Inside Ronald Reagan

A Reason Interview

From the July 1975 issue

(Page 3 of 7)

REASON: These days, most private universities are the recipients of Federal funds. Do you think that it’s proper to use tax revenue to finance higher education?

REAGAN: Well, if I answer that question then I’m answering that we should do away with our state universities and frankly I haven’t given enough thought to what could be a counter-system.

At first, there was a great opposition to most of the Federal revenues that are going to education on the part of many educators. Once the money was there, however, it was like the farmer who went into the woods and came back with the wagon loads of wild pigs. When they asked him how he had done it–they’d been wild for a hundred years–he said, "I built a fence and I put corn down and fed them, and they got used to eating the corn there, so l extended the fences’s sides and finally I had an enclosure and I corralled them." He said, "If I can get them to take food from me, I’ll own them." And this is what really happened with Federal aid to education. You know, the Federal Government could have done it differently if the Federal Government did not at the same time want control.

REASON: Many students at universities are middle class or upper middle class and tax support means that a lot of the lower class/lower income people are paying for that education. Don’t you feel that there’s something immoral or unethical about redistributing wealth from the lower class up to the middle class.

REAGAN: Yes. And I used that argument in my fight to get tuition in the University of California. I have to tell you about that fight with the University of California–they were very much opposed! They wanted it kept totally free, as it had been. The tuition I was proposing was less than 10 percent of the actual cost of educating the student–which is more than $3,500 now, and at that time was roughly $3,000. I was proposing $300 tuition–and I used the exact same argument you’re using. Finally, tuition was instituted.

But, I had always said that tuition should never be a block to anyone getting an education who could not otherwise afford to go to the university. I fought for a plan that would have allowed the financially needy student to defer until after graduation all or part of his tuition. And the same university administration that had fought me and did not want tuition at all, fought me equally hard on deferred tuition and did not want that benefit for the students!

REASON: Let us shift for the moment from education to your Proposition One initiative that you campaigned so hard for. How would you describe the purposes of Proposition One, Governor?

REAGAN: Well, first of all, we realized that at the state level we could not do an awful lot to reduce the vast tax burden that the people of America carry. Right now, virtually half of every dollar earned in the United States is taken by governments–Federal, state or local. And governments in the United States are all growing at about the same rate, which is about 2-1/2 times as fast as the increase in population. We couldn’t do anything with the Federal rate, which is the big villain. Nor could we impose on local governments. But we said that if the biggest state in the Union can put itself on a basis of establishing a percentage of the people’s earnings above which government cannot go in taxation without the consent of the people, and if it works, then it sets an example that makes it almost impossible for the Federal government not to follow suit and do the same thing. And hopefully local governments also.

So I appointed a task force and this task force talked to economists like Milton Friedman who then volunteered to help. The task force report came back with all the facts and figures. We concluded that we could over 15 years reduce the percentage the California state government was taking–from about 8-3/4 cents out of every dollar down to 7 cents out of every dollar. It doesn’t sound like much, but at the end of 15 years the difference would be that you could triple the present budget of California at a seven percent rate, and you’d have a budget three times the present size of the budget. We thought the growth of the economy was such that people could recognize that you could have this tax rate reduction without doing away with any useful government service.

Now we could have probably passed Proposition One if we had settled for the percentage the state is now taking and proposed freezing the percentage at the present level. But you see, the opposition was very dishonest. (And when I say this I include the State Employees Association, the whole educational establishment of California that opposed it, and the League of Women Voters, who made it very plain that they were going to oppose anything that limited government’s ability to get more money.) These people dishonestly campaigned and convinced the people that to reduce the state’s share we were going to dump the load on local government, so that the local property taxes would go up. We couldn’t make clear the fact that in our plan there was a distinct prohibition on the state transferring this cost over to local government without lowering the percentage comparably. And so we lost. I still think it’s an idea whose time has come.

REASON: Governor, given the way that Prop. One was misrepresented in California by these very strong interest groups (which would exist in other states as well), how would you restructure a campaign to sell it to the people, to counteract that kind of misrepresentation?

REAGAN: Well, as I say, it was so complicated. Maybe if we had to do it all over again, I shouldn’t be so greedy. Maybe we should have settled for the present percentage, and then just held at the present spending, while waiting for people to realize that maybe you could then reduce spending in the future as you were successful with it. That would have robbed our opponents of their argument. You see, if they hadn’t been able to say, "They’re going to reduce the money the state’s getting–so they must be going to get it from someplace else"–if they hadn’t been able to say that, we could have refuted anything else they said by saying, "Wait a minute–if they don’t want it frozen at the present percentage they must be telling you that they’re going to raise taxes if they have their way."

REASON: Governor, isn’t it true that in your first year in office there was actually a 24 percent increase in the state budget?

REAGAN: Oh, for heavens sakes, I don’t know what the percentage was–but you see, the problem was that the state budget we inherited didn’t mean anything. We got in and found that to get through the election year, the previous administration had changed the bookkeeping and had a budget that was financed by 15 months’ revenue. By changing to an accrual method of bookkeeping, what they really were doing was postponing until after the election what they knew was going to have to be a tax increase. We won and found that out to our surprise –because we were quite unable, even in the period between election and inauguration, to get very much information from the outgoing administration. It was not an orderly transition! In fact, the Director of Finance in his briefing said to one of my representatives, "Look, we’re spending a million dollars a day more than we’re taking in–I’ve got a golf game–good luck." That was our briefing in finance! We had to–much as we objected–institute a gigantic tax increase, and put the state back on a solvent basis. I said at the time that I did not recognize that as permanent–that we were going to try to give the money back to the people, just as we could institute reforms. Over the eight-year period we gave back in the form of one-time rebates, tax cuts and even bridge toll cuts $5.7 billion–which comes pretty close to giving back the amount of that increase.

REASON: Let me ask you–still in the area of tax reform, Governor–how you feel about the Liberty Amendment, which would abolish the income tax. Is that something you’re in favor of?

Comments

Pingback| 10.7.09 @ 7:36AM

The American Spectator : AmSpecBlog : Pinkerton Redefines Conservatism links to this page. Here’s an excerpt:

…I am doing the very best I can." Robert Poole, one of the early editors of Reason magazine, has called Goldwater “20th-century America's first libertarian politician.” And as for Ronald Reagan, he himself declared that, “If you analyze it I believe the very heart and soul of conservatism is libertarianism… The basis of conservatism is a desire for less government interference or less centralized authority or more…

Pingback| 10.7.09 @ 4:48PM

My Kids Deserve Better | My Kids Deserve Better links to this page. Here’s an excerpt:

…very best I can.” Robert Poole, one of the early editors of Reason magazine, has called Goldwater “20th-century America’s first libertarian politician.” And as for Ronald Reagan, he himself declared that, “If you analyze it I believe the very heart and soul of conservatism is libertarianism… The basis of conservatism is a desire for less government interference or less centralized authority or more…

Pingback| 10.10.09 @ 12:54PM

Modlitba s médii, 10.10.2009 « Bolkův blog links to this page. Here’s an excerpt:

…aby si Cameronův projev prostudoval sám a aby se případně podíval i na první část knihy Život jednoho Američana od Ronalda Reagana, která mi skutečně mnoho dala. Přidávám také odkaz na zajímavý rozhovor s Ronaldem Reaganem. Média často přináší různé zprávy o kriminalitě, ale také o úspěších v boji proti ní. A tak jsme se mohli dozvědět, že policie dopadla gang zlodějů železničních modelů, britské námořnictvo zadrželo…

|10.25.09 @ 11:01PM|#

I like Reagan, but I wonder sometimes how different and how better the world might be had he read Atlas Shrugged. Oh if only!

|11.2.09 @ 7:11PM|#

I have a feeling he did. Google Reagan and "Red Hen" - he had his own mini-fable version of Atlas Shrugged that he told many times.