Michael New - Contributor
J. New received his Ph.D. in Political Science from Stanford
University and is currenty a post-doctoral fellow at
the Harvard-MIT Data Center. Michael's research interests
include tax limitations, campaign finance reform, and
welfare reform. Michael's writings have appeared in a
number of publications including Investor's Business
Daily, National Review Online, and
Country Register. He
is a board member of The Stanford Review and an Adjunct
Scholar at the Cato Institute. [go
to New index]
Governor Who Changed America
Laying the groundwork for a Presidency...
[Michael J. New] 6/11/04
the days that have followed the passing of Ronald Reagan, conservatives
extolled Reagan’s numerous successes
while President. However, Reagan’s accomplishments as Governor
have received relatively scant coverage. This is unfortunate
because Reagan’s tenure as Governor had a profound impact
on the country. His victories in California’s 1966 and
1970 gubernatorial elections rejuvenated and inspired the conservative
movement. Furthermore, many of Reagan’s actions while Governor
laid the groundwork for a number of conservative political successes.
First, Reagan’s victory in California’s 1966 gubernatorial
election gave the conservative movement a much needed spark.
Many conservatives were downtrodden after Barry Goldwater’s
landslide defeat in the Presidential election just two years
earlier. However, Reagan preached optimism, writing in National
Review that the “majority did not vote against our conservative
philosophy, they voted against a false image our liberal opponents
successfully mounted.” Reagan’s victory in 1966 demonstrated
that conservative ideas, when presented effectively, could enjoy
Indeed, Reagan made conservative ideas an important part of
his campaign. He came out strongly in favor of property tax relief.
Furthermore, Reagan opposed withholding of state income taxes
because he felt that it would make subsequent tax increases easier.
In contrast, his Democratic opponent, Governor Pat Brown had
hiked taxes, increased state support for schools, and enacted
a massive welfare liberalization package. Overall, the rising
tax burden, coupled with the urban riots in Watts, and the unrest
on college campus propelled Reagan to a surprisingly easy victory.
his entire term as Governor, Reagan faced Democratic majorities
chambers of the California state legislature.
This made it very difficult for Reagan implement a number of
policy reforms. However, Reagan did sign a sweeping welfare reform
bill in 1971. During this time, AFDC caseloads were rapidly expanding
across the country. In California caseloads quadrupled between
1963 and 1970. In fact, by 1971 one out of 13 Californians was
receiving AFDC. Reagan’s desire to both promote self sufficiency
and reduce state spending led him to aggressively promote welfare
reform during his time as Governor.
California Welfare Reform Act (CWRA) was one of Reagan’s landmark achievements as Governor. These reforms
tightened eligibility requirements and implemented stringent
antifraud measures. This bill also started a Community Work experience
program which required fathers and mothers without young children
to work at public sector jobs. Within three years, California’s
AFDC caseloads declined by 17 percent, saving taxpayers $2 billion.
Furthermore, because benefits were maintained for those unable
to work, it earned plaudits from many across the political spectrum.
Governor Reagan’s efforts to reduce taxes
and spending in the Golden State met with less success. When
Reagan was inaugurated in 1967, his first priority was reducing
the sizeable deficit that he inherited from his predecessor Pat
Brown. Reagan ordered a hiring freeze, a 10 percent budget cut
from all state agencies, and other expenditure reductions. However,
since he was unable to convince Assembly Democrats to support
further spending reductions, Reagan reluctantly signed a tax
increase in 1967.
This tax increase succeeded in reducing the state deficit. However,
revenues from this tax hike would later generate more revenue
than expected, pushing spending to record levels. Reagan wanted
to reduce the flow of revenue coming into the state treasury
and proposed tax cuts on a number of occasions. However, Assembly
Democrats were not receptive. The best Reagan could do was to
increase the size of the property tax exemption for homeowners
and to issue temporary tax income rebates in 1969 and 1973.
As a result, Reagan decided to pursue another strategy to keep
spending in check, a constitutional limitation on state expenditures.
A blue ribbon commission of economists, including Milton Friedman
worked together to craft a spending limit. Their final product
called for the rate of budgetary growth to be slowed until state
expenditures equaled 7 percent of state personal income.
The drafters of Proposition 1 were careful to avoid loopholes
that could be exploited by the legislature. In fact, they were
probably too careful. Many voters found the initiative to be
somewhat confusing and, on a couple occasions, Reagan seemed
unaware of a few of the details himself. In the end, Proposition
1 failed, winning only 46 percent of the vote.
However, Proposition 1 scored some impressive victories along
the way. First, it marked the first time that a statewide initiative
to limit spending had qualified for the ballot. More importantly,
the fact that Proposition 1 came close to passing convinced many
that the initiative could be an effective tool for placing limits
on government. In 1978, California voters overwhelmingly approved
Proposition 13 and in 1979 California residents enacted a spending
limit. By the early 1980s, 30 states had reduced property taxes
and 17 states enacted spending limits. The tax revolt had arrived.
Ronald Reagan enjoyed less success as Governor than as President.
many of his actions paid long term dividends
for conservatives. His reform of welfare had a long term impact
both in California and across the country. Governor Reagan’s
willingness to use ballot initiatives to place limits on government,
inspired others to do the same with even greater success. However,
most importantly Reagan’s victories in 1966 and 1970 rejuvenated
the conservative movement and rallied countless Americans to
the conservative cause. Furthermore, Reagan’s ideas and
leadership as Governor gave him nationwide recognition and played
no small part in his successful bid for the Presidency in 1980. CRO
Michael J. New, is a post-doctoral fellow at the Harvard-MIT
2004 Michael New