‘Used Up All the Resources’ : Budget Deficits to Restrict Social Programs for Years

To hear some conservative activists tell it, Ronald Reagan has proved to be a tremendous disappointment as President.

“It would be hard to argue that the Reagan Administration represented any real kind of revolution” in domestic policy, said Paul Weyrich, president of the Free Congress Research and Education Foundation, “because the Administration was clearly not very committed to the social issues.”

In one sense, that appears to be true. President Reagan, despite a vigorous campaign to reverse decades of growing federal involvement in the day-to-day lives of Americans, was unable to quell the public’s appetite for government services. And he failed to implement the conservative social agenda--banning abortions, for example, and allowing prayer in public schools.

But, in a much more important sense, Reagan’s presidency has spawned a decisive turn to the right. Whether intentionally or accidentally, Reagan’s whopping federal budget deficits will limit the reach of the federal government in domestic policy and restrict the welfare state.

It is a legacy that will live well beyond his Administration, regardless of the identity of the next President.

“Ronald Reagan has fundamentally used up all the resources for initiatives for the next two decades,” contends Barry Bosworth, a former Jimmy Carter Administration economist now at the Brookings Institution.

Unfortunately for the next President, however, many of the problems remain. Reagan’s critics believe he has neglected homelessness, AIDS and the difficulties facing single parents and their children. Pent-up pressure to do something about them will land on Reagan’s successor.

“After eight years of complete inaction at the federal level, there is a growing sense that it is time to deal with real problems again,” said David Ellwood, professor of public policy at Harvard’s Kennedy School of Government and author of the book “Poor Support: Poverty in the American Family.”

No Criticism of Reagan

Managing the collision between rising expectations and dwindling resources will be one of the major challenges of the new President. And so popular has Reagan been that even the most partisan Democrats are unwilling, when appealing to the general electorate, to criticize him for creating that predicament.

“Reagan has set the agenda for both political parties,” said Martin Anderson, an economist at the Hoover Institution in Palo Alto, Calif., who was a senior White House domestic policy adviser at the start of the Administration.

Perhaps so, but it is also true that Reagan failed to mount the all-out assault on federal domestic programs for which his conservative backers had hoped. He eliminated practically none of the agencies that are anathema to conservatives--even the Legal Services Corp., one of Reagan’s bugaboos because of its advocacy for the poor, survived in Congress when Reagan tried repeatedly to kill it.

Some Programs Trimmed

Although the President succeeded in 1981 in trimming some benefit programs for the poor, including food stamps and Aid to Families with Dependent Children, Congress rejected most of his subsequent proposed cuts. And, for the most part, the President never even tried to go after Social Security, Medicare, veterans’ benefits and other programs for Americans of all income groups.

What happened instead, as analyst Jack Meyer puts it, is that the Reagan Administration, by “pulling the revenue plug,” has assured that there simply won’t be enough money coming in to the Treasury for the federal government to initiate any significant new social programs. Meyer, who heads a Washington research group called New Directions for Policy, said that Reagan’s fiscal policies “herald a major accomplishment for the Administration.”

Most analysts point to the historic reduction in income tax rates enacted in 1981, Reagan’s first year in office. Although subsequent changes in tax laws have restored the federal government’s share of the nation’s income close to its pre-Reagan level, Reagan halted the upward climb.

Brackets Tied to Inflation

And the 1981 tax law, by making tax brackets expand with inflation, ensured that inflation-driven increases in income no longer would push tax revenue ever upward.

Meanwhile, by reviving military outlays, maintaining Social Security benefits for the growing elderly population and increasing payments on the ever-mounting national debt, Reagan has left less room for everything else the government does--or might want to do.

“By begetting his successor an oversized budget deficit and fostering an anti-tax sentiment, Reagan has made it very difficult for succeeding Administrations to come up with new resources to address neglected problems,” lamented Robert Greenstein, director of the Center on Budget and Policy Priorities, one of Washington’s most respected liberal advocacy groups.

The gap between the growing demand for renewed government activities and Washington’s declining ability to pay for them will require new approaches that do not rely on large federal outlays.

‘Burst of Creativity’

“Fortunately, one legacy of federal inaction has been a burst of creativity at the state level,” Harvard’s Ellwood said. “That’s where the innovations in social policy are coming from.”

Although Reagan eliminated federal revenue sharing with local governments, he will leave behind a new emphasis on state government. Once considered a hopeless backwater, state governments began improving rapidly in the 1970s, and Reagan’s cutbacks on federal programs accelerated the trend.

“People recognize that the government needs to be involved in solving some problems, but they don’t automatically turn to the federal government any more,” said Stuart Butler, director of domestic policy studies at the conservative Heritage Foundation. “Pushing for solutions from lower levels of government seems to me to be a major success.”

Nonetheless, although the states picked up some of the slack, new problems have grown unchecked, creating demand for federal intervention.

“For the first time,” said Hugh Heclo, a professor of public affairs at George Mason University in Fairfax, Va., “Reagan brought an approach to Washington designed not so much to accomplish things but to stop them.”

Housing Funds Cut

As the stock of existing low-income housing continued to shrink, for instance, spending authority for new federal housing assistance was cut from nearly $36 billion in 1980 to less than $15 billion last year, making it more and more difficult for poor families to find homes they can afford. Last year, nearly half of the households with incomes below $7,000 living in rental housing were paying at least 60% of their income on rent.

And, although the Reagan Administration was not responsible for many of the demographic changes in the poverty population, it failed to respond to them. Social Security and Medicare have helped lift huge numbers of the elderly into the middle class, but there are now 1 million more children living in poor families than in 1980.

“There’s a glaring disparity between the continued success in improving the lot of the elderly,” Meyer said, and “the intractability of problems of young adults and children.”

Moreover, under Reagan, the proportion of children falling into the “poorest of the poor” category, which counts those in families whose incomes do not reach even half the poverty line, swelled by more than 25%. Nearly all those children are in families headed by a single woman.

Single-Parent Homes

Roughly half of the children born in America today will spend some time in a single-parent home. Conservatives and liberals agree that the nation’s current social policy is poorly designed to provide enough support for the parents of such children so that they are not faced with the choice of working full-time or going on welfare.

“Reagan never came to grips with the problems of broken families,” the Heritage Foundation’s Butler concedes.

“We need to create some middle ground for the working poor,” Ellwood said, “so they can count on some core of support without having to choose between welfare and leaving their children out in the cold.”

In addition, the Reagan Administration dragged its feet for years when acquired immune deficiency syndrome emerged unexpectedly in the early 1980s as the nation’s top public health crisis. By the time Reagan delivered his first speech on the epidemic last May, 36,058 Americans had been diagnosed as having the disease and 20,849 of them had died.

“He was the man who had let AIDS rage through America, the leader of the government that, when challenged to action, had placed politics above the health of the American people,” Randy Shilts wrote in “And the Band Played On,” a harsh but well-documented attack on the initial lack of urgency prevalent in the federal government and among many gay activists about the disease.

Middle-Class Benefits

A central irony of Reagan’s assault on the domestic services of the federal government is that he has demonstrated how well-entrenched are the middle-class benefit programs of Social Security, Medicare and veterans’ benefits.

“Reagan proved once and for all that it is impossible to dismantle the domestic public sector,” according to Walter Dean Burnham, a University of Texas political scientist. “He may have rolled back the Great Society, but he has preserved the New Deal.”

And Sen. Phil Gramm (R-Tex.), although arguing that “Congress has never lived up to the budget side of the Reagan revolution,” concedes that Reagan “never developed a long-term strategy nor was willing to expend the political capital to curb the middle-class welfare state.”

Many conservatives are convinced that Reagan, after eight years in office, will at least leave a lasting imprint on the nation’s federal courts.

Reagan has appointed nearly half of the federal judges currently on the bench. His appointees to the Supreme Court closed the door on the era of social activism that began with the 1954 school desegregation decision under Chief Justice Earl Warren and began to wane with Richard M. Nixon’s four appointees in the early 1970s.

Appointed Young Judges

Before Reagan, the average federal judge served about 12 years before retiring. But many of Reagan’s appointees have been younger judges who, if they choose, will be able to serve well into the next century.

The Administration’s “legacy depends wholly upon Reagan’s judicial appointees,” conservative activist Weyrich said. “He leaves very little outside the judicial area in concrete terms.”

But conservatives may find that they cannot win their long-pressed social agenda any more easily in the courts than they have been able to in the political arena. If the Reagan judges adhere to the doctrines of judicial restraint that they espouse, they may be unwilling to reverse many of the decisions of their predecessors. Perhaps just as important, they may be unprepared to curb the decisions of lawmakers.

‘Trapped by Own Beliefs’

“Conservative judges are trapped by their own beliefs,” Butler said. “In the absence of any consensus on these divisive issues, they are going to be reluctant to impose their views on society because they believe those matters are best left to legislators and the electorate to decide for themselves.”

In the end, then, how has the domestic policy landscape of the nation been reshaped by eight years under the most conservative President in 50 years?

“Reagan has erected massive barricades to the kinds of programs Democrats have traditionally favored,” Burnham concludes. “But Reaganites learned that there are limits on their dreams, too.”