This Is Why It's So Hard To Cut Public Spending

Key takeaways

Cutting public spending is inherently contentious and difficult due to the political promise to maintain social welfare programs.
Historical examples reveal that governments at both ends of the political spectrum may struggle to implement austerity measures successfully.
The legitimacy offered by democratic systems can facilitate the acceptance of unpopular economic policies, although it remains a double-edged sword.
Leaders can utilize electoral gains as leverage to implement necessary, albeit painful, austerity measures if the public perceives the government's legitimacy.

Summary

The Challenge of Cutting Public Spending

In this episode, the hosts discuss the difficulties faced by the Trump administration in reducing the deficit and cutting public spending. They reflect on previous administrations that have attempted to implement austerity measures but ultimately failed to execute substantial cuts due to political pressures and public expectations. The conversation highlights the complexities of managing fiscal responsibility while maintaining domestic support.

Historical Context of Austerity

Fritz Bartel, the guest and author of 'The Triumph of Broken Promises,' shares insights from his research on the simultaneous economic crises in the US, UK, and the Soviet Union during the 1970s. He explains how each country had to confront significant economic challenges that led to broken promises—specifically within welfare and social commitments—to stabilize their economies, showcasing how these historical contexts can inform current political and economic strategies.

Imperatives and Political Legitimacy

The discussion deepens into the political legitimacy associated with breaking promises versus maintaining public support. Bartel argues that democratic governments, while facing challenges when cutting spending, often possess a form of legitimacy that allows them to make unpopular decisions. The guests illustrate this point through historical examples, contrasting the experiences of Eastern Bloc countries with Western democracies in executing austerity measures.

The Role of Elections and Political Capital

The conversation also deliberates on how elections serve as conduits for public sentiments and grievances, focusing on figures like Ronald Reagan and Margaret Thatcher. They note how electoral victories can provide governments with the political capital needed to push through unpopular economic reforms, even as the social sacrifices from austerity measures can lead to societal tension and unrest.

Show notes

The Trump administration has come into office with big ambitions to lower the size of the US deficit. So far, a number of small items have been identified as possible waste. But to meaningfully bend the curve on spending, there's widespread agreement that we'd have to look at things like Medicare, Medicaid, Social Security and defense. This is hard stuff to cut and it's something that governments around the world have long struggled with. How do you pull back on a prior commitment that your constituency has come to expect? In this episode of the podcast, we speak with Firtz Bartel, an assistant professor of international affairs at the Bush School of Government and Public Service at Texas A&M. He is also the author of the recent book The Triumph of Broken Promises, which examines the simultaneous economic crisis in the US, UK, and Soviet Union during the 1970s, and how each country was forced economically to essentially "break promises." We talk about what it takes politically to maintain domestic credibility for any government while undergoing such wrenching choices, and why some systems are better suited for it than others.

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