The Behavioral Political Economy of Budget Deficits: How Starve the Beast Policies Feed the Machine
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Joseph Daniel Ura
The notion of “starving the beast” has been an important justification for fiscal programs emphasizing revenue reductions since the mid-1970s. While the idea of restraining government spending by limiting government revenues has an intuitive appeal, there is convincing evidence the reducing federal tax rates without coordinated reductions in federal spending actually produces long-term growth in spending. This perverse result is explained by a theory of “fiscal illusion.” By deferring the costs of government services and benefits through deficit financing, starve the beast policies have the effect of lowering the perceived price of government in the minds of many citizens. We assess the principal behavioral prediction of the fiscal illusion theory.Incorporating estimates of the effects of federal deficits into a standard substantive model of Stimson's mood index, we find strong support for a subjective price-driven theory of demand for government. In particular, we find that the size of the federal budget deficit is significantly associated with greater demand for government services and benefits. This may have important implications for contemporary debates about fiscal discipline.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Response to Quirk's "Polarized Populism: Masses, Elites, and Partisan Conflict"
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Articles in the same Issue
- Article
- Historical Analogies, Military Surges, (and Economic Crises): Who Should be Consulted?
- It's the Financial Crisis, Stupid! How Framing and Competency Signals Altered the Economic Vote in the US and Germany
- Going off the Rails on a Crazy Train: The Causes and Consequences of Congressional Infamy
- Unhyphenated Americans in the 2010 U.S. House Election
- Candidate Obama and the Dilemmas of Political Time
- Obama to Blame? African American Surge Voters and the Ban on Same-Sex Marriage in Florida
- The Behavioral Political Economy of Budget Deficits: How Starve the Beast Policies Feed the Machine
- Publius and Proofiness: Is Using Sampling with the Census for Apportioning Representatives Constitutional?
- Testing Obama's Withdrawal Timeline Hypothesis in Afghanistan
- The Practicing Politics Working Group of the American Political Science Association: Bridging the Policy-Research Divide from the Practitioner's Point of View
- Response to Quirk's "Polarized Populism: Masses, Elites, and Partisan Conflict"
- Review
- A House Dividing: Understanding Polarization
- Review of Treaty Politics and the Rise of Executive Agreements: International Commitments in a System of Shared Powers
