The Politics of Drift

Politics and Society, which is my favorite journal, has a special issue centered on Jacob Hacker and Paul Pierson’s “Winner Take-All Politics” argument. They’ve made it freely available for a couple of months, and I recommend people read it, not only for the Hacker and Pierson piece, but for the responses from Lane Kenworthy, Neil Fligstein and others. I’ll be writing a few posts on this, and wanted to start out by pointing to Hacker and Pierson’s discussion of one interesting and not immediately obvious implication of the Senate filibuster and other forms of veto. Very obviously, they make it harder for new pieces of legislation to get through. But they also lead to problems with existing legislation. Over time, legislation can become increasingly unmoored from its supposed purposes, as society changes. Alternatively, existing legislation can turn out to have quite unexpected loopholes. But reorienting legislation or closing loopholes will be very difficult when there are veto points such as super-majoritarian requirements. Hacker and Pierson give the example of an obscure loophole dating back decades, which has been used in a quite unanticipated way to allow hedge fund managers to have their management fees counted as capital gains rather than income (and thus taxed at a much lower rate). Recent efforts to amend the tax code to get rid of this loophole failed in the Senate, and are (as best as I know) unlikely to be revived. This kind of “drift” is also advantageous to politicians who want to favor influential interest groups, because it means that they can protect their interests through inaction (which is often politically invisible) rather than direct action.

It is worth noting though that this mechanism cuts against some of Hacker and Pierson’s previous arguments in Off-Center. There, they suggested that the Republican use of sunset clauses to get tax cuts through were likely to lead to long run change.

it means that future politicians will face a fundamental political quandary: Should they allow enacted provisions of the tax code to expire, explicitly taking from (for the most part, wealthy) taxpayers benefits that they already enjoy? Or should they extend these provisions, incurring the $4 trillion in lost revenue and additional debt service that the sunset provisions of the tax cuts represent? The sunsets, in short, create an unprecedented new political environment – one that is highly favorable to tax-cutters’ core goals. … Republicans reasonably predict that the pressure to extend the tax cuts will be intense, not least because well-off folks who receive the big tax provisions that take effect just before the sunsets kick in will be unusually well poised to make their voices heard. They also expect, no doubt, that the need to protect these provisions will provide a powerful motivation for the wealthy to bankroll Republican reelection effects in the future.

Here, the putative mechanism of policy change was not drift (there is some status quo bias but it is not caused by institutional lock in and veto points). Indeed, it was precisely because of the likelihood that the legislation would be blocked by a Senate filibuster that the Republicans had to pass the bill through reconciliation and jiggery-pokery with the numbers. There is a current debate about the tax cuts’ expiration – but this doesn’t look to me to be a “highly favorable environment” for their retention – and not only because of the economic crisis. There is a substantial minority of Republicans and conservative Democrats who can try to block major efforts to increase taxes on the rich, but (pending the elections), it is probably not be enough to pass new legislation to re-enact the taxes. While we still haven’t seen whether the tax cuts will or will not be renewed, it seems to me plausible that Republicans were too smart for their own good. They might have been smarter to settle for more limited cuts without a sunset clause (putting the future burden of change on those who wanted to repeal the cuts, rather than those who wanted to renew them).

[Cross-posted from Crooked Timber]

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