With conventional wisdom suggesting that the Republicans will gain at least the control of the House in November, some have begun to ponder what that might mean for the battle over the federal budget. If we’re lucky, those sorts of election returns may at least result in budget gridlock next year.
In political science circles, the term “divided government” implies that at least one house of Congress is controlled by the party opposite that of the president’s. “United government” is the opposite: when both the House and Senate are controlled by the party of the president. The resulting gridlock tends to lock in the status quo – which, in the case of the budget, is usually better than the alternative (read: even more spending).
This isn’t a new idea, but it’s one that’s rightly begun to get some more attention. If history is any guide, the data show that divided government has quite a good track record at moderating the rate of spending increases. Updating the analysis that first appeared in my book on a related topic (Buck Wild: How Republicans Broke the Bank and Became the Party of Big Government, published in 2006) I find that the past three years hasn’t changed the fact that tamer-than-average rates of spending growth – after adjusting for population growth and inflation -- still correlate with periods of divided government.
Here are the numbers: Between 1965 and 2009, the average growth rate of real per capita federal spending in the divided government years was 1.9%. For the years of united government, that average was 3.1%.
In fact, spending in fiscal 2007 (the first in which Bush faced an entirely Democratic Congress) clocked in at a negative real per capita growth rate (-0.94%). That’s because Democratic congressional leaders decided to avoid a budget showdown with a president who had suddenly became willing to veto bills from time to time. So they put the federal budget on autopilot through a “continuing resolution” which maintained spending at then-current levels for the remainder of the fiscal year. It was the first time federal spending grew slower than population and inflation since fiscal 2000, one of President Clinton’s last budget years and a divided government year to boot. The budget lagged behind the rate of economic growth, too – a rare occurrence during the Bush years.
The economic downturn upended the political calculus of divided government in FY 2009. The budget for that year – bridging the presidencies of George W. Bush and Barack Obama -- seems to be an exception. Large increases in government spending occurred during both a divided and a united period: Bush’s last four month in office overlap with the first four months of fiscal 2009, and Obama’s first eight months stretch over the remainder. Overall real per capita federal spending grew at a massive 16.8% rate.
Some of that spending increase was the Bush administration’s bailout of banks and Wall Street firms and Obama’s various stimulus programs. The crisis mentality in Washington spawned in 2008 trumped the partisan dimension and overwhelmed the gridlock effect on the budget. But if you assume that part of the blame should be shared by each administration, divvying up the budget growth between both periods brings would change the numbers only a bit. The win still goes to divided government.
So, can gridlock put a cap on spending in the future? I’m optimistic. Stimulus programs and corporate welfare spending are proving increasingly unpopular (and ineffective). And the one thing that Republicans seem to have proven over the years is that they are more likely to be opposed to big government when they can turn a Democratic president into the poster child for excessive spending. The GOP pulled their punches during the Bush presidency because to take a swing at the federal behemoth at that point meant taking a shot at their own teammate.
The take-home message for fiscal conservatives? If it’s a bad idea to put your faith in politicians, the good news is you can probably put a decent amount of faith in institutional gridlock.