Twenty-Two
The Deficit and the Public Interest

The budget deficit as an issue is important both in its own right, although its effects are controversial, and for its impact on other concerns, ranging from caring for the homeless to the national defense. Yet many of us care about the deficit story for another reason: it tells us how, and how well, our political system is working. The deficit is seen as a test of Americans' ability to govern themselves. The myriad battles of deficit politics, from Carter's remade budget in 1980 to the budget summit of 1987, reveal patterns of power and influence that can help us understand how our government works, for better or worse.

In evaluating the system, our judgments inevitably will be shaped by our opinions of the deficit itself. What people think of a procedure depends on what they think of its results. And it should be obvious that White and Wildavsky do not believe the deficit is the end of the world. It is, we think, a regular size, not a giant size, problem. We have emphasized that deficit reducing choices are hard because they require accepting other evils, from a weaker defense to less investment to sicker children and old people, including the very depression balancing the budget is supposed to prevent. When a problem is difficult its resolution is not obvious. We claim that our deviant views help make more sense out of the events of our story than could be made with other presumptions, such as that the evils of the deficit are so overwhelming that any reasonable person would sacrifice much to fix it. In questioning the deficit's horrors, we admit a bias toward a more favorable view of both the political system and our politicians than may be common.

Several readers of early drafts of our book have complained that it lacks villains. With all major players acting to achieve the good as they understand it, the persistent gimmickry and obfuscation are revealed to be as much products of trying to avoid even worse as determinations to

mislead. Understandable if not always laudable behavior has been portrayed as due to frustration at endless inability to agree rather than desire to do wrong. We have diffused blame for the deficit to the point where, to some readers, it might indicate lack of character or atrophy of the critical, faculties. Surely (SURELY!), they tell us, President Ronald Reagan with his feckless tax cuts, his heedless refusal to compromise, his utter disregard for the consensus of his own staff and of the vast majority of the nation's economists, let alone all our allies abroad, that the deficit was a very bad thing deserves worse than we have given him. And the unexpected criticism we do offer to the political paragons of budget balance, the heroes of losing battles to balance the budget, but heroes nevertheless, seems (to them) inexplicable or perverse. After all, everyone has heard of extremists of the right or of the left, but extremists of the center, never.

Our point is that Ronald Reagan's, Tip O'Neill's, and Pete Domenici's behaviors, different as they were, all made sense given their different values. Political conflict and everyday life make no sense if we think everybody's the same. Political analysis has to start by asking why which values prevail, not by judging a system entirely according to its output along one criterion of evaluation. In the final chapter we will say what we think should and should not be done about the deficit. Here we ask how the deficit story can help us revise standard evaluations of how the American political system works.

Who Rules?

The most obvious question is that of power. Who rules? The battles of the budget, involving all the federal government's choices as to who gets and pays what over a period of years, provide the best possible evidence for answering such a question. At first blush, the answer is simple enough. The candidates are the mass public, elected officials, civil servants (bureaucrats, if you prefer), interest groups in general, business groups in particular. Required to give a short answer, a reader of this book would be compelled to say either "elected officials" or some compound of "elected officials and the mass public."

It is clear that citizen opinion, as recorded in innumerable polls and as reflected in elections—whether indirectly through anticipation, directly through petitioning legislators (e.g., against social security cuts or interest withholding), or through elections—placed limits on what politicians could do. There were to be neither reductions in social security, nor, after income tax cuts were enacted, increases for the bulk of the population. These constraints ruled out the two most obvious (because most ample) sources of deficit reduction: higher income taxes and

greater reductions in the rate of increase in entitlements. Within these biting but broad constraints, elected and appointed officials initiated alternatives and made the ultimate decisions. It cannot be said that public opinion demanded either the Kemp-Roth tax cuts or tax reform, but neither did it oppose them. It can be said that mass opinion wanted more defense and less welfare spending than Carter offered in 1980 and the reverse in regard to Reagan after 1982. Although the public clearly disapproved of deficits, it just as clearly objected to doing anything conclusive, therefore drastic, about them—a state of opinion neatly reflected in the actions of elected officials. At any time in this story, the movement of taxing and spending may be said to be reasonably in accord with the preferences of the mass public.

The most decisive statements of opinion and major causes of budgetary behavior were elections themselves. The difference between 1980 and 1981 was the difference between a troubled but basically Democratic Congress and a Congress dominated (barely) by the Republican/boll weevil coalition. The 1982 election ended that coalition.

Civil servants are seldom heard from, apparently speaking only when spoken to. Because there are multiple and competing sources of advice—agencies, OMB, CBO, CRS, private groups—the politicians are able to choose among them. Economic forecasting is the preeminent example of staff unable to dominate with their expertise given the many competing sources. This does not mean staff is without influence; after 1981 the Treasury's tax policy staff successfully pushed a series of revenue-raising initiatives. They succeeded because their political superiors, John Chapoton and Donald Regan, were skeptical of many business tax breaks. Stockman's OMB and Reagan's political agency appointees show the extent to which an administration can bypass civil servants if it wishes. These administrators could appeal on back channels to the appropriations committees, which might reverse the administration's cuts. But such a strategy only reveals the preeminence of elected officials; it takes Congress to defeat the president. Either way, bureaucrats are not in charge.

Interest groups are ubiquitous, but are they dominant? The difficulty in appraisal consists in differentiating them from other actors who want what they want. From the mid-1970s through the first year of the Reagan administration, for instance, the politicians' concern with capital accumulation led to a considerably reduced effective corporate tax rate. Big business could hardly have done better than it did in 1981. How should these events be interpreted in terms of business power?

Look at what followed. In 1982 and 1984, corporate preferences were whittled down. Did business have fewer resources? No, but the politicians wanted to do something about the deficit; business was the target of

opportunity. The agendas of business and elected, officials had diverged. Tax reform was an example of the president's agenda differing from that of business; there, also, business lost.

Of course, business groups are a force to be reckoned with, and politicians went to great lengths to adjust their packages so as to anger as few groups as possible. Equally clearly, business groups needed allies. When they did well, as in 1980–1981, it was because the agenda of national policy making—"productivity"—favored them. When business did poorly, the agenda—deficit reduction, preferably from those who could afford it and who had fewest votes—was unfavorable. Business groups could try to set this agenda: a lot of publicizing and lobbying went into building a concern with capital formation, just as a campaign put infrastructure on the agenda in 1982. Yet their influence on the issues in debate was limited. Whatever happened to capital formation, anyway?

Other interest groups were able to exploit opportunities or to beat off attacks. Federal employees and retirees won battles against the budgeters in 1980 and 1982. Oil interests—which means whole states—did very nicely in 1981 and not so badly thereafter. But they and their states still suffered badly from the sharp decline in international oil prices. The banks overwhelmed Congress on withholding in 1983. Most important, whenever the deficit dentists went after social security, the elderly lobby chomped down on them. One thing is evident: the more an interest group looks like a whole mass of angry voters—from five million affected by civil service retirement provisions to untold millions interested in interest withholding, and virtually everyone involved, either immediately or potentially, in social security—the more powerful it gets. That makes it difficult to distinguish interest group power from that of the public. If many, many people want something, Congress either supplies it or doesn't take it away. Is this bad?

Sometimes we distinguish interest power from public preference by emphasizing resources (e.g., money) used by groups: When Congress responds to threats or inducements involving campaign contributions, we see a force that differs from citizen opinion. The dairy lobby is a good example of a sophisticated group that poured money into politics; while it lost some battles, some claim it should have lost more. Business in general with its checkered outcomes is another example of a monied interest. The history of revenue policy shows, at the least, that politicians like to please groups that are big contributors (remember the "commodity tax straddle" in 1981). Yet our politicians also are capable of playing monied interests off against each other (as in 1982, 1984, and 1986). There could not be a better example of a policy discombobulating

interest groups—who hardly knew what was happening to them, even if it wasn't that bad—than tax reform. In part because there are so many interests, politicians have substantial independence.

Have we come all this way, then, only to repeat elementary school maxims—America is ruled by its people acting through its elected officials? Given the separation of powers, moreover, Congress counts a great deal, so much, in fact, that any theory of rule in America that omits the legislature is hopelessly wrong. Yes, we think these are truer maxims at this time than common alternatives—America is ruled by business or the military-industrial complex or bureaucrats. Yet judgments of relative power do not explain its exercise. Nor does the relative power of voters and elected officials mean that some citizens are not favored over others, that the system is unbiased. Indeed, bias may arise not from the ways interests are aggregated but from the ways people determine their interests.

Evaluation again cannot be separated from values. Bias exists only in reference to some standard; the system is said to favor business, labor, or farmers if it provides benefits to those forces at the expense of the public interest. Such an evaluation depends on what you think the public interest is. If capital formation is necessary to the general welfare, then policies that favor it, even if they aid rich people more directly than poor, cannot be said to show the system's bias.

Many analysts would argue that who wins the battles of the time is not the issue. Accepting those battles as the standard omits fundamental questions. Why are some people rich and others poor, some well organized and others disoriented? Where do the alternatives come from? Not all alternatives are offered. Medicare was a budgetary crisis, but no one suggested socializing medicine as a solution, though that is common in most of the industrialized world. Hardly anyone suggested getting out of NATO, which might save big bucks. Certain kinds of options—challenges to private property, retreat from America's world role—were not considered.

Whether you believe the political process even asks the right questions—never mind gives the right answers—depends on your ideology with its accompanying worldview, which shapes your judgment about both bias and effectiveness. Yes, public officials rule, economic conservatives agree, that is the trouble. For, in order to curry favor with the electorate, they spend too much, thus taxing too much and thereby weakening capitalism. To stop the government from governing too much, they want a balanced budget—spending limit amendment.^[1] That's the trouble, say radical democrats (with a small "d"); the state budgets instead of the people. Instead of ordinary people gaining experience in reconciling differences, they are depoliticized in favor of control by corporations

and experts.^[2] The real trouble, other critics say, is that the state ought to govern but actually does not. Real power is delegated to irresponsible interest groups.^[3] Too simple and too nice, Marxists reply. The state rules not in the public interest but on behalf of private, capitalistic interests. Indeed, the state does better by capitalists than they can for themselves, thus perpetuating an unjust system.^[4]

Ultimately, for most people, the questions, Who does the system favor? and Does the system work? merge into one: Does the system serve the public interest? An irony of the deficit battles is that observers from across the political spectrum can agree the deficits reveal the system's failure, even as they disagree about the lost public interest and the found bias.

Capitalism, Democracy, and the Budget

Long before Jimmy Carter confronted his budget difficulties, two broad streams of social science analysis argued that a capitalist democracy, such as the United States, faces potentially crippling obstacles in controlling its budget. Both streams, Marxist and conservative, considered the problem in terms of the independence and the strength of "the state."

The term sounds alien to Americans, who are used to referring to the government or city hall and who are likely to find "the state" too pretentious or archaic, a remnant of absolutism or perhaps an insidious effort to impose strange and harmful European doctrines. We Americans do speak of it but in other words. For in the halls of Congress and on main street the same question is being raised ever more insistently: Is there a government that can govern?

During the 1970s, political scientists throughout the industrialized world rediscovered the state. Their interest grew with the politico-economic crisis that began our story. Governments of all the industrialized democracies faced economies that would not function acceptably. Scholars wrote about "strong" (more capable) and "weak" (less capable) states; America's state was viewed as weak because it directed the economy less. Governments felt responsibility for an inability to manage those economies as well as they would have liked. To others, however, these nations' political economies functioned all too well.

Pride of place in resurrecting the state goes to Marxists, for whom the relationship of politics and economics was always primary. They, however, begin not in the 1970s but before, when things were going well. Therefore, their basic question is different. Why, they ask, despite its moral illegitimacy, its political ineptitude, and its economic incapacities, in sum, its systemic irrationality, does capitalism survive, even prosper? Capitalism, Fred Block writes, faces "the twin dangers of economic

crisis and radical working-class movements."^[5] Market failure, like the Great Depression and/or popular revolt, could overturn the system. Why has it not done so? Like many other Marxists, he argued that the state apparatus acted to save capitalism from itself.

Before it can be appraised, neo-Marxist theory has to be differentiated from the older, classical version, whose conclusions it seeks to validate while altering the causal path through which they are derived. Starting with the words of Marx and Engels's Communist manifesto—the state is a "committee for managing the common affairs of the whole bourgeois"—Lenin and other Marxists developed an instrumental view of the state. In its most mechanical version, government officials carry out orders from capitalists who, through their ownership of the means of production, lord it over the rest of society. While Marx was attracted to this mechanical view, in order to hold capitalists responsible for their crimes, he also recognized that government officials need not be capitalists to do what they wished. The important point was that these administrators had to serve the interests of capital ("objectively," as Marxists say).

Almost from the beginning doubts were voiced: How do capitalists know so well what is good for them? Are they in fact united? Is there some mysterious relationship at work so that whatever policy capitalists need mysteriously appears? Is government necessary if it only carries out orders? Are these instructions part of a capitalist conspiracy? And, if so, why would a ruling class have to mask its power?

Modern Marxists, confronting these questions and researching them, found that public officials were often neither rich nor capitalist. The growth of the welfare state suggested that capitalism might have benevolent aspects. Studies of interest group-government relations, as well as casual observation, revealed continuing divisions within both sides of this relationship. Often it appeared that state organs had different views from those of business and succeeded in imposing them. And so we have found as well. A more adequate account was called for.

Just as Marx and Lenin developed the theory of the vanguard of the proletariat, made up of ideologically conscious intellectuals who better understood the interests of the working class than the workers themselves, there developed among Marxists a theory of what we will call the "capitalist vanguard," a state composed of government officials who know better than industrialists what is good for them.^[6] As Stephen Elkin described the analysis, "class lackeys" became "class fiduciaries.^[7] Because capitalists are engaged in competition and because they are short-sighted, that is, interested in immediate profits, Marxist scholars began to argue that they are unlikely either to organize in a class conscious way or to take a long-range view of their class interests. Therefore (consciously or

not, views vary) capitalists consent to turn over the task of seeing they remain in business to their own government. "Ruling-class members who devote substantial energy to policy formation become atypical of their class," Fred Block explains, "since they are forced to look at the world from the perspective of state managers. They are quite likely to diverge ideologically from politically unengaged ruling-class opinion.^[8]

Such a formulation allows for seeming differences between the state and the capitalists, while assuming shared interests. The state managers' problem then becomes one of keeping the public happy with welfare state measures and regulation while retaining the capitalist character of society and support from the capitalist class. Block describes their response in terms that recall Adam Smith's "invisible hand."

If the state managers decide to respond to pressure with concessions, they are likely to shape their concessions in a manner that will least offend business confidence and will most expand their own power. These two constraints increase the likelihood that the concessions will ultimately serve to rationalize capitalism.^[9]

Business confidence matters because, otherwise, businesses will not invest and the economy will collapse. No conspiracy is needed.

The actions of individual entrepreneurs, in putting forth or withholding their resources, the "investment strike" of Marxist lore,^[10] guarantees favorable state action.^[11] Far from being an impediment to ruling in the interests of capitalists, it turns out that the class struggle helps the vanguard capitalist state persuade the owners of production to adopt far-sighted policies, such as social security and unemployment insurance, to keep them in power.

Marxist analyses pose the right question: How is political legitimacy combined with maintaining the health of the capitalist economy? The tax and budget battles are about that question. A better answer is needed than that the politicians work it out so the capitalists (or, at least, capitalism) always win. If, as Jon Elster pungently puts it, "it is in the political interest of the bourgeoisie that the State should not act in the economic interest of the bourgeoisie," such a proposition is essentially "vacuous."^[12]

Was it in the long-term interest of capitalism to cut income tax rates across-the-board by 23 percent? The administration, at least the president, thought it was, but there were worriers about deficits, like the budget director and Senator Domenici. Should these cuts have preceded rather than followed equivalent spending cuts on domestic programs? President Reagan thought so and persuaded most members of Congress, but not without acknowledging their strong qualms. Was it better to accept huge deficits, though no one intended them, than to accept larger revenues that might have hampered the economy, encouraged larger

domestic spending, and given anticapitalist forces resources with which to expand their clientele? Was it better for capitalism to enact lower income tax rates or rely on tax preferences to directly enhance capital accumulation? Were the majorities who, after 1981, safeguarded the bulk of welfare programs either the better defenders of capitalism because they may have protected its legitimacy or the worse defenders because money was diverted to what some considered less productive uses?

All these disputes occurred within an overwhelming consensus of the political stratum as to the merits of capitalism. Such doubts as the Democrats would display about the market's wonders were always subordinated to claims of loyalty to dominant economic ideology. Media scorn of Richard Gephardt's rather mild protectionism in the 1988 campaign or labeling Jesse Jackson's policies as radical, shows that dominance, what Italian Marxist Antonio Gramsci would call the hegemony of capitalist ideology. In America capitalism is what everyone swears they want; because no one is exactly sure how to maintain it, however, the lot of state managers is not happy.

Can the notion of state managers have much meaning if it does not include the chief executive? If that is so, in what sense can it include Ronald Reagan? Perhaps his willingness to impose costs on businesses, as in the tax reform, so as to improve long-term conditions for market capitalism, fit this scheme. Is President Reagan, then, the epitome of the socially advanced leader of the state apparatus who knows what is good for capitalism even (or especially) when capitalists themselves disagree?

Perhaps we can view politicians as a group, with all their disagreements, as united in commitments to both capitalism and political institutions. The politicians who look most like Block's state managers are the experienced politicians in the legislature, particularly on revenue and appropriations committees. Fair enough, but what kind of state is colonized so easily by less socialized members of the ruling class, such as Stockman, Reagan, and Regan?

Claus Offe expresses the difficulty of the state managers' task well. (Exactly who they are, we will discuss next.) He argues that the state is, at one and the same time, biased, independent, and troubled. The state, defined as the institutions and the norms that regulate relationships between private and public sectors, is biased because it attempts to maintain the dominance of market relationships. It is independent (or relatively so) because it must try to reconcile acceptance of capitalism by the mass public (legitimacy) with capital accumulation (effectiveness). The state is troubled because it must simultaneously try to reconcile conflicts (1) within the capitalist class, (2) between that class and workers, (3) within its own ranks, and (4) between itself and the rest of society.

Offe treats the state as a political body trying to keep sufficient distance

between itself and society to avoid being overwhelmed by the problems it is supposed to solve. In this sense, though Offe does not explicitly say so, his detailed analyses of policy formulation suggest that maintaining the image of the state as a neutral arbiter may be a fiction, but necessary, if the state apparatus is to save itself from the system of relationships it is desperately trying to safeguarded.^[13] Being in the fray, while being above it, budgeters would agree, is neither an easy nor an enviable position.

Déjà vu. Translated into their own vocabulary, participants in the battles of the budget could only assent to Offe's description of them as state actors. Of course, they would not accept his characterization of their dominance. After all, it is hard to square his evocative description of their beleaguered status as dominating anything. Our participants are sensitive to what they consider misunderstanding. In tax reform, they, the governors, tried to show they were not merely a "switchboard state," passive implementers of other people's desires, but also a "switchblade state," ready to attack those who stood in the way of their conception of general interest. They would show "the special interests" who was in charge. And they did. But not without concern, as Offe suggests, about possibly diminishing capital accumulation. They took actions that at least kept the deficit from growing much larger than it otherwise would have been. If a rise in interest rates or some other factor they could not control vitiated their efforts, that was life, frustrating but inevitable. They were biased; they were in charge; and, to complete Offe's portrait, they were also troubled.

There is truth in Evans, Rueschemeyer, and Skocpol's conclusion that "state interventions in socio-economic life can, over time, lead to a diminution of the state and to a reduction of any capacities the state may have for coherent action."^[14] Thus, the combination of spending growth (especially on entitlements), rising social security taxes, Kemp-Roth tax cuts, and tax reform, all of which make it politically difficult to raise income tax rates, restricted the range of feasible alternatives for economic management in general and the debt in particular.

Everybody sees the budget squeeze, but what does it mean? The politicians, instead of blaming the system, blame themselves and each other. Their laments and frustration have filled this book. The general feeling of Democrats, for instance, that taking more than one-fifth of GNP in federal taxes would hurt them at the polls, followed by Reagan's 1984 victory, severely constrained their future action.^[15] They might be said to have sacrificed their principles to expediency. Yet this, catering to pronounced public opinion, is what politicians think they are supposed to do. In their eyes, the state ought never, never to be more than partially autonomous because that would mean democracy is dead.

Where Marxists see ineluctable contradictions of capitalism, based on

the opposed interests of capitalist and other classes, our politicians see the old Burkean dilemma between good government and representative democracy. Marxists suspect that the problem is unsolvable, that politicians cannot maintain both a growing economy and popular support, because the logic of the economic system is to immiserate the masses eventually. Few American politicians would agree. They think (and, so far, they have been right) that capitalism, prosperity, and democracy ought to be self-reinforcing; it is their task to make sure this happens.

Although politicians do not see hopeless contradictions of capitalism, an influential school of commentators take seriously their Burkean dilemma and see possibly catastrophic contradictions of democracy. Ironically, some conservatives who see the state as a source of order in society, and therefore care most for state capacity, moved during the 1970s to a position much like that of Marxists.

Stagflation in America and stagnation in Europe during the 1970s, which accompanied the growth of governmental budgets, led conservatives to wonder whether an excess of democracy was making their societies ungovernable.^[16] Because both society's resources and government's ability to solve problems, like reducing crime or dependence on governmental welfare payments, were limited, one felt government was being overloaded. Richard Rose put it simply: "Governments become overloaded when expectations are in excess of national resources, the government institutions, and the impact that its outputs can achieve. Such an overload arises from the decision of citizens individually and in organized groups to ask more of government than it can in total provide."^[17] Because people expected more than government could deliver, it would lose legitimacy. "Because of the lack of any widely shared belief in the legitimacy of the present order," according to Samuel Brittan, the pursuit of private self-interest, driven to excess by "the process of political competition," would overwhelm public institutions.^[18] Competition for votes led the parties to offer ever more ample subsidies, which would bankrupt government first economically and then politically. Whether a decline in legitimacy would exacerbate governmental incapacity or vice versa, democratic capitalism might be in as bad shape as Marxists claimed it was.

While winning elections required avoiding tax increases, Samuel Huntington wrote, the same forces required expanding benefits. The (familiar sounding) result, he feared, would be perpetual inflation.^[19] Ordinarily abstruse mathematical and geometrical modelers had a field day pointing out the democratic road to perdition. Among the earliest was this warning: "Thus from our model we reach the politico-economic conclusion that a pure democracy with all parties seeking to maximise

public supports is doomed to increasing inflation and political disintegration."^[20]

The earlier concern with economic dislocation soon gave way to a profound unease about political collapse. The state was in trouble. Thus, as Michel Crozier puts it, "the more decisions the modern state has to handle, the more helpless it becomes. Decisions do not only bring power; they also bring vulnerability."^[21] The more government intrudes into the lives of citizens, that is, the more welfare payments it must offer, the more it is hemmed in by prior commitments—budgetary promises—and becomes less able to meet new and rising expectations. This gap between promise and performance, Huntington feared, "could lead to deep feelings of frustration, a reaction against existing political institutions and practices, and a demand for a new political system that could and would do what had to be done."^[22]

Soon enough, given the rooting of causality within an overloaded political system, the call was, in Anthony King's words, for suggestions on "how the number of tasks that governments have come to perform can be reduced."^[23] Although this call was certainly not in line with Marxist preferences, it was based on a parallel analysis.

David Stockman's concern with ideology, with finding a way to define some demands as legitimate and others as not, was a practical response to the conservatives' view of the government's dilemma. His "Social Pork Barrel" article argued in 1975 that government's capacity to make policy was limited by old (and bastardized) policies. His answer, a radical market position, was one example of how concern with the capacity to govern has led to renewed discussion about the proper boundaries of political life. "The concept of politics," Offe observes, "turns reflexive; politics centers on the question of what politics is about—and what it is not [he means, we think, ought not to be] about."^[24] He accuses contemporary (neo)conservatives of aiming "at a restrictive redefinition of politics, the counterpart of which is looked for in the market, the family, or science."^[25] Just this, indeed, is the view taken in Michel Crozier, Samuel Huntington, and Joji Watanuki's The Crisis of Democracy .^[26] The private realm of family, work, locality is their preferred arena.

In turn, Huntington views with alarm "the prevalence of oppositional political values and ideologies among key elements of the population" who will first overload government and then delegitimize it for its failure.^[27] Radicals and conservatives play into one another's fears.

The conservative distrust of democracy has a long pedigree in American political thought. There can be too much of a good thing: democracy must be dammed up and channeled so it cannot overflow its banks and destroy the very society it normally waters. Alexander Hamilton's distrust

of the populace ("Your 'people,' sir, is a great beast!") distilled that fear to its essence. His partner in The Federalist, James Madison, expressed the fears more powerfully and acceptably than Hamilton, arguing that checks and balances, federalism, and a large country that made it difficult for interests adverse to theirs to form coalitions could preserve freedom from the "tyranny of the majority."

Few of our sainted founders would have described their constitution as a democracy; the whole point was to be a republic, something better. Lincoln's description of a government "of the people, by the people, and for the people" would have seemed, four score and seven years earlier, radical and extreme. Tom Paine might have applauded; others would not.

Yet, by his time, Lincoln's phrase distilled what Americans chose to believe about their government. Something like the Civil War could never have been justified by the kind of lesser-evil arguments made in the The Federalist . Certainly the notion that government was the province of an elite of learning and virtue was destroyed in the Jacksonian political revolution of 1828. Andrew Jackson, his allies, and (reluctantly) his Whig opponents built a political system in which the people were the source of legitimacy. Jackson's genius was to make the presidency into the "tribune of the people" by turning it into an opponent of big government, a strategy emulated by Ronald Reagan. Politicians won (and win) office by proclaiming their similarity to the common man.

The fear of democracy lived on in two transmuted forms. First, and weakest, was distrust of government itself. For most people, government seemed a possible threat to liberty. The logical extension, that democracy threatened liberty, was less popular. Reagan maintained his position by saying government was alien and uncontrolled, in essence undemocratic. That meant, however, that if "the people" wanted big government, it was legitimate. For all that Reaganism tapped into deep American values, on that issue he faced a serious difficulty. Democratic practice, the source of his own legitimacy, justified his opponents as well. Democracy, within these limits, is as hegemonic as capitalism, and democracy itself severely limits capitalism's hegemony.^[28]

The second repository of fear of democracy was reverence for the Constitution itself. If citizens did not share the attitudes of the Founders, they still had been socialized into respectful awe of their work. Thus, the political structure was very difficult to change, and that structure, by hamstringing government, inhibited the exercise of the public's will (if such a thing existed) through government. Ironically, for conservatives, the separation of powers that limited government by the unruly passions of the public also limited "responsible government" by elites.

Supporters of the welfare state believe it will improve, perhaps preserve,

democratic capitalism. Marxists hope, and conservatives fear, that it will not because it will not be able to accommodate all the demands: To Marxists, capitalist failure provokes those demands; to conservatives, democratic failure invites those demands. In either case, the budget crisis seems to prove the excess of demands.

Both Marxist and conservative analyses sound strange in an America where neither democracy nor capitalism is easily challenged. They may sound alien for another reason as well. If something exists, it must have interests; the concept of "state interest," except in certain legal contexts, would make Americans very uncomfortable. We Americans speak instead of the public interest and ask if the state is serving it. Indeed, our political structure and ideology are oriented toward blocking a distinct state interest from arising. It is hard enough to identify the American state, never mind its interests.

The Dis-United State

We have made a case in this book for the (semi)autonomy of government actors, the holders of formal authority. In the 1950s, by contrast, the dominant theory in American political science, a version of what is called "pluralism," emphasized organized groups much more than officials. Reduced to its essence, in Earl Latham's description, politics could be understood by adding up the group pressures on the various sides; the government was a cash register, giving the total, the largest winning.^[29] Over time, the empirical work of political scientists who were both self-consciously pluralist and antipluralist—Robert Dahl, Raymond Bauer, Ithiel Poole, Lewis Dexter, Theodore Lowi, James Q. Wilson, and others—modified this emphasis on groups ruling over politicians.^[30]

Political scientists who rediscovered the (semi)autonomy of government actors did not, however, find "the state." Unlike in Europe, they could not sense the self-conscious feeling of top officials that they, not others, have the right to rule. When Hugh Heclo studied the federal executive in his evocative A Government of Strangers, he found that they may know the members of their "issue network" but they do not personally know (and are unlikely to get to know) most leading members of the executive branch. There is little sense of common identity within the federal executive; loyalties go to the agency (Forest Service, FBI) or profession (law, social work) rather than to the bureaucracy as a whole. There is no elite corps of administrators similar to France's graduates of the École Nationale d'Administration or the OxBridge products who become permanent secretaries in the British ministries. Political appointees make up far more of the top levels of the executive in America, and they are often in and out within eighteen months. For all these reasons

the permanent government, in a sense the Europeans or Japanese understand, does not exist in the United States.

In Europe this top level of the bureaucracy (with or without an admixture of politicians frequently found atop key ministries, such as finance) is the state. In Europe the state came first; representative democracy is a control on it, not its creator. Marxist talk about "state managers" makes sense; they are a distinct class of people, united by a process of training and selection and rules for relating to each other (as much informal as formal) and to society (business, labor, politicians) that build boundaries—who is allowed to relate to whom—and define roles—who is allowed to do what. But who in these United States could fill such a role?

The Congressional State

If in America the state were not the bureaucracy, where, if anywhere, could it be found? How about political executives? It is rather hard to conceive of Ronald Reagan as "the state" in a European sense. He certainly had a vision for the long-term success of capitalism; yet he surely did not see himself as part of the government. The political executive is easily colonized by people who have few ties to the bureaucracy, little memory, and no ideology of system maintenance. That can change; Stockman is a revolutionary who was won over to a manager's stance. On balance, the political executives do not much look like the state.

The only group that combines power and continuity in a way that allows the efficacy and identity we might call the state is, of all places, in Congress. The idea that this fragmented institution might be the state seems so ludicrous that it has never, to our knowledge, been taken seriously. Yet when Jamie Whitten, chairman of the House Appropriations Subcommittee on Agriculture for nearly forty years, is jokingly referred to as the "Permanent Secretary of Agriculture," we should take notice. The senior members of Congress have been around a long time, sharing responsibility for running a government. Like European state managers, they have their own bailiwicks; they are also a group of people who know each other well and form a community; they train each other. Unlike European legislators, they run things. Congress has far more control of the budget than does any other legislature we can name. They also feel a responsibility to govern, which is manifest throughout our book. Congressmen such as Senators Dole, Domenici, and Chiles have been most exercised over the deficit.

Although Congress is the core of the American state, the system is fragmented. Congress is hardly the sole possessor of legitimate authority. Presidents have some; so do the courts. In a Madisonian system of "ambition

opposing ambition," opposing holders of authority clash over policy. It becomes hard to talk of state interest when the president and Congress are at odds. The structure of America's budget stalemate would make no sense in other countries that have more coherent states.

When president and Congress clash, they turn to the twin sources of legitimacy: the people and the Constitution. It sounds trite, but listen to the Iran/Contra hearings, where each tried to invoke these authorities against the other. The budget fights have seen some attempts to create constitutional authority, namely the proposed balanced budget amendment. Mostly, however, they have involved appeals to the public, to notions of the "public interest."

Congressmen feel their legitimacy (and, in European terms, that of the state) is threatened by failure to pursue the public interest in deficit reduction. This threat exists not in their imaginations (though partially there) but in a political process, hard to characterize but palpable. It is the process of debating and creating "respectable opinion," those ideas that the media and experts, as well as politicians, consider responsible.

Any politician could tell you that experts and the media, particularly the major networks, newspapers, and news magazines, are predominant forces in American politics. Accusations of a liberal or conservative bias (earnestly denied by journalists, of course) reflect that power. News is meaningless if it does not influence opinion. Headlines in Time, the Washington Post, and other "powers that be" tell us what to think about; their stories then tell us what to think about it. The media's role as purveyor of opinion is most evident when major organs differ, as when Time and Newsweek disagreed on whether President Carter's FY81 budget showed attention to the lessons of Lyndon Johnson's failure to finance the Vietnam War. Less evident, but more telling, was their agreement that Lyndon Johnson's deficit had started an inflationary spiral; the panic about deficits flowed from that supposed fact.

A policy advocate attains nirvana when his position becomes the conventional wisdom: that deficits cause inflation (1973–1983), that deficits cause high interest rates (1983–present), that defense is badly underfunded (1980–1981), that tariffs are bad because they caused the Great Depression (1946–present). As the examples suggest, such wisdoms are neither immutable nor divorced from real world events. People fight to change them. Nor does conventional wisdom always win. It may identify a problem but not a response, as with the deficit. It may not exist; there was no authoritative analysis of stagflation to guide politicians in 1980–1981. Furthermore, there are politicians who, either because of a loyal constituency or their own conviction, can ignore or resist a media consensus. A Ronald Reagan or a Phil Gramm is not interested in other people's judgments, except as a guide to tactics. Reagan had a further

advantage: in many ways he was outside the mainstream of policy debate. Donald Regan's memoir provides a telling example of the difference between Reagan, a politician of conviction, and his conservative but more normal vice president. Reagan tended to quote the Washington Times, which matched his ideology but was hardly one of the "powers"; George Bush quoted the New York Times .

How the movements of opinion within this stratum of experts and journalists favored one political side or another has, of course, been a large part of our story. In defining some opinion as respectable and some as not, some analysis as fact and some as opinion, the experts and journalists are defining, for purposes of mass consumption, public interest and special interest. Thus tax reform—simplification and fewer loopholes—became the public interest even though (perhaps because) there was no public outcry for it. If Bob Packwood had followed his basic instincts and fought reform, he might have been serving his own constituents and even a majority of the public, but he would have lost face in Washington, reported back home as "Senator Hackwood," an opponent of the public good. This pressure for reform was self-consciously nonpartisan, as was the criticism of budget deficits. In fact, both could be seen and were presented as issues of system maintenance, making the system work the way it should.

What outsiders call the establishment does exist as part of our system of government. It also has some attributes of what social scientists call the state.

The Political Stratum

The editors of the New York Times, or economists at the Brookings Institution, have a permanence and interest in governance that some elected politicians will not possess. Foundation executives who fund projects on "The Governance of America" or "The Deficit and the Public Interest," as well as the academics who write those books, perform some functions of system maintenance. During summer 1987 every thirty-second television spot about our wonderful Constitution was a reminder that system maintenance occurs outside the formal procedures of state authority.

The processes that form attitudes are as consequential as those by which people resolve differences over the values they have formed. By this logic, Gramsci reminds us, schools and newspapers are as much a part of politics as are legislators and courts. If we follow this path too far, however, we will reidentify the state and society because all life

teaches about values. Furthermore, how are we to separate those acts of opinion formation that are system maintenance (thus the state) from those that are antisystem (thus something else)?

The Public Sphere

The phenomenon we are describing has been differentiated from the state by, among others, Jürgen Habermas. Habermas calls it "the public sphere":

A realm of our social life in which something approaching public opinion can be formed…. Newspapers and magazines, radio and television, are the media of the public sphere. We speak of the political public sphere in contrast, for instance, to the literary one, when public discussion deals with objects connected to the activities of the state.

(One sign of such differentiation, he notes, was "the separation of the public budget from the household expenses of the ruler."^[31] In this view the public sphere should oppose the state. He mournfully argues that the modern public sphere has lost its critical function, as the press became a mainly commercial enterprise. Thus, instead of discussion of the general interest, there is persuasion and propaganda at the service of established authority. Habermas is wrong because welfare policies are extensively debated: their ostensible failures, whether "left" (too little) or "right" (too much), form a virtual cacophony of criticism. Nor is the media much disposed to praise those in authority. Look, read, and see. Nevertheless, he is right in that the participants in public debate are committed to the fundamental outlines of the existing order.

Yet, if these be evils, what political system could be good? In what kind of system are the fundamental aspects of society extensively debated? Only where there is little agreement on them. Then how do people live together? In El Salvador or Lebanon there is fundamental disagreement. There also is not much of a "public sphere"; decision by debate, instead of bullets, presupposes limited stakes. What Gramsci calls hegemony, and Habermas a failing of the public sphere, may be its first requisite.

In any stable system, the people who participate most actively according to the existing rules and come to the top by those rules tend to believe in them. Otherwise they could not justify their power to themselves or others; any system that gave authority to its enemies, as the Weimar Republic did to Hitler, would not be in power very long. Whether the economic system is capitalist, socialist, or something else, is irrelevant. General Secretary Gorbachev, for example, has been very

careful not to question one-party rule in the Soviet Union because his power is based on that primacy.

At the same time, no group of people can ever discuss its general interest without participants pursuing their particular interests in the process. People wish to believe that what is good for them is good for the larger society. So we agree with those, like Madison, who doubted politics could ever be free of such "corruptions," hoping instead only to control their effects.

Thus, we would expect the discussion within the public sphere to include construction companies talking about the nation's decaying infrastructure, businesses talking about capital formation, labor unions about keeping America strong by keeping jobs at home, and wealthy doctors about the long lines and impersonality of socialized medicine, For all we know, they may be right.

Permutations of particular interests shaped attention to the general interest in deficit reduction. Democrats jumped on the issue in part because their constituencies had more problems with Reagan's than with previous deficits. Yet neither the deficit panic in its various forms, nor the dominance of debate over tax reform by appeals to the general interest in a simpler tax code, can be explained by particular interests alone. Similarly, the budgetary rhetoric of fair shares—freezes, three-legged stools, and all that—expressed a norm of balance that has no necessary partisan import. The media are suckers for concepts like deficit reduction, tax simplification, and fair shares because they seem like general rather than special interests. None of these concepts challenge the existing order; instead, they are nearly procedural norms that are supposed to help maintain the system as a whole, which is why they command such widespread support. In everyday rhetoric, in Time, Newsweek, and the floors of the House and Senate, they are presented as the embodiment of the general interest. Try to remember deficit reduction, a simpler tax code, or fair shares being described as the demands of special interests. It does not happen.

Rather than the general interest being unrepresented in the American public sphere, certain policy preferences are conventionally distinguished as the general interest within that sphere. The difficulty is that these conventional notions of general interest contradict the interests of most people. In essence, the policy instructions from the public sphere contradict the instructions legislators receive directly from their constituents . The crisis of budget politics in our time is not a failure to bring the general interest into political debate; on the contrary, it is spoken there ad nauseum. The crisis lies in the conflict between what is represented in the debate of the public sphere and majority interest (more precisely, majorities of interests) in the electoral sphere .

The State as a State of Mind

We began looking at the public sphere as part of the search for the state as it is commonly discussed—institutionalized in some form that allows one to talk of the state as having its own interests and tasks, under pressure from society's problems, struggling to maintain its independence. In American politics no one entity fits that role. Senators and representatives come closest, but have no monopoly of authority; in some areas, especially foreign and defense policy, they see themselves as outsiders vis-à-vis the president and his minions. Instead of a group of people or formal institutions, the state, in a sense, is a state of mind.

In the budget battles, participants who emphasize balance above other values feel particularly like the Marxists' embattled state managers. When the media raise a clamor against deficits, they are thinking like state managers but, unlike the politicians, they do not have to do anything. They fulfill their obligations to the system by criticizing the politicians, which, neatly enough, allows the press to believe itself both critical and loyal at the same time. Meanwhile, some holders of formal authority (in Congress and the presidency) resist the balancers, though, under the terms of the political debate, they cannot say they are doing so. No one is for the deficit, at least not publicly.

We have an extremely vigorous and important public sphere; it shapes the actions of holders of formal authority, at the same time criticizing them and committing itself to system maintenance. The state itself is a category of interest, distinguishable by the way it is discussed and, for a moment in time, defined. The "party of responsibility"^[32] consists of politicians who more likely represent that interest than the two other major aggregations: the established coalition of social hierarchy and competitive individualism, which cares more about moral control and freeing capital, and the liberal, egalitarian coalition, which cares more about changing institutions to provide benefits to the less powerful.^[33] Thus, we recreate the basic cleavages sensed by both Marxists and conservatives—versions of capitalism and mass politics, both pressuring the state in the middle—into a more appropriate form. This produces a shifting battle of interests; the state has distinct advantages through its validation in the public sphere, but, because it is just one construction of interest, the state need not win the battle.

"Interest,"just like "state," is a social construction. When there is widespread agreement on the answer to the stirring question of the old labor song—"Which Side Are You On?"—we have temporarily accepted the latest definition of who are "the interests" and who is "the state." Usually, things are not that clear. That is why the state is often a state of mind. To those who grew up with power in America as a fissiparous construct,

so hard to get hold of it slips through your fingers, namely, the pluralists who until recently dominated debate on American politics, the state is not problematic because they do not expect any group or interest or institution to rule.

This understanding of the special nature of the American state and the public interest can be used to make sense of the major cleavage in American political science, between pluralism, best represented by David Truman, and its critics, best represented by Theodore J. Lowi.

Pluralism and the Dilemma of Public Authority

Our description of the governmental process can be incorporated into David Truman's. Truman sees politics as a competition of interests. An interest, to Truman, is simply an attitude. Some interests will be manifest in political organization; some will not. People sharing an interest organize in response to stimuli—perhaps changes in society, perhaps government policy. An interest may be unorganized (thus invisible) not because it is weak but because it is strong, that is, unthreatened.

Truman describes "interests or expectations that are so widely held in society and are so reflected in the behavior of almost all citizens that they are, so to speak, taken for granted." He calls these "widely held but unorganized interests 'rules of the game.'" These interests become, in Truman's model of group competition, "potential groups." These attitudes may be more strongly and precisely held "at the leadership level" than by "the mass of the population," but these "are interests the serious disturbance of which will result in organized interaction and the assertion of fairly explicit claims for conformity." Often these interests do not have to be visible because they have been embedded in the political structure. "As embodied in these institutional forms and in accepted verbal formulations … the interests of these potential groups are established expectations concerning not only what the governmental institutions shall do, but more particularly, how they shall operate." Organized groups with other attitudes must attempt not to violate these rules of the game for two reasons: the group's own members tend also to support the rules (Truman calls this overlapping interests), and others will oppose the group on the basis of rules alone. "Violation of the 'rules of the game' normally will weaken a group's cohesion, reduce its status in the community, and expose it to the claims of … competing organized groups that more adequately incorporate the 'rules,' or … [are] organized on the basis of these broad interests and in response to the violations."

Truman goes on to explain that these attitudes-cum-interests, inculcated in family, schools, and other experiences, are continually reinforced

in political combat. Public officials are under particular pressure to conform.

The strength of these widely held but largely unorganized interests explains the vigor with which propagandists for organized groups attempt to change other attitudes by invoking such interests. Their importance is further evidenced in the recognized function of the means of mass communication, notably the press, in reinforcing widely accepted norms of public morality.

These attitudes are not always and everywhere dominant because they may be substantively ambiguous (e.g., free speech), are not all equally fundamental, must compete with other interests, or their violation may not be visible.

All this fits the story of the budget deficit near perfectly. Balance is a rule of the game, a weapon in fights for other goals, enforced as an evaluative norm by the media and particularly pressed upon politicians. Economic policy making is also shaped by such "rules of the game." Truman goes so far, following Harold Lasswell, as to describe "the state" as a shared attitude, sometimes weaker, sometimes stronger—"the unique mark of the state is the recognition that one belongs to a community with a system of paramount claims and expectations." Truman adds that "the existence of the state, of the polity, depends on widespread, frequent recognition of and conformity to the claims of these unorganized interests and on activity condemning marked deviations from them."^[34]

Thus, the state is a state of mind, reproduced by processes of the public sphere that constitute the hegemony of the "rules of the game," meaning the established order. Truman views the legislature as another potential interest, occasionally manifest (lobbying regulation, his example; tax reform and GRH, ours). Although he does not predict when any given interest will dominate, his list of relevant factors is concise but exhaustive.^[35]

The more they ask who actually does what to whom, the Marxists' picture looks more like the pluralist Truman's. Yet they give a different meaning to their picture by asking questions about the relationship between politics and society, about who wins and loses and why.

The question of bias—Does the system favor or work against poor people? Business? The national security?—is generally subsumed in a larger critique by scholars who feel the pluralist system is not sufficiently democratic; that is, it does not represent everyone equally.

We have argued that public opinion and the beliefs of public officials were the strongest forces in our budgetary decisions. When money (doctors and hospitals) confronted votes (the elderly) over medicare cost

reductions, votes won. But the elderly were not poor, either, and we have seen the advantages of organization: federal employee and retiree organizations work through the Post Office Committee to fend off the budgeters; farmers escape reconciliation with "cuts" designed to increase their incomes. All sorts of narrow interests have hitched rides on the continuing resolutions, where they might go unnoticed in the crowd. There are dramatic cases of politicians holding their noses and supporting a group—for example, the oil auction in 1981—because they found themselves in a pivotal position.

We have emphasized that the hegemonic "rules of the game" include prohibitions against certain policies; thus, they are biased. Truman sees those beliefs as an interest like any other; critics such as Murray Edelman see them as a means of deceiving majorities, diverting them from what he views as their real interests.^[36] Both Truman and his critics are selfproving. If, like Truman, we say interest is whatever attitudes people have, "deception" has no meaning. If, like his critics, we say people's interests are what they think people should want, then, if the critics lose (which they must, that's why they are critics), the system is automatically undemocratic. These difficulties on both sides do not remove the larger issue: Do the rules of the game systematically favor some people over others?

The same people don't always win. Federal employees beat the budget cutters in 1980, lost in 1981, and fared a bit worse than a draw in 1982. The poor got cut in 1981, escaped afterward, and won big in 1986. These and other swings resulted not from changes in group resources but from changes in how the rules worked. For both the poor and business, the norm of fair shares required that the winners and losers of 1981 be reversed, though not enough to repeal 1981, in subsequent rounds. In many cases the rules required that majorities in separate institutions put first one interest, then another, in the position of being the marginal vote. In 1981 neither side could pass its tax package without support from the oil patch. In 1982 the budgeters could not pass the TEFRA tax hike without support from advocates for the poor.

These and similar examples show that the majority was not some preexisting entity. Instead, there are many possible majorities. To make the possible actual, majorities must be constructed by bargaining and compromising; that is the heart of democratic politics. In none of these instances did the group identified get its way in isolation: lots of other players accepted the package and also got something. Of course, more people are poor than own oil wells; to say either group can cut deals does not mean the system is equitable. If the bias that is revealed in policy changes, however, then it is possible to change results.

Early pluralists emphasized that results change due to a process of

stimulus and response. An interest that is hurt organizes and, because it tries harder in the next round, does better. Savings interest withholding is a wonderful example of that process: banks that did not fight hard on TEFRA decided they did not like the new law, mobilized, and overran Congress in 1983. Yet the overall swing against cutting the poor cannot be explained by such a response; liberal groups were neither immobile in 1981 nor crucial in 1982. It is true that businesses were more mobilized and united in 1981 than in 1982. But that shows the influence of politicians. When they set an agenda of business tax hikes, their stimulus created a different response—fragmentation and demoralization—than had been created in 1981.

If, with the pluralists, we speak of power eliciting countervailing power, we must say that countervailing power is not just out there in society but also in the norms and the actions of the political stratum, especially in Congress. Time and again they intervened to give, maintain, and take away according to two related but distinct notions of fairness: those who were advantaged earlier should make sacrifices later (business, the military); while those who had been hurt earlier (families with children, the working poor) should be recompensed later; and those whose total resource position was low (poor and disabled people) should be protected against further cuts. Not only are these norms openly avowed, but neither the favorable treatment of families and the working poor in the tax reform, nor the exemption of poor people's entitlements from all or most of Gramm-Rudman's proportional cuts, nor the increases in business taxes after 1981, nor the diminishing role of increases in defense after 1983 can be understood without them.

The attitude of "those who did well last time should sacrifice this time" might be called an interest. Indeed, if widely shared, it could be called a public interest. Then we could ask how large it was and whether policy favored other interests at its expense. Yet such bias would have very different meaning for society than would a bias against blacks, or capitalists, or any specific group of people. Here we reach the problem with Truman's notion of interest; it doesn't fit everyday notions. People tend to think of bias in terms of some objective aspect of people's lives, like their race or income, not their attitudes.

For purposes of evaluation, therefore, a distinction between attitudes not clearly associated with concrete groups and attitudes clearly fitting such groups is in order. The former category is particularly the province of the public sphere: attitudes the mass media believe they can invoke without being accused of taking sides. Truman's notion of "rules of the game" captures their sense: anybody in the game cannot object to a reminder of the rules. In this context, antipluralist critiques then take two forms; these values may in fact advantage one group over another

in ways that people, precisely because they hold these values, cannot see, and the values themselves are shunted aside too often, that is, are less influential than they should be.

Every Government Would Bribe Business to Bring Prosperity, If Only It Knew How

The first argument—hidden, systemic bias—restates hegemony identified by scholars who do not call themselves Marxists.^[37] We have said our piece; here we insist only that "confidence" is not merely a bribe paid by government to business so as to get a good economy. If it were, every government would pay it; "if only," we hear the pols saying, "we knew whom to pay it to!" And if only, to echo a familiar lament about patronage, they would stay bought. Rather, confidence is the product of successful economic management, or good luck, neither of which requires favoring business. Not knowing what to do, of course, there is a tendency to do what businessmen say will make them happy. In a capitalist society, businesses will have some advantages in debate. But if our story is clear on anything, it is that nobody, including the gurus of the markets, is a reliable guide to policy.

Interest Group Liberalism

The second critique, that the rules of the game are not followed, is the burden of the very common rhetoric that the public interest is shunted aside in the pursuit of special interests. Theodore J. Lowi takes the argument a step further. In perhaps the most influential book on the rules of the game in the past quarter century, The End of Liberalism, Lowi argues that a new set of rules, "interest-group liberalism," emerged from pluralist analysis and produced rules that cannot be followed if one wishes to govern. The new ideology argued that the endless battle of interest groups was good by denying the existence of a public interest to be contradicted. In thus justifying our politics, Lowi argues, this ideology lost the justification of government. If the state's actions are merely the current balance of interests, why should losers obey? Government is left with no special legitimacy, no authority separate from society. But a government that cannot separate itself from society cannot govern. People must obey because the government decided, not because their interests are served by the decision. Pluralism as an ideology, to Lowi, abdicates authority.^[38]

Lowi denies that the state is an attitude or an interest like any other.

Its defining attribute, the legitimate use of coercion, requires special justification.^[39] In this he must be right; at the extreme, the attitude of the state is the soldier's willingness to kill another human being at the orders of his government. Preferences about commodity tax straddles are not of the same order.

We need not agree with either Lowi's construction of interest-group liberalism or his opinion of its influence to agree that the legitimacy of the state—citizens' willingness to accept government's decisions—requires believing the political process creates something more than just a bargain reflecting the balance of power among the currently organized. A majority of groups is not enough to justify coercion—state power over a minority. Instead, government in the democratic state must be able to claim that in some way—some characteristic of its decisions or of how they are made—it represents "the people," not some subset of groups.

We might ask why all the people not affected by a policy should be involved in making it. Normally they care little and know less. That is why we have subgovernments, such as the nexus of interest groups, congressional committees, and agencies that make agricultural policy. Some tendency in that direction is unavoidable; if others don't care, it may be justified. But these subgovernments neither raise their own revenues nor pay their own costs. They are funded by taxes, mostly paid by other people. On what basis, other than fear, are citizens to accept this application of government's coercive powers?

When Charles Anderson wrote that "interest group pluralism is simply not a theory of representation," he confronted the essential difficulty.^[40] Grant McConnell crystalized the problem in regard to subgovernments and, even more, organizations that have power sanctioned but not directly controlled by the state, such as corporations and unions. "The problem," he wrote, "is authority. What justifies the existence of power; by what principle is it rightful? For if it is not justifiable, power is properly open to attack and, if possible, destruction."^[41]

What rules legitimate authority; do they work? A pluralist line of defense emphasizes that procedures provide acceptable outcomes in the long term. Groups left out in one coalition can join another; groups that lose one time win at another. The difficulty with this standard is that it is not a standard at all. It does not say the rules are intrinsically good; they are to be judged by the long-term substantive consequences of group competition. Thus, one is left without a criterion of judgment that is procedural or substantive. Who is to say how long a term is appropriate, or whether the outcome reached at any point is satisfactory? Both our "disappointed Democrats" on the left and our foes of big government (Gramm, Stockman) on the right rejected the bargain and therefore the

way it was made. Lowi argues that this pluralist argument fails precisely because it places no special value on the formality of rules.^[42] It eliminates the distinction between a law and a bargain.

Effective governance, in Lowi's formal procedural view, requires affected interests see and feel that the state's decisions are based on considerations on which they, the affected interests, have no claim to superior judgment. If the basis of legitimacy lies in democratic forms, then the state, to be powerful, must be visibly democratic. The ostensible rules must be the real rules. Lowi wants to free both the public and the state from the power of private interest groups by committing the government to clear statements of policy objectives embodied in legislation. That is possible only if political debate is phrased in terms of competing ideologies, of arguments about justice, rather than focused on the peculiarities of individual policy domains that few people understand.

Budget stories almost catalog the objections to Lowi's thesis. Two are primary. First, ideology provides only a limited guide to effective policy. Effectiveness depends not only on perceived legitimacy but also on technique. Policies that do not fit ideology may work; policies that fit ideology may not work. Neither competing conception of justice in welfare programs has told us how to reduce poverty. Free-market Republicans have trouble applying their ideology to farmers. Where a Stockman sees a failure of conviction, we point out that the failure is just as plausibly within the ideology itself. In short, what amateurs at OMB or in the public may understand about a policy—is it interventionist or market-oriented, expensive or cheap, better for poor people or rich?—likely is not all we would want to know. There must be some role in the debate for expertise based on experience; and that lets the special interests (recall these are the people immediately affected by decisions, hence, self-interested) back in.

Second, even more important, there may be no majority for any particular conception of justice or the public good in a policy dispute. There obviously is no such majority in the argument over the budget deficit. Then what? What happens when, in effect, Lowi gets his way and rival conceptions of the good budget clash over and over and over again?

Arguments about justice rarely convince one side it was wrong. Both Stockman and the liberal budgeters were disappointed in their hopes that a budget crisis—by posing the issue as "what is right?"—would favor their side. People do not change their judgments of morality very easily. Thus, a politics of justice or ideology leaves little room for persuasion; that is what we mean by a polarized debate. Such a situation leaves no more room for compromise.

Lowi relies on procedure. Yet when issues are posed so that any solution clearly opposes the will of majorities, but procedure requires majority

support, the result is stalemate. The budgeting solution has almost parodied what Lowi condemns in other policies: obfuscation, lies, passing the buck, evasion. Where budget politics is most visible, as on budget resolutions (never mind GRH), it is also most dishonest. This results not from a failure to have a politics of principle but from the inability to assemble a majority that way. What Lowi desires to make decisions easier to enforce—clarity based on open discussion of principle—is precisely what makes decision itself most difficult.

"You must first enable the government to control the governed," Lowi quotes James Madison, "and in the next place oblige it to control itself." We would add that, if government is to enforce decisions, it must first be able to decide. In a sense, we have had an experiment in Lowi's style of democracy. New procedures (budget resolutions and reconciliation) and new conditions (the massive deficit) made budget politics far more ideological, more public and less private, than in the bad old days of the 1960s and 1950s. Then the bad old days started looking a lot better.

Public Interests

Just as hypocrisy pays homage to virtue, otherwise there would be no need to dissemble, no one begins political disputation with the phrase "though the policy I recommended is against the public interest, nevertheless, it is to my advantage." Although politics is often about advantage, that is not all it is about, or there would be no common bonds.

If politics were only about public interests, however, opposite but equally great evils would assert themselves. Hypocrisy (saying one thing while meaning another) would become the only rhetoric because people could not admit what they were doing. Interests important to many people, as David Braybrooke and Charles Lindblom demonstrated in a Strategy of Decision, would be neglected because no one had a legitimate right to speak up for them.^[43]

Opposing "self-interest" to "public interest" misses the political point, for part of self-interest lies in the viability of institutions permitting self-expression. And part of public interest lies explicitly in facilitating the representation of private interests.

Now the budget may be the last place to look for public interests. No one is disinterested. Everyone involved has something specific they want out of spending and taxing decisions. So many values and valuables are at stake for so many people in government and society in such a disaggregated manner that parochialism ordinarily prevails. But, then again, a narrow, self-enclosing vision does not explain tax reform, Gramm-Rudman, or panic about deficits.

We have, then, a dilemma. Contrary to Marxist "crisis of democracy"

and antipluralist critics, we argue that a politics of the public interest, conducted in the public sphere of debate, is an important factor in the major struggle in current American politics. Unlike classical pluralists, we claim that such politics can be distinguished from and opposed to other kinds of interests. We hold as well, explicitly with Lowi, that whether the state is perceived as acting within the parameters of the public interest as defined within the public sphere is one source of public authority. The attendant bias may be a problem of equity, we have argued, but not a source of instability. The difficulty is that Lowi's explicit politics of the public interest doesn't work. It has become difficult for the government to perform the most elemental of chores—decide how much money to provide for each of its activities—in a timely manner. It gave up on managing the economy long ago; we can't remember the last time we heard a cogent argument that some particular deficit level would have some particular effect on economic variables.

An Immune System out of Control

Every political system is filled with tensions, with what Marxists call contradictions. Preferences that are logically or practically contradictory must both be satisfied. A logical system is invalidated when beset by contradictions. Politics and society, however, are not logical constructs. Rather than killing a system, its contradictions may define it. What Marxists see as a contradiction between legitimation and accumulation is a choice no modern welfare state can make; the whole point is to keep both democracy and capitalism. Contradictions are important not because they will destroy a system but because they explain so much of the politics within it.

The tension between the state as the holder of formal authority and the state as a set of attitudes toward political questions is especially sharp in America. A president, like Reagan, can have great formal authority yet not share both the positive attitude toward institutions and the sense of common enterprise with other officeholders that we generally associate with state managers. The editors of major newspapers and leaders of foundations tend to have the attitude without the authority. We suspect that any modern political system involves some disjunction between these two sides of stateness. But the strength of the public sphere, combined with the separation of powers, probably allows less overlap in the United States than in other nations. The deficit furor is a case of formal outsiders telling the holders of authority to start acting more like the state.

The split between authority and attitude in the United States helps explain the peculiar spirit of budget politics: an establishment that

sounds extremist. The government, not some interest group, has defied the rules of the game.

In the ideal world of the political center, everybody would sacrifice equally to reduce the budget deficit. However, in the real world, most people are unwilling to pay their fair share of deficit reduction, for the reasonable reason that they would lose more than they would gain. That is why packages, including Gramm-Rudman-Hollings, have always clipped only portions of the budget. Overstated claims about the deficit's horrors should be understood as attempts to convince people that they have more to gain from deficit reduction, and therefore should gladly sacrifice more than they currently believe.

Although it is not unique, the contradiction at the heart of deficit politics is unusually concrete, visible, and difficult to live with. There is no way to reconcile three rules of the game: budget balance (or an approximation thereof), fair shares, and majority rule. No majority can be built that will substantially reduce the deficit without clobbering the minority—something centrists won't do. The center's dream of equal sacrifice has not been approximated, for the simple reason that the benefits of deficit reduction, for most individuals, are less obvious than the costs of paying a fair share.

Therefore, the two key processes of the democratic state have been turned against each other. The public interest as articulated in the realm of the public sphere has been defined as deficit reduction. That has been the most obvious violation and the easiest criticism, and value enforcement by the media is most commonly negative; politicians and economists have fed the criticism. The deficit provides an easy way to keep score. But this definition of the public interest in the public sphere contradicts majority interest represented through the formal procedures of legislation.

Politicians have responded with continual legislative hostage taking, mythical budget resolutions, and a quest for automatic formulas. At its worst, in Gramm-Rudman-Hollings, the deficit panic created a law that either meant nothing or meant that all other budget laws did not count. Nobody could tell. Clear, however, is the quest for automatic government that GRH epitomizes, rejecting the normal processes of government through assembly of majority preferences.

In pursuit of the public interest, the most fundamental rules of the game, those that structure the legislative process, have been put up for grabs. That has been done as much in the name of system maintenance (for a Rudman or Domenici or Chiles) as in pursuit of a minority ideology (Gramm) or a partisan advantage (most legislators, most of the time). The politicians are telling people to ignore laws: if we pass an appropriation, we don't mean it; we promise to reduce the deficit with a sequester,

but we don't really mean that either. At worst, the politicians have abandoned the idea that procedures have any value separate from whether they reduce the deficit. Why, then, should anybody accept any decision, ever? Lowi's fears are being realized in an entirely unexpected fashion: instead of formal authority being reduced by the pursuit of special interests, it is being battered by a panic about the public interest.

We do not worry that the governed will be immediately disaffected. The crisis of congressional procedure described in this book is an inside-the-beltway story that the public will, in the main, tune out. Its relevance to daily life is slow and indirect. Furthermore, as David Truman knew, the system is legitimated by the public sphere's continual repetition of its wonders. Celebration of the Constitution in 1987 was but one example. Attention is directed, not to the difference between the existing equilibrium and some ideal, but to the difference between America and other places. America is seen as both more free and more stable than anywhere else. Basic emotions of nationalism and patriotism are linked, not to a land or a people, but to the system of government. The forces generating popular support for the governmental system are very powerful.

Yet we wonder how the governors themselves will ever decide what to do if they lose, as they seem to be losing, their willingness to accept the outcome of decisions made by established procedures. Government requires obedience to formal rules for settling disputes. However, since the mythical budget resolution of 1983, such obedience has diminished.

The course of budgeting suggests that the elites, not the masses, have lost confidence in the rules of the game. Politicians engage in endless rounds of hostage taking; the media, instead of condemning procedural terrorism, say it is okay so long as the deficit is reduced. Apparently there is room in the public sphere for furor about only one aspect of the public interest; the interest in authoritative procedure is crowded out.

The budget deficit is sometimes portrayed as a cancer, eating away at society without being visible on the surface. So, though we are dubious, it may be. Yet the reaction to the deficit resembles an immune reaction run amuck. The body has no way to defend itself against itself, just as at present there is no one to defend the politicians of the center and all those most concerned with preserving the political system against their own attacks on the system. The crisis is a crisis of their own confidence.

There is much difference between theorists who view democracy as being about procedures enabling people to agree on what they can and those who view democracy as being about the attaining of certain substantive ends. When there is a dominant party or faction, these differences may amuse philosophers, but they need not trouble members of the

political stratum who justify the procedures because they agree on substance and accept majority rule on substance by accepting the procedures. The battles of the budget evoke reflection on such hitherto arcane matters precisely because the political stratum is divided and the public has not yet decided. The grand irony is that the people could resolve the state's problem by developing consistent preferences. The people could resolve their governors' dilemma: What could be more democratic than that?

The trouble nowadays is that the voice of the people—reduce the deficit but do not undertake drastic measures which may do more harm than good—has been drowned out by the shouts of catastrophe coming from the political stratum. We think "the people" are right; as part of this political stratum ourselves, we next shall develop a policy rationale and a political strategy that would fit their voice.