Interest Group and Political Party Influence on Growth in State Spending and Debt

Date01 July 2020
Published date01 July 2020
Subject MatterArticles
/tmp/tmp-17QK29EoNxhlT9/input 875695APRXXX10.1177/1532673X19875695American Politics ResearchHolyoke and Cummins
American Politics Research
2020, Vol. 48(4) 455 –466
Interest Group and Political Party
© The Author(s) 2019
Article reuse guidelines:
Influence on Growth in State Spending
DOI: 10.1177/1532673X19875695
and Debt
Thomas T. Holyoke1 and Jeff Cummins1
Does more lobbying by more interest groups, especially groups representing a state’s largest business sector, lead to greater
spending and debt? Or does the blame really rest with state lawmakers and their political parties, which compete to attract
and retain the allegiance of these powerful organized interests so they can win control of state government? We test this
question with data on annual state budgets from 2006 to 2015, the number of interest groups in each state for those years,
the size of the constituencies in different economic and social sectors these groups potentially represent, and the degree of
competition between the political parties. Our results reveal that while there is a positive interest group effect on spending,
the effect becomes negative as parties compete more for control of the state. As the gatekeepers, lawmakers and their
parties, more than interest groups, are ultimately responsible for a state’s fiscal condition.
interest groups, state budget, state debt, political parties, state legislatures
The conventional wisdom is that government budgets increase
political party competition, testing whether interest group
in response to political demands, but demands from whom
advocacy directly, or indirectly through the parties, drives
and under what circumstances is not always clear. The need
spending and debt with data on groups, parties, and budgets
for constituent support has often led elected officials to
in the American states from 2006 to 2015. We find that
promise new policies and financial benefits in return for
more organized interests can drive up spending, but, sur-
enough votes to comfortably secure reelection, but not all
prisingly, their influence decreases as more parties compete
constituents are equal when it comes to their political appeal.
to control state legislatures. This, we argue, is a significant
Those mobilized as interest groups may have greater value to
change in the way we understand interest group influence.
legislators because they are more politically active and, at
Interest groups may be players in spending politics, but
the behest of group leaders, direct their votes for or against
lawmakers and their parties are the ones ultimately respon-
candidates. Elected lawmakers, organized into parties com-
sible for runaway budgets and crushing debts.
peting to control state governments, therefore, have a power-
ful incentive to reach out to these organized constituencies,
The Politics of State Spending
increasing the financial benefits they already enjoy, or prom-
ising whole new regimes of benefits and spending in
What drives government spending has drawn no shortage of
exchange for votes. The unintended result is increased over-
scholarly attention. Studying state and national government
all spending by the state and, consequently, greater debt due
spending trends, scholars have identified a number of factors
to interest group influence.
influencing growth in public budgets. Often, their work came
Interest group influence over a government’s ability to
as contributions to debates about potential structural changes
deliver services has been studied, often in response to
in national and state constitutions and governing institutions.
Olson’s (1982) dire prediction that too many demands from
For instance, in the 1980s, there was a flurry of research on
too many interests will retard the state’s ability to support
the effects of line-item vetoes and debt limits on state
economic growth, ultimately resulting in paralysis. Whether
this happens because interest groups drove governments
1California State University, Fresno, USA
into debt by pressuring lawmakers to overspend, though,
has at best received only modest attention. As elected offi-
Corresponding Author:
Thomas T. Holyoke, California State University, Fresno, 2225 East San
cials make the actual spending decisions, we develop a
Ramon, M/S MF19, Fresno, CA 93740-8029, USA.
model of group influence that is partially conditioned on

American Politics Research 48(4)
spending because Congress was considering them as well
Perhaps the closest scholars have come to looking for an
(Abney & Lauth, 1997; Bails & Tieslau, 2000; Holtz-Eakin,
interest group-driven effect on overall government perfor-
1988). When the term-limits debate heated up in the 1990s,
mance has come from testing Mancur Olson’s (1982) argu-
researchers started exploring whether adopting them
ment that excessive interest group influence will lock up
would reduce spending at both national and state levels
public sector investment in new industries and technologies
(Erler, 2007; Johnson & Crain, 2004; Payne, 1991; Reed,
to such a degree that a nation’s productive economic growth
Schansberg, Wilbanks, & Zhu, 1998).
is paralyzed. Empirical support for Olson’s rather apocalyp-
Scholars also started investigating the effects of interstate
tic hypothesis in studies of democratic nations (e.g., Coates
competition when “race to the bottom” concerns emerged
& Heckelman, 2003; Horgos & Zimmermann, 2009) and the
over changes in public safety-net spending, finding that some
American states (Ambrosius, 1989; Crain & Lee, 1999; Dye,
states were reducing benefits to deter potential recipients
1980; Gray & Lowery, 1988) has been decidedly mixed
from relocating there from neighboring states (e.g., Bailey &
(Heckelman, 2007), though most of this work focused on
Rom, 2004). While such concerns primarily arose in welfare
how states stimulate economic activity rather than spending
policy, Bailey, Rom, & Taylor (2004) also found evidence of
and debt.1 However, with Bacot and Dawes’s (1996) and
it in higher education spending. Surprisingly, though, Volden
Newmark and Witko’s (2007) finding that interest group
(2002) found that states were willing to increase their benefit
advocacy led to more spending on state environmental pro-
levels if other states did so first. Further work also found that
grams, we argue it is worth testing for a general group effect
internal budgetary trade-offs matter at least as much as inter-
on spending and debt in the American states. Not only do
state competition, with increased spending in one policy area
state budgets and debts vary considerably, so do the size and
forcing reductions in others (Berry & Lowery, 1990; Garand
diversity of state interest group populations (Holyoke, 2019;
& Hendrick, 1991; Nicholson-Crotty, Theobald, & Wood,
Nownes & DeAlejandro, 2009; Strickland, 2019).
Other research in both welfare and education policy attri-
Interest Groups, Parties, Spending,
butes much of the rises and falls in spending to ideological
and Debt
clashes and political competition, especially between the two
major parties for control of state governments (Barrilleaux,
We start by assuming that interest group lobbyists want to
Holbrook, & Langer, 2002; Berkman & Plutzer, 2004; Dye,
obtain public resources for their members, or otherwise enact
1984; Hwang & Gray, 1991; Poterba, 1996). Recent research
policies providing them with benefits, regardless of whether
has found that both parties benefit at the polls from higher
these members are individuals, businesses, or other kinds of
overall spending (Cummins & Holyoke, 2018), so recurring
organizations. The benefits may be targeted appropriations,
competition between them may drive it even higher, perhaps
guaranteed spending formulas, tax breaks for conservative
accounting for some of the cyclical pattern of occasional
interests, or all of the above. Because lobbyists cannot
bursts of state spending uncovered by Jones et al. (2009).
directly manipulate public budgets themselves, they must
It is to these partisan and electoral explanations for
convince state legislators to do it for them. What is the con-
increases in spending and debt (a consequence of overspend-
nection? The literature cited above emphasizes the influence
ing) that we hope to contribute. Targeting budget rewards
of party competition on state policy as the elected officials
toward key constituencies is a long-practiced means of gain-
embodying these parties use the tools available to them to
ing and retaining electoral support (Arnold, 1990; Fiorina,
advance their collective goal of dominating state government
1989). Yet, while bringing home money for all kinds of
(Dye, 1980; Morehouse, 1981). Scholars have shown how
things from big dams (McCool, 1994) to higher education
important it is to a party’s electoral fortunes to gain and
dollars (Balla, Lawrence, Maltzman, & Sigelman, 2002) can
retain the loyalty of coalitions (e.g., Bawn et al., 2012;
produce good results at the polls, the obligation on available
Brown, 1995; Herrnson, 2009), and others like Heaney
budget dollars and levels of long-term debt can be signifi-
(2010) argue that interest group members’ benefits rise and
cant. Even the demands of conservative,...

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