The Populist Radical Right in Government and the Budgetary Implications

Populist radical right parties (PRRP) became established government coalition partners in many democracies and thus, affects public spending and the public spending of the future by leaving a track record of substantially increased public debt. In our mixed method study we show that the populist radical right defends and even increases expensive parts of the consumptive component of the welfare state and reduces tax revenue by cutting corporate and top marginal income taxes simultaneously. Strategically, this is how the populist right ensures the loyalty of economically heterogeneous groups of voters (worker, pensioners and small entrepreneurs) but the price is a systematic and substantial increase in public debt. Our systematic path-analysis indicates that public debt is increased by 4.5 percentage points of the GDP for an average government with PRRP participation. The combination of high consumptive social spending as well as tax cuts mediate this effect. We complement our average effects models with purposefully selected case studies. Those indicate that the majority of cabinets with PRRP participation, including those with favourable economic conditions, increase public debt due to the combination of high social spending and reduced tax revenues. The exemption are several Swiss and Norwegian cabinets, which for different reasons escape the logic of budgetary trade-off. Finally, we shortly discuss the viability of the two self-proposed deficit remedies by PRRPs: Decreasing welfare rights of immigrants and tax-cut induced economic growth.