3 - Political Competition and the Expenditure Pie

Summary

In Chapter 3, we focus on explaining the tradeoffs between expenditure categories in government budgets. Rather than explain total expenditures or expenditures in specific policy areas, we argue that the competition for expenditures is in the spending allocations. Governments of varying ideological stances prefer increasing or decreasing spending for different policy areas, but we argue that their ability to do this is hindered by their government status. Governments with a majority of the seats in the lower house of parliament are better able to push through their preferred changes to spending budgets. Using a compositional methodological approach on data for 33 developed democracies across 35 years (1975–2010), we find that government ideology does influence budgetary allocations for majority governments, with left and right governments altering budgets in different, but expected, ways. For minority governments, our results suggest they too are strategic in making relative budgetary changes, but it is less about ideology and more about appeasing the necessary political parties in order to stay in power. This focus on budgetary compositions highlights the political competition for resources between policy areas that previous work has overlooked.