Commitment, Conservatism, and the Welfare State

Eric Patashnik. Putting Trust in the U.S. Budget: Federal Trust Funds and the Politics of Commitment. Cambridge: Cambridge University Press, 2000. 246 pp. $54.95 cloth; $19.95 paper.

No one who has observed the seemingly interminable debate over the creation of a Social Security "lock box" can deny that trust funds are now a central feature of modern politics. But are trust funds more than a linguistic device? Do they actually affect the content of public policies, and if so, how? Of even more significance, what rules do politicians apply in using trust funds, and do these correspond to a defensible standard of good public policy?

These are the questions asked, and on the whole admirably answered, by Eric Patashnik's book Putting Trust in the U.S. Budget. Like all important books, its success inheres as much in the questions it raises as in those it answers; the debates it starts as those it concludes. All students of U.S. social policy and political institutions will have to grapple with its elegant analytical structure and powerful findings.

The most basic, although to my mind not the most important, accomplishment of Patashnik's work is his demonstration that trust fund financing has an appreciable effect on policy outcomes. It does so not by "depoliticizing" policies or making them immune to alteration. Even in the two most politically potent trust-funded programs, Social Security and Medicare, significant changes have been made and will be made in the future. What trust funds succeed in doing, however, is insulating at least some policies from the ebb and flow of normal partisan politics. While general fund taxation is significantly influenced by electoral stimuli, especially the election of Republicans to office, trust fund taxation is not.

According to Patashnik, what trust funds do is shift the sources of potential disruption in the affected policy from outside the policy area (exogenous) to inside the policy itself (endogenous). Trust funds tend to force actors to debate the affected policy in its own terms and to view "problems" as those thrown up by the program's own structure. So, for example, trust funds require, over some period of time, a balance between inflows and outflows. When this balance is projected to be disrupted, a problem exists. This does not mean that politics is rendered wholly technocratic or that all solutions in trust-funded programs must be narrowly oriented to solving the funding problem. In fact, the recurrent funding problems of trust-funded programs create a window in which changes unrelated to the funding can get on the political agenda. The essential point is that trust-funded programs operate on a political cycle largely disconnected from that of the normal electoral cycle, and this affects the timing, scope, and character of changes in the policy.

While in a less formal way many of these points were at least dimly recognized in the public policy literature, Patashnik's critical addition is his persuasive statistical evidence demonstrating that trust fund political cycles are disconnected from ordinary politics. Perhaps even more important, and more original, is his demonstration that, in trust funding particular policies, political actors exercise foresight. That is, they sense that trust funds will have something of the effect described above.

Patashnik suggests that trust funds can best be understood as a form of "precommitment," a concept that raises the question: who is committing whom? Trust funds are not primarily a self-binding mechanism, but a device through which actors in the present constrain actors in the future. While there are a number of other reasons one might create trust funds (making users pay, maximizing budgets, or establishing control of the Treasury), their most important purpose is to "reduce political uncertainty," which translates into reducing the flexibility of future decision makers. If trust funds were just a mechanism through which politicians, knowing they will be faced with disagreeable choices...