americans,
    providing funds to address special needs.

    National Service

      National service is rooted in American values of performing community
    service, rebuilding communities, rewarding personal responsibility,
    expanding educational opportunity, and fostering a sense of common good.
    Established two years ago, the Corporation for National and Community
    Service is engaging Americans of all ages and backgrounds to solve
    problems inside America's communities.
      The Corporation's signature initiative is AmeriCorps, which includes
    the Volunteers in Service to America program, VISTA. AmeriCorps enables
    young Americans of all backgrounds to serve their local communities
    full- or part-time. In return, they earn a minimum living allowance and,
    at the end of their term, an education award to help pay for post-
    secondary education or repay student loans. Currently, about 25,000
    Americans participate in AmeriCorps.
      The budget proposes $772 million for the Corporation, $87 million more
    than in 1995, to expand programs begun in 1994 and continued in 1995 and
    1996. The $772 million would finance 30,000 participants in 1997,
    bringing to 100,000 the total number of Americans who have participated
    in AmeriCorps since the program began in 1994.
      The budget also proposes $53 million for the Learn and Serve program,
    providing almost 900,000 opportunities for school-age youth to serve
    their communities. It proposes $145 million for the National Senior
    Service Corps (NSSC)--which includes the Retired Senior Volunteer
    Program, Foster Grandparent Program, and Senior Companion Program--to
    engage nearly 480,000 older Americans in service. Under the NSSC,
    mature,
    [[Page 58]]
    experienced, skilled people serve the ill, the frail, the
    isolated elderly, and young people with emotional, mental, or physical
    disabilities. The budget also proposes $6 million for The Points of
    Light Foundation. All told, the Corporation would provide opportunities
    for over a million Americans to engage in service.
      AmeriCorps strengthens America's communities in several ways.
    National, State, and local organizations operate AmeriCorps programs,
    designing them individually to meet specific needs. AmeriCorps members
    do not displace existing volunteers or employees; they participate
    alongside the men and women already working to solve problems at the
    community level. They provide a regular source of service that most
    volunteers, given their time constraints, cannot offer.
      The Corporation operates few AmeriCorps programs itself; its primary
    work is ensuring quality in AmeriCorps programs that are locally
    developed and implemented. The Corporation works with States to run
    competitions that determine what programs will participate in
    AmeriCorps. Because States best know their own needs, they enjoy
    considerable autonomy in determining priorities, selecting programs, and
    offering additional assistance. AmeriCorps is not a mandate for any
    State or organization, although 49 States sought AmeriCorps funds last
    year.
      In addition, AmeriCorps seeks to encourage strong partnerships with
    the private and non-profit sectors. AmeriCorps grantees must raise
    matching funds from outside the Corporation, and many AmeriCorps
    programs are underwritten by businesses, including American Express,
    Fannie Mae, General Electric, IBM, and Timberland.
      Following intense competition last year, bipartisan, gubernatorially-
    appointed State commissions and the Corporation chose 450 organizations
    to participate in AmeriCorps, including the American Red Cross, the
    National Coalition of Homeless Veterans, the YMCA, and local United Ways
    across the country. Wherever they serve, AmeriCorps members are meeting
    vital needs and getting solid results:
      In Kansas City, they helped close 44 crack houses and drove
              out drug dealers from a 173-block community--and brought in
              over 3,000 volunteers to keep the area safe and clean;
      In Simpson County, Kentucky, they raised the reading levels of
              nearly half of the county's second grade students; and
      In Miami, they recruited and worked with over 5,000 volunteers
              to build 44 new homes for working families.
      Many AmeriCorps members act as ``volunteer generators'' who recruit
    and supervise other citizens in direct service. The Corporation's
    motto--``getting things done''--expresses AmeriCorps' commitment to
    achieving direct and demonstrable results.
      With a strong commitment to community-based direction, the Corporation
    maintains a small Washington staff. The law limits administrative costs
    included in grants to AmeriCorps programs to five percent of grant
    amounts.

    Empowerment Zones and Enterprise Communities

      As part of his 1993 economic program, the President proposed, and
    Congress enacted, the Empowerment Zones and Enterprise Communities
    program. Under it, communities develop a strategic plan to help spur
    economic development and expand opportunities for their residents, in
    exchange for Federal tax benefits, social service grants, and better
    program coordination.
      Empowerment Zones (EZs) and Enterprise Communities (ECs) are parts of
    urban or rural areas with high unemployment and high poverty rates. For
    EZs, the Federal Government provides tax benefits for businesses that
    set up shop, and grants to community groups for job training, day care,
    and other purposes. For ECs, the Government provides grants to community
    groups for the same array of purposes. EZs and ECs both can apply for
    waivers from Federal regulations, enabling them to better address their
    local needs.
      The 1994 competition for the first round of EZ and EC designations
    generated over
    [[Page 59]]
    500 applications as well as new partnerships for
    community revitalization. The 105 selected communities made well over $8
    billion in private-public commitments, apart from the promised Federal
    resources. Even in communities that applied but were not designated as
    EZs or ECs, local efforts to marshal resources and forge broad
    coalitions to support an innovative economic empowerment strategy
    produced tangible benefits.
      But many other communities lack the seed capital to implement their
    strategies and sustain private commitments. Thus, the President now
    proposes a second round of EZs/ECs to stimulate further private
    investment and economic opportunity in distressed urban and rural
    communities and to connect residents to available local jobs. The
    program would again challenge communities to develop their own
    comprehensive, strategic plans for revitalization, with input from
    residents and a wide array of community partners. The Administration
    would invest in communities that develop the most innovative plans and
    secure significant local commitments.
       The second round would build on the President's ``brownfields'' tax
    incentive (described in Chapter 9), which would encourage businesses to
    clean up abandoned, contaminated industrial properties in distressed
    communities. Also, this round would offer a competitive application
    process that would stimulate the public-private partnerships needed for
    large-scale job creation, business opportunities, and job connections
    for families in distressed communities. The Administration would seek up
    to 105 new designations, with communities receiving a combination of tax
    incentives, direct grants, and priority consideration for waivers of
    Federal program requirements from the President's Community Empowerment
    Board, chaired by Vice President Gore.
      The proposed budget for the second round includes $2 billion for tax
    incentives, including incentives for brownfields clean-up and small
    business investment, and $1 billion for direct grants and loans over
    three years. Each EZ or EC would have to identify performance benchmarks
    to show what it plans to accomplish in each year of the 10-year
    designation.

    Community Development Financial Institutions (CDFIs)

      Proposed by the President in 1993 and created a year later, the CDFI
    Fund is designed to expand the availability of credit, investment
    capital, financial services, and other development services in
    distressed urban and rural communities. By stimulating the creation and
    expansion of a diverse set of CDFIs, the Fund will help develop new
    private markets, create healthy local economies, promote
    entrepreneurship, restore neighborhoods, generate tax revenues, and
    empower residents.
      CDFIs provide a wide range of financial products and services--e.g.,
    mortgage financing to first-time home buyers, commercial loans and
    investments to start or expand small businesses, loans to rehabilitate
    rental housing, and basic financial services. CDFIs also cover a broad
    range of institutions--e.g., community development banks, community
    development credit unions, community development loan funds, community
    development venture capital funds, and microenterprise loan funds. These
    institutions, not the CDFI Fund, decide which individual projects to
    finance.
      The budget proposes $125 million for the CDFI Fund, with gradual
    increases each year to bring the six-year total to $1.6 billion. Private
    sector interest in the program has already dramatically exceeded
    expectations. To date, the CDFI Fund has received requests for
    assistance from new and existing CDFIs of over $300 million, about 10
    times the amount available for the first round.
      These applications, however, barely scratch the surface of long-run
    potential. The Fund also plans to implement an aggressive, long-term
    program of training, technical assistance, and capacity building, which
    would help the CDFI field grow substantially over time while maintaining
    high-quality standards and market discipline. In addition, the Fund will
    inaugurate an annual Presidential Microenterprise Awards program and
    coordinate a new Federal Microenterprise Initiative.
      Additional resources would enable the Fund to implement a new
    initiative to support private institutions that provide secondary
    [[Page 60]]
    markets for CDFIs, leveraging public resources with private capital. The
    added money also would substantially enhance the CDFIs' capacity to take
    advantage of coordinated, multi-faceted community development efforts,
    such as EZs and ECs. Finally, this initiative would increase the
    resources to provide incentives, through the Bank Enterprise Award
    program, for traditional banks to expand their community development
    lending and support local CDFIs.

    Federal Relationship With Communities

      The EZ/EC initiative and CDFI program are just two examples of the
    Administration's efforts to help communities develop their own
    strategies to face their toughest economic and social challenges.
      To implement this new relationship with communities, the budget builds
    on the President's reinvention proposal of last year by restructuring
    the major programs of the Department of Housing and Urban Development
    (HUD). The Administration would consolidate HUD programs into three
    flexible, performance-based funds. It would award most of the funding by
    formula, as in a block grant, but focus it on clearly-stated national
    goals. And it would judge communities' use of funds against measures
    that are consistent with national goals but tailored to each community's
    situation.
      Like the EZ/EC initiative, this structure provides flexibility but
    demands accountability. To further reward results, communities would be
    eligible for bonus funding. Funds would go to communities that set and
    achieve ambitious performance goals, consistent with national program
    objectives and local needs.
      HUD Secretary Henry Cisneros proposes to transform HUD by creating
    single points of contact for all major localities and giving HUD staff
    the expertise to help communities reach their goals. In this
    transformation, HUD would move much of its staff out of Washington and
    into the communities to operate as problem-solvers, working with, and
    for, the States and communities. Mayors and other local leaders would no
    longer have to work with three or four HUD offices to get answers on
    community priorities. Instead, community contacts would troubleshoot,
    respond to community complaints, and help communities identify and
    overcome Federal impediments to achieving local priorities.
      The budget also builds on the President's reinvention proposal of last
    year by supporting efforts to demolish 54,000 of the worst public
    housing units in the next three years and, in their place, provide
    portable rental subsidy certificates that give residents greater
    mobility. In limited cases where appropriate, communities would
    construct new, less dense units.
      Through the Campus of Learners program, HUD also is working to
    transform selected public housing developments into avenues of
    educational achievement and job advancement. On these campuses, public
    housing agencies link up with local schools, universities, and training
    centers--many of them located near the housing developments. The program
    would require residents to participate in education and job training
    programs, and would limit the period of residency. Upon completing
    campus programs, residents would receive help in moving into private
    housing and securing employment.

    Government-to-Government Commitment to Native Americans

      The President continues to listen to the views and concerns of Native
    Americans, and proposes to address basic needs and restore high-priority
    Native American programs to pre-1996 levels.
      The Administration has fought to restore critical 1996 funding to
    enable the Federal Government to fulfill its trust responsibility to
    Tribes. The budget proposes a 10 percent increase for Government-wide
    programs, compared to 1996.
      Budgets for the Interior Department's Bureau of Indian Affairs (BIA)
    and the Health and Human Services Department's Indian Health Service
    (IHS) comprise about two-thirds of Federal funding for Native American
    programs.
      BIA: The budget proposes $1.8 billion, an increase of $136
              million over 1996. The BIA budget focuses on supporting the
              growing school population on or near Indian reservations,
              increasing Tribal self-
    [[Page 61]]
    determination, and protecting Indian
              trust resources.
      IHS: The budget proposes $2.4 billion, an increase of $186
              million over 1996. The IHS budget emphasizes support for
              clinical services, often the only source of medical care on
              isolated reservations. It also supports water and sewer line
              construction--such basic utilities are still lacking on too
              many reservations.
      The BIA and IHS will continue to promote self-determination by
    allowing Tribes to direct and administer more resources for Tribal
    priorities at the reservation level. In addition, both agencies have
    worked extensively with Tribes to develop regulations to implement
    recent amendments to the Self-Determination Act.
      The Interior Department continues to encourage an increase in the
    number of Self-Governance Tribes. Self-Governance compacts, which give
    Tribes greater flexibility to administer Federal programs on
    reservations, now number 54 and will rise to a projected 74 in 1997.
      Finally, the budget proposes $36 million for a new Office of the
    Special Trustee for American Indians to oversee trust fund management
    reform, and Interior Secretary Bruce Babbitt has directed all Interior
    Department offices and bureaus to redouble their efforts to protect
    trust resources.
      Beyond funding issues, the Administration continues to emphasize the
    spirit of consultation and recognition of the unique status of Native
    Americans. In the past year, the Administration invited Tribal leaders
    to two national meetings--one marking the first anniversary of President
    Clinton's historic April 1994 meeting with Tribes, the other focusing on
    economic development.

      ----------------------------------------------------------------------

                               Table 5-1.  GOVERNMENT-WIDE NATIVE AMERICAN PROGRAM FUNDING
                                       (Budget authority, in millions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                                                                                   Change:   Change:
                                                        1993      1995        1996        1997     1996 to   1993 to
                                                       Actual    Actual    Estimate\1\  Proposed    1997      1997
    ----------------------------------------------------------------------------------------------------------------
    BIA.............................................     1,647     1,733       1,646       1,782      +136      +135
    IHS\2\..........................................     2,022     2,173       2,214       2,400      +186      +378
                                                     ---------------------------------------------------------------
      Subtotal, BIA/IHS.............................     3,669     3,906       3,860       4,182      +322      +513

    All other.......................................     1,828     1,992       1,865       2,098      +233      +270
                                                     ---------------------------------------------------------------
      Total.........................................     5,497     5,898       5,726       6,280      +554      +783

    ----------------------------------------------------------------------------------------------------------------
    \1\Includes Administration's proposed adjustments to 1996 continuing resolution levels.

    \2\IHS program level includes both budget authority and Medicaid, Medicare, and private insurance collections.

      ----------------------------------------------------------------------