Defense/Welfare Tradeoffs in West German Budgeting.

Abstract

The study seeks to answer two questions: (1) Is there evidence of defense/welfare tradeoffs in German budgetary outputs? and (2) Is there evidence of partisan differences in the relationship between defense and civilian spending? The study presents a model of resource allocation within which tradeoffs can be analyzed. Given the predominance of short-term, incrementalist behavior in budgeting, we argue that tradeoffs can be analyzed in terms of expenditure change. The study introduces West German budgeting and provides a first evaluation of the likelihood of defense tradeoffs. One body of results is the regression analysis of both budgeted expenditures and final expenditures for 10 categories of civilian spending at the Federal level. The results demonstrate that factors other than defense spending are the primary determinants of expenditure change. Finally, the study investigates tradeoffs in the wider public sector. Regression analysis of state and local spending and spending of social security trust funds indicates that revenue constraints, electoral considerations and demographic pressures outweigh defense spending as correlates of spending change. The study concludes with some considerations on the generalizability of the results. In particular, we discuss the potential uniqueness of German public finances and the effect of "small state" status on the priority accorded defense spending. We raise the possibility that defense may have been relegated permanently to a secondary status by the social and political changes of the post-WWII period.