For Richer or Poorer: The Politics of Redistribution in Bad Economic Times

Abstract

This paper examines the consequences of economic downturns for states’ redistributive politics. We track state policies from 1980 through 2010 and illustrate how economic downturns led states to adopt budget-balancing policies by suppressing both the increased spending on programs benefiting the poor otherwise expected under Democratic Party control and the tax cuts for the wealthy otherwise expected under Republican Party control. We also undertake a natural experiment case study—comparing the forty Democratic and Republican governors in office right before (2007–2008) and after (2009–2010) the onset of the Great Recession. We find that Republican governors were less likely to propose spending and increased calls for spending cuts; yet, no similar shift in tax proposals was evident with continued calls for tax cuts to the wealthy. Democratic governors exhibited a similar pattern, but were less responsive and more likely to maintain their earlier policy proposals even after a significant downturn in the national economy. Together, these findings highlight how economic and political conditions interact with one another to shape “who gets what, when, and how from government,” as well as clarify that we must ask and answer these questions separately for taxing and spending to capture the complex politics of redistribution.

A Rapid Review of Economic Policy and Social Protection Responses to Health and Economic Crises and their Effects on Children

“…was combined with increased taxes and accompanied by reductions in state and local government employment levels (Campbell and Sances, 2013;Gordon, 2012;Rigby and Hatch, 2017).…”

Weathering the Storm: Social Policy and the Great Recession

“…But, even that was insufficient to offset lost state revenue. In response to budgetary shortfalls, states cut spending, raised taxes, and reduced state and local government employment (Campbell & Sances, ; Gordon, ; Rigby & Hatch, ).…”

“…Rigby and Hatch () analyzed state policy choices in response to the GR and observed that in addition to having fewer resources and increased demands from safety net programs, many states were institutionally constrained by balanced budget requirements. But these balanced budget requirements can also be an opportunity for politicians.…”

“…During periods of recession, Democrats cannot get the spending increases they want, and Republicans cannot get the tax cuts they want; both parties must call for pro‐cyclical budget‐balancing proposals. However, during recessions, “Republicans were more likely to opportunistically shift their policy platform—increasing calls for spending cuts—while maintaining their previous calls for tax cuts on the wealthy” but Democrats did not opportunistically call for tax hikes (Rigby & Hatch, , p. 600). While both parties find themselves constrained by balanced budget requirements during budget shortfalls, recessions are more of an opportunity for austerity‐minded Republicans than they are for Democrats, who are unable to defend against Republican calls to reduce social spending.…”

“…In response to budgetary shortfalls, states cut spending, raised taxes, and reduced state and local government employment (Campbell & Sances, 2013;Gordon, 2012;Rigby & Hatch, 2017). Rigby and Hatch (2017) analyzed state policy choices in response to the GR and observed that in addition to having fewer resources and increased demands from safety net programs, many states were institutionally constrained by balanced budget requirements. But these balanced budget requirements can also be an opportunity for politicians.…”