The Reagan Administration and the Thatcher Government
In this present crisis, government is not the solution to our problem; government is the problem. — Ronald Reagan, inaugural address, 1981^
After Ronald Reagan and Margaret Thatcher came to power in 1981 and 1979 respectively, they continued their successive terms of office under the dual banners of reducing public spending and expanding the private sector. The policy of privatisation on their political agendas has not only re-defined the role of the state in every aspect of economic and social life in contemporary American and British society, but also extended into the cultural landscape of both countries. The previous social-democratic/liberal assumption, that access to the arts, like that to any other public service provided by the state such as education, is a fundamental right of every citizen, has been profoundly challenged. This is especially true with regard to the arts in Britain, since the British government had directly provided arts organisations with their operating costs since the establishment o f the Arts Council of Great Britain in 1945.
In the Thatcher years public-funded arts institutions, whether they liked it or not, were forced to expose themselves to market forces and adopt the competitive spirit of free enterprise. To move the arts world into line with the enterprise culture, both the Reagan administration and Thatcher government cut the budget for direct arts subsidies, which were perceived not only to have weakened initiative and created a culture of craven
dependency among the subsidised bodies, but also to have discouraged or driven out potential supporters from the private sector.^
While one can well argue that budget cuts were being exercised across the board rather than being specifically targeted at the arts, both Reagan and Thatcher made persistent efforts to ensure that sufficient incentives were implemented to lure private rhoney in this area. Their efforts can best be illustrated by changes in public policy related to the arts, especially tax policy, during their terms of office, and by the associated use of political influence and symbolic power which they both commanded as heads of state or government. If the former seems to be black-and-white and thus self-explanatory, the latter is more than mere speculation. The importance of this political posturing must not be underestimated. Exclusive government receptions given in the name of the arts provided businessmen with unique occasions to meet leading politicians (and the royal family in Britain) in a seemingly non-political ambience and thus, it was hoped, open up a pathway to the corridors of power for them. This was both tacitly understood and explicitly stated by government and business.
The Arts under the Reagan Adminstration
When he was still Governor o f California, Ronald Reagan already preached the gospel of less government interference and poured scorn on intellectuals and liberals. He was once quoted as saying that he was not "in the business of subsidizing intellectual curiosity. In response to American Arts magazine’s questions to presidential candidates in 1980, Reagan criticised the "populism" of the Carter administration. While stating that federal arts funding might have a steady annual increase under his administration, his allegiance to private arts support was unequivocal: "Support of the arts by the private sector is very uneven. I would take a personal interest in encouraging individuals and corporations to provide support. No sooner had he assumed the presidency of the United States in 1981 than his avowed intention to increase federal support evaporated. Instead the administration, with unabashed candour, carried out its agenda of corporate soliciting.
What the Reagan administration first proposed for the National Endowment for the Arts, along with its sister agency the National Endowment for the Humanities, was a fifty percent cut in the fiscal-year 1982 budget of $175 million, as had been requested by the Carter administration, paring it down to $88 million, and from the fiscal year 1984 onwards the Endowment’s budget would be held at $100 m illion/ The Reagan White House also requested the abolition of the Institute of Museum Services. There was even widespread suspicion that the Administration intended to abolish the two Endowments altogether.^ This drastic budget cut represented a sharp reversal of federal policy on public funding for the arts, which had been expanding since the Nixon administration. The sum involved, compared to an overall federal budget of $700 billion, was minuscule, and even abolishing the entire agency would in no way have substantially reduced a projected deficit of $40 billion.
The meaning of these draconian cuts has thus to be understood in relation to the administration’s own particular ideology. Firstly, Reagan’s political allies claimed that the Endowment programs had been "politicalised" under the Carter administration and redirected towards developing arts for social rather than for artistic purposes. In response, the right-wing think tank the Heritage Foundation came up with a "new" arts policy: "The arts that NEA funds must support belong primarily to the area of high culture. Such culture is more than mere entertainment... [italic a d d e d ] T h e implication was that funding of art for "social purposes" had in the past led to expenditure of public funds on unworthy projects — "mere entertainment."
Secondly, the public ownership of the arts provided by the Endowment was deemed to be a disincentive to private support, and thus contrary to the free-market driven policies of the Reagan administration. To revise the federal arts policy completely, the administration had severely to prune the Endowment financially. As the Office of Management and Budget (0MB) put it: "This policy [of the NEA and the NEH] has resulted in a reduction in the historic role of private individual and corporate philanthropic support in these key areas. The reductions would be a first step toward reversing this trend."* Declaring federal cultural support to be a "low priority item," the 0M B thus decreed that the NEA programs had to suffer the largest single cut.
proportionately speaking, in any government agency.
Having threatened to halve the 1982 budgets for both Endowments in February 1981, the 0MB further announced their intention to rescind about $6.6 million from the NEA’s existing 1981 fiscal year appropriations in June, a decision which was however overturned by Congress.’ Nor did the President succeed in the proposed-50 per cent reduction of the Endowments’ 1982 budgets, thanks to the concerted efforts of the arts lobby. The Art Endowment’s budget was eventually set at $143 million, representing a reduction of only 10 per cent.
The favourable outcome for the Endowments did not induce the administration to abandon its ideological battle lines over arts funding. In February 1982, the 0M B proposed a 30 per cent budget cut for the Arts Endowment, a 27 per cent cut for the Humanities Endowment, and, again, the termination of the Institute of Museum Services for the fiscal year 1983. The administration stated its message in no uncertain terms: "These reduced levels of funding reflect the Administration’s intent to encourage direct beneficiaries and the private sector to make larger contributions to cultural activities. The attempts of the Reagan White House to reduce the federal arts budgets, despite opposition from significant elements in Congress, did not abate throughout Reagan’s two terms in office.
In the wake of the proposed 50 per cent cutback of the two Endowments, Reagan established a Presidential Task Force on the Arts and Humanities in May 1981. The President charged this Task Force with studying the possibility of restructuring the two agencies and recommending ways to "increase the support for the arts and humanities by the private sector."" As a result of the Task Force’s report, a President’s Committee on the Arts and the Humanities was set up with a similar mandate in the following year. The Committee, described as "the President’s troubleshooting team for the arts and humanities," had a limited role in the public art funding debate, however." It had a small staff and a modest budget. Yet its underlying meaning and political potency are not to be found in its formal structure, but in the very fact that, being a president’s committee, the Committee had, as its deputy director Malcolm Richardson pointed out: "direct access to the political players over in the White House" and was not just "a small
outlying appendage of the government. «13
This access to the highest office in the land no doubt has its political appeal. On the one hand the Committee’s memberships read like a Who*s Who of the American corporate community, and included the chairmen or chief executive officers from blue-chip companies such as the Mobil Corporation and the Times-Mirror Corporation, in addition to celebrities from the arts w o r l d . O n the other hand, the Committee was a "delightful place" for the President to reward his political supporters and give presidential recognition to the private-sector contributors.
The significance of presidential recognition was indeed emphasised by the Presidential Task Force’s report in 1981.’^ Both as the head of state and as a celebrity at the heart of high society, Ronald Reagan commanded enormous political influence and symbolic power. The appearance of the President or First Lady could therefore confer kudos on any arts event, and provides its participants with a kind of quasi national stamp of approval.
This exercise of symbolic presidential power had come to be considered by the administration as an effective way of raising money privately, and to give the same sort of artistic imprimatur as a NEA grant used formerly to confer. To quote Frank Hodsoll, chairman of the Arts Endowment appointed by Reagan and an insider close to the very centre of power in his administration: "I think you will see this Administration — the White House, the First Lady, and occasionally the President — getting into the act to encourage people, whether individuals, corporations, or foundations, to give more."^^
Soon after the proposed cut for the Endowments was announced, for example, the Reagan White House hosted a mammoth fund-raising gala for Ford’s Theatre in March 1981. The President was reported to have seized every opportunity to plead for corporate dollars as he urged on the audience: "We need this private support for the arts to continue in years to come."^* These presidential festivities entertained not only an impressive list of performers and political movers and shakers, but also nearly 100 major companies, ranging from Alcoa to Xerox, with some of them having reportedly paid up
to $5,000 for a seat.
Not surprisingly, when the corporate giant Philip Morris had an art show opening in Washington in June 1981, Reagan also gave a reception in the White House to boost m o r a l e . T h e incessant fanfares at the White House not only deflected criticism of his ideological stand against public arts funding, but inevitably helped to legitimise corporate intervention in the contemporary culture of American society.
Trivial as this may seem, the truth is that the rôle of government vis-à-vis the arts had been re-defined by the Reagan ideology. The government was acting as fund-raiser rather than simply as funder, and the federal agency, the Arts Endowment responsible for the arts, had effectively been replaced by the personal aura of the President, and removed from the arena of open democratic debate.
The grandest of these presidential gestures came when twelve artists and art patrons were honoured at a White House luncheon in May 1983, and given The Presidential Award fo r Service to the Arts, a new honour devised by the administration.^ The Texaco Philanthropic Foundation, the Dayton Hudson Foundation and Philip Morris were among those honoured as art patrons. The inclusion of three companies (or their foundations) underlined the prominent rôle that the business sector was expected to play in the administration. Perhaps to no one’s surprise, it was Philip Morris — the company whose slogan for its arts projects is "It takes art to make a company great" — that was honoured first by the President (fig. 3-1).^^
To further consolidate presidential endorsement for artists and art patrons (which, as Frank Hodsoll put it: "the President is rather good at..."), Reagan then proposed to transform this original series of one-off awards into a National Medal of Arts. This was approved by Congress and enacted into law in 1984 as an on-going p r o g r a m m e . T h e significance of these Medals was succinctly summed up by one of their recipients, the film director Gordon Parks, in 1988: "We need more medals and less money, as far as some artists are concerned.
To elicit higher levels of corporate donation, the Economic Recovery Tax Act of 1981 raised the deduction ceiling for charitable contributions for companies, either cash or benefit-in-kind, from 5 to 10 percent of a firm’s taxable i n c o m e . T h i s statutory limitation, moreover, was not as binding as it appeared to be, since any excess contribution of more than 10 percent in a given year could be carried over to each of the following five years.
Nor, without reference to the historical context, can these figures in themselves demonstrate the full extent of the Administration’s determination to encourage private donations. At the time of the legislative amendment in 1981, forty-five years had elapsed since the Federal Revenue Act of 1935 first allowed the five percent deduction for corporate donations to charitable causes. However, the evidence is that corporate donors had always been giving much less than the limits would allow, and that their contributions had remained stable at about one percent or less for the previous decades (see Table 3.1).^^
There was a modest rise in corporate contributions as a percentage of pre-tax income from 1 percent to 2 percent in the 1980s (see Table 3.2). Yet, Michael Useem, a sociologist at Boston University, pointed out that "changes in the deductibility elements of federal law may or may not alter giving patterns. The extent to which the growth that occurred is directly attributable to the change in the law is unclear, and there has not been enough research in the area to draw any definitive conclusions. This is because there are several different factors that affect corporate giving, and the tax law in question is only one of them.^* For instance, according to Useem, corporate income taxes can have a direct bearing on corporate art contributions. In 1981 the overall effective corporate tax rate was 35 percent on average. While pharmaceutical companies were taxed at a rate equalling 36 percent of their income, commercial banks were taxed at only 2 percent. In that year pharmaceutical companies gave relatively more than the banking sector (1.76 versus 1.32 percent of their pre-tax net income), and this may have been partly as a result of their relatively higher tax rate.^® The point is of significance in that the more a company has to actually contribute in giving, when tax deductions are taken into account, the less a company gives, a theme to which we will return later. Thus,
when the Administration amended the tax law relating to corporate contributions in 1981, on the assumption that higher corporate giving would ensue from favourable tax write offs, it was actually indulging in wishful thinking.
Margaret Thatcher and her Arts Ministers
Some months before the 1979 election, Margaret Thatcher assured Kenneth Robinson, the then Chairman of the Arts Council, that her government would continue to support the arts, since she did not believe that "it will make sense for any government to look for candle-end economies which will yield a very small saving, whilst causing upset out of all proportion to the economies achieved. Despite her pledge, arts expenditure for the year 1979-80 was to be reduced by almost £5,000,000, including a drop of £1,114,000 in the Arts Council’s annual grant.
To dispel accusations that she would become one of the most philistine Prime Ministers of the century, Thatcher pledged her approval of state subsidies in her first speech on the arts after she became Prime Minister at a Royal Academy banquet in May 1980. But her view of state patronage was categorically clear: "You cannot achieve a renaissance by simply substituting state patronage for private patronage. Thus the Prime Minister in the same speech praised the historian Hugh Thomas, who not long before had refused to accept a sizable prize of £7,500 from the Arts Council "on the grounds that it was a matter of principle for him that artists should not take public money.
Thatcher’s view was further articulated and trumpeted through her Ministers for the Arts, who changed six times during her eleven and a half years at Downing S t r e e t . T h i s is no surprise as one of her famous adages was "one of us," a category open to continuous reinterpretation. Her third Arts Minister, Lord Cowrie, for example, was reported as saying that he was "an orthodox member of this government in terms of economic thinking.
Ministers, Norman St John-Stevas, made his stand for commercial sponsorship without reservation:
State-side expansion has come to an end. While the public support policy will continue, in this economic and political climate it will be totally unrealistic to look to the public sector for large sums. We must look to the_private sector for new sources of money. That’s where the possibilities for the future lie.^^
The "private sector" referred to here by the Minister includes, of course, both wealthy individuals and businesses. But it is to business that the government primarily looked by introducing substantial measures to stimulate their support.
The Arts Minister soon launched an aggressive campaign to persuade the business sector to invest in the arts. No means of communication were spared as the Minister remarked: "Our task will be to explain and clarify, by means of leaflets, conferences, seminars, advertisements, newspaper articles, research projects, consultancy sessions, and various other devices. The crusade was intended to boost arts sponsorship, estimated at around £4 million to £5 million in 1979, to double that figure for the coming year.^^
In its drive to propagate the message, the Government awarded a special grant of £25,000 to the Association for Business Sponsorship of the Arts (ABSA), a "private" enterprise designed to promote arts sponsorship, which we shall consider in more detail later. The