Published online by Cambridge University Press: 22 September 2009
This chapter draws on recent work in transaction cost theory and historical institutionalism to provide a framework for analyzing the causes and consequences of trust fund financing. It first explains the relevance of political transaction costs for an understanding of trust funds in the US budget. Next, it outlines four reasons for the creation of trust funds. It then describes the main effects of the trust fund mechanism on the policymaking process, and how current officeholders can try to increase or decrease the credibility of existing trust fund commitments. Finally, the chapter discusses the case selection.
Political transaction costs, trust funds, and government budgeting
It is helpful to begin a study of trust funds with an examination of the larger budgetary system of which the trust fund instrument is a part. Public budgeting must be understood not merely as a technical exercise in resource allocation, but rather as the setting for some of the most crucial tasks of a democratic polity: mobilizing revenues, delivering benefits to constituencies, safeguarding the public fisc. These tasks inherently require politicians to enter into commitments both with one another and with voters and groups in the larger society. Budgeting can thus be seen as a form of contracting behavior, in which the government pledges – not always credibly – to do certain things rather than others in the future.
To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.