Presidential agenda control and spending policy: Lessons from general Pinochet's constitution

Formal institutions put in place upon the establishment of a new democracy can have profound effects on political bargaining. We demonstrate how the b udgetary procedure bequeathed by the outgoing Chilean military regime affec ts policy choices available to elected officials. Chilean budget procedure should discourage deficits, allow for a reduction in the relative size of t he defense budget, and facilitate cuts in executive proposals when the inst itutional interests of the legislature are at stake I,ut not under conditio ns of coalitional conflict. We present a simple spatial model of bargaining over spending decisions between the executive and Congress that facilitate s comparisons between the Chilean budget procedure and that of other presid ential systems. The model suggests that, relative to other regimes, Chile's budget process should constrain spending and favor the president's prefere nces over the legislature's. Comparative fiscal data from twelve other pres idential democracies and from the first eight Chilean budgets since the tra nsition to democracy, as well as interviews with key legislators and execut ive officials, sill support our hypotheses.