Where Johnson, Nixon, and Carter had expanded the Role of Government economically, Reagan wanted to shrink it by cutting:
The growth of government spending.
Both income taxes and capital gains taxes.
Regulations on businesses.
The expansion of the money supply.
In other words, Reagan is just laying down the groundwork for what would become Reaganomics (trickle down, supply-side) in this quote, he isn’t saying government is the problem in general (and indeed his record shows he used government liberally at times despite his general small government message; in fact, his critical fans will tell you Reaganomics would have worked if it wasn’t for all the other government spending!)
Today people often treat the quote as if it applied to any issue of government, but Reagan didn’t say it that way, and Reagan didn’t govern that way.
Today we hear “small government,” but like it was with Reagan, this is often just a statement on taxes on the rich and subsidization for the poor, not a stance on military spending, debt, or religious-based policy.
And indeed, the records of Reagan, the Bushs, and Trump don’t show “small government.” They show only and specifically tax cuts for the wealthy, especially in terms of wealth taxes, the creation of debt, lots of military spending, and select uses of power when it suits their agenda.
Does that grow the economy? One can surely argue that it does, but it also grows the wealth gap and debt (but not wages), which is hardly a recipe for “less government.”
Love Reagan and his polices or not, that is the context in which the quote should be understood.
Ronald Reagan .. “Government is the problem.” Listen to what Reagan actually says. He isn’t anti-government, he is pro-people. This is the short clip, see the full clip, a transcript, and a longer excerpt from the speech below.
TIP: The quote is from January 20, 1981 from Reagan’s first inaugural address. 8 years later Reagan was somewhat of a changed man with more nuanced views. People tend to politicize this Reagan quote in a way that differs from the context in which it wasn’t said. Reagan was a small government Republican, clearly favoring Reaganomics over regulations and taxes, but he also spent decades in politics trying to ensure government worked for the people. Reagan may have been for a limited government, but he was not “anti-government.”
How to Understand Reagan’s “Government is the Problem” Quote
On January 20, 1981, during his first inaugural address, Reagan gave a speech where he offered a new solution to America’s recession.
His message was one of individual responsibility and small government, especially in terms of economics, where freeing up businesses would trickle down wealth on the lower classes.
In terms of the quote specifically, the specific point wasn’t that “all government is bad,” or that “government was always the problem,” it was (to sum up his intent, not to quote him exactly) “in this situation, in terms of our current economic crisis here in 1981, more government regulations and taxes aren’t the answer to our problems, they are the problem, we should cut taxes, deregulate businesses, and unburden the individual and let wealth trickle down.”
At this point we can ask again, did Reaganomics work, did wealth really trickle down? The answer is yes and no. The rich got richer, the country went into debt, but the economy did grow, and some aspects of wealth did trickle down.
A rising tide lifts all boats, but the shifting of money into the pockets of the wealthy also had some nasty effects (like high end stores saw more business but low-end stores suffered).
Below I’ll present a video of Reagan’s speech, then present a pro-Reaganomics and anti-Reaganomics video so you can be your own judge.
Full Show 11/11/15: How Reaganomics Killed America’s Middle Class. An argument that Reaganomics began the cycle of debt and killed the middle class.
Stockman: Reaganomics Would Have Worked If Tried. In a way this is the best argument for Reaganomics, even though it is a much shorter video. It says “if Reaganomics was tried, it would have worked.” In other words, if Reagan actually wanted small government, and didn’t spend on other things like defense spending, it would have worked. And that is the point here, Reagan and Republicans aren’t for “small government – period” they are for less spending on welfare and more tax breaks to the top (with a promise that wealth will trickle down). Yet, for all the talk, national and personal debt grows and so does the wealth gap. Meanwhile wages aren’t growing at the same rate.
TIP: Today we aren’t in Reagan’s early 1981 crisis, the tax rates are much lower and debt is much higher (every President has grown it, Democrat and Republican). So even if Reagan was right in 1981, that doesn’t make him right today.
What is the Point to Reagan’s “Government is the Problem” Quote from his 1981 Inaugural Address?
The idea here is that Reagan was an individualist who believed in liberty, democracy, free enterprise, and small government.
Reagan believed in government, but he didn’t believe in a government run by cronies and elites and dependent on debt.
The way the Reagan quote is used today often implies that “government doesn’t work – Period,” but that isn’t exactly what Reagan said, nor is it what Reagan’s record shows (consider his heavy borrowing, the war on drugs, tariffs, the North American accord that became NAFTA, etc).
Reagan’s “the government is the problem” message, especially in context, is simply one of economic populism, a rejection of Carter era polices, and optimism about what would be come to be known as Reaganomics. It is not however a pure rejection of government in general.
Reagan thought a country should be governed like one cooks a small fish, gently.
Although Reagan did call for smaller government and trickle down in 1981, and although he never changed his general thoughts on economics, by 1988 Reagan was tearing down walls in the name of liberalism by leveraging state power, and that sort of context is important to remember.
Below is an excerpt from Reagan’s speech so you can decide what you think the quote means in context for yourself.
Excerpt From Ronald Reagan’s Inaugural Address January 20, 1981
“But great as our tax burden is, it has not kept pace with public spending. For decades we have piled deficit upon deficit, mortgaging our future and our children’s future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals.
You and I, as individuals, can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we’re not bound by that same limitation? We must act today in order to preserve tomorrow. And let there be no misunderstanding: We are going to begin to act, beginning today.
The economic ills we suffer have come upon us over several decades. They will not go away in days, weeks, or months, but they will go away. They will go away because we as Americans have the capacity now, as we’ve had in the past, to do whatever needs to be done to preserve this last and greatest bastion of freedom.
In this present crisis, government is not the solution to our problem; government is the problem. From time to time we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price.
We hear much of special interest groups. Well, our concern must be for a special interest group that has been too long neglected. It knows no sectional boundaries or ethnic and racial divisions, and it crosses political party lines. It is made up of men and women who raise our food, patrol our streets, man our mines and factories, teach our children, keep our homes, and heal us when we’re sick—professionals, industrialists, shopkeepers, clerks, cabbies, and truck drivers. They are, in short, “We the people,” this breed called Americans.”
Reagan said, “…Government is the problem…”, but it was part of a longer sentence and speech, with more words in it, in which he makes his point more clear.
Reagan cherished the individual, such is a good liberal position in the vein of Jefferson, Jackson, or even a 1920’s Republican, but he never implied that the answer was to literally dismantle the government (nor did he govern that way).
Reagan spent much of his life in government, so he obviously wasn’t fully opposed to it, he simply thought that big government solutions weren’t generally the answer, specifically regarding economics (we can’t act like there wasn’t times when he did indeed use big government without batting an eye such as for the purposes of military or drug wars).
All this to say, the quote is real, but it is often misquoted and misremembered. The quote had specific meaning that applied to specific times, and thus it should be remembered in context (not truncated to “government doesn’t work” and then used to support any anti-government ideology).
Author: Thomas DeMichele
Thomas DeMichele is the content creator behind ObamaCareFacts.com, FactMyth.com, CryptocurrencyFacts.com, and other DogMediaSolutions.com and Massive Dog properties. He also contributes to MakerDAO and other cryptocurrency-based projects. Tom's focus in all...