Great quote, it is precisely what happened and is what made Reagan one of our greatest Presidents of all time. Reagan was all about the power of the individual and limiting the power of government. Government creates inefficiency because bureaucracy wrests control from local people for its own sake but has no solution or common sense strategy about the way things work.
The bigger our government gets, the worse off we will all become.
Governments grow out of necessity as populations increase and societies becomes more & more complex. It is no different than a person's jean size growing along with their owners waist size.
As far as the Libertarian Cato institute's view of Reagan goes, it is at odds even with what the Ludwig von Mises Institute has to say about old Ronnie.
and for those who are really, truly interested in the real Ronald Reagan legacy, please do take a gander at the article referenced in the link below.