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Should the Tea Party Hope for a Government Shutdown?

by Matt Mitchell on March 21, 2011

in Tax and Budget

Last week, yet again, Congress passed a short-term continuing resolution, funding the federal government for another few weeks while Republicans and Democrats attempt to work out some sort of compromise to get an actual bona fide budget passed. This pushed off the prospect of a government shutdown a few more weeks.

Also last week, CNN released a poll finding that 73 percent of Americans believe a government shutdown that lasted a few weeks would be a bad thing. This general opinion seems to cross ethnicity, age, income, geographic region, and political party affiliation (though a little more than half of Republicans would be okay with a shutdown if it lasted only a few days). There was, however, one exception to the near-universal opposition to a shutdown: Tea Partiers. Fifty two percent of those who self-describe as Tea Party supporters thought a government shutdown that lasted a few weeks would actually be a good thing. I should note that 46 percent of Tea Partiers opposed such a shutdown and that the margin of error was plus/minus 5.5 percentage points. Still, this suggests that those who support the Tea Party are far more sanguine about the possibility of a shutdown than other Americans.

As advocates of limited government, are the beliefs of Tea Partiers justified?

As is often the case, we can look to the American states for some guidance. It turns out that in 23 U.S. states, the government will automatically shut down in the event that the governor and the legislature fail to agree on a budget. In his work on budget rules, David Primo examined the theoretical impact of these provisions from a game theoretic perspective. He noted that in states with an automatic shutdown provision, “the legislature will be able to achieve its ideal budget, so long as the governor prefers it to no spending.” (p. 102)

He therefore predicted that states with such a provision will spend more than states without such a rule. He then tested the hypothesis, controlling for a number of other factors known to impact state spending and found that states with an automatic shutdown provision actually spend about $64 more per capita than other states. As he notes, “This effect is remarkably large, given that shutdowns occur rarely.” (p. 103)

This suggests that the federal government’s automatic shutdown provision—by making Congress’s desired spending level a take-it-or-leave-it offer—tends to bias the government toward more spending. By extension, it also suggests that a government shutdown will shift negotiating power toward those who favor more spending. So, paradoxically, fiscally-conservative Tea Partiers stand to lose the most if the federal government shuts down.

Perhaps it is time for them to rethink their support of a shutdown.

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