The Economic Dimension: Fiscal Conservatism, Deficit Reduction, and Welfare Retrenchment in the United States

Abstract

In the American context, it is important to understand that contemporary conservative fiscal policy represents the extension over time of certain class interests that have been championed by political parties of different names and different fiscal policies. This historical evolution of policies in defense of material interests may best be understood from an historical institutionalist, path dependency theoretical interpretation of policy development (Pierson 2000; Mahoney 2000). Employing this perspective, it is possible to see six “critical junctures” in the history of American political economy, dating to colonial America and the founding of the republic that over time influenced the development of contemporary conservative fiscal and economic policies. Each of these periods encouraged the policies that were pursued in the following era, often under the direction of a “dramatic actor,” each of which is noted for institutional adjustments and “institutional stickiness” that lasted for some time.