The Walker Victory: Reform Is Good Policy and Good Politics →
Economist Veronique de Rugy.
I have written a few times in the past about the growing evidence that, contrary to common belief, a political party that implements ambitious reforms or spending cuts won’t be punished by voters in the next election. In fact, it may even be rewarded.
Among other studies, there is a Goldman Sachs Global Economics study by Ben Broadbent called “Fiscal tightening need not be electorally costly, but it will test government unity.” It shows that spending cuts can actually be a good thing politically. “It is commonly assumed that cuts in government spending will be both economically painful and electorally costly,” he writes. And:
Neither is borne out in the data. We’ve written before about the limited (and sometimes positive) effects of spending cuts on economic growth, at least in open economies. Here we add some simple analysis on the electoral consequences and, like others, find no evidence that spending cuts reduce support for the incumbent government. If anything the opposite tends to be true.
This entry was tagged. Elections Fiscal Policy Reform