Government Spending Moves Public Opinion

A couple days ago, John Cluverius noted that public opinion moves in the opposite direction as policy is moving.  We tend to assume that the party in power has public opinion on its side—after all, that’s why they won, right?—but in reality the public usually shifts away from them.  The public is a thermostat.

In this paper, political scientists Christopher Ellis and Christopher Faricy add some nuance to the story.  They find that trends in government spending do drive public opinion, as the thermostatic account suggests.  But it matters how the government spends its money.

When the government spends more on direct social benefits—Medicaid, Medicare, Social Security, and the like—the public becomes more conservative.  But when the government “spends” more via tax expenditures—such as by allowing people to take deductions for mortgage interest—the public becomes more liberal.  These relationships are stronger among citizens with more formal education, who are thus more likely to be attentive to politics.

Here’s part of Ellis and Faricy’s discussion of why we might expect divergent responses to these two types of spending:

An increase in direct spending targets social benefits to vulnerable populations such as the elderly, the working poor, and the unemployed. Public social programs produce an income effect by redistributing cash and financial benefits downward. They also increase the role of the federal government in directly providing benefits and social services. Given these expected outcomes…direct social spending should be perceived as ‘‘liberal’’ policy, given the combined effects of targeting vulnerable populations, progressive redistribution, and direct government administration of benefits…

As we have discussed above, indirect spending tends to accrue social benefits to wealthier and more economically and professionally secure citizens and does so by enhancing the position of private and market-based actors in the provision of benefits. These ideas are considered, in the main, to be right-of-center policy goals. In addition, the vast majority of tax expenditure programs designed as deductions and exemptions accrue more income benefits to wealthier citizens (mainly homeowners), due to the progressive structure of the income tax. The resource effects of the two types of social spending are reinforcing, then, in that they serve politically distinct sectors of the population, which allows the mass public to more readily discern the ideological direction of the policy effects. We thus expect that indirect social expenditures, because their intent is to allocate public resources to businesses and private organizations while redistributing wealth upward, should be perceived as conservative policy…

Following the thermostatic logic, citizens should thus respond to increases in direct social spending by increasing their demand for conservative public policy solutions and respond to increases in indirect spending by increasing their demand for liberal policy solutions.

See the paper for more.  Note that this helps to explain why the public’s mood has become more conservative under Obama: much of the Obama administration’s policy policy is designed to be somewhat redistributive—e.g., by raising taxes on the wealthy to fund government social programs and investments—and thereby to reduce inequality.

[Originally posted at The Monkey Cage]

John Sides

John Sides is an associate professor of political science at George Washington University.