New evidence confirms my suspicion that divided government leads to smaller government. The latest news: A policy analysis by Stephen Slivinski, director of budget studies at the Cato Institute, finds that:

  • “Total government spending grew by 33 percent during Bush’s first term. The federal budget as a share of the economy grew from 18.5 percent of GDP on Clinton’s last day in office to 20.3 percent by the end of Bush’s first term.”
  • “The Republican Congress has enthusiastically assisted the budget bloat. Inflation-adjusted spending on the combined budgets of the 101 largest programs they vowed to eliminate in 1995 has grown by 27 percent.”
  • “The final nondefense budgets under Clinton were a combined $57 billion smaller than what he proposed from 1996 to 2001. Under Bush, Congress passed budgets that spent a total of $91 billion more than the president requested for domestic programs. Bush signed every one of those bills during his first term.”

    One of my dissertation chapters, later published in the Southern Economic Journal as “Has Leviathan Been Bound?”, reached compatible but less dramatic findings for state governments. Imagine graphing size of government as a function of the percentage of the seats in the legislature controlled by Democrats. (Note that if the percentage is below 50%, that means that Republicans are in control).

    My result: The size of government – measured by either spending or taxes – is roughly flat from 0% to 50% Democratic control, and then starts to rise as Democratic control becomes more pronounced. A Republican supermajority does no more to carry out the small government agenda than a bare Republican majority.

    So is Republicans’ reputation as the free-market party completely illusory? Not quite. Michael Munger convincingly argues that Republican control leads to less regulation. My guess is that you can’t easily buy friends and repay political favors by cutting spending, but you can do so by cutting regulation. If Republicans can kill two birds with one stone – helping allies and adhering to their ideology – they do. Otherwise they pretend they’re in a bad movie about amnesia. “Ideology? I don’t remember any ideology.”

    Thanks for Tyler Cowen for the link.