[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.
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  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.

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                  5.  RESTORING THE AMERICAN COMMUNITY

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  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
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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 
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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-
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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.


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                           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.  

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