Are Better Legislation and Lower Federal Spending on the Horizon?

One of my favorite places to take in varying perspectives of current political events and issues is Politico’s “The Arena." In this forum, Politico poses a question to a panel of respected political observers—ranging from political scientists, historians and journalists to lawmakers, lobbyists and political strategists.  In one recent discussion, Politico asked: “What can the 112th [Congress] realistically accomplish?”  Regular readers of Rule22 will know that Josh, Nate and I have tried to address this question through some occasional data driven exercises (see here and here for examples).  Among the excellent responses to Politico’s query, David Boaz—The Cato Institute’s executive vice president—argued that one of the positive aspects of the 112th Congress is that, with divided party control, the federal government will enact better policies and cut spending.  Here is the gist of his post:

We shouldn’t assume that passing laws is always a good thing. Gridlock and divided government have protected the American people from a lot of bad laws and excessive spending. So my goal is not simply to find laws that both parties will pass but, rather, to consider whether there are pieces of legislation that would do more good than harm.

On the first point, I think Boaz is probably right.  In fact the question of the “quality” of legislation passed during split-party control was one of the central motivations behind a recent paper of mine that modeled the determinants of policy repeal during the post-WWII era (see here for an executive summary).  Though this paper is relevant to the Republican effort to repeal health care reform (see a previous blog post on this), the paper is much more ecumenical.  In particular, I asked whether laws passed during divided government exhibit greater durability.  This hypothesis stands in contrast to the perceived negative effects of divided government (that less legislation gets enacted).  Ultimately, I found evidence of greater durability.  According to my model, legislation enacted during divided party control is 42% less likely to experience any repeal more than 10 years after enactment and 56% less likely to experience any major repeal.  On the one hand I contend that this might be due to what Boaz suggested; that because of each party’s bilateral veto power during divided government there is greater deliberation in Congress resulting in the enactment of laws that better solve social problems.  Of course I also point out another causal mechanism—that legislation enacted during divided government is simply more moderate (and moderate policy is less likely to be reversed by subsequent governing coalitions).  Overall, though, I think there is a good chance that some “better” legislation will be produced by the 112th Congress.  At the very least there will be greater compromise between Democrats and Republicans (and of course we could debate whether compromise legislation is “better” legislation, but I digress).

The second point raised by Boaz is that that divided party control will lead to lower budget deficits.  Of course, many political observers (mostly conservatives, I suspect) have cited such an effect.  Unfortunately I think this is probably wrong.  The first reason is obvious—with the Republican Party controlling the House, the prospect of Congress raising taxes is slim.  Taxes are, after all, one of the main ways the federal government cuts deficits and debts.  But also, studies by a handful of well-respected political scientists have shown, fairly convincingly I think, that divided party control is associated with greater, not lesser, budget deficits.  In one paper (here, gated) James Alt and Robert Lowry find that state deficits are exacerbated by split-party control of the legislature (among other things).  As they note, “In a nutshell, big state deficits arise in recessions, but we find they do so where different parties control each legislative chamber…” (see 811).  And Mathew McCubbins (paper available here) finds similar results at the federal level.  Simply put, the logic behind this effect is that when lawmakers attempt to secure reelection by increasing federal spending in their district or state, and because divided party control necessitates some degree of compromise and concession, the obvious solution is to engage in logrolling and/or combine spending proposals into large omnibus bills.  Subsequent work by George Krause (gated paper here) argues that it’s not divided government or partisan control per se, rather it’s the ideological distance between the president, House and Senate.  Of course, the ideological distance between these three actors will be large in the 112th Congress.  So either way you slice it, all three studies (among others) point to one unambiguous outcome—higher budget deficits for the coming Congress.

Is there an alternative?  Perhaps.  Part of the logic for greater budget deficits during split-party control is the famous collective action problem (that the behavior of self-interested lawmakers produces the sub-optimal outcome of greater deficits).  Of course, there is a simple solution to this problem—party discipline.  If Republicans in the House and Senate can creditably commit to lower spending and enforce those commitments, then the budget might be trimmed in the 112th.  After all any spending provision that Obama signs must pass through the Republican controlled House.  But then again, this is essentially what came to fruition with the government shutdowns in 1995.  And I doubt Republicans will want to push the matter that far this time.  Perhaps the key is for the Republican leadership to find a "Goldilocks" level of party discipline (that is, a "just right" amount) and work constructively with Democrats to trim the budget (perhaps accepting the fact that "Obamacare" won't be repealed in the 112th).  Still, I have my doubts...