Reagan's Greatest Success as Governor

President Reagan’s most splendid achievement was making the Evil Empire vanish. But he never would have made it to the Oval Office if he hadn’t become one of California’s most successful governors–a success that was far from assured and has rarely been mentioned by the national media in all the coverage since his death.

Reagan had run for governor in 1966 as a conservative, but, by the end of his first term in 1970, he had raised taxes sharply and was still facing a welfare crisis that threatened to bankrupt the state. The relief rolls had climbed from 600,000 to a stunning 2.2 million in the previous decade, costing in excess of $2.5-billion annually. As Reagan put it, the Golden State was facing a “fiscal and human disaster.”

The governor’s choice of Robert Carleson to lead his welfare reform effort proved to be one of Reagan’s shrewdest moves–an appointment that burnished his gubernatorial career and led to a revolution in how this nation deals with the welfare issue.

In August of 1970, Carleson headed up a subgroup of a welfare taskforce to analyze the state’s mounting burden. After a thorough study of all the complex laws and regulations, Carleson informed the governor that the welfare rolls were not only heading moonward, but that really needy families had to rely on benefits that had been frozen for over a decade. The good news: Both problems could be solved.

Carleson’s optimism was not widely shared, but the governor and a few others in the administration were determined to succeed. Virtually all of the welfare and fiscal experts, however, believed in the alarming assessment of the state’s legislative analyst, A. Alan Post, that no matter what effort was made, the relief rolls would swell by an additional half-million recipients by 1974.

Undeterred, Reagan, after his re-election, appointed Carleson director of the social welfare department, with Carleson picking legal expert Ron Zumbrun, program analyst Jack Svahn and several others to tackle the enormous problem. None, by design, was tied to the state’s welfare establishment, which Carleson felt was largely responsible for the crisis that existed.

Crucial to the Carleson group’s success was a surprise discovery: that the director had broad legal authority to restrict welfare eligibility and curb abuses.

With this weapon in hand, Carleson & Co. reorganized the department and instituted scores of administrative and regulatory changes.

By restricting eligibility, cracking down on eligibility “error,” increasing work incentives and similar changes, the Carleson team managed to place a tourniquet on costs and reform the bureaucracy–fighting the welfare establishment every step of the way. By March of 1971, Gov. Reagan delivered to California’s lawmakers a comprehensive proposal designed to codify these administrative changes and enact further reforms that needed legislative approval.

To goad the Democratic legislature into acting on his plan, Reagan formed a bipartisan group that mobilized widespread grass roots backing for the governor’s package. Months of hearings also fueled public support.

In case the legislature still refused to act, Gov. Reagan was prepared to unleash “Operation Crossfire,”–a plan to get his popular reform plan put on the ballot and then stump for it throughout the state, thus threatening the obstructionists in the legislature with political defeat. When this secret political strategy became known, the Democrats finally decided to deal. As Reagan liked to say, “When the legislators feel the heat, they frequently see the light.”

The Democratic Speaker of the Assembly, Bob Moretti, agreed to head a team that would negotiate directly with the governor and his aides. Reagan worked from a copy of his own bill, coded by Carleson so the governor knew in what areas he had to hold firm and where he could generously concede. (In their good cop, bad cop routine, Reagan would sometimes firmly “overrule” a supposedly deflated Carleson on a minor issue.)

After five days of negotiations, Reagan and Moretti shook hands before the television cameras and the bill went to legislative staff to make the modest changes agreed upon. Reagan and Carleson had won hands down, but the battle was not quite over.

Carleson and Zumbrun were sitting in Carleson’s office on a Saturday waiting for a call from the staffers that the Reagan-Moretti compromise was ready to present to the legislature. When the call appeared to be slow in coming, Carleson and Zumbrun dashed to the Capitol and found Bob Rosenberg, a deputy legislative counsel, and another counsel for the Welfare Rights Organization (the leading opponent of the reforms in court), inserting “legal land mines” into the compromise version! “They were attempting to undo what Reagan and Moretti had accomplished,” Carleson recalls.

So another week of negotiations–this time without Reagan and Moretti–was necessary, with Ed Meese, Reagan’s chief of staff, now heading the Reagan team. After Meese exposed Rosenberg’s duplicity, the initial Reagan-Moretti agreement was stitched back together. The Welfare Reform Act, consisting of over 84 major provisions, was passed and then signed into law on Aug. 13, 1971, taking effect two months later.

The administrative reforms, combined with the legislation, proved effective–and historic. When 1971 began, the welfare rolls had been growing at the rate of approximately 40,000 persons per month, and continued to climb through the first three months of the year.

Then came an abrupt change, with the rolls not just leveling off, but declining in real numbers as the March administrative reforms took hold. From the end of March 1971 until late 1974, the end of Reagan’s second term, there were more than 850,000 fewer persons on Aid to Families with Dependent Children (AFDC) and general assistance than had been projected by the experts prior to the administrative reforms.

There was an absolute reduction of over 300,000 persons.

Despite major benefit increases to truly needy families, total welfare expenditures dropped in fiscal year 1972-73 for the first time. Nearly nine years later, in January 1980, there were still close to 300,000 fewer persons on AFDC and general assistance than in March 1971.

Reforming welfare was Ronald Reagan’s most impressive gubernatorial achievement and turned out to have enormous political and fiscal impact. The reform not only helped put the budget in the black, allowing Reagan to return money to the taxpayers, but proved that conservative principles applied to a seemingly intractable domestic problem could be highly effective. It also transformed Reagan from a celebrity governor, grounded in conservative philosophy, into a high-performing chief of state and a credible presidential candidate.

Because of the success in California, a number of other states embraced similar policies, including New York under liberal Gov. Nelson A. Rockefeller.

So successful was this Reagan program that the Nixon Administration–which, amazingly, was attempting to federalize welfare through its Family Assistance Plan–had to abandon this absurdly misguided program that had been pushed relentlessly by Nixon and the late Daniel Patrick Moynihan when Moynihan was serving as a Nixon policy adviser. (Reagan personally finished it off for good when he testified on his own welfare reform program before the Senate Finance Committee in Washington in February 1972.)

The impact of the Reagan-Carleson reforms had not yet run its course.

Carleson, working for both Presidents Nixon and Reagan, managed to secure additional reforms on the federal level. And, in 1996, President Clinton, under pressure from a Republican Congress–with extensive lobbying by Carleson as a senior fellow with the Free Congress Foundation–signed the landmark federal welfare reform law.

It was based on the principles laid out in the initial California program of 1970-71 and the Reagan-Carleson belief that the federal bureaucracy, much of it captured by the welfare lobby, was hamstringing state reforms. The AFDC program was replaced, federal restrictions on the states were considerably reduced and state incentives to increase their caseloads to secure more federal funding were ended.

The results are in: Welfare rolls across the country have not only been dramatically reduced, but overall poverty, child poverty and black child poverty “have all dropped substantially,” notes the Heritage Foundation’s welfare expert, Robert Rector, who also played a key role in the 1996 reform effort. Catastrophic predictions of mounting poverty have failed to materialize.

Ronald Reagan’s views on how to deal with welfare had triumphed nationwide. But he might never have risen to the presidency if he hadn’t stuck to his philosophical guns some 34 years ago.