A few days ago, I gave the theoretical logic for why the availability of the government shutdown results in growing government spending. Advocates of smaller government should advocate a default budget rule that is far milder than shutdown. Now, I have come across academic research by David Primo finding just this at the state level. States with an automatic shutdown provision actually spend on average $64 more per capita than states without such a provision.
As Tea Party Republicans approach the final denouement of their humiliating, destructive defeat on the latest budget battle, it bears thinking about how U.S. fiscal institutions essentially predestined this outcome.
HT: Matt Mitchell
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