The politics of public versus private social welfare

The United States has a divided social system in that both the public and private sectors provide citizens with benefits and services. The effects of political party control on public social policy are widely known. An area of study less understood is how partisanship influences private social benefits. I develop and test a theoretical argument that political parties' choice between indirect and direct social expenditures is primarily motivated by a desire to alter the balance between public and private power in society. The two major political parties have divergent philosophies on the role of government in society due to their significant differences in core democratic values and electoral coalitions. First, I properly conceptualize social policy as a choice between direct and indirect spending, using a new data set of federal tax expenditures. Next, I find no statistically significant difference between the Democratic and Republican parties in annual changes to total social expenditures. Additionally, my results show that Republican influence in the legislature results in a higher ratio of indirect to direct social spending, more private-sector spending, and increases to income inequality. These results have implications for determining the providers and beneficiaries of social benefits, the balance of power in society, and economic inequality