Parties, taxes, and American democracy

Why do parties change their policy positions? This research employs two models to examine the influence of ideas and interests on Democratic and Republican party tax policy change since the late 1960s. Each model has normative implications for democratic theory. The external model posits that parties change their policy positions in response to environmental influences with electoral implications for the party. The possible influences include economic conditions, public opinion, electoral defeat, and tax revolts. In contrast, the internal model holds that party leaders change policy in the absence of direct outside influences. In the internal model, changes in ideas are sufficient to produce policy change. The volatile period under study witnessed the collapse of Keynesianism, the rise of supply-side economic policies, and the emergence of a decade-long era characterized by the passage of deficit-reduction tax increases. The findings demonstrate that parties consistently changed policy in the fashion of the external model, but that ideas structured the response politicians had to their shifting political and economic environment. Politicians endorsed new ideas, such as supply-side economic policies, when those ideas were in accordance with the political and economic conditions facing the party. In addition, ideas conditioned the reaction politicians had to economic influences. Party leaders adhering to a Keynesian view of the functioning of the American economy, for instance, responded to rising inflation in one way; those believing in a supply-side economic view reacted to rising inflation in another. In terms of democratic theory, party politicians exhibited a realistic understanding of their political and economic environment, and they changed policy accordingly. Outside influences, however, did not fully determine policy. Ideas conditioned the specific manner in which party policy evolved.