Graph by Lane Kenworthy
John Podesta’s imminent arrival as a White House adviser may signal an even greater commitment by the Obama administration to fight inequality. This is already a White House priority — as evidenced again in Obama’s speech last week — and it is a priority of Podesta’s as well. On Monday, he wrote:
For the last three decades, the U.S. economy has been growing dramatically more unequal and less mobile by nearly every measure. The fact is that we don’t know nearly enough about what high inequality means for economic growth and stability. We need a better understanding of how inequality affects demand for goods and services and macroeconomic and financial imbalances. We are in the dark on whether and how inequality affects entrepreneurship, or whether it alters the effectiveness of our economic and political institutions, or how it affects individuals’ ability to access education and productively employ their skills and talents.
For these reasons, he recently founded a new “research and grantmaking organization” called the Washington Center for Equitable Growth. WCEG’s focus is on the consequences of inequality — for economic growth, human capital and so on. But if the goal is combating income inequality, we need to understand its sources too. New research suggests that those sources are not simply economic but deeply political. And a key factor is none other than the filibuster itself.
In a recent paper, political scientists Peter Enns, Nathan Kelly, Jana Morgan, Thomas Volscho and Christopher Witko advance a simple hypothesis: The government could act to mitigate the economic and demographic factors that increase inequality, but the American political system’s separation of powers and checks and balance make it difficult to pass such policies. Instead, there is a bias toward the policy status quo — one that Enns and colleauges argue only worsens as inequality itself increases. One important source of status quo bias in American politics has been the de facto super-majority requirement in the Senate — the need sometimes to win the votes of (initially) two-thirds and (later) sixty Senators.
Enns and colleagues tested this hypothesis with nearly seventy years of data on income inequality, from 1940 to 2006. To demonstrate the impact of the filibuster, they measured the ideological difference between the average Senator and the Senator estimated to provide the crucial vote to overcome a filibuster (known in political science as the “filibuster pivot”). As this difference increases, it becomes harder to enact policies that appeal to the requisite super-majority — and thus harder to enact policies that would address income inequality. To measure the broader consequences of status quo bias, Enns and colleagues measured the overall policy output of Congress in each year. The less policy Congress is producing, the worse the status quo bias — and the more inequality should increase.
Both hypotheses proved true. Indeed, simply graphing inequality and these two measures of status quo bias suggests how such bias may matter (click the image to enlarge it):
As the distance between the average Senator and the filibuster pivot grows, so does inequality. As Congress produces less policy — an increasing line in the right-hand graph, which inverts this measure — so does inequality. Statistical models confirm these relationships and also demonstrate how the status quo bias worsens as inequality grows. Enn and colleagues conclude:
Even after controlling for economic factors like the top marginal tax rate and financial deregulation, status quo bias matters for inequality. Although many factors may lead to rising inequality, status quo bias makes this process difficult to reverse. Importantly, the effects of variables related to institutionalized status quo bias become larger at higher levels of income concentration, which provides additional evidence that the effect of stalemate matters more as conditions favorable to rising inequality emerge and intensify.
There is no real sign that this stalemate will end. Senate Democrats’ recent decision to exercise the “nuclear option” and limit the use of filibusters for presidential appointments “won’t have much effect on policy gridlock in Washington,” writes one of the paper’s authors, Nathan Kelly. He continues:
It’s tempting to view the nuclear option as an intriguing power play by Democrats, a shift of power from the legislative to the executive branch, or a restructuring of the nomination process to bring some degree of efficiency. But the nuclear option and the filibuster provision in Senate rules that it targets is more broadly part of a policymaking system that is biased toward stasis, and this bias has consequences for who gets what in the American economy. Only the very rich benefit from today’s anti-majoritarian, gridlocked government. The recent reforms merely scratch the surface of what would be needed to overcome policy gridlock and enhance the likelihood of egalitarian policy change.
If the Obama administration’s goal is to reduce income inequality, this research shows just how difficult that will be. The roots of inequality derive, to some extent, from the very nature of American politics.