Explaining deficits: public choices, not character flaws.

I disagree with both my fellow bloggers. The root cause of deficits isn’t either national character or Republican perfidy. It’s the logic of social choice in a system of separated powers.

Keith writes that America’s national debt reflects our national character.  Jonathan disagrees and blames instead purposeful Republican strategy, which has deliberately understated the costs of tax revolts.  I disagree with Keith too. But much as I’m normally wiling to blame Republicans, I think the problem goes deeper.  The real explanation has to do with what’s loosely called a fallacy of composition and more accurately a public choice problem. Public choice explanations are often strained, mischievous, based on assumptions that are parsimonious but false, and biased against government action—but not this time. The best, most obvious, and clearest explanation of the known facts explains how a majority of Americans in each district or state can prefer, over the alternatives nominated in each district and state, politicians whose combined votes result in large deficits, without most of them (or, in theory, any of them, but I’ll settle for most) supporting the outcome to which their votes collectively give rise.

Consider a voter who really is a deficit hawk—or “buzzard,” as the fiscal liberal “koreyel” in one of Jonathan’s comments prefers—who cares more about balancing the budget than about the particulars of how that is to be done. (I’m not sure that even the biggest deficit hawk/buzzard is fully indifferent to those particulars, but stipulate that for now.) How is he or she supposed to bring about the desired result?  It’s impossible.  The chances are huge that neither the Democrat nor the Republican on offer will care more about debt than about maintaining spending or taxes respectively at the ideologically desired level, as set by primary voters in each party. Even if an individual candidate did “care about debt,” that’s very different from belonging to a party that can, through forcing coordination and cooperation across two legislative houses and the presidency, effect deficit reduction through any coherent mix of tax increases and spending cuts.  The incentives for what David Mayhew calls “position taking”—talking about how one would love to do something purist that pleases one’s constituents but can’t because so-and-sos from the other party (or one’s own) won’t allow it—are immense and for the most part insurmountable.

Given that no voter no voter has available a strategy that will result in deficit reduction,* each settles for, and votes for, what she can get: a politician in her own district or state, and the White House, who shares her values concerning the desired relative weight of taxes and spending, and concerning distribution.  The problem then is that a legislature and President composed of Republicans who care above all about low taxes, especially for the wealthy, and Democrats who care above all about social spending, especially for their strongest supporters, combined with a fair set of mavericks who make coherent negotiation even harder, not easier (since they’re generally position-taking free-lancers or devoted to eccentric local interests, not the pragmatic deal-makers that the press often takes them to be), is guaranteed to produce a fiscal mess—or, in rare cases of unified government, a result so ideologically extreme that it’s guaranteed to enrage the median voter instead of satisfying her.
Only a parliamentary system lets either party be truly responsible for the overall mix of taxes and spending, or for the result thereof, and gives each party an incentive to propose such a mix in the way best suited to please the median voter.  The whole point of a U.K. election is to decide who gets to enact a  budget that represents a coherent policy and to a first approximation a relatively popular one.  The whole point of a U.S. election (or worse, a California one) is to decide who gets to preside over a budget that comes late and that is founded on lies.  Blame, if you like, party polarization (which makes it very unattractive for most voters to be deficit buzzards given the likely terms on which a budget would be balanced); or the single-member-district system of representation, which ceteris paribus provides incentives to please local interests rather than balancing national ones; or the two-thirds rule in California; or the filibuster in the U.S. Senate (which doesn’t apply to budgets but applies to so many other fiscal policies that it hardly matters); or the Constitution, which rules out what might otherwise seem some reasonable fixes (like my favorite, abolishing the independent Executive and with it a superfluous veto point).

But don’t blame the median voter, who according to a great many opinion polls longs (however foolishly) for a budget balanced in every year, but because of the structure of her political institutions never gets one.

*I’ll grant that there are some voting strategies which, if generally adopted, would result in a balanced budget.  The easiest one I can think of is “Draconian retrospective fiscal conservatism”: “vote against any incumbent representative, or governor, or president, in any election in which a balanced budget has not been enacted at the relevant level of government during all years of that incumbent’s term, regardless of how the incumbent voted [so that problems of tracing responsibility can’t arise].”  The only problem is that for any voter to adopt such a rule would be insane.  Leaving aside that this would be awful fiscal and social policy, as well as providing incentives for bizarre accounting tricks, there’s a fallacy of composition/social choice/collective action problem again.  That some voters adopted that rule would hardly guarantee that others would. Those who didn’t could expect to further their ideological preferences at the expense of those who did.  Put differently, the latter would simply end up voting out some politicians they would otherwise favor, to no purpose and against their interests.

 

Author: Andrew Sabl

Andrew Sabl, a political theorist, is Associate Professor of Political Science at the University of Toronto. He is the author of Ruling Passions: Political Offices and Democratic Ethics and Hume’s Politics: Coordination and Crisis in the History of England, both from Princeton University Press. His research interests include political ethics, liberal and democratic theory, toleration, the work of David Hume, and the realist school of contemporary political thought. He is currently finishing a book for Harvard University Press titled The Uses of Hypocrisy: An Essay on Toleration. He divides his time between Toronto and Brooklyn.

3 thoughts on “Explaining deficits: public choices, not character flaws.”

  1. The public choice logic is sound, but a bit of history is worth a lot of logic.

    As far as I can see, there was no real deficit problem until the Republicans acted on the two Santas theory, somewhere in the reign of St. Ronnie. Before those halcyon years, you had a two-party system, with a party of large government and a party of smaller government. Both parties could do arithmetic. The party of large government raised taxes to pay for its preferences, and the party of small government thought that lower taxes would flow from smaller government.

    The two Santas theory acknowledged that a party of small government operated at an electoral disadvantage, since voters prefer large government. So the post-Ronnie Republicans became the Santa Claus of low taxes, while not fighting the Santa Claus of large government. In other words, they responded as public choice theory predicts, unlike previous incarnations of Republicans, who believed in quaint notions such as patriotism and ideology.

    Public choice theory ignores things like patriotism and ideology, which is why it is useless in describing the world. But so did the two Santas theory, which is raw public choice.

    So instead of having a party of small government and a party of large government, you now have two parties of large government. The Democrats can still do arithmetic, but its hard to fight the other guy’s Santa Claus when they aren’t fighting your Santa Claus. And we merrily go to hell in a handbasket . . . bah, humbug!

  2. My late father was a campaign manager, occasional lobbyist and conservative, usually voting R but not always. We never heard this mantra of ‘big government by one party, small government by another’, even as St Ronnie tried to jump-start the Wrecking Crew machine. Maybe because he worked on campaigns at the local level and the bifurcation of our society hadn’t gotten so deep at that time.

    But in my view this ‘big gov/small gov’ is a purposeful exaggeration brought out since RoveCo came to power.

    .02

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