Thursday, October 28, 2010

Defending Divided Government

The good news - I am seeing more attention paid to the divided government meme from the main stream media than at any point in the four+ years that I have been beating the drum for this voting heuristic.

The bad news - As we close in on election day, much of the attention is in the form of an attack from the left on the intellectual foundation of the divided government voting rationale. This is problematical, because in two years they will all be making the argument for divided government. It won't look good. Truth be told, I don't really believe this is bad news. This is a case where any publicity is good publicity. Particularly since the arguments against divided government are so weak.

The reason for this recent spike in attention is not hard to understand. The Democrats biggest erosion of support from '08 to '10 is from the independent, moderate, centrist, libertarian vote. For the most part, these voters are not choosing to vote Republican in 2010 because they like the Republican candidates or because they suddenly have embraced GOP values. They are voting Republican to divide the government in the hope of reining in the Democratic agenda and restoring some semblance of fiscal rationality. The only surprise is that it has taken this long for the left to understand that their core problem was not ennui in the base. Their core problem is they have lost the center.

We rebutted an attack from academia a few days ago, now a new front has opened up in the the left-o-sphere and op-ed columns of the main stream media. Leading the liberal wolf pack attack is progressive journolist policy wonk Ezra Klein (you don't suppose this is being coordinated do you?) No matter, I don't really care. Let us deconstruct, starting at the source. Ezra Klein at the Washington Post dismisses the notion that divided government will result in lower deficits in "Handicapping the deficit under divided government":
"When you get concrete, in other words, it's much easier to see how divided government worsens the deficit and very hard to see how it reduces it. The vehicle for worsening the deficit already exists and has Republican support. The vehicle for reducing the deficit doesn't. And that's before we talk about health-care reform, where Republicans have supported both repeal and, more specifically, repeal of the bill's cost controls, either of which would worsen the deficit picture further."
To some degree, this is a red herring. The intent is to distract from the massive increase in federal spending under the last two years of One Party Democratic Rule, which was a primary contributor to the contemporaneous exploding deficit. Ezra does not speak specifically to the spending question, because he knows that the historic correlation of federal spending increases in the modern era when comparing divided and one party government is unambiguous and unassailable.

Divided government restrains the growth of spending. Full Stop. This has been documented beyond any reasonable doubt by economists and political scientists like Niskanen, Van Doren, and Slivinski. Klein does not really challenge this historical fact, instead he contends that extending the Bush tax cuts are more likely under a divided government, and no spending cuts can overcome that negative impact to revenue. This is nonsense. For one thing, the consensus in Congress to extend most of the cuts is as bipartisan as it gets. Even the administration supports extending most of the Bush cuts. After this election, it'll be practically unanimous. Moreover, the fiscal insanity of One Party Democratic Rule under the Obama administration has set the bar of improved fiscal responsibility very low. It will not be hard to improve on this:

I don't need to respond to Ezra's demand to name where the specific cuts will come from to know that the new divided government will find a way to improve on the 2009-2010 fiscal disaster. I will, however, make this counter offer should Klein find his way to my obscure corner of the blogosphere: I'll take your bet Ezra. You name the stakes. Should the GOP take the majority in either house of Congress, I'll bet the 2011-2012 deficit will be lower than 2009-2010.

Mathew Yglesia follows Ezra's lead, quotes a supporting article by Jackie Colmes in the New York Times, asks and answers the question "Will Divided Government Lead to Deficit Reduction? Will it lead to anything?":
"Jackie Calmes writes in the New York Times, however, that she thinks it’s unlikely a new GOP majority in the House of Representatives would lead to a bipartisan coalition for deficit reduction. She paints this picture in fairly broad terms whereby “incumbents otherwise inclined to make deals are now wary, Republicans say privately, mindful of colleagues who lost primary challenges from Tea Party candidates.” I think we should assume that Calmes is right, but I would put forward another hypothesis about this. There’s unlikely to be a bipartisan deficit reduction deal because conservatives don’t care about the deficit... But conservatives don’t favor deficit reduction. They favor tax cuts. When the budget was in surplus, both George W. Bush and Alan Greenspan defined the existence of the surplus as a problem for public policy—one that should be solved with tax cuts. You can’t compromise without some element of common purpose."
More nonsense. Yglesias uses Calmes article as a launching point for little more that an anti-conservative diatribe. Moreover, he ignores her concluding paragraph, wherein Calmes explicitly outlines a scenario whereby divided government leads directly to deficit reduction. It is not a very attractive scenario, but by itself refutes what both Ygelsias and Klein assert in their posts.

Yglesias should know better, as he cites David Mayhew's definitive work Divided We Govern earlier in the post. Mayhew showed that bipartisan legislative productivity in Congress is not correlated with the government composition but rather is correlated with a "palpable public mood for change". If the public really wants spending restraint and deficit reduction - the public will get it under a divided government. Right now, both Republicans and moderate Democrats understand that this is exactly what the public wants. And on that basis Mr. Yglesias - I'll offer you the exact same wager.

For Round two, Ezra Klein cites John Sides blogging at the Monkey Cage (h/t Ricketson), who is in turn citing the Ezra Klein and Matt Yglesias posts above. Sides promises a blogging series on what political science can tell us about divided government in "What Divided Government Does: Deficit Edition". His first finding in the series is a paper from James Alt and Robert Lowrey on which he bases some fairly extravagant claims:
"Based on their model and evidence, divided government usually makes deficits worse. Here's some of their theory about situations where different parties control each chamber, as is likely to result from next week's election... Their data come from the American states during the period 1968-87. Their central finding regarding divided government is:

'We show how, faced with an unexpected recession or inheriting a deficit, unified party governments not subject to deficit carryover laws might allow it to grow (if they remained in office) while those subject to such laws eliminate deficits more quickly. States with split legislatures also adjust less, regardless of the legal situation, in large part because divided legislatures do not appear to adjust revenues in response to surpluses and deficits.'

...The more general point from this piece: divided government makes it harder to reduce the deficit. Doing this often entails coordinating on unpopular choices -- something that becomes more difficult when opposing parties are simultaneously in charge."
Do I even have to say it? There is absolutely no basis for assuming what happens in a state government is applicable to what happens at the federal level. None. Zero. Nada. Sides is making a huge leap across a bottomless chasm carrying a finding on apples to support his sweeping conclusion on oranges. It is as ridiculous as studying hung governments in a parliamentary system in Italy, and claiming it is applicable to the US federal divided government (or vice versa).

From the beginning of this blog, I have been meticulous about applying historical and economic scholarship on divided federal government to a voting heuristic applicable only to the federal government. Unless there is scholarship that shows findings at a federal level can be applied at the state level and/or vice versa , this is just plain wild ass guesswork (not even Scientific Wild Ass Guesswork) by John Sides, and intellectual sleight of hand.

The historical evidence at the federal level does show unambiguously that federal spending is restrained under divided government compared to single party rule. Combine that with Mayhew's finding that legislation follows public demand for change - and I am confident in a different conclusion. Confident enough to offer John Sides the same wager that the deficit will be reduced under the next two years of divided government.

Finally, we return to Ezra Klein one more time. For his third post in three days attacking divided government, Ezra presents an interesting chart attributed to staffer Alicia Parapaino, and then tells us what to think about it:

"What you're seeing there is that it's not the composition of the government, but the growth of the economy, that drives the deficit. Wide gaps open up during the 1973, 1981, 1991 and 2008 recessions, and they close as the economy recovers."
Actually, Ezra, the more pertinent information "you're seeing there", is that the average rate of federal spending during periods of single party rule is much larger than during periods of divided government. The federal government has a direct impact on federal spending. The federal government has, at best, an indirect influence on GDP and the macro economy. So there is no reason to expect an explicit linkage between federal government deficits determined by the macro economy and government composition, except to the degree that it is influenced by the direct correlation with federal spending.

There is one other really obvious thing "you're seeing there" - The rate of increase in federal spending during these last two years of One Party Democratic Rule swamps everything that has gone before.

Which brings me to my sweeping conclusion (everyone else is doing it) of what the electorate's preference for divided government in 2010 is really all about...

Divided and Balanced.™
Now that is fair.

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