quences of inflation on low-income families budgets are also severe.

The Conference also served, however, to remind the Nation that, despite record growth in overall employment and a substantial drop in unemployment since January 1977, there are groups of Americans and places still experiencing Depression levels of joblessness. For these distressed peoples and places, carefully targeted remedies must be applied. The primary emphasis of employment and economic development programs should be on retaining and creating jobs where unemployed people live, although some relocation assistance may be needed for those who desire it.

The private sector must be at the core of any national effort to achieve full employment. Two major points of consensus were expressed:

permanent, private sector jobs are more desirable than temporary, public service employment, and

government incentives to business are needed to leverage private expansion of job opportunities for disadvantaged workers.

The Conference recognized that public monies must be used, not simply as expenditures, but as investments, linking Federal programs and local plans to stimulate private action.

EFFECTIVE GOVERNMENT

The Conference participants expressed the view that there is need to take a fresh look at the present roles of the different levels of government to make them more effective and responsive. The "fair and flexible Federalism" proposed by the Conferees will require some reassignment of functions and responsibilities and reexamination of outmoded systems of revenue allocation injurious to distressed

communities. The Conference urged the Federal Government to provide incentives to states to assume more responsibility for the problems of their local governments by modernizing local governmental structures and reforming inequitable revenue systems and state expenditure pat

terns.

The Conference recognized that uniformly applied national practices and rules ignore substantial regional differences. The Federal Government must begin to fine tune national policy and programs, taking into account substantial diversity among regions, states and localities, and encouraging through incentives. more shared responsibility in the achievement of national objectives. Thus, a stronger role for states and localities in the design and management of Federallyassisted programs and greater decentralization in their administration is needed. As former Massachusetts Governor Dukakis said: "We cannot leave to chance the role of state governments in the implementation of a national economic policy . . . Unless the states are involved, and involved deeply, it is doomed to failure."

In return for greater state involvement, the Conference recommended that state governments assume increased responsibility for local education costs, while the Federal Government assumes more responsibility for welfare costs.

GROWTH POLICY

The Conference recognized the need for greater coherence in policy-making at all levels of government. Henry Ford said, "We must know how each action affects another, and be willing to change or eliminate those that are counterproductive." The processes that shape energy, environmental, business, community, and economic growth policies in particular

must be related to and support one another. The proper role of the Federal Government is to establish a coordinated policy framework to guide regional, state and local planning and decision-making, seeking insofar as possible to anticipate change so as to enable all levels of government as well as private interests to take timely actions.

Conferees asserted that growth policy processes should provide a systematic, consultative forum for the establishment of goals, the analysis of alternative policies and programs, and the reconciliation of conflicting laws, programs and regulations, thereby strengthening the capacity of elected officials to guide growth and development in beneficial ways. State and local governments should continue to have responsibility for planning, assuring participation of governmental and private. interests, while responsibility for establishing policy processes, setting goals and reconciling differences should reside at the Federal, regional and state levels.

Many problems of growth and decline, the Conferees noted, are most effectively dealt with in a multi-state context. Effective regional institutions are required to attack problems that transcend state borders and which, if not sensitively handled, serve to exacerbate negative, unproductive sectionalism. The State-Federal Regional Commissions could provide a partnership means of achieving national objectives while respecting regional differences. These institutions should be strengthened to realize their full potential for helping shape Federal growth policies and development programs.

To exhibit "balance," the Conferees thought growth policies should reflect:

a concern with the problems of rural counties and small towns as well as with metropolitan jurisdictions;

⚫ a recognition of the needs of rapidly growing as well as declining communities; and

the opportunity to consider simultaneously environmental mandates and economic growth proposals. Conferees felt that some Federal, State and local regulations and red tape have a dampening effect on economic growth and contribute to our inflation problem. Energy, industrial location, and transportation initiatives have been stalled or thwarted by a maze of procedures and litigation stemming from excessive regulation. The Conference urged that:

regulations be simplified and coordinated;

• Federal, State and local regulations be periodically reviewed; and

• state and local governments and the private sector have larger roles in shaping Federal regulations. National energy policy, according to the Conferees, is essential to a balanced growth policy. In order to curtail inflation and expand employment, the Nation needs dependable, affordable energy sources which reduce U.S. dependence on imported oil. Energy conservation and development should create new jobs to help meet our full employment goals.

URBAN AND RURAL POLICIES

National urban and rural policies are also essential components of national growth policy, the Conferees said. The Conference favored selected targeting of Federal and State assistance to areas of greatest need, regardless of region, whether they be central cities or small cities, suburbs, rural counties or areas in decline or impacted by rapid and disorderly growth. Moreover, the Conference urged the resolution of State and local fiscal burdens through selective reassignment of responsibilities within the Federal system.

The Conference affirmed that Federal and State tax policy should help target private investment in distressed communities. Federal aid should, however, be premised on clear-cut national performance criteria concerning economic, fiscal, and employment objectives which reflect national commitments to equal opportunity, housing and jobs.

Finally, the Conference recognized the need for a balance between the national concern for large urban centers and counties, and for rural areas and small towns. It acknowledged that urban and rural development may require different tactics to address the diverse contexts in which similar problems may occur.

III. THE ADMINISTRATION'S INITIATIVES

Many of the recommendations made by the Conference have the same basis as the principles which have guided my Administration in setting new directions. The development of my domestic policy rests upon the recognition of the need for "shared responsibility" among all levels of government, and with the private sector, for the economic health and well-being of all people and places. The Conference came at an excellent time to help us think through the elements of our National Urban Policy, while it also helped launch a badly needed review of the performance of Federal programs in rural counties and small towns, largely in response to Conference recommendations, my Administration has taken the following steps toward a "fair and flexible Federalism."

INFLATION AND EMPLOYMENT

Overall, we have made dramatic gains in the past two years in expanding employment and reducing the number of jobless. In order to strengthen further the Nation's commitment to full employment

while guarding against the crippling effects of high inflation I have signed into law the Humphrey-Hawkins Full Employment and Balanced Growth Act. By requiring the more systematic consideration of both concerns in developing national economic policies, it provides a framework for pursuing the more orderly and integrated growth policy process which the Conference endorsed.

The overall economic health of our Nation, however, is also founded on the economic well-being of its individual regions, communities, people and industries. This interdependence means that the distress of some people and places affects all of our people and places. Moreover, a non-inflationary national growth policy requires the efficient use of unemployed and underemployed workers and of underutilized private and community infrastructure. Federal action on the subnational economic development front, therefore, is an important, long neglected component of national economic policy concerned with stemming inflation, reducing unemployment and underemployment and increasing the productivity of our nation's industries.

In a break with past practice, the Federal Government is now deliberately and systematically pursuing "micro-economic❞ policies to help distressed places as well as people as an essential part of overall economic policy. This Administration has expanded and improved Federal community and economic development programs. We recognize that national development policies must link related development activities such as job creation and training, business assistance, housing and community improvements, human services, and transportation in unified state and locally planned programs. Pursuant to the Conference emphasis on private sector jobs, we have expanded the Comprehensive Employment and Train

ing Act program, adding a new Private Sector Initiative which involves local, private sector councils in designing training and developing unsubsidized jobs. $400 million has been requested to support the new program. We have also developed with the Congress a targeted tax audit which provides a substantial tax incentive to employers to encourage them to hire poor young persons.

My Administration has also:

Increased funding for HUD's Urban Development Action Grant and Commerce's Economic Development programs to leverage and target job-creating private investments.

• Launched the Air Quality Planning Grant program to help cities comply with the Clean Air Act without reducing needed private sector investments.

Begun targeting $9 billion in Farmers Home Administration development funds, including over $1 billion in business and industry loans, on the most distressed rural communities and population groups.

• Established for the first time loans to farmers and ranchers for economic distress. This revolving fund of credit will strengthen the rural economy as well as the many segments of our national economy that benefit from a strong agricultural system.

Develop a new Home Ownership Assistance Plan for very low-income rural residents, which will aid 16,000 families during 1979.

• Better targeted scores of existing programs toward urban and distressed rural

areas.

My anti-inflation program includes the first systematic review of Federal regulations to reduce their cost and to eliminate

those whose costs are not warranted by their effects. I urge state and local governments to join us periodically in reviewing such regulations as those affecting

construction, environmental protection and energy production to speed decisions and reduce burdensome and inflationary

costs.

Other elements of my anti-inflation program are:

A restrained but fair budget.

• Review of existing and proposed regulations through the newly formed Regulatory Council which will develop for the first time a Regulatory Calendar that will present all the major regulations the government will issue in the forthcoming year. A Regulatory Analyses Review Group will review major regulations to insure they are as cost-beneficial as possible.

• Establishment of non-inflationary wage and price standards for both the public and private sectors. State and local governments are asked to comply with these standards.

• Review of health costs, State and local regulation costs, productivity within. government, and the inflationary impact of Federal policies on State and local governments.

Proposal of a program of real wage insurance by which workers who limit their raises to 7% would be eligible for a tax rebate if current prices rise by more than that amount, together with other anti-inflationary proposals such as hospital cost containment.

EFFECTIVE GOVERNMENT

I am determined to make Federal programs fairer, better coordinated, more easily administered and capable of responding to regional, State and local growth strategies in a concerted fashion. Examples of Administration actions supporting Conference recommendations in this area include:

• Congressional passage of all six reorganization proposals I made last year, in

cluding civil service reform, which will help provide better incentives for productive work by Federal officials.

An Executive Order establishing a White House led Interagency Coordinating Council. This is a new mechanism for resolving conflicts among agencies and community programs, providing a comprehensive Administration-wide response to coordinated State and local development strategies.

• The Assistant Secretaries' Working Group on Rural Development to work on major, long-standing rural problems, through links to the White House and the Interagency Coordinating Council.

• Coordination of project investment activities and joint applications among domestic departments. Commerce and HUD are working toward streamlined economic development planning quirements.

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• Coordination of Federal programs to target on special rural problems. Some of the results to date are:

-EPA and Agriculture will give priority in existing loan and grant programs to rural towns to comply with the Safe Drinking Water Act.

-HEW and Agriculture have agreed that Agriculture will target a share of its community facilities loans to make possible the construction, renovation and equipping of some 300 rural primary health care clinics. The Department of Labor will support training to enable people to work in these clinics. In all, over 13.5 million previously medically underserved Americans in rural areas will now have greater access to care.

-EPA, EDA, HUD, and FmHA have adopted procedures for improving the coordination and delivery of rural water and sewer services, with emphasis on paperwork reduction (e.g., single applications, consolidated reporting and auditing

requirements), simplified compliance requirements for the host of Federal laws applicable to water and sewer construction, joint agency training seminars and technical assistance materials, a common data base for needs assessments, and joint agency consultation with applicant communities to ensure that proposed facilities are affordable and suited to local needs. A companion agreement between DOL and EPA has resulted in the training of 1,750 workers in the water and wastewater treatment field to meet critical rural shortages in this rapidly expanding job market.

Agreement between the Department of Transportation and the Environmental Protection Agency on a joint planning and funding process for air quality and transportation planning.

• Joint development and implementation of a public transportation assistance program in rural areas and small cities by the Federal Highway Administration and Urban Mass Transportation Administration.

• A "zero-based" review of Federal

planning requirements governing receipt of Federal grants by State and local governments. This has produced:

-Demonstration programs in up to five States permitting a single integrated stitute for HEW's multiple planning proplanning and budgeting process to sub

cedures.

-Annual program plans required by HUD are being replaced with triennial plans with annual updates.

-Approximately 165 of the more than 300 EPA planning requirements will be consolidated or simplified.

-State/EPA agreements will be negotiated to develop an integrated approach to solving water supply, solid waste, and water pollution control problems.

-Agreement between DOT and Farmers Home Administration to coordi