Reagan's $90 Billion Blunder

Ronald Reagan had decided that it was time to switch from conservative generalities to a more specific blueprint for drastically reducing Big Government. And so, after three weeks of slapdash staff work, he proposed on Sept. 26 "a single bold stroke" that would abolish the federal role in welfare, education, Medicaid, air-traffic control, postal subsidies and some other services.

He estimated that the scheme would reduce federal expenditures by more than $90 billion, enabling the Government "to balance the federal budget, make an initial $5 billion payment on the national debt and cut the federal personal-income tax burden of every American by an average of 23%." Almost in passing, he mentioned that states or communities wanting to retain programs formerly financed by federal funds "might" have to raise taxes.

As he began stumping for the Republican presidential nomination last week, Reagan may well have begun to regret the whole idea. Reason: the $90 billion statement is threatening to turn into the sort of gaffe that has helped sink previous presidential campaigns: Barry Goldwater's 1964 proposal to make Social Security voluntary and George McGovern's 1972 recommendation that the Government pay every American $1,000 a year. Above an editorial at tacking the scheme, New Hampshire's Portsmouth Herald last week carried the headline REAGAN DIGS HIS OWN GRAVE. Although federal taxes would be decreased, Gerald Ford's campaign aides--and Democrats--point out that state and local taxes would soar.

At nearly every campaign stop, Reagan last week insisted that he had been misunderstood, and did a considerable amount of backpedaling, explaining and modifying. There would be no "dumping" of social-service functions on state and local governments, he said; instead, the transfer would be "orderly" and "phased." He argued that tax rates would be entirely up to state and local governments, since they would decide which federal programs to continue, cut back or abandon. Moreover, Reagan maintained, his scheme would provide additional tax savings for Americans by eliminating the large federal administrative costs and enabling the programs to be run more efficiently at lower levels.

In any case, the $90 billion figure is based on budget estimates made by Ford Administration economists nearly a year ago and is out of date. Because of tax cuts and other changes, the fiscal 1976 federal budget would show only a $5 billion surplus if Reagan's proposal had been adopted. Said a Reagan aide:

"It taught us a lesson. This is a presidential campaign, and we have to be much more cautious and carefully researched." What is more, the idea has such a tar-baby quality that Reagan is now perfectly willing to share its paternity. In snowy Conway, N.H., last week, he credited Presidents Franklin Roosevelt, Dwight Eisenhower and John Kennedy with similar notions and shrugged: "It isn't a new idea."

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