The Reagan Resolve, Part IV: Reducing Federal Spending

Robert Knight
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Posted: Feb 06, 2014 12:01 AM
The Reagan Resolve, Part IV: Reducing Federal Spending

In celebration of the Gipper's birthday, Townhall is featuring a series of concise examples of Mr. Reagan's wisdom, mostly in his own words, drawn from The Reagan Resolve, a monograph compiled by the Carleson Center for Welfare Reform.

Ronald Reagan, whose 103rd birthday we celebrate today, understood Washington’s insatiable appetite for spending.

"We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much."

[Remarks to the Nat’l Assn. of Realtors, March 28, 1992]

As a result, he favored passage of a Balanced Budget Amendment to the Constitution. Reagan wanted to:

“Balance the budget by bringing to heel a Federal establishment which has taken too much power from the States, too much liberty with the Constitution, and too much money from the people."

[Remarks at a rally for a proposed Constitutional Amendment for a balanced federal budget, July 19, 1982]

Consistent with Reagan’s philosophy, a balanced budget amendment needs to include enforceable limitations on both total spending and taxes as a percent of GDP, to prevent Congress from using the amendment as a mandate to raise taxes to finance runaway spending.

“It is clear that we need a mechanism to control expenditures of Americans’ hard-earned money. To this end, I will send to the Congress a proposed constitutional amendment to require a super-majority vote in the Congress in order to increase the tax burden on our citizens. I urge the Congress to act expeditiously in approving this amendment and to send it to the States for ratification.”

[1988 Legislative and Administrative Message to Congress: A Union of Individuals, Jan. 25, 1988]

A supermajority voting requirement for raising taxes or exceeding spending limits, such as 60% of both the House and the Senate, would be one way. The late William Niskanen, who served on Reagan’s Council of Economic Advisors from 1981-1985 and was a founding member of the Carleson Center policy board, proposed such a Constitutional Amendment to Congress in January 1995. It ran just 125 words, "consistent with the crisp and majestic language of most of the Constitution” as recounted by Richard W. Rahn in memoriam in the Washington Times on November 1, 2011.

We feel certain President Reagan, if in office today, would place a high priority on cutting federal spending from the current 23-25% back to at least the long term historical average since World War II of 20% of GDP.

Deregulation

Ronald Reagan would be a staunch opponent of President Obama’s reregulation onslaught and his massive increase in the size of government and the scope of its intrusion on American life.

"Government has an inborn tendency to grow. And, left to itself, it will grow beyond the control of the people. Only constant complaint by the people will inhibit its growth."

[Address to the Comstock Club, Sacramento, Aug. 6, 1973]

Reagan recognized the need for reasonable regulation to protect public health and safety, and to prevent fraud and other abuses, but he firmly believed that to avoid unnecessary costs on business and society, government regulation must be held to a minimum.

“We’re going to try to take off the back of business a horde of unbelievable and unnecessary regulations that [government] bureaucracy over the years … has spawned. I believe in an old rule that [says] ‘If it ain’t broke don’t fix it.’ And government’s been trying to fix things too long that weren’t broke.”

[Remarks at Control Data Institute, Pittsburgh, Pa., Aug. 6, 1983]

In addition to limiting regulatory intrusion, Reagan also believed that, to the extent government regulation is necessary, it is more appropriately done through state and local governments — not by unelected bureaucrats in Washington D.C. with their one-size-fits-all solutions.

"We have found, in our country, that when people have the right to make decisions as close to home as possible, they usually make the right decisions.”

[Address to the International Committee of the Supreme Soviet of the U.S.S.R., Moscow, Sept. 17, 1990]

President Reagan’s first Executive Order, E.O. 12287 signed on January 28, 1981, deregulated crude oil and refined petroleum products, unleashing a massive, private expansion of the nation’s enormous energy reserves and enabling a plentiful supply of low-cost energy. Just two years later on Feb. 26, 1983, Reagan pointed out that:

"The economic realities of the marketplace have done more to bring down the price of oil than all those years of frenetic government regulating.”

[Radio address to the nation, Feb. 26, 1983]

Today, America has the resources to be the world’s number one oil producer, the world’s number one natural gas producer, the world’s number one coal producer, and the world’s number one producer of nuclear energy. The problem is that our own government has stood perversely in the way, preventing America from using her own resources to produce a reliable supply of low-cost energy. Reagan made unleashing the private sector to produce energy the central principle of his energy policy.

The day following his first executive order, Reagan signed his second, Executive Order 12288, which terminated the Wage and Price Regulatory Program that had been instituted by President Carter to control wages and prices by, among other things, denying federal contracts to private companies that did not abide by wage and price levels set by the federal government.

If Ronald Reagan faced the current situation, he would find the most important and urgent deregulatory policy to be freeing the private sector to enable it to produce a plentiful supply of low-cost energy. That would reduce the cost foundation for the entire economy — effectively providing the equivalent of a major tax cut.

See full text of The Reagan Resolve and source documents for Reagan’s quotes at http://theccwr.org/ReaganResolve.html.

For more information, see the Carleson Center for Welfare Reform at http://theccwr.org/