Bryan Caplan  

Does Unified Government Mean Big Government?

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New evidence confirms my suspicion that divided government leads to smaller government. The latest news: A policy analysis by Stephen Slivinski, director of budget studies at the Cato Institute, finds that:

  • "Total government spending grew by 33 percent during Bush’s first term. The federal budget as a share of the economy grew from 18.5 percent of GDP on Clinton’s last day in office to 20.3 percent by the end of Bush’s first term."

  • "The Republican Congress has enthusiastically assisted the budget bloat. Inflation-adjusted spending on the combined budgets of the 101 largest programs they vowed to eliminate in 1995 has grown by 27 percent."

  • "The final nondefense budgets under Clinton were a combined $57 billion smaller than what he proposed from 1996 to 2001. Under Bush, Congress passed budgets that spent a total of $91 billion more than the president requested for domestic programs. Bush signed every one of those bills during his first term."

    One of my dissertation chapters, later published in the Southern Economic Journal as "Has Leviathan Been Bound?", reached compatible but less dramatic findings for state governments. Imagine graphing size of government as a function of the percentage of the seats in the legislature controlled by Democrats. (Note that if the percentage is below 50%, that means that Republicans are in control).

    My result: The size of government - measured by either spending or taxes - is roughly flat from 0% to 50% Democratic control, and then starts to rise as Democratic control becomes more pronounced. A Republican supermajority does no more to carry out the small government agenda than a bare Republican majority.

    So is Republicans' reputation as the free-market party completely illusory? Not quite. Michael Munger convincingly argues that Republican control leads to less regulation. My guess is that you can't easily buy friends and repay political favors by cutting spending, but you can do so by cutting regulation. If Republicans can kill two birds with one stone - helping allies and adhering to their ideology - they do. Otherwise they pretend they're in a bad movie about amnesia. "Ideology? I don't remember any ideology."

    Thanks for Tyler Cowen for the link.


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    TRACKBACKS (3 to date)
    TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/253
    The author at The Club for Growth Blog in a related article titled Tuesday's Daily News writes:
      A Study in Bias - Herman Cain, National Review Not So Glamourous - Carrie Lukas, National Review Give Us the Real Thing on Social Security - W. Wilkinson, Cato In The Static World of the Left - Jack Kemp, Townhall... [Tracked on May 10, 2005 8:46 AM]
    COMMENTS (11 to date)
    Half Sigma writes:

    Maybe the Republican party just had a huge idealogical switchover during the last few years.

    The Republicans, these days, seem to me like nothing more than religious Democrats.

    Danno writes:

    Does this mean that if there weren't any political parties we'd have really, really tiny government?

    Matt Peppe writes:

    It means if we had an infinite number of political parties we'd have no govermnent. If we had no political parties, we would face an all-consuming bureaucracy.

    Robert Schwartz writes:

    Is this really that hard to understand? First, American Politicians are not idealogues. They adopt positions the way lonley old ladies adopt stray cats, and abandon them the way gamblers dump losing hands. We note the current senatoral do-se-do on fillibusters. Those who hated them in the 90s now praise them as the ancient guardians of our liberty and those who used them in the 90s now declare them unconstitutional menaces to the saftey of the republic.

    The real interst of American Politicians is in winning and holding power. All else pales. They are not men who are inclined to think that words have any fixed meaning or useage. They say what sounds good and do what seems to be expedient.

    The party in power gets to spend money. Spending money is fun and it can be a winning political strtegy, particularly in modern America where the MSM has spent the last 3/4 century fetishizing spending money as the primary purpose of the national government. Roosevelt came to power in 1932 on a platform of fiscal rectitude, it lasted less than a minute after he took office with big majorities in both houses.

    The party out of power cannot take credit for spending money so they depreciate it and discover the virtues of balanced budgets and governmental thrift. The party out of power will always deride the imprudence of the party in power and claim it is leading the coutry to rack and ruin.

    The Current Administration responded to its election and circumstances as could be expected. It enacted wasteful spending programs such as NCLB and the Medicare drug benefit, and imprudent tax cuts.

    In all fairness not all of the federal budget deficit of 2001-2003 is their fault. Most of the revenue decline was due to the collapse of the stock market bubble that was in train well before the 2000 election and the defense increases were ocassioned by the excigencies of history. Further the new programs mentioned have yet to have made any real impact on spending. Nor can the Administration be mulcted with the operation of the programs (Medicare, Medicaid, Social Security, etc.) which are the real drivers of Federal Spending. It is an enormous multi year task to bring those leviathans into harbor.

    I voted for George Bush last year, but not with the expectation that it would produce fiscal prudence. I was and am far more concerned with foreign policy and judicial nominations than I am with the fiscal issues of the day. Those can be dealt with later at our lesiure. Terrorism and judicial tyranny will not wait. I would be happier if President Bush had shrunk the deficit and the size of government, but those are matters of prudence not principal.

    Lancelot Finn writes:

    Imagine the following game. I pick a random number between 1 and 100 (inclusive). Player A makes a guess. Then Player B makes a guess. Whoever is closer gets $10. What will A and B pick? 50 and 51.

    Now let's call the players Dem and Repub, and for the numbers, substitute political platforms, on a scale of 1 to 100, according to the size of government that will result if they are enacted, calibrated in parallel with voters' preferences such that the median voter's preferences lie at 50-51.

    If Dem and Repub are smart, they will pick 50 and 51, and the election will be a tie.

    Add two assumptions: 1) that the actual spectrum of voter preferences is not observable with certainty to the players, and 2) Dem usually picks a higher number than Repub, and takes pride in it. Eager to pick a higher number than Repub, Dem also deludes himself about the underlying voter distribution, pretending that voters want the high numbers that he prefers. He keeps picking numbers like 55, 60 and 65. When he keeps losing, he argues to himself that voters made a mistake, or that other factors distracted them, or that maybe he didn't pick a number high enough.

    Repub, being rational, responds to this by picking the number just below Dem. When Dem picks 55, Repub picks 54. When Dem picks 60, Repub picks 59. This is logical, maximizing his chances of re-election.

    In short, I blame the expansion of government mostly on the Democrats. Not the Republicans. Your average congressman or senator is not supposed to have to be a hero; they have their work cut out for them kissing babies and raising money and getting re-elected, and that's what they're doing. No, the Democrats are to blame. They could have embraced the New Democrat philosophy of Bill Clinton and let America slip into what Tom Friedman called the "Golden Straitjacket" of free-market capitalism; instead they have reverted, like a dog to its vomit as the Bible says somewhere, to a discredited political philosophy of Great Society liberalism. They should have reconstructed themselves, and they would have done us all the service of having a lively political arena where the people could be represented and the issues of the day smartly debated. Instead, they have given voters, and the Republicans, the obnoxious task of killing them bit by bit over many years while cringing at their delusional trash-talk; and, in the meantime, they deprive us of any way of holding our government accountable, and drag the government in the direction of their pathetic cause.

    Half Sigma writes:

    Robert Schwartz has written a really great comment.

    "The real interst of American Politicians is in winning and holding power. All else pales." The way I like to phrase it is that the politician's JOB is to win elections. People are confused into thinking his job is to make laws or something. Actually, he gets to hire a staff of people who do the real work of making laws, he's just the salesman who sells their work to the public.

    But still, I'd like to think that SOME politicians might actually believe in something.

    "Spending money is fun" This is a problem not only in politics, but also in business. CEOs like to spend the shareholder's money on new initiatives because it's a lot more fun than just paying dividends.

    "Most of the revenue decline was due to the collapse of the stock market bubble that was in train well before the 2000 election and the defense increases were ocassioned by the excigencies of history." An honest evaluation... Bush sucks, but conditions he has no control over suck even more.

    Lancelot Finn writes:

    I wanted to add:

    I think it's a mistake to vote for gridlock. Because this is a game-theoretic interaction: if a lot of people starting voting tactically, for gridlock, politicians will begin to anticipate this. I think this is already happening. John Kerry was obvious a big-government tax-and-spend liberal of the worst kind, yet he made a few noises about being "conservative" and asking for fiscal discipline, and even cutting tax cuts, and while it was pretty clear he didn't mean it, he was providing a pretext for small-government conservatives to vote for him-- or rather, against Bush and incidentally for him-- in order to get useful 1990s-style gridlock. Some, like Andrew Sullivan, fell for it. My guess is that a significant chunk of the 48% who voted for Kerry-- maybe 5%-- were actually voting for smaller government in a tactical, too-clever-by-half way. But now the Democrats use the relative narrowness of Bush's margin of victory to claim that there's no mandate for parts of Bush's program conservatives like, and as a sign of hope for a future "progressive" majority.

    My advice: if you believe in limited government, complain like crazy about Republican spending and abuses. But VOTE REPUBLICAN.

    Lawrance George Lux writes:

    Study of the early history of the Republican Party provides great insight. They were the Party of great expansion of Government from 1861-1912, while Democrats tried to control the excessive taxation. Harding through Hoover was again Government of expansion, especially in Overseas commitments. Eisenhower created the Interstate System, and built major military installations (missile silos etc.) costing almost 300 billion dollars. Nixon and Ford doubled the Deficit, and Reagan doubled it again. The only fiscally-Conservative Republican was H.W. Bush, and Republicans crucified him for raising Taxes. Geoge W. Bush is the greatest Spending President in nominal terms, and inflation-adjusted, second only to Reagan. Some of the Younger Generation ignore history. lgl

    Lancelot Finn writes:

    Re: Lawrance George Lux

    I'm impressed, but.

    1) Pre-FDR Democrats aren't the point, are they? The party underwent a revolution that started with FDR, then went through a dramatic new phase in the 1960s and especially after 1968, in the course of which they were transformed from small-l liberals to something more like Social Democrats.

    2) If the Democrats are really the limit-spending party, why don't they say so? Why do they boast about what they spent, what they want to spend, and what the other guy didn't spend, rather than talking about what they haven't spent, and won't spend, and wouldn't have spent if they'd been in power? Are we really supposed to think that Congressmen, for some reason, constantly and successfully mislead the public about their political philosophy, so that the Democrats have been the limited-government party all along?

    The simple game I explained above provides an explanation for the phenomenon you're pointing out (to the extent that your narrative does not mislead through selectivity). Dem and Repub always pick numbers that are quite close together, because there's no advantage in leaving a gap between yourself and your opponent, and thus losing some voters you could have picked up by moving towards the center. So the question in each election is, where will they jointly come down? This is to some extent a matter of accident, of the skill with which candidates look for and position themselves in the center, and in their willingness to respond to electoral incentives (possibly at the expense of their inner beliefs).

    According to this game, whenever Dem and Repub come down at, say, 46-47 or 47-48 (assume Dem's number is always higher), Dem will win. If Dem enacts the program he promised, Dem's presidencies will be characterized by under-50-sized government. Whenever Dem and Repub come down at, say, 52-53 or 53-54, Repub (with the lower number) will win, and enact over-50-sized government. This creates the paradoxical situation that the small-government party will always end up enacting bigger-government policies than the big-government party would.

    But now suppose that, in a given election, Dem proposes 55 and Repub proposes 54. And suppose that some history-minded supporters of limited government (who prefer, say, a size-10 government) say to themselves, "In the past, despite Repub's supposed preference for small government, it's actually Dem who kept the government smaller." If these supporters vote for Dem and succeed in giving him, say, a 51% majority (generously imagine that these too-clever-by-half tactical voters constitute 6% of the electorate), they won't get smaller government for their pains. In the short run, they'll get a slightly worse outcome, as Dem enacts size-55 government instead of the size-54 government that Repub would have. But the real damage comes in the longer run, because next time around, Dem is likely to say, "55 worked well; maybe I should try 57 this time!" and Repub will reply with 56, and government will just get bigger.

    I'm not saying that libertarians and limited-government supporters should swear utter and total loyalty to the Republicans forever. But I also think tactical voting is likely to backfire by sending the wrong signal to the politicians. The present-day Democrats are frankly a disgrace, a pile of half-Marxist loons who sneer at Middle America, self-righteous, obsessed with their own virtue, and disdainful of the Republicans in whom the American people have repeated expressed their confidence. This party most emphatically does not deserve the benefit of any tactical votes.

    Keep punishing the Dems until they reinvent themselves and start credibly outflanking the Republicans on the low-spending side. Then vote for them.

    Randy writes:

    Lancelot,

    Agreed. When the Democrats become the party of smaller government and lower taxes I will switch my vote immediately. But its going to take some serious convincing.

    El Presidente writes:

    Government cannot expand indefinitely because people will not allow it. So what's the catalyst for a renewal? My answer is immortality or, more likely, individual opportunity which requires creative destruction. The bad news is creative destruction is still destruction. It's like human maturation. When you are a child you have the vast majority of your natural years yet to live. Yet you are less than mature. You're short, weak, awkward, etc. When you look at your parent they seem strong, tall, agile, etc. However, they're closer to death. I think this illustrates the need for renewal in a way that acknowledges the benefits of attainment but also the need for opportunity. If you can reverse aging instead of dying and being replaced it might be preferable. Small government and large government aren't universal goods. I would strive for fresh government. Never so big that it is unwieldy. Never so small that it is impotent. Never so old that it is irrelevant. Never so new that it ignores the wisdom of its predecessor.

    Politicians are typically virtue-oriented (not to be confused with virtuous). What appears to be reflexive spineless waffling is the adaptation of a politician to the perceived preferences of others. Believe it or not, this has been, and still is, considered ethical behavior because it validates community; that no man is a law unto himself and that all men are responsible to each other to do what society requires/requests. If somebody persuaded you that your opinion was wrong and you refused to change it then anyone else would be foolish to consider anything you said. We insist that politicians should have all of the answers from birth or that once they speak their mind they will never change their mind. Our ethical conceptions are heavily weighted toward fundamentalism (Kant, categorical imperative) and are migrating toward utilitarianism; the other two in the Big Three of ethical theories. We get off on calling politicians calculating, power-hungry SOBs because they seem to express deviant morality. They might be expressing corporate morality as opposed to individual morality and interactive morality as opposed to consequential morality. Then again sometimes they probably just don’t give a damn. Either way, if we know that politicians as people are conditioned to behave this way then perhaps we are putting them up to it by electing them. What do you think?

    Republicans of late have been perplexed by the renewal dilemma because they are caught in a nostalgic haze longing for renewal, believing in an innate sanctity of Americanism yet painfully aware of the consequences of liberty. They seem convinced that they can drive the solution out into the open by accelerating the problem. It's a high stakes game.

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