Presidential Agenda Control and Spending Policy: Lessons from General Pinochet's Constitution

Abstract

Formal institutions put in place upon the establishment of a new democracy can have profound effects on political bargaining. We demonstrate how the budgetary procedure bequeathed by the outgoing Chilean military regime affects policy choices available to elected officials. Chilean budget procedure should discourage deficits, allow for a reduction in the relative size of the defense budget, and facilitate cuts in executive proposals when the institutional interests of the legislature are at stake but not under conditions of coalitional conflict. We present a simple spatial model of bargaining over spending decisions between the executive and Congress that facilitates comparisons between the Chilean budget procedure and that of other presidential systems. The model suggests that, relative to other regimes, Chile's budget process should constrain spending and favor the president's preferences over the legislature's. Comparative fiscal data from twelve other presidential democracies and from the first eight Chilean budgets since the transition to democracy, as well as interviews with key legislators and executive officials, all support our hypotheses.