Two days ago I blogged about the reason other countries generally do not have government shutdowns: when negotiations break down the budget does not revert to $0 but to last year’s budget for all previously authorized legislation. Or, there is some other set of rules, such as requiring new elections when no budgetary agreement is reached by a certain date with budgets continuing at previous levels in the mean time.

Gary Cox, the William Bennett Munro Professor of Political Science at Stanford University, has extensively researched the history and purpose of budgetary reversion rules. He has published numerous important books and articles on legislative and electoral politics and has been elected to the American Academy of Arts and Sciences and the National Academy of Sciences. I invited him to offer his insights below.

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Recent Monkey Cage posts have lamented the dysfunction on display in the U.S. federal government, with 800,000 federal workers furloughed due to a lapse in appropriations.  Who came up with the idea that budgets should be delayed as a means to force the executive to adopt policies it doesn’t want to?

The idea goes back to England’s Glorious Revolution, where MPs fought hard to put the Crown on a short financial leash, so that they could control Crown officials’ actions. Although they did not use the term, English arguments about what would give Parliament bargaining leverage vis-à-vis the Crown hinged on the budgetary reversion.  Because expenditure authority would lapse every year, forcing portions of the government to “shut down” in contemporary American parlance, parliamentarians were assured the Crown would seek a new budget every year — whereupon they could bargain for attainment of their various goals.  As James Madison put it, “This power over the purse may…be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.”

Madison’s version sounds pretty nice. However, when given the power a shutdown reversion confers, the “immediate representatives of the people” have, in country after country, done precisely the sort of thing that the House Republicans are now doing. They have sought to force the executive to adopt “just and salutary” measures, using the threat of a government shutdown. Examples include the Australian episode noted by Max Fisher, Chile before and after its civil war of 1891, and various European countries that subsequently sought to create what was dubbed parliamentarisme rationalisé in the interwar period.

Government shutdowns, like wars, impose costs on both sides (and on innocent by-standers).  They represent a bargaining failure in the sense that, whatever deal is ultimately struck at the end of a particular shutdown could have been reached without any shutdown, thereby avoiding all the costs.

There are two and only two institutional reforms that can reliably avoid the bargaining failures that lead to shutdowns.

One solution is to break the legislature’s power over the purse. This can be achieved by, for example, making the executive’s proposal the budgetary reversion. Such executive-favoring reversions (or EFRs) have been widely adopted over the 20th century (see graph below) and they effectively end inefficient budget battles. However, they can also end any hope for limited government or democracy.

Graph by Gary Cox
Graph by Gary Cox

The other solution is to break the executive’s power to act independently of the legislature, by establishing a parliamentary system.  Parliamentary regimes rarely experience government shutdowns, because a government that cannot pass the budget simply falls.  In other words, parliamentary regimes avoid the inefficiencies of government shutdowns, at the price of government instability.

In the United States, it is difficult to imagine a transition to parliamentarism.  Thus, we are stuck with a system in which multiple actors — the House, the Senate and the President — can veto the budget.  This means that the risk of bargaining failure is inherent in our system; and the only straightforward way to get rid of bargaining failure is to strengthen the executive.

Another alternative would be to live with the risk of bargaining failure (preserve Congress’ power over the purse) but lower the costs that arise when the budget is not passed.  For example, we might adopt one of the “automatic continuing resolution” proposals that were floated after the shutdown in 1995.  Tinkering with the reversion is a complicated endeavor, however, since it affects everyone’s bargaining leverage.  Presumably this is one of the reasons that none of the “automatic continuing resolution” proposals have been enacted.