Against (And For) Madison: An Essay in Praise of Factions

. The number of low-income children actually served under Medicaid has grown rapidly since the mid-1980s, largely due to statutory changes expanding coverage well beyond the traditionally categorically eligible AFDC families. The largest growth in Medicaid spending occurred between 1988 and 1992, when the program grew at over 22% each year, primarily because of expanded coverage of children; nominal dollar expenditures per beneficiary also grew rapidly during this period, increasing by almost 50%. See John Holahan & David Liska, Reassessing the Outlook for Medicaid Spending Growth, NEW FEDERALISM: ISSUES & OPTIONS FOR STATES (Urban Institute, Series A, No. A-6, Washington, D.C.), Mar. 1997, at 1, 1-2. Although future growth rates in the program may be lower than this, see id. at 4-6, several bipartisan bills are pending in Congress that would further expand the coverage of low-income children. See Robert Pear, Senate Bills to Extend Medicaid to Children, N.Y. TIMES, Apr. 24, 1997, at B8 (describing proposals). The welfare-reform legislation enacted in 1996, although bitterly and in some respects rightly denounced for its possible effects on low-income children, can best be understood as an effort, perhaps misguided, to improve the long-term prospects of these children by altering their parents' incentives and behavior. See Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L. No. 104-193, 110 Stat. 2105 (codified in scattered sections of 42 U.S.C.). 88. See Robert Pear, Congress Weighs More Regulation on Managed Care, N.Y. TIMES, Mar. 10, 1997, at Al (reporting that Congress, anticipating public frustration, is likely to dictate some industry practices, as it did during its 1996 session). 89. Indeed, neo-conservative critics argue that those who propagate the notion of a politics of ideas, rather than of interests, themselves constitute an increasingly powerful special interest-a "new class." See supra note 16. Yale Law & Policy Review self-interest of well-organized provider groups (for example, pollution-control manufacturers, teachers unions, health care providers) often coincides with these diffuse collective interests.' Especially when one considers the far greater complexity of social and political problems today, the United States is probably a better governed, less corrupt, more tolerant, and more just society than at any time in its history.91 Second, although well-organized, well-funded groups start with important political advantages, those advantages by themselves are seldom decisive. Political resources take many different forms. They include not only money but also the number and intensity of supporters, quality of leadership, strategic thinking, institutional embeddedness, allies among policymaking elites, name recognition, skill in using the media, political skill, a 'sense of timing, reputation, rhetorical effectiveness, legal authority or leverage, the appeal of attractive ideas and anti-special interest arguments, and just plain luck.' The recent and rapid decline of the political fortunes of the tobacco industry is a dramatic case in point. This industry has long been among the wealthiest, best-connected, effectively organized, legally impregnable, aggressively managed, tactically sophisticated, and politically powerful corporate groups in the United States, indeed in the world. Yet its adversaries-who are poorly endowed in terms of financing, legal precedents, and the support of leading politicians-have nevertheless succeeded in turning public opinion decisively against the industry, transforming its political and economic prospects. 93 This does not mean, of course, that the war against the tobacco industry is over or that the industry will not continue to win some important battles. But the tobacco example indicates the variety of political resources that skillful advocates can press into service and the remarkable openness and fluidity of American politics. In the United States these resources are distributed widely enough that the vital interests of even poor people-to take what is surely the hardest case for the argument that I am making about the broad distribution of political influence-have gained and sustained a considerable measure of protection 90. See, e.g., R. SHEP MELNICK, REGULATION AND THE COURTS: THlE CASE OF THE CLEAN AIR ACT 37 (1983); Bruce A. Ackerman et al., Toward a Theory of Statutory Evolution, 1 J.L. ECON. & ORG. 313, 320 (1985). 91. For a comparison of social conditions in 1965 and 1995 documenting significant improvements in these and other areas, see Peter H. Schuck, Alien Ruminations, 105 YALE L.J. 1963, 2007-12 (1996) (book review). For a more rueful comparison of the 1950s and the 1990s, one that argues that the decline of authority caused by Americans' obsession with increased personal choice has produced social disintegration, see ALAN EHRENHALT, THE LOST CITY: DISCOVERING THE FORGOTTEN VIRTUES OF COMMUNITY IN THE CHICAGO OF THE 1950S (1995). 92. See ETHNIC IRONIES: LATINO POLITICS IN THE 1992 ELECTIONS, at xi-xiii (Rodolfo 0. de Ia Garza & Louis DiSipio eds., 1996) (arguing that luck is important condition for political influence and that it magnified Latino influence in 1992 elections). 93. See Kevin Sack, For the Nation's Politicians, Big Tobacco No Longer Bites, N.Y. TIMES, Apr. 22, 1997, at Al. 15:553, 1997 In Praise of Factions despite their relatively low level of political participation and their small share of the population. This is demonstrated by the large growth in overall income and in-kind transfers to the poor (the "safety net") during the last three decades, a growth that was maintained even during the Reagan-Bush years and will remain at high levels even after the implementation of federal welfare reforms enacted in 1996. 4 At the same time, as Paul Peterson has shown, the share of federal spending for programs favored by special interests (as he defines them) declined significantly during the 1980s under the pressure of a more centralized politics of budgetary constraint, tax reform, and programmatic retrenchment: "Although other components of the national budget were holding their own or expanding, these [special interest] programs were being cut by 70% -from 5.3% to 3.7% of GNP-a reduction back down to the levels that had existed in 1962. " An important reason for this reduction in special interest influence over the budget has been Congress's imposition of budgetary and tax procedures that require proponents of additional budget or tax expenditures to maintain revenue neutrality by proposing offsetting reductions in other areas.96 As I discuss below, this establishes a competitive, zero-sum game among special interests that both exposes opportunities for policy 94. The enactment and vast expansion of the food stamp program has virtually eliminated hunger from American life. See R. SHEP MELNICK, BETWEEN THE LINES: INTERPRETING WELFARE RIGHTS 183-232 (1994). Although the real value of AFDC benefits eroded during the 1980s, Medicare and Medicaid expenditures grew rapidly, helping many low-income people. See Schuck, supra note 91, at 2011. Since 1965, the poor have seen an increase in their standard of living. See Daniel T. Slesnick, Gaining Ground: Poverty in the Postwar United States, 101 J. POL. ECON. 1, 16 tbl.3 (1993). For data on the growth of social welfare spending, see STATISTICAL ABSTRACT, supra note 87, at 368-69. The 1996 welfare reform legislation, which will reduce federal AFDC expenditures, will have relatively little effect on the larger entitlement programs. Indeed, some of these programs, such as Medicaid, Medicare, and Social Security (and possibly food stamps), are expected to grow substantially in the future for demographic reasons. Although President Clinton has proposed capping Medicaid payments, the governors are strongly opposed to such limits. See Robert Pear, Governors Oppose Clinton Proposal for Medicaid Cap, N.Y. TIMES, Jan. 31, 1997, at Al. Moreover, additional state expenditures on safety net programs may fill some of the gap created by the new legislation. See Jennifer Preston, Trenton Approves Bill Overhauling Welfare System, N.Y. TIMES, Feb. 21, 1997, at Al (reporting that New Jersey legislature approved legislation proposed by Gov. Whitman continuing cash benefits and Medicaid for legal immigrants and providing other coverage no longer required or funded by federal government). Hence total safety net expenditures are likely to remain at or near the historically high levels achieved before the 1996 changes were enacted. Recent research comparing a variety of poverty rate measures across nations indicates that the United States (along with Canada and Luxembourg) has the lowest absolute poverty rate, as measured by equivalent purchasing power, in the world. When measured by relative poverty rates, as determined by incomes below a given percentage of average income, the United States is one of the highest among industrialized nations. See McKinley L. Blackburn, Comparing Poverty: The United States and Other Industrial Nations (Feb. 7, 1997) (unpublished manuscript, on file with author). 95. Peterson, supra note 17, at 337. 96. See Edward A. Zelinsky, Text, Purpose, Capacity, and Abertson's, 2 FLA. TAx REV. 717, 729 (1996) (arguing that under constraint of revenue neutrality requirements congressmen otherwise indifferent to granting special interest tax benefits are forced to attack such benefits to pay for desired programs). Yale Law & Policy Review improvements and minimizes the inefficiency costs that they can exact through their lobbying activities.' Again, I certainly do not mean to deny that the funds that special interests invest in political influence do not have an effect on gaining preferred access to decisionmakers. The point, rather, is that many other resources, which special interests may lack, also play their parts in influencing policy outcomes. Even in the area of