The following is a collection of the materials used in creating the ninth episode of the
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Welcome to the Citizen Reagan podcast. As you may know, what I do with this podcast is discuss the contents of the Ronald Reagan Radio Commentaries produced between 1975 and 1979. Sometimes, I may decide to talk about some other topic, but with over 1000 of these Commentaries to cover, the bulk of my work will be on them.
This is one of those times where I will be branching out beyond the Commentaries, and even beyond Reagan himself. Reagan did record one at least one broadcast that pertains to what I want to discuss, but he'd mention this problem as early as 1961.
The topic is government waste and it is, for me, one of the single-most important reasons why I, personally, favor a smaller federal government.
In 1961, an article by Reagan was printed in Qualified Contractor magazine. It contained the following passage:
Early in our history we were warned that the farther the spending was removed from the source of taxation, the less restraint there would be in its spending. Today, shocking figures prove the truth of this. When you contribute to your local charities, you must give $1.10 for every $1 that is to be spent in good works. County welfare sees an increase in this overhead to where $1.23 must be raised for every $1 actually spent on welfare. At the state level it takes $1.49 and the federal government must raise $2.10 for every dollar it will spend on the recipients of federal welfare, a $1.10 overhead for each $1.
Ever since I read that, I've had one question in my mind: If it was that bad then, in 1961 before LBJ's Great Society, how bad is it now?
I wish I could tell you I know where he got those numbers, but I have been unable to track them down. Incidentally, what is this "Puzzle Palace" Reagan's talking about? I haven’t found anything about the origin of the expression as yet, but Reagan wasn’t the only one to use it. I’ve found a couple books using it in their titles. Personally, I've always taken it to mean the tangled web of government agencies and their bureaucracies. A place that if you try to enter, you may never be able to escape.
Also in 1961, in Phoenix Arizona, Reagan spoke about how our tax dollars are divided among the levels of government:
Today, 31 cents out of every dollar earned in the United States goes to the tax collector. And of that 31 cents, 23 cents goes to the federal government, leaving 8 cents for the federal, county and the local community to divide up between itself. No wonder we have to turn to government and ask for federal aid in all of our projects. But wouldn't it make a lot more sense to keep some of that money here in the local community to begin with rather than routing it through that puzzle palace on the Potomac where it’s returned to us, minus a sizable carrying charge?
By the way, yes, Reagan mis-spoke. He meant 8 cents for the state, county and local community.
Then, in his famous 1964 speech for Barry Goldwater, he executed some simple arithmetic:
We were told four years ago that 17 million people went to bed hungry each night. Well, that was probably true. They were all on a diet. But now we are told that 9.3 million families in this country are poverty-stricken on the basis of earning less than $3,000 a year. Welfare spending is 10 times greater than in the dark depths of the Depression. We are spending $45 billion on welfare. Now do a little arithmetic, and you will find that if we divided the $45 billion up equally among those 9 million poor families, we would be able to give each family $4,600 a year, and this added to their present income should eliminate poverty! Direct aid to the poor, however, is running only about $600 per family. It would seem that someplace there must be some overhead.
So now we declare "war on poverty," or "you, too, can be a Bobby Baker!" Now, do they honestly expect us to believe that if we add $1 billion to the $45 million we are spending... one more program to the 30-odd we have — and remember, this new program doesn't replace any, it just duplicates existing programs — do they believe that poverty is suddenly going to disappear by magic? Well, in all fairness I should explain that there is one part of the new program that isn't duplicated. This is the youth feature. We are now going to solve the dropout problem, juvenile delinquency, by reinstituting something like the old CCC camps, and we are going to put our young people in camps, but again we do some arithmetic, and we find that we are going to spend each year just on room and board for each young person that we help $4,700 a year! We can send them to Harvard for $2,700! Don't get me wrong. I'm not suggesting that Harvard is the answer to juvenile delinquency.
Let me quickly confirm, yes, Harvard was $2700 at the time. I found an article from the archives of the Harvard Crimson from May of 1963 stating Harvard would be raising its tuition. Before the raise, tuition was $1520 per year with an average boarding price tag of $1100. That’s $2620. Add in some textbooks and booze, and Reagan's dead on with that number.
More recently, Paul Ryan, while running mate to Mitt Romney in the 2012 Presidential election, made this statement (and I was actually there to hear it):
I see veterans... and cheeseheads! It makes me hungry, sometimes, when I see that.
Opps, wrong clip, though I was in the audience for that too.
Just last year, total federal and state spending on means-tested programs came in at more than one trillion dollars. How much is that in practical terms? For that amount of money, you could give every poor American a check for twenty-two thousand dollars. Instead, we spent all that money attempting to fight poverty through government programs.
Over the course of the last 240+ years, the United States federal government has been slowly accumulating more and more duties for itself to perform, instead of leaving them to the people, the cities or the states. As it has done so, it has created more and more need to tax us to pay for what it does. There are more buildings to maintain, more employees to pay, more, more, more and everywhere you look, there’s a hand out, needing to get paid.
For example, let's create a scenario. I am sure this is nowhere near how things actually work, but, for the sake of illustration, here it is: Say you or I have $10 that is going to the federal government from our payroll tax withholdings. It reaches Washington D.C. and someone at the IRS or Treasury Department routes it to the Department of Agriculture, but they have to snip off a little piece of that for themselves, you know, administrative costs. It arrives at the Department of Agriculture. Now they take their piece of it and determine where the remainder is going to go, a federal subsidy for school lunches being administered by a state, let's say. So, my money now travels to that state capital, where a state level education department takes it, gets their piece of the action and moves what’s left of our $10 to a city school district, which clips off a piece for its own administrative costs and finally pays for one or more underprivileged children's lunches. Let’s be generous and say that $5 made it all the way back down. I honestly don’t believe that it would be that much, but that's just me being cynical.
Now, let's tweak the scenario, slightly: That $5 landed right back in the city where you or I live.
Wouldn't my tax dollars, your tax dollars, all our tax dollars be more efficiently spent if that $10 never went through the federal or state levels of the government? Instead of $5, it could be $8 or $9 buying lunches for those kids because the only level of government covering its costs is the local level.
Now, I understand there are some things the Federal government must do, but that list is pretty short. I can think of 5 Cabinet-level departments that could be eliminated, with most, if not all, of their functions being transferred down to the state and/or local levels or maybe just being eliminated completely. Add in various other administrations, commissions, programs, boards and bureaus and we may be able to cut down the size of the federal government, cut the deficit and debt, cut taxes at the federal level. I freely admit, local and state taxes would likely go up as a result of those transfers of functions.
Why not do it? Why not make the change? Power. Those given power seldom release their hold on it. I am talking not just about our elected officials, but the unelected bureaucrats in these departments as well. By commanding the lion's share of the tax funds, they can hand it out to the lesser governments, state, county and local with strings attached. Strings cause all kinds of problems. Without going into too much detail, my own city was forced to remove traffic signals (which included crosswalks) as a condition of taking money from the state to pay for the new signals. Had they paid for the project themselves, they could have configured the streets anyway they wanted. Strings can be used to dictate education standards at every level. In fact, in yet another Reagan speech. This one from 1966, he tells the following story:
Some time ago a group of distinguished college presidents, alarmed at the extent to which academic freedom has been compromised by these vast money grants, went to Washington and they had a proposal they'd worked out. ... Over and over again in Washington they kept asking, "But why won't this system work?" and finally a Freudian slip occurred. Francis Keppel, United States Director of Education blurted out, "You don't understand, under the plan you proposed, we couldn't achieve our social objectives."
This is why schools like Hillsdale College refuse federal funds. They feel they would be required to compromise their educational standards.
So, let me ask, in closing, is it worth it to compromise if it means you don’t have to pay?