Look for the Party Label

by John Hood

I noted a couple of days ago that North Carolina native Richard Weaver helped spark the modern conservative movement with his 1948 book Ideas Have Consequences. My John Locke Foundation colleagues and I like Weaver’s famous phrase so much that we used it in the subtitle of our new book on North Carolina’s policy agenda.

In political science, the notion that ideas have consequences is actually controversial. Some scholars believe that ideology is neither a reliable predictor nor a valuable explanation for political and legislative outcomes. The argument is that political actors act solely for short-term advantage. They respond to incentives such as financial gain, personal glory, or reelection. To the extent that political actors cite ideology as the reason for their actions, they are either fooling us or fooling themselves – or so goes the argument.

I’m a fan of analyzing political behavior with an economic lens. I think public-choice economics has been a revelation, and that no politician’s protestations of ideological fervor should be taken at face value. We should judge them on what they do, not what they say they will do.

But to toss ideology out entirely as an explanation for political behavior is unwise. It ignores obvious empirical evidence and weakens the predictive value of one’s model. Sometimes politicians really do vote the way they believe. Hawks and doves vote differently on war resolutions. Free-market conservatives and social-democrat liberals vote differently on tax policy.

Several recent studies, for example, have confirmed the effect of partisanship on state budgeting. In the past, scholars focused too much of their attention on the partisan affiliations of state governors. It turns out that the legislature is the more important institution when it comes to fiscal policy.

Writing in The Journal of Politics in 2000, James Alt of Harvard and Robert Lowry of Iowa State described their study of more than four decades of state budgeting and partisan affiliation. They found that “Democrats nearly everywhere target a larger share of state incomes for the public budget than Republicans,” and that when either party enjoyed unified control of their state legislature, they tended to get their way on fiscal policy even when the governor was of the other party. Thad Kousser of the University of California-Berkeley zeroed in on Medicaid spending and confirmed the role of partisanship. States don’t just adjust their Medicaid programs to maximize cash flow out of Washington. Democrats tend to vote for bigger Medicaid budgets, all other things being equal.

In 2006, University of Oklahoma economist Robert Reed examined 40 years of state tax data and found something similar. States with Democratic governments consistently had higher tax burdens than states with Republican ones. Once Reed adjusted for partisan control of the legislature, partisan control of the governorship had little effect. In a 2009 follow-up to Reed’s study, Clemson economist Patrick Warren controlled for the margin of legislature control and found an even stronger effect from partisanship. “Compared to Republican control,” Warren wrote, “Democratic control of the legislature causes tax burden growth of more than a full percentage point over a 5-year period, on a mean tax burden of about 10.7 percentage points.”

Recent experience tracks with these research findings. At the onset of the Great Recession in 2007, states and localities found themselves with falling revenue forecasts and escalating service demands. Democratic governments tended to raise taxes across the board. Republican governments tended to say no to new taxes, or at least to broad-based tax hikes, while enacting larger budget cuts.

According to the Tax Foundation’s analysis of the latest data from the U.S. Census, the 10 states with the highest combined tax burdens took an average of 11.2 percent of their residents’ income in 2010. The average for the 10 lowest-taxed states was 7.9 percent. Nine of the 10 most-taxed states had Democratic legislatures. Most of the 10 least-taxed states had Republican legislatures, and three others were Southern states with relatively moderate Democratic legislatures as of 2010, all since replaced with more-conservative Republican ones.

Ideology – as translated into partisan affiliation – truly has consequences.

John Hood is president of the John Locke Foundation and an NC Spin Panelist