The time between the House Appropriations Committee's (HAC) creation in 1865 and its wholesale loss of institutional power in 1885 was one of nearly continual debate over the proper way to structure the appropriations process in the House. The debate started slowly, but by the late 1870s its intensity had increased substantially.

As we shall see, the debate was guided by the theoretical dynamics identified in Chapter 1, which informed the structural preferences of members and helped to determine their reform tactics. Of the dynamics identified as key to understanding structural politics, two especially stood out during the period covered in this chapter, giving rise to the most important reform attempts and ultimately shaping the form of the new appropriations process that was in place by 1885. The first key dynamic was the tension between leadership and rank-and-file preferences. With only a couple of important exceptions, the structural debate after 1865 was prompted by the dissatisfaction of the rank-and-file with the status quo; the rank-and-file frequently opposed the formal structures of centralized spending control, which leadership usually defended vigorously. The split between leaders and backbenchers was greatest among Democrats, whose southern members occasionally found themselves in direct conflict with the preferences of northern Democratic Speakers.

To what extent should we regard the most fundamental principles of a just society as the subject of an agreement, actual or hypothetical? In this essay I look at two famous recent approaches to this question. Then I suggest a more general framework for considering the problem. I begin with brief discussions of the contrasting approaches of James Buchanan and John Rawls.

I would like to focus on a basic issue at the center of both theories: Can a hypothetical choice motivated by self-interest yield unique and significant results and, at the same time, preserve impartiality? By yielding unique and significant results, I mean establishing nonintuitionist first principles (solving the “priority problem”) for either the general question of political procedures considered by Buchanan or the even broader question of the distribution of primary goods considered by Rawls.

Both the Buchanan and Tullock constitutional convention and the Rawlsian original position appeal to hypothetical self-interest under fair or impartial conditions. In each case the following problem arises: Can we know enough about our self-interest to choose one and only one first principle and, at the same time, not know so much that the choice has been biased in our own favor? I will claim, on the one hand, that the Buchanan and Tullock contractors, operating from behind a thin veil, know too much and, on the other hand, that the Rawlsian contractors, operating from behind a thick veil, know too little.

The story of the development of the budgetary process in the House between the Civil War and World War I is in many ways a stripped down version of the story of the development of the budgetary process in the House, and in Congress more generally, since 1921. The names and contexts have changed, but the basic processes and themes of reform have remained quite similar over the years. In the last few pages here, I want to revisit the basic theoretical points I outlined at the end of Chapter 1, examine how they expose certain themes in the development of budget reform politics between 1865 and 1921, and, finally, suggest ways that the events of this period can be used to elucidate reform politics during the past two generations.

One general point needs to be reiterated, however, before moving on to conclusions about specific themes of reform politics. That point is this: In order to understand the congressional budgetary system and the politics of its reform, one must begin with a clear definition of what constitutes this system. The analysis in the preceding chapters reinforces the need to define the budgetary system in terms of the relationships among the four major sets of actors that are involved in determining the dynamics of congressional politics – the rank-and-file, party leaders, committee members, and presidents.

The devolution of 1885 significantly altered the orientation of structural politics in the House. Most obviously, the new regime represented a shift in the status quo, altering the basic orientation of leaders, committee members, and backbenchers toward structure. Legislative committee members, who had previously been the old regime's strongest opponents, became the new regime's staunchest supporters; members of the traditional money committees became its biggest critics. Leaders could not openly assault the regime of 1885 since their followers obviously supported the new arrangement, but they could work quietly to effect their own wills through the appointment process and their efforts to coordinate committee decisions informally.

As I suggested in Chapter 1, however, the devolution was likely to have indirect institutional consequences as well. Most importantly, now that seven legislative committees could oversee appropriations bills, resources available to protect the new status quo were dispersed throughout the chamber. As members of these legislative committees went about their jobs, they were bound to generate support for their own institutional positions by doing favors for other members. As these favors proliferated, so too did the institutional currency necessary to withstand structural challenges. In short, membership on these legislative committees was valuable not only because members could more easily aid their own constituents, but also because members could assist the constituents of others, extracting a price in the process.

Because of largely exogenous leadership changes, most of these institutional chits never had to be called in, however.

Individual preferences, institutions, and public choice

Before the development of public-choice theory, normative writing about the public sector in general, and about democratic politics in particular, belonged to one of two broad categories. First, many critics defended or decried some particular public policy as advancing or denying the achievement of a just society, as they defined it. Both history and contemporary political life provide ample evidence of this kind of critical writing. For example, in earlier days advocates for and against slavery, the gold standard, progressive taxation, labor-union cartels, economic planning, and international isolationism dominated political discourse. And each advocate framed his argument in terms of fulfilling some vision of justice. Today many of the issues seem different, but as contemporary writers argue for or against a woman's right to have an abortion, a greater or lesser amount of income redistribution, or more or less government regulation of the private sector, the framing of argument in terms of justice, rights, and other deontological goals persists.

Second, other writers attacked or defended not the policies of government, but its structure, its organic laws, and the basis of representation, but again in terms of preconceived notions of justice or rights. Surely, such arguments are as old as the state.

Whether a society composed of individuals with diverse interests can be organized successfully by democratic means has been a major issue of philosophical debate at least since the time of ancient Greek civilization. That an upstart discipline like public choice could resolve in thirty-five years issues that have been debated for twenty-five hundred would seem improbable, and I will not be so presumptuous as to claim that it has. But it has the potential to shed new light on old questions, and may already have succeeded to some extent in doing so. I shall in this essay examine certain parts of the public choice literature to see what it has to offer to this long debate.

The chief assumption delineating the public choice approach is that political man and economic man are one and the same, each acting rationally in pursuit of his self-interest. They differ only with respect to the environments in which they act. Economic man encounters his fellow man in the marketplace, where they engage in mutually beneficial exchanges. Political man, either directly or through his representative, meets his fellow men in the assembly, where all engage simultaneously in what we call the “democratic process.” That the different contexts in which economic and political man act can have important implications concerning the normative properties of the consequences of these acts has been an important part of the public choice literature ever since Buchanan (1954a) first raised the issue some thirty-five years ago, and I shall return to it later.

Democracy, it may seem, has never been less in need of defense — or even evaluation. Gradually, over the past couple of centuries, it has passed into the catalog of universal virtues. We are all democrats now, differing at most only in the qualifier we prefer: “liberal,” “workers',” or “people's.” Anyone labeled “antidemocratic” or even “undemocratic” has been ostracized from the relevant community of normative discourse. Correspondingly, any urgings in favor of democracy are likely to strike the contemporary ear as platitudinous.

Complacency, however, would be out of place. If “democracy” has become a “motherhood term,” it runs the risk of all such: that it become emptied of meaning. If all regimes, whatever their institutional detail and political spirit, claim to be democratic — as virtually all do — then what, we may reasonably ask, is undemocratic? Is it not a fair bet that charges made in the past against democracy — or for democracy against other regimes — have been answered by mere changes in the meanings of words? What are the defining features of a democratic order? What exactly are the virtues that democracy is supposed to engender? And does democracy really succeed? In some ways it is important that such questions be asked precisely when the answers seem to be so widely taken for granted.

Those who have lived in the United States during the post-World War II era have witnessed a considerable amount of tinkering with the procedures Congress uses to appropriate public funds. Each decade seems to bring a structural fix for the budgetary problems that ail us. Four “reforms” in recent decades particularly stand out: the creation of a joint budget committee under the Legislative Reorganization Act of 1946, the experiment with an omnibus appropriations bill in 1950, the passage of the Congressional Budget and Impoundment Control Act (CBICA) of 1974, and the passage of the Gramm-Rudman-Hollings deficit reduction act in 1985. The shift of billions of dollars of expenditures away from the annual appropriations process toward “entitlement” and “backdoor” spending during the 1960s also counts as an important, if informal, alteration of congressional procedures. In addition to these procedural changes that have actually been enacted by Congress within the past generation, countless other schemes have been proposed to change the budgetary process even further, only never to get out of committee.

To most people, all of this tinkering (or tampering) is yet another indication of the increased complexity of our age. The necessity to deliver more government services to more people requires Congress to expand its institutional and analytical capacities. More people rely on government spending for their livelihoods, and both they and their representatives try to structurally shield spending of interest to them from close public scrutiny.

As far as can be ascertained, the following list of cases is exhaustive of all reform attempts that reached the House floor between 1865 and 1921 (indeed, several never made it as far as the floor). The cases were derived by thoroughly examining the subject and bill indexes of the House Journal, Congressional Globe, and Congressional Record for each Congress in the time period, as well as the New York Times Index for each year and the secondary congressional historical literature.

38th Congress, 1863–65

House Appropriations Committee formed.

43rd Congress, 1873–75

William Wheeler attempts to bring the Army Asylum on-budget (unsuccessful).

44th Congress, 1875–77

First passage of the Holman Rule.

45th Congress, 1877–79

Commerce Committee successfully asserts dominance over rivers and harbors appropriations for the first time.

Railways and Canals Committee challenges the right of the Commerce Committee to report rivers and harbors appropriations.

46th Congress, 1879–1881

Rules Committee proposes two rules: requiring three-fourths majority to pass spending bills under a suspension of the rules and granting the HAC jurisdiction over rivers and harbors appropriations (both unsuccessful).

Commerce Committee's exclusive jurisdiction over rivers and harbors legislation is written into the House rules.

Agriculture Committee wrests control of Agriculture Department appropriation from the HAC.

Decentralization of a number of appropriations items is attempted – public buildings, military affairs, patent office, Mississippi River (all unsuccessful).

Railways and Canals Committee challenges Commerce Committee for control over the rivers and harbors appropriations bill (unsuccessful).

This is an essay about the justification of democracy in which democracy is understood as a way of making coercively enforceable collective decisions. The problem of justifying democracy arises once a group perceives a need for collective action, that is, a need to construct principles specifying the terms of cooperation. One's theory of democracy, then, is likely to depend on one's views about the reasons for collective action. Let us distinguish two such views. In one, collective action is thought necessary to resolve coordination, externality, and Prisoner's Dilemma problems. We might loosely refer to this view as the “market failure theory of collective action.” In this account, cooperation is necessary only because markets are imperfectly competitive. Market failure creates a need for individuals to abandon rational self-interested strategies over specifiable domains in favor of compliance with jointly maximizing ones. Over some domains individuals must abandon competition in favor of cooperation; and the question they must ask is, By what rules or principles are the terms of cooperation to be determined?

In the other view of collective action, individuals are already disposed to cooperate with one another on fair terms. Individuals may already share particular conceptions of just cooperation and seek to institutionalize them concretely in political and legal institutions.

It is one thing to know that support for, and opposition to, decentralization in 1885 was largely based on predictions about what structural change would do to subsequent spending decisions. It is quite another thing to show that the predictions were borne out. Because members on both sides of the issue fought so hard for their positions in 1885, and because reform rhetoric early in the next century turned its fire on the regime of 1885, it is tempting to assume without second thought that the decentralizers ultimately triumphed in both their structural and substantive goals, gaining both spending independence and expansion.

Yet we should be slow in jumping to conclusions about the actual performance of the 1885 regime. The reasons for expressing caution are simple enough: Many factors influencing spending decisions were still beyond the direct control of members of Congress (MCs) after 1885. MCs could change structure, but structure was not the whole ballgame. The country and its demography, geography, economy, and politics had begun to change at an astounding pace by 1885. Certainly these changes would have some impact on subsequent House spending decisions, independent of the appropriations structure itself. Thus, if we are to develop a clear understanding of how changing the appropriations process changed spending decisions, we need to take these other factors into account.

In the next few pages I shall develop a theory to explain why members of Congress (MCs) create specific budgetary structures. Basic to this discussion is the identification of salient budgetary actors and processes, identification of the goals and constraints facing budgetary actors, and the specification of the key relationships among actors, processes, goals, and constraints. My aim is to lay the foundation of a theoretical explanation that is relevant to Congress over a long sweep of history. My focus, therefore, is on what has been common to congressional politics over the past century, not on the idiosyncrasies of any particular age. The exploration of unique elements of budget reform politics occurs in later chapters. Once the common elements of structural politics have been identified and the relations among them specified, then we shall be able not only to understand the important recurrent themes in reform debates over the years, but also to judge the relative importance of other causal dynamics that may have been unique to a given era, be they past, present, or future.

The importance of developing a theory to explain the genesis of decisionmaking regimes is clear, once we accept the conclusion that ongoing budget making is typically incremental. Incrementalist strategies operate through simplifying uncertainty and conflict, and structure is the most important formal mechanism by which such simplification occurs.

Introduction

This essay is directed toward clarification of the relationship between contractarianism and majoritarian democracy. Contractarianism does, indeed, presuppose political equality among all members of the politically organized community, both in the operation of the law and in changes in the law, as well as in the determination of collective action within the law. Political equality does not, however, imply majoritarian decision making either in the enforcement of law or in the changing of law; and majoritarian decision making remains only one among several optional means of making collective choices under the range and scope allowed for such action within the law of the constitution.

If politics is to be interpreted in any justificatory or legitimizing sense without the introduction of supraindividual value norms, it must be modeled as a process within which individuals, with separate and potentially different interests and values, interact for the purpose of securing individually valued benefits of cooperative effort. If this presupposition about the nature of politics is accepted, the ultimate model of politics is contractarian. There is simply no feasible alternative. This presupposition does not, however, directly yield descriptive implications about the precise structure of political arrangements and hence about “democracy” in the everyday usage of this term.