Retrenchment without Retribution: The Importance of Party Collusion in Blame Avoidance

Martin Hering Department of Political Science

McMaster University Hamilton, ON, Canada heringm@mcmaster.ca

— DRAFT —

Paper prepared for the ECPR Joint Sessions of Workshops, Granada, Spain, April 14-19, 2005

Workshop 29: Blame Avoidance and Blame Management

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Introduction

What would happen if a government announced that it plans to make a large cut

to a very popular social benefit that most voters receive in their lifetime? Most likely, the

opposition parties would try to bring down the government by mobilizing disaffected

voters against these cutback plans; the government would try to control the resulting

damage by accommodating many of its opponents’ objections, and perhaps also by

covering up the planned benefit cutbacks; and many voters would decide not to support

the parties in government in the next election, if the cutbacks were enacted. The likely

result would be a policy blockade and electoral failure: the government’s plan to cut

social benefits would either be withdrawn or significantly scaled back; and the parties in

government would either be thrown out of office or suffer major electoral losses that

would make governing much more difficult in the next legislative period. In short,

governments would be blamed for unpopular policies and punished in elections. And

since governments prefer to prevent a scenario like this, they would use all available

means in order to avoid being blamed. The best way to accomplish this would be to bring

the opposition parties on board, which would prevent them from mobilizing voters

against the government.

In brief, these are two of the key insights of the notion of blame avoidance into

the politics of welfare state reform: first, governments do not dare to unilaterally adopt

unpopular benefit cutbacks; and second, voters defeat governments that made the mistake

of unilaterally retrenching the welfare state. In the 1980s and 1990s, the politics of

welfare state reform was mostly an exercise in blame avoidance. But more recent

developments in a number of European welfare states show that blame avoidance varies

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significantly over time: not only was there retrenchment without partisan cooperation,

there was also retrenchment without electoral retribution. In Austria, for example, a

center-right government unilaterally adopted visible cutbacks of social benefits despite of

the obvious electoral risks. Moreover, even though the parties in government lost office

in several federal states and suffered losses of votes in the federal election, voters

returned them into office in 2002.1 Germany’s pattern of reform was the same as

Austria’s, and in France and Italy, broadly similar developments occurred.2

Do these developments imply that blame avoidance no longer matters in the

politics of welfare state reform? In this paper, I show that the retrenchment and

restructuring of welfare states is still shaped by voters’ aversion to losses and

governments’ interest in avoiding blame, but that the types of strategies that governments

employ vary over time. In recent years, governments increasingly used a little recognized

strategy of blame avoidance: party collusion. Since party collusion removes the option of

refinancing social programs from the menu of policy alternatives, I argue that it

potentially solves the two puzzles raised by the Austrian, German and other cases: first,

why parties in government unilaterally pursue welfare state retrenchment, and second,

why voters reelect such parties. I further argue that, like the formation of a grand

coalition, party collusion is an effective strategy of blame avoidance. Thus, government

parties may prevent electoral retribution either by cooperating with the opposition across

party lines or by offering similar policy alternatives to voters.

1 Herbert Obinger, "Veto Players, Political Parties, and Welfare-State Retrenchment in Austria," International Journal of Political Economy 32, no. 2 (2004). 2 Martin Hering, Rough Transition: Institutional Change in Germany's "Frozen" Welfare State (Ph.D. Dissertation: Johns Hopkins University, 2004), Ch. 8.

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Table 1. Retrenchment without Partisan Cooperation in German Pension Policy

Retrenchment Restructuring

Cooperation Pension Reform Act 1992 (1989)

Competition Growth&Employment Promotion Act (1996) Pension Reform Act 1999 (1997) Budget Consolidation Act (1999)

Social Insurance Reform Act (2003)

Old-Age Provision Act (2001) Sustainability Act (2004)

Retirement Income Act (2004)

Table 2. Retrenchment without Electoral Retribution in German Pension Policy

Cooperation Competition

Retribution Growth&Employment Promotion Act (1996) Pension Reform Act 1999 (1997)

Reelection Pension Reform Act 1992 (1989) Budget Consolidation Act (1999) Old-Age Provision Act (2001)

To analyze the impact of blame avoidance strategies on electoral outcomes, and

explore the potential effects of party collusion, this paper examines a classic case of

blame avoidance in a crucial, and particularly sensitive, area of welfare state

retrenchment: the reform of Germany’s large public pension system in the period

between 1989 and 2004. Public pension programs are often seen as the “third rail” in

politics, since most citizen benefit from them and rely on them for their income security

in old-age. In the 1980s and early 1990s, German governments either did not dare to

initiate painful cutbacks, or, at the minimum, formed a “grand coalition” with the major

opposition party to diffuse responsibility for imposing losses on voters. However, recent

pension reforms in Germany raise the puzzles of retrenchment without cooperation and

retrenchment without retribution (see Tables 1 and 2).

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This paper is divided into four parts. In the first part, I review the existing

arguments and hypotheses about blame avoidance in welfare state reform, and outline the

new puzzles created by the most recent reforms in Austria, Germany and other countries.

In the second one, I discuss the importance of party collusion in blame avoidance and

integrate collusion in a revised typology of blame-avoiding strategies. In the third one, I

propose a model of blame avoidance that puts governmental strategies in a broader

context. In the fourth part, I use both the model and the typology of blame avoidance to

analyze pension reform strategies and outcomes in Germany in the 1989-2004 period.

The Electoral Imperative and Governmental Strategies

Governments in advanced industrialized countries that want to reform the welfare

state face multiple constraints. Policy legacies, such as mature pay-as-you-go pension

systems or universal health insurance programs, may constrain governments’ reform

options. In addition, political institutions, such as presidentialism, federalism,

bicameralism and short electoral cycles, may restrict their capacities to enact and

implement reform laws. The biggest constraints of all, however, are not these institutional

factors per se, but the actors that operate within democratic institutions. Even if

governments have unrestricted institutional capacities and a very broad range of options

within the existing social policy arrangements, they still find themselves in the following

dilemma: since voters are deeply attached to their social benefits, they tend to punish

governments that cut social programs. Thus, governments that attempt to retrench the

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welfare state run the risk of losing office. As Paul Pierson put it, they confront “... a clash

between their policy preferences and electoral ambitions”.3

How do governments resolve this conflict between their substantive and political

preferences? Most scholars who study the reform of welfare states argue that there is an

electoral imperative.4 They argue that governments put their electoral considerations first

and thus follow Anthony Downs’ assumption that parties “... never seek office as a means

of carrying out particular policies; their only goal is to reap the rewards of holding office

per se”.5 Pierson, for example, points out that “... failure to consider electoral

consequences can jeopardize policymakers’ long-term prospects for implementing their

preferred policies”.6 Since social programs are highly popular among voters, do

governments either never pursue welfare state retrenchment or always retreat from it?

Many scholars argue that this is not necessarily the case because governments are

sometimes able to avoid blame for unpopular policies. In some situations, which they

often help to create, governments are able to reduce or even avoid the negative electoral

consequences of welfare state retrenchment. First, as Weaver and Pierson argue,

governments sometimes manage to reduce voter mobilization against retrenchment by

reducing the visibility of benefit cutbacks, either through clever policy design or through

extensive negotiations with the opposition parties. These strategies, which are the most

3 Paul Pierson, "The New Politics of the Welfare State," World Politics 48, no. 2 (1996): 146. 4 Herbert Kitschelt, "Partisan Competition and Welfare State Retrenchment: When Do Politicians Choose Unpopular Policies?" in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001), 267-269. 5 Anthony Downs, An Economic Theory of Democracy (New York: Harper & Row, 1957), 28. 6 Paul Pierson, Dismantling the Welfare State? Reagan, Thatcher, and the Politics of Retrenchment (Cambridge: Cambridge University Press, 1994), 17.

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well-known examples of blame avoidance, may reduce the risk of electoral retribution,

and thus weaken the conflict between governments’ office-seeking ambitions and their

policy preferences. Second, as Kitschelt points out, governments’ ability to avoid blame

for unpopular policies does not rest only on their strategic choices in the policy-making

arena, it also depends on the contextual conditions in the electoral arena.7 If the main

competitor in the electoral arena is a market liberal party, and if party competition

revolves mostly around economic and distributive issues, governments are often able to

enact social benefit cutbacks with a low risk of being blamed by the opposition party and

punished by voters.

The emphasis on the role of blame avoidance raises important questions about the

implications of the electoral imperative for governments’ actions. Do governments

pursue welfare state retrenchment only if there is a minimal risk of losing office? Or are

they willing to take the risk of electoral retribution as long as they can reduce that risk to

some extent? Put differently, does welfare state retrenchment depend on using blame-

avoiding strategies, or on achieving effective blame avoidance? There are different

hypotheses with regards to these questions (see Table 3). Some scholars assume that the

electoral imperative is, in practice, mostly a blame avoidance imperative.8 Pal and

Weaver, for example, argue that governments employ every blame-avoiding strategy

available to them, but do not shy away from enacting unpopular benefit cutbacks: “[f]rom

7 Herbert Kitschelt, "Partisan Competition and Welfare State Retrenchment: When Do Politicians Choose Unpopular Policies?" in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001). 8 R. Kent Weaver, "The Politics of Blame Avoidance," Journal of Public Policy 6, no. 4 (1986); R. Kent Weaver, "The Politics of Public Pension Reform," Center for Retirement Research at Boston College Working Paper, no. 2003-06 (2003).

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a strategic perspective, assuming that a decision has been taken to impose a loss, ....

politicians do what they can to (1) effectively manage the impact of that loss, and (2)

protect themselves from blame”.9 This argument implies that blame avoiding strategies

are both a necessary and sufficient condition for governments’ pursuit of welfare state

retrenchment: even if these strategies do not minimize the risk of electoral retribution,

governments would not abandon their plan to cut social benefits.

Table 3. Hypotheses about Loss Imposition in Welfare State Reform

a Blame Avoidance Imperative

b Grand Coalition Imperative

Hypothesis I If a government does not cut social benefits, voters will not punish it in elections

Same as hypothesis I-a

Hypothesis II If a government cuts social benefits and uses blame-avoiding strategies, voters will still punish it in elections, but much less than they otherwise would

If a government cuts social benefits and forms a grand coalition with the opposition parties, voters will not punish it in elections

Hypothesis III If a government cuts social benefits and does not use blame-avoiding strategies, voters will punish it in elections

If a government cuts social benefits and does not form a grand coalition with the opposition parties, voters will punish it in elections

Hypothesis IV A government that decides to cut social benefits will use blame-avoiding strategies whenever it can

A government will cut social benefits only if it can form a grand coalition with the opposition parties

In contrast to Pal and Weaver’s argument, other scholars argue that the electoral

imperative has a much stronger impact on governments’ decisions. In their view, the

electoral imperative is, in practice, not only a blame avoidance imperative, but also a

grand coalition imperative. Pierson, for example, argues that “[g]overnments confronting

9 Leslie A. Pal and R. Kent Weaver, "The Politics of Pain," in The Government Taketh Away, ed. Leslie A. Pal and R. Kent Weaver (Washington, DC: Georgetown University Press, 2003), 26.

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the electoral imperatives of modern democracy will undertake retrenchment only when

they discover ways to minimize the political costs involved”.10 In addition, Myles and

Pierson argue that blame-avoiding strategies that lower merely the visibility of cutbacks

are often insufficient, especially with regards to public pensions, since most voters regard

these as an insurance contract with the government. Myles and Pierson conclude that, in

order to minimize the risk of losing office, governments need to negotiate extensively

with opposition parties and build a grand coalition for welfare state cutbacks.11 In

reforming public pensions and other popular social programs, governments thus confront

the “... imperative of reaching a negotiated settlement ... rather than unilateral enactment

of new legislation”.12 Similarly, Kitschelt argues that, unless the context of party

competition is favorable, governments need to use not just any blame-avoiding strategy,

but need to seek an all-party agreement. More specifically, Kitschelt hypothesizes that

governments enact benefit cutbacks “... only if all the major competitors can be

incorporated in a ‘grand coalition’ for social retrenchment and thus engineer a ‘blame

diffusion’ across the political spectrum”.13 This argument has more specific and far-

reaching implications than Pal and Weaver’s. First, only a successful grand coalition

strategy is a sufficient condition for the pursuit of welfare state retrenchment. And

10 Paul Pierson, "The New Politics of the Welfare State," World Politics 48, no. 2 (1996): 179. 11 John Myles and Paul Pierson, "The Comparative Political Economy of Pension Reform," in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001), 320-324. 12 John Myles and Paul Pierson, "The Comparative Political Economy of Pension Reform," in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001), 320. 13 Herbert Kitschelt, "Partisan Competition and Welfare State Retrenchment: When Do Politicians Choose Unpopular Policies?" in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001), 280.

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second, since other blame-avoiding strategies merely reduce, but do not minimize the risk

of electoral retribution, governments will abandon welfare state retrenchment in the event

that building a grand coalition is not feasible.

Many empirical studies of welfare state retrenchment, and of loss imposition more

generally, support the notion of a blame-avoiding imperative.14 There is evidence from

numerous studies of diverse policy areas that governments employ a wide range of

blame-avoiding strategies when they face the prospect of voter mobilization against

cutbacks (Hypothesis IV-a). Conversely, there is little evidence that governments

disregard the blame avoidance imperative and do not try to at least reduce the risk of

electoral retribution. Thus, governments in advanced industrialized countries seem to

have internalized the imperative to avoid blame (Hypotheses II-a and III-a).

By contrast, the empirical evidence is more mixed with regards to the argument

that governments seek a grand coalition for welfare state retrenchment, and that they do

not follow through with their plans if the formation of a coalition fails. Some cases of

welfare state retrenchment are consistent with the notion of a grand coalition imperative.

First, cases in which governments formed a broad coalition among parties always led to

successful retrenchment. For example, in the United States, the pension retrenchment of

1983 was enacted by a bipartisan coalition of Republicans and Democrats, and did not

lead to a defeat of the Republican president.15 In Sweden, the retrenchment and

14 Christopher Hood, "The Risk Game and the Blame Game," Government and Opposition 37, no. 1 (2002); Leslie A. Pal and R. Kent Weaver, eds., The Government Taketh Away: The Politics of Pain and Loss Imposition in the United States and Canada (Washington, DC: Georgetown University Press, 2003. 15 R. Kent Weaver, "Cutting Old-Age Pensions," in The Government Taketh Away, ed. Leslie A. Pal and R. Kent Weaver (Washington, DC: Georgetown University Press, 2003), 48-49.

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restructuring of public pensions in 1998 resulted from an all-party agreement which

included the Social Democrats, the government’s key competitor in the electoral arena.16

Second, cases in which governments did not seek a grand coalition, and thus attempted to

enact benefit cutbacks unilaterally, mostly led to reform failure, and sometimes to

electoral failure. The unsuccessful and electorally devastating pension reforms of center-

right governments in Italy (1994), France (1995) and Germany (1997) are frequently

cited in support of the argument that grand coalitions are an essential ingredient of

retrenchment without retribution.17

Nonetheless, these cases as well as those mentioned in the introductory section—

the recent unilateral reforms in Austria, France, Germany and Italy—raise doubts about

the validity of the grand coalition argument. Specifically, they cases pose two different

puzzles for the study of blame avoidance. First, why do the parties in government

unilaterally pursue welfare state retrenchment even though this may cost them the return

to office? In the blame avoidance literature, it is often overlooked that the pension

reforms initiated in the mid-1990s by the French, German and Austrian governments do

not fully conform with the grand coalition imperative. Since these reforms were

electorally costly, they support the argument that voters punish governments if these

16 Karen M. Anderson, "The Politics of Retrenchment in a Social Democratic Welfare State: Reform of Swedish Pensions and Unemployment Insurance," Comparative Political Studies 34, no. 9 (2001). 17 Giuliano Bonoli, "Pension Politics in France: Patterns of Cooperation and Conflict in Two Recent Reforms," West European Politics 20, no. 4 (1997); Maurizio Ferrara and Elisabetta Gualmini, "Reforms Guided by Consensus: The Welfare State in the Italian Transition," West European Politics 23, no. 2 (2000); John Myles and Paul Pierson, "The Comparative Political Economy of Pension Reform," in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001), 322; Martin Schludi, The Reform of Bismarckian Pension Systems (Berlin: Dissertation, Humboldt Universität, 2002).

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attempt to enact retrenchment measures without political cover (Hypothesis II-b). But

since governments obviously did not shy away from attempting welfare state

retrenchment, these cases conflict with the notion of a grand coalition imperative

(Hypothesis IV-b). Governments either did not anticipate the negative reactions from

voters or disregarded them. The most recent unilateral pension reforms in four

Continental welfare states raises the same question: assuming that parties put their

electoral goals first and that welfare state retrenchment is treacherous in the absence of a

broad agreement among parties, why do governments unilaterally consider and propose

unpopular policies? The second puzzle that the Austrian, French, German and Italian

cases pose for blame avoidance relates not to the initiatives of governments, but to the

reactions of voters: why do voters return government parties to office even though these

parties unilaterally enacted social benefit cutbacks? As mentioned above, since the

formation of a grand coalition is imperative, one would expect voters to punish

governments for unilaterally enacting benefit cutbacks (Hypothesis III-b). If the

opposition parties mobilize against the government’s policies, voters are not only able to

better detect the social cutbacks, they also have an alternative to turn to in elections.

Party Competition and Blame Avoidance Typologies

In the literature on welfare state reform and blame avoidance, the puzzles of

unilateral retrenchment and retrenchment without retribution are rarely recognized and

addressed. Herbert Kitschelt’s work on party competition and welfare state retrenchment

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is an exception to this rule.18 Even though his work focuses not so much on blame-

avoiding strategies, but mostly on the context of blame avoidance, Kitschelt’s

formulation of the explanatory puzzles is quite similar to that in the previous section: “...

in some countries, rational vote- or office-seeking politicians and their parties have

pursued ... unpopular policies. What may be even more surprising, on a number of

occasions, parties were elected into office that announced unpopular social policy

changes ahead of elections ...”.19 Kitschelt argues that, in order to solve these puzzles, the

dynamic of party competition needs to be examined. He suggests that favorable

competitive configurations enable parties in government to propose, enact and implement

welfare state retrenchment without electoral retribution. These configurations are shaped

by a number of factors, the most important of which are the existence of a strong market-

liberal party and party competition around economic and distributive issues. Thus, if the

context is right, government parties do not need to rely on blame-avoiding strategies in

order to avoid blame for unpopular policies. Even a grand coalition with the opposition

parties is not necessary for winning reelection.

Kitschelt’s argument about the importance of party competition has many

strengths because it helps account for the significant cross-national variation in the

magnitude of welfare state retrenchment. It explains why countries with a strong market-

liberal party and a dominant economic dimension of electoral competition, such as

18 Herbert Kitschelt, "Partisan Competition and Welfare State Retrenchment: When Do Politicians Choose Unpopular Policies?" in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001). 19 Herbert Kitschelt, "Partisan Competition and Welfare State Retrenchment: When Do Politicians Choose Unpopular Policies?" in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001), 265.

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Australia, Britain, the United States and New Zealand, were able to enact much larger

social benefit cutbacks than most other advanced industrialized countries. In addition,

Kitschelt’s argument accounts for the fact that, in the 1990s, countries with two strong

welfare state parties and a dominant sociocultural dimension of competition, such as

Austria, France, Germany and Italy, undertook few and only limited initiatives to cut

social benefits.

However, Kitschelt’s explanation has some weaknesses in explaining variation

over time in the extent to which governments in a given country cut social benefits.

Changes in the configuration of party systems are certainly possible and, to a small

extent, have occurred in a few cases. For example, in the 1990s market-liberal parties

emerged in Austria and Italy, increasing the salience of the economic-distributive

dimension of party competition.20 Nonetheless, since the configuration of the party

system remained quite stable, the latter cannot account for the increasing occurrence of

retrenchment without retribution. For example, in the German case, the significant

changes in social cutbacks that occurred over time cannot be explained by changes in the

configuration of party competition: an electorally significant market-liberal party still

does not exist, and party competition still revolves primarily around sociocultural issues.

In order to account for variations over time, and also to better explain cross-

national variations, I argue that Kitschelt’s argument needs to be extended to another

level of party competition: to the level of the policy alternatives that the key competitors

20 Herbert Kitschelt, "Partisan Competition and Welfare State Retrenchment: When Do Politicians Choose Unpopular Policies?" in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001), 300.

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offer to voters. More specifically, we need to examine not only the structural

configuration of party competition, such as the size and type of political parties and the

dominant electoral dimension, we also need to take into account the policy content of

party competition, specifically the types of policy alternatives that parties stand for and

promote, and the similarities and differences between these alternatives. The advantage

of looking at both levels of analysis is the following: if the structure of party competition

remained stable, but the content of the competition for votes changed, changes in the

behavior of governments and voters can still be explained through the dynamic of party

competition.

The underlying logic of the structure- and content-oriented arguments is similar.

Either the configuration or the content of party competition determines whether the party

in government is able to pursue welfare state retrenchment without having to fear

punishment from voters. If the governing party’s competitor for office is a party that is

not a long-standing welfare state defender, voters will have no alternative to turn to in the

next election, and are thus unlikely to punish the party in government for enacting

retrenchment measures. A similar situation may arise even in competitive configurations

in which both the government party and the opposition party are defenders of the welfare

state: if the opposition party’s policy alternative is not to defend the welfare state through

refinancing, but to transform the latter through retrenchment, restructuring or a

combination of the two, voters are unlikely to severely punish the government for cutting

social benefits. Voters may have a narrow range of choices between slightly different

retrenchment or restructuring alternatives, but they no longer have the alternative to vote

for a major party that defends the existing welfare state through revenue increases.

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Even though the logic of structure- and content-oriented arguments is similar,

there is a crucial difference. Parties are usually unable to strategically modify the

structural configuration of party competition in order to escape electoral retribution. The

competitive structure is an important part of the context that determines the potential for

blame generation, but not an object of blame-avoiding strategies. It is hard to imagine

that a party in government could replace a dominant sociocultural dimension of electoral

competition with an economic one, or help create an electorally significant market-liberal

party. But a party in government could strategically change the content of party

competition from refinancing to restructuring, first, by redefining its own policy

alternative, and second, by opening opportunities for its competitor to abandon the

defence of the welfare state status quo. Thus, the change and restriction of the policy

content of party competition may be pursued by government parties as a blame-avoiding

strategy. In the literature on party competition, for example, such change is usually seen

as the result of deliberate “collusion” or “cartelization”.21

How does party collusion relate to the widely known strategies of blame

avoidance? Is it similar to other strategies, or distinct from them? Even though many of

the existing classifications of blame-avoiding strategies recognize the importance of party

competition, they rarely identify the efforts to change parties’ policy alternatives as a

significant strategy for the prevention of electoral retribution. First, scholars pay more

attention to the strategies that reduce voters’ willingness and ability to attribute blame to 21 Stefano Bartolini, "Collusion, Competition and Democracy: Part I," Journal of Theoretical Politics 11, no. 4 (1999); Stefano Bartolini, "Collusion, Competition and Democracy: Part II," Journal of Theoretical Politics 12, no. 1 (2000); Mark Blyth and Richard S. Katz, "From Catch-All Politics to Cartelization: The Political Economy of the Cartel Party," West European Politics 28, no. 1 (2005); Richard S. Katz and Peter Mair, "Changing Models of Party Organization and Party Democracy: The Emergence of the Cartel Party," Party Politics 1, no. 1 (1995).

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the government parties22 than to those that reduce the opposition parties’ goals of, and

capacities for, generating blame against the government.23 Second, when scholars deal

with strategies to reduce blame generation, they focus not on the collusion among parties,

but on the attempts of government parties to create cooperation across party lines, or

build a grand coalition for welfare state retrenchment.

I argue that collusion is distinct from cooperation, even though these strategies

have common characteristics. Like the replacement of policy alternatives, the formation

of a grand coalition limits or minimizes the competition among parties, and thus reduces

the risk that voters withdraw their support from the parties in government. However,

there are a number of important differences between these strategies. For example, a

strategy of cooperation rests on an explicit agreement or pact between the government

and opposition parties. By contrast, a strategy of collusion does not require a concerted

effort since parties can change their policy alternatives in a series of uncoordinated

moves. Most importantly, the strategy of cooperation creates only the perception that the

government party and the opposition party prefer retrenchment or restructuring to

refinancing: in the next election, either party may revise its strategic stance and return to

competing about the content and direction of welfare state reform. By contrast, a strategy

of collusion leads to a real shift in parties’ policy preferences from refinancing to

retrenchment or restructuring, and thus may produce a much more stable outcome.

22 Christopher Hood, "The Risk Game and the Blame Game," Government and Opposition 37, no. 1 (2002): 16-17; Paul Pierson, Dismantling the Welfare State? Reagan, Thatcher, and the Politics of Retrenchment (Cambridge: Cambridge University Press, 1994). 23 John Myles and Paul Pierson, "The Comparative Political Economy of Pension Reform," in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001); Leslie A. Pal and R. Kent Weaver, "The Politics of Pain," in The Government Taketh Away, ed. Leslie A. Pal and R. Kent Weaver (Washington, DC: Georgetown University Press, 2003).

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Table 4. Existing Typologies of Blame-Avoiding Strategies

First Type Second Type Third Type

Pal and Weaver (2003)

Procedures

Insulation Passing the buck Agenda limitation

Perceptions

Obfuscation Finding a scapegoat Circling the wagons Redefining the issue

Payoffs

Dispersion Compensation

Exemption Concentration

Pierson (1994)

Obfuscation

Decrementalism Indirect incidence

Burden shifting Automaticity

Lagged cutbacks

Division

Targeting policies

Compensation

Exempting constituencies

Offering other benefits

Hood (2002)

Presentation

Excuses Justifications

Policy

Selecting policies

Agency

Delegation

The recognition of the importance and distinctiveness of party collusion in blame

avoidance, and the distinction between the reduction of blame generation and the

restriction of blame attribution, expand and improve the existing typologies of blame-

avoiding strategies. Currently, there are three classifications. First, Pal and Weaver

identify 11 different “loss-imposing strategies” and put these into three categories,

depending on whether they manipulate procedures, perceptions or payoffs. Second,

Pierson distinguishes three types of “strategies for minimizing costs”: obfuscation,

division and compensation. He argues that obfuscation is the most important strategy, and

makes a further distinction between obfuscation strategies that limit the visibility of

decision-making, policies or policy outcomes. Finally, Hood differentiates between

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presentational, policy and agency strategies.24 Looking at these classifications, there

seems to be an agreement that the distinction between preference-oriented strategies and

perception-oriented ones is important: Pal and Weaver distinguish payoffs from

perceptions and procedures; Pierson division and compensation from obfuscation; and

Hood policy strategies from presentational and agency strategies.

I suggest to introduce a second, cross-cutting dimension that makes it possible to

separate analytically party-oriented strategies from voter-oriented ones: governments can

reduce blame generation by opposition parties, or they can restrict blame attribution by

voters (see Table 5). The former limit the electoral competition between parties

(competition avoidance),25 and the latter reduce the electoral mobilization by voters

(mobilization avoidance).26 Using two dimensions leads to the distinction among four

types of blame avoidance: collusion and cooperation on the one hand, and distribution

and discourse on the other. To illustrate how this four-fold typologies overlaps with the

existing classifications, I listed Pal and Weaver’s 11 blame-avoiding strategies under

each of these categories, and added the replacement of policy alternatives as an important

example of collusion.

24 Christopher Hood, "The Risk Game and the Blame Game," Government and Opposition 37, no. 1 (2002): 16-17. 25 Stefano Bartolini, "Collusion, Competition and Democracy: Part II," Journal of Theoretical Politics 12, no. 1 (2000): 37. 26 The distinction between party-oriented and voter-oriented strategies builds on Scharpf’s conceptualization of the blame game as an “asymmetrical zero-sum game between government and opposition” and a “connected positive-sum game with the swing voters”. See Fritz W. Scharpf, Games Real Actors Play: Actor-Centered Institutionalism in Policy Research (Boulder: Westview Press, 1998), 183-188.

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Table 5. A Revised Typology of Blame-Avoiding Strategies

Party-Oriented “Competition Avoidance”

Voter-Oriented “Mobilization Avoidance”

Preference-Oriented

Collusion

Alternative Replacement

Distribution

Compensation Exemption Dispersion

Concentration

Perception-Oriented

Cooperation

Circling the Wagons Agenda Limitation

Discourse

Obfuscation Issue Redefinition Passing the Buck

Scapegoating Delegation

The usefulness of classification does not primarily lie in exploring and mapping

the varieties of blame avoidance. Distinctions among types of strategies create the

possibility to formulate hypotheses about the impact and effectiveness of different blame-

avoiding strategies. In the literature on blame avoidance, there are a number of those

hypotheses. First, Myles and Pierson argue that discursive strategies are often ineffective:

“[b]lame avoidance strategies of obfuscation and decremental cutbacks might fool

untutored and atomized voters in fragmented, pluralist policies, but the are unlikely to

fool trade union confederations or social democratic parties”.27 In addition, as mentioned

earlier, they argue that cooperative strategies are essential for governments. Second,

Kitschelt argues that discursive strategies alone are unable to account for the fact that

governments are sometimes electorally successful in enacting unpopular retrenchment

measures. His argument about the context of party competition suggests that collusive

27 John Myles and Paul Pierson, "The Comparative Political Economy of Pension Reform," in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001), 332.

21

and cooperative strategies are the most important ones, partly because they increase the

effectiveness of discursive strategies: “... the track record, reputation, and strategic

situation in which each competing party is immersed in the democratic electoral and

legislative competition ... endows its framing of the policy issue with greater or less

credibility”.28 Third, Hood argues that delegation is a key strategy since it may make

other discursive strategies as well as distributive ones unnecessary: “... agency strategies

...., if successful, ... eliminate the need for presentational and policy bias to achieve blame

avoidance.29

Based on the four-fold typology proposed above, I suggest to refine the existing

hypotheses about the effectiveness of blame-avoiding strategies. First, party-oriented

strategies (collusion and cooperation) are effective in avoiding blame, but voter-oriented

strategies (distribution and discourse) are not effective. The hypothesis suggested by

Kitschelt and Myles/Pierson is convincing: the effectiveness of discursive strategies, such

as obfuscation and justification, is most likely limited—unless these strategies are

combined with a strategy of cooperation, which is very effective in avoiding blame.

However, this hypothesis applies not only to cooperation, but also to collusion: if parties

avoid competition, either by cooperating or colluding, it is highly unlikely that significant

voter mobilization against the government would emerge, even if the social cutbacks are

visible and affect most voters. Interest groups may still try to mobilize voters against the

government, but since there is no policy alternative or party alternative to turn to in

28 Herbert Kitschelt, "Partisan Competition and Welfare State Retrenchment: When Do Politicians Choose Unpopular Policies?" in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001), 273. 29 Christopher Hood, "The Risk Game and the Blame Game," Government and Opposition 37, no. 1 (2002): 17.

22

elections, such mobilization would be both difficult and ineffective. By contrast, even if

government parties reduce voter mobilization through distributive and discursive

strategies, opposition parties may still be able to inflict significant punishment in

elections. As Pal and Weaver point out, the opposition can employ a variety of blame-

generating strategies, such as redefining the issue and concentrating blame, which

counteract or undermine the government’s efforts to manipulate voters’ perceptions and

preferences.30 To conclude, distributive and discursive strategies do not preclude party

competition, and thus do not necessarily avoid punishment from voters. But collusive and

cooperative strategies preclude voter mobilization, and thus minimize the risk of electoral

retribution.

Second, based on the four-fold typology presented above, I propose to refine the

notion of a grand coalition imperative: preference-oriented strategies (alternative

replacement, or “burning the bridges”) are as effective in avoiding competition as

perception-oriented ones (grand coalition, or “circling the wagons”).31 This hypothesis

is largely implied in the first one. Governments are able to avoid competition either by

formally cooperating with the opposition or by colluding with the latter. There is little

reason to suspect that collusion is less effective than cooperation. In fact, since collusion

is informal and rests on a change in parties’ policy preferences, it is likely that collusion

is effective not only in the short-term, but also in the medium- and long-term. By

30 Leslie A. Pal and R. Kent Weaver, "The Politics of Pain," in The Government Taketh Away, ed. Leslie A. Pal and R. Kent Weaver (Washington, DC: Georgetown University Press, 2003), 25-33. 31 For a similar argument see R. Kent Weaver, Institutions, Policy Cartels and the Politics of Loss Imposition (Manuscript: Georgetown University and the Brookings Institution, 2004).

23

contrast, formal cooperation may weaken or break down if the strategic calculus of either

the government parties or the opposition parties changes.

A Model of Blame Avoidance

Formulating hypotheses about the effectiveness of different types of blame-

avoiding strategies is easier than testing them. In the study of welfare state reform, there

are many hypotheses about the choice and consequences of blame-avoiding strategies,

but a surprising lack of analyses that compare over time or across countries the

employment and effectiveness of these strategies. This lack is mostly due to the

complexity of studying blame avoidance: a large number of variables affect the behavior

of governments and voters in welfare state reform, and it is still unclear which variables

need to be controlled for. In order to better structure the analysis of the types of strategies

and their effectiveness, I suggest a model of blame avoidance that takes five groups of

variables into account (see Appendix A): (1) the blame-generating context, (2) the blame-

attracting decisions, (3) the blame-avoiding strategies, (4) the blame-generating

strategies and (5) the blame-attributing decisions.

The blame-generating context is shaped by at least four key variables: public

opinion, the party system, political institutions and policy legacies. First, public opinion

is perhaps the strongest determinant of the potential for blame generation. Numerous

studies of welfare state reform showed that governments seek to avoid blame because

voters are averse to losing social benefits. Yet, the intensity of the public’s aversion to

losses may differ across space and time. As Hood argued, public opinion is not

necessarily vindictive, but may be relatively sympathetic, which significantly reduces the

24

blame potential.32 Second, as discussed further above, the party system creates

opportunities and constraints for blame generation. As pointed out by Anderson, Green-

Pedersen and Kitschelt, the characteristics and the competitive configuration of party

systems determine to an important extent whether governments may become the target of

blame from voters.33 Third, the type of political institutions shapes the degree to which

responsibility for unpopular policies is concentrated or diffused. As Pierson/Weaver and

Powell/Whitten showed, the more governmental power is centralized, the greater is the

potential for blame.34 Fourth, policy legacies may restrict the government’s options in

increasing the acceptability of benefit cutbacks. As Myles/Pierson and Levy showed, if

the policy legacies are favorable, governments are able to “rationalize redistribution”, or

increase both equity and efficiency. But if they are unfavorable, governments may have

no choice except to make across-the-board cuts.35 The contextual variables—public

opinion, the party system, political institutions and policy legacies—influence not only

the potential for blame in cases in which the government seeks to impose losses on 32 Christopher Hood, "The Risk Game and the Blame Game," Government and Opposition 37, no. 1 (2002): 21-26. 33 Christopher J. Anderson, "Economic Voting and Political Context: A Comparative Perspective," Electoral Studies 19, no. (2000); Christoffer Green-Pedersen, "Welfare State Retrenchment in Denmark and the Netherlands, 1982-1998: The Role of Party Competition and Party Consensus," Comparative Political Studies 34, no. 9 (2001); Herbert Kitschelt, "Partisan Competition and Welfare State Retrenchment: When Do Politicians Choose Unpopular Policies?" in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001). 34 Paul Pierson and R. Kent Weaver, "Imposing Losses in Pension Policy," in Do Institutions Matter? ed. R. Kent Weaver and Bert A. Rockman (Washington, DC: Brookings Institution, 1993); Bingham G. Powell and Guy D. Whitten, "A Cross-National Analysis of Economic Voting: Taking Account of the Political Context," American Journal of Political Science 37, no. 2 (1993). 35 Jonah D. Levy, "Vice into Virtue? Progressive Politics and Welfare Reform in Continental Europe," Politics & Society 27, no. 2 (1999); John Myles and Paul Pierson, "The Comparative Political Economy of Pension Reform," in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001).

25

voters, they also have an impact on the magnitude and type of losses that the government

decides to enact. For example, if public opinion is very strongly in favor of public health

insurance, or if the party system is dominated by parties that defend the welfare state

through refinancing, the potential for being blamed for retrenchment or restructuring

would be very high. In addition, governments may be reluctant to propose reforms that

would lead to a restructuring of the health care system.36

The blame-attracting decisions by governments are diverse and vary across

countries as well as across policy fields. For example, for the field of pension policy, R.

Kent Weaver has developed an inventory of loss-imposing decisions which includes

measures such as increasing payroll taxes, raising the retirement age and eliminating

universal pension tiers. In addition, Weaver classifies these strategies according to three

types of reforms that are commonly used in welfare state studies: refinancing,

retrenchment and restructuring.37 What is the relationship between these three types and

the magnitude of blame attraction? Refinancing is increasingly seen as not blame-free.

Several scholars disagree with Pierson’s argument that refinancing attracts little blame.38

Korpi and Palme, for example, argue that voters’ negativity bias plays a role when these

are “... asked to give up money from their own pocketbooks in return for future, often less

concrete benefits”.39 In addition, there seems to be a growing consensus that

36 A situation like this exists in Canadian health care reform. 37 R. Kent Weaver, "Cutting Old-Age Pensions," in The Government Taketh Away, ed. Leslie A. Pal and R. Kent Weaver (Washington, DC: Georgetown University Press, 2003), Table 2-1. 38 Philip Manow and Thomas Plümper, "The Relative Costs of Fiscal Policy Instruments," 3. 39 Walter Korpi and Joakim Palme, "New Politics and Class Politics in the Context of Austerity and Globalization: Welfare State Regress in 18 Countries, 1975-95," American Political Science Review 97, no. 3 (2003): 430.

26

restructuring, which is often combined with retrenchment, does not necessarily attract

more blame than “pure” retrenchment since governments use new program tiers to

compensate for cutbacks.40 Nonetheless, scholars do not yet agree on the relative blame-

attracting capacities of these different reform types. Does retrenchment attract more

blame than refinancing? Does restructuring have less capacity to attract blame than

retrenchment? Several options exist to conceptualize the relationship between the types

of welfare state reform and the extent of blame-attraction. First, governments may attract

a similar amount of blame no matter what they do.41 Second, refinancing may have a low

blame-attracting capacity, retrenchment a medium one, and restructuring a high one.

Finally, refinancing may be associated with a low degree of blame-attraction, and

retrenchment and restructuring with a high degree. In light of the points discussed above,

I find the third one the most convincing conceptualization.

The blame-avoiding strategies of government parties are those introduced in the

previous section: collusion and cooperation (competition avoidance) and distribution and

discourse (mobilization avoidance). The blame-generating strategies of opposition

parties are the direct counterparts to these blame-avoiding strategies, with one exception.

Opposition parties are able to generate blame through strategic competition, defection

from a cross-partisan consensus and an alternate discourse, but they are unable to do so

by manipulating the distribution of cutbacks. Finally, the blame-attributing decisions are

40 David Natali and Martin Rhodes, "The 'New Politics' of the Bismarckian Welfare State: Pension Reforms in Continental Europe," European University Institute Working Paper SPS 2004/10, no. (2004). 41 Fritz W. Scharpf and Vivien Schmidt, "Conclusions," in Welfare and Work in the Open Economy: From Vulnerability to Competitiveness, ed. Fritz W. Scharpf and Vivien Schmidt (Oxford: Oxford University Press, 2000), 334.

27

the voting decisions of citizens. In response to the sequence of blame-attraction, blame

avoidance and blame-generation, voters may withdraw their support from the government

parties by voting against these in the next election (retribution/defeat), or continue to vote

for the parties in government (reelection).

Patterns of Blame Avoidance in German Pension Policy, 1989-2004

Since the electoral consequences of blame-attracting decisions varied over time,

as I will discuss further below, the development of German pension policy in the 1989-

2004 period provides a good opportunity for testing the following two hypotheses about

blame avoidance: first, collusion and cooperation are effective in avoiding blame, but

distribution and discourse are not effective; and second, collusion is as effective in

avoiding blame as cooperation. One issue to consider is whether or not the blame-

avoiding strategies employed by governments explain the variation in electoral

consequences in German pension policy. According to the model of blame avoidance that

I presented in the previous section, the explanation for the intertemporal variations in

electoral retribution could lie not only in the blame-avoiding strategies, but also in

variations in the blame-generating context, the blame-attracting decisions, or the blame-

generating strategies. Therefore, before I analyze the variations in blame-avoiding

strategies, I examine whether some of these other factors can be ruled out as potential

explanations.

Between 1989 and 2004, German governments enacted an unprecedented series

of pension reforms (see Appendix B). In total, more than 10 pension reforms were

passed, the majority of them after 1995. Since that year, Germany has seen a period of

28

“permanent pension reform” in which goverments adopted one reform in every year

(except in 2000), and sometimes even two reforms in a single year (in 2001 and 2004).

Moreover, the reform process did not stop in 2004. Even though major reforms were

enacted only last year, in spring 2005 the government’s key pension policy advisor called

for yet another reform.42

Not only was there a large number of pension reforms during the past 15 years,

there were also significant variations over time in the electoral punishment of

governments. The electoral impact of pension policy reform varied significantly in the

German case. There were four federal elections in this period: in 1990, 1994, 1998 and

2002. Since the next federal election will be held only in 2006, at this point we are able to

only speculate about the impact of the most recent pension reforms that were enacted in

2004. In the 1990 federal election, pension cutbacks were not a big issue. Even though

the reform enacted in the previous year included some retrenchment measures, it did not

generate much blame and did not lead to electoral retribution. In the 1990-1994

legislative period, the Christian Democratic/Liberal government did not propose another

refinancing/retrenchment reform. With the cooperation from the Social Democrats, it

expanded the pension system to the new federal states in the East. As a result, the issue of

pension cutbacks did not play a role in the 1994 federal election.

In the 1998 federal election, by contrast, the Kohl government witnessed one of

the few instances in which the pensions issue clearly contributed to its electoral defeat.

Just one year before the election, the Christian Democratic-Liberal government enacted

42 Manfred Schäfers, “Rürups Allgemeine Rententheorie”, Frankfurter Allgemeine Zeitung, March 30, 2005.

29

major across-the-board cutbacks of pension benefits. Even though there are no

individual-level analyses of this type of “economic voting”, election analyses strongly

suggest that pension retrenchment played a role in German voters’ decisions to throw the

government out of office.43 Perhaps the clearest indication was the Christian Democrats’

massive and surprising decline in support among German pensioners, who were one of

the Christian Democrats’ key constituencies from the 1950s to the 1990s. In previous

elections, even in those that the Christian Democratic Party lost, more than 50 percent of

pensioners voted for this party. The 1998 federal election changed this long-standing

pattern of support: many pensioners and older workers who were close to retirement no

longer saw the Christian Democrats as the “godfather” and protector of generous public

pensions.44 The impact of pension reforms on voting in the 2002 federal election were

different from that in both the 1990 and 1998 elections. Only one year before the

election, the Social Democratic/Green government passed a landmark reform that

included not only major retrenchment measures, but also a novel restructuring

component, which opened a path towards a partially privatized pension system. But even

though the potential for attracting blame was high, there was no electoral retribution: in

43 Herbert Kitschelt, "Partisan Competition and Welfare State Retrenchment: When Do Politicians Choose Unpopular Policies?" in The New Politics of the Welfare State, ed. Paul Pierson (Oxford: Oxford University Press, 2001), 295; Herbert Kitschelt, "Political-Economic Context and Partisan Strategies in German Federal Elections, 1990-2002," West European Politics 26, no. 4 (2003): 136. 44 Thomas Emmert, Matthias Jung, and Dieter Roth, "Das Ende einer Ära: Die Bundestagswahl vom 27. September 1998," in Wahlen und Wähler: Analysen aus Anlass der Bundestagswahl 1998, ed. Hans-Dieter Klingemann and Max Kaase (Opladen: Westdeutscher Verlag, 2001); Tim C. Werner, "Wählerverhalten bei der Bundestagswahl 2002 nach Geschlecht und Alter," Wirtschaft und Statistik, no. 3 (2003).

30

2002, the Social Democrats and Greens were reelected, albeit narrowly. The pensions

issue did not play a role in the 2002 federal election.45

Is it likely that the difference in governments’ blame-avoiding strategies did not

account for the observed variations in electoral retribution in German pension policy? I

argue that neither the blame-generating context nor the blame-attracting decisions can

account for these variations, and that blame-avoiding strategies were the key determinant.

First, changes in the blame-generating context are an unlikely explanation of these

patterns of reelection and retribution, since it remained largely constant in the 1989-2004

period. Most importantly, the competitive configuration of the party system did not

change between 1989 and 2004.46 The Free Democratic Party, which in the 1990s

reinvented itself as a market-liberal party, continues to be electorally insignificant in

comparison with the two major social-protectionist parties, the Christian Democrats and

the Social Democrats. In addition, public opinion changed little.47 The majority of

German voters did not move towards market-liberal positions during the 1990s. The

welfare state remains very popular, especially in the new federal states in the East.

Finally, the institutional conditions that influenced the potential for attracting blame and

45 Forschungsgruppe Wahlen, Bundestagswahl 22. September 2002 (Mannheim: Forschungsgruppe Wahlen, 2002). 46 Herbert Kitschelt, "Political-Economic Context and Partisan Strategies in German Federal Elections, 1990-2002," West European Politics 26, no. 4 (2003); Stephen Padgett, "Welfare Bias in the Party System: A Neo-Downsian Explanation for Gridlock in Economic Reform," German Politics 13, no. 2 (2004). 47 Dieter Fuchs and Edeltraud Roller, "Demokratie und Sozialstaat," in Datenreport 2002, ed. Statistisches Bundesamt (Bonn: Bundeszentrale für politische Bildung, 2002); Edeltraud Roller, "Shrinking the Welfare State: Citizens' Attitudes towards Cuts in Social Spending in Germany in the 1990s," German Politics 8, no. 1 (1999).

31

parties’ choices of blame-avoiding strategies were the same: Germany continues to have

both a decentralized system of government and restrictive pension policy legacies.

Table 6. Refinancing, Retrenchment and Restructuring in German Pension Policy, 1989-2004 Reform Law Refinancing Retrenchment Restructuring 1989/91 Pension Reform Act 1992 X X 1996 Growth & Empl. Promotion Act X X 1997 Pension Reform Act 1999 X X 1998 Social Insurance Correction Act X 1999 Budget Consolidation Act X 2001 Old-Age Provision Act X X X 2001 Reserve Fund Act X 2002 Contribution Stabilization Act X 2003 Social Insurance Reform Act X X 2004 I Sustainability Act X X 2004 II Retirement Income Act X X

Second, changes in the blame-attracting decisions cannot account for the

observed differences in the aggregate blame-attributing behavior of voters, especially the

absence of retribution in the most recent federal election, because the potential for blame

increased over time. During the past 15 years, German governments moved increasingly

from a mix of refinancing and retrenchment to a combination of restructuring and

retrenchment (see Table 6 and Appendix B for details). This change in the policy mix

signalled a shift from preserving generous, income-replacing public pensions to

transforming the traditional pay-as-you-go system. The Restructuring/retrenchment

combination should attract much more blame than the refinancing/retrenchment one. Yet,

the exact opposite occurred: the Christian Democratic-liberal government was punished

for two refinancing/retrenchment acts in the 1998 election, but the Social Democratic-

Green government escaped punishment for the first restructuring/retrenchment reform in

32

German pension policy, and was reelected in the 2002 election. To conclude, since the

blame-attracting potential was higher in 2002 than in 1998, it is unlikely that the type of

blame-attracting decisions was the cause of major variations in the electoral

consequences of benefit cutbacks.

Table 7. Effects of Blame-Avoiding Strategies in German Pension Policy, 1989-2004

Blame-Avoiding Strategies

Blame-Attributing Decisions Collusion Cooperation Distribution Discourse

1989/91 Reelection X X X X 1996 Defeat X X 1997 Defeat X X 1998 Reelection X X 1999 Reelection X 2001 Reelection X X X 2002 Reelection X X 2003 —* X X 2004 I —* X X X 2004 II —* X X X *Next federal election will be held in 2006.

Since neither the blame-generating context nor the blame-attracting decisions

were the causes of retribution or reelection in German pension policy, I argue the blame-

avoiding strategies explain the differences in outcomes. But does the empirical evidence

support the hypothesis that distributional and discursive strategies alone are not sufficient

to secure a government’s reelection? Does it show that collusion is an alternative to

cooperation in avoiding blame? To answer these questions, Table 7 provides a

breakdown of the blame-avoiding strategies employed by German governments in

reforming pensions (see Appendix B for details). It shows that distributive and discursive

strategies were used in almost every case of pension reform, including in the 1996 and

1997 cases, which contributed to the defeat of the Christian Democratic/Liberal

government in the 1998 federal election. The evidence thus supports the hypothesis that

33

the effectiveness of voter-oriented strategies, or “mobilization avoidance”, is limited.

The German case of pension policy reform shows that these strategies do not prevent

electoral retribution.48

Table 7 further shows that even though cooperative strategies were effective in

the late 1980s, they do not seem to be the only means of escaping electoral punishment. If

the period of investigation was restricted to the 1989, 1996 and 1997 pension reforms, the

conclusion would be that cooperation is a strict requirement for avoiding retribution: in

1990, the Christian Democratic government was reelected since it cooperated with the

Social Democrats in pension reform; but in 1996 and 1997, the Christian Democrats

suffered a major defeat in the 1998 federal election because it did not ensure cross-

partisan cooperation. However, if the pension reforms enacted during the past five years

are taken into account, the pattern changes dramatically, putting into doubt the notion of a

grand coalition imperative: after the cross-partisan cooperation in pensions between the

Christian Democrats and the Social Democrats broke down in the mid-1990s, all pension

reforms—six in total—were passed with the votes of the governing parties, but against

opposition from the Christian Democrats. Nonetheless, the governing Social Democrats

and Greens were not thrown out of office in 2002.

This pattern provides evidence in support of the hypothesis that building a grand

coalition is not a necessary requirement for enacting welfare state retrenchment without

retribution. In addition, it suggests that there are alternative strategies that effectively

48 If German governments had failed to use any blame-avoiding strategies in cases in which they were defeated, distributive and discoursive strategies could potentially account for the observed differences in voters’ blame-attributing behavior. However, as Table 7 shows, this was not the case in pension policy reform in Germany.

34

minimize the risk of electoral retribution. However, it should be noted that it does not

suggest that cooperation is an ineffective blame-avoiding strategy.

Table 8. Configuration of Policy Alternatives in German Pension Policy, 1989-2004 Reform Christian Democrats Social Democrats Configuration1989 Refinancing Refinancing Collusion 1996 Retrenchment Refinancing Competition 1997 Retrenchment Refinancing Competition 1998 Retrenchment Refinancing Competition 1999 Retrenchment Restructuring Competition 2001 Restructuring Restructuring Collusion 2002 Restructuring Restructuring Collusion 2003 Restructuring Restructuring Collusion 2004 Restructuring Restructuring Collusion 2004 II Restructuring Restructuring Collusion *Party in government is underlined.

The conclusion that discourse, distribution and cooperation are unable to explain

the variations in voters’ blame-attributing behavior leaves open the question whether or

not collusion is able to explain the patterns of reelection and retribution in German

pension policy. Did party competition lead to the Kohl government’s electoral defeat in

1998, and did party collusion secure the Schröder government’s reelection in 2002? To

answer these questions, I analyzed the Christian Democrats and Social Democrats’ party

programs in pension policy, categorized their policy alternatives as refinancing,

retrenchment or restructuring, and looked at the convergence or divergence of these

alternatives (see Table 8).49 Table 8 shows that between 1989 and 2004, there were two

periods of collusion and one period of competition, each of which lasted about five years.

49 Party collusion exists if the policy alternatives belong to the same category, and party competition if the latter fall into different categories. For details on the development of the pension policy programs of the CDU/CSU and the SPD during the past decade, see Martin Hering, Rough Transition: Institutional Change in Germany's "Frozen" Welfare State (Ph.D. Dissertation: Johns Hopkins University, 2004), Ch. 6.

35

Specifically, in 1996, Germany’s two major parties switched from collusion to

competition, and in 2001, they switched back from competition to collusion. However,

the content of party collusion changed dramatically: before the mid-1990s, the Christian

Democrats and the Social Democrats stood for refinancing public pensions, but in the

present decade, both promote the restructuring of the pay-as-you-go pension system.

Table 7 shows that the convergence or divergence of these parties’ pension policy

alternatives explains most of the variations in voters’ blame-attributing behavior: when

the CDU/CSU and SPD offered the same policy alternatives, voters reelected the

government (in 1990, 1994 and 2002); but when they competed about different

alternatives, voters threw the government out of office (in 1998). The pension reform of

1999 is the only case that deviates from this pattern.50 In 1999, the Social Democrats

competed against the Christian Democrats about the direction of pension policy. The

government advocated pension restructuring, but the opposition still stood for saving the

existing system through retrenchment (see Table 8). Despite of these differences, the

Social Democrats and Greens returned to office in 2002. Three factors could explain this

deviant case. First, the Christian Democrats’ advocacy of “pure” retrenchment was short-

lived: only two years later, the CDU/CSU endorsed the restructuring of the pension

system. Second, the reform of 1999 was enacted three years before the next federal

election, which reduced the risk of electoral punishment. Finally, the Christian Democrats

were substantially weakened by a major party financing scandal that was discovered

shortly after the 1999 pension reform had been passed.

50 Since the 1998 pension reform did not include any retrenchment measures, it does not deviate from this pattern.

36

To conclude, the analysis of the impact of the configuration of policy alternatives

on electoral retribution shows not only that party collusion plays an important role in the

avoidance of blame, it also shows that the impact of collusion is largely independent from

that of cooperation. Even though the Christian Democrats and the Social Democrats

stood for similar restructuring alternatives in the period between 2001 and 2004, they did

not cooperate in enacting the most recent series of pension reform laws. Yet, despite of

this absence of cross-partisan cooperation, retribution from voters did not follow.51

Conclusion

My analysis of the more than 10 pension reforms that were enacted in Germany

during the past 15 years supports the hypotheses about the effectiveness of blame-

avoiding strategies that I formulated in this paper. First, there is evidence that party-

oriented strategies are effective in avoiding blame, but that voter-oriented strategies are

not. Second, there is also evidence that party collusion is an effective blame-avoiding

strategy and thus an alternative to cross-partisan cooperation. These findings shed light

on the controversy about the nature of the electoral imperative: do governments face a

blame avoidance imperative or a grand coalition imperative? This paper showed that the

answer lies in the middle: governments face a competition avoidance imperative. Since

not all blame-avoiding strategies are equal in terms of their effectiveness, governments

cannot rely on a range of strategies as broad as the notion of a blame avoidance

51 It should be noted that, on the basis of the available evidence from Germany, it is not possible to draw any conclusions about the independent impact of cooperation. Does cooperation ensure blame avoidance even if the major parties’ policy alternatives are different? In the 1989-2004, there was no case in which the CDU/CSU and the SPD cooperated with one another, but did not collude.

37

imperative implies; but since cross-partisan cooperation is not the only blame-avoiding

strategy that is effective in avoiding electoral retribution, governments are not as

restricted in their choice of strategies as the idea of a grand coalition imperative suggests.

Both cooperation and collusion enable governments to avoid competition about

retrenchment and restructuring, and thus minimize the risk of blame for benefit cutbacks.

The analysis presented in this paper raises a number of questions for further

research. First, why do opposition parties cooperate or collude with the parties in

government? Put differently, what determines the opposition’s blame-generating

strategies? A preliminary answer is that there are strategic and substantive causes of

collusive and cooperative behavior. As Bartolini argued, strategic incentives to collude

arise out of a situation of perfect competition in which the competitors for office have

similar chances of winning.52 In addition, parties collude when intra-party politics

produce a change and convergence of policy programs.53 The second question is the

following: which are the causal mechanisms through which party collusion produces

effective blame avoidance? This paper discussed only the direct effect: the fact that

voters have no policy alternative to turn to in elections. However, party collusion also has

several indirect effects that need to be investigated further: collusion creates favorable

conditions for cross-partisan cooperation (since parties are more likely to cooperate if

52 Stefano Bartolini, "Collusion, Competition and Democracy: Part II," Journal of Theoretical Politics 12, no. 1 (2000): 34-35. 53 Martin Hering, Rough Transition: Institutional Change in Germany's "Frozen" Welfare State (Ph.D. Dissertation: Johns Hopkins University, 2004), Ch. 6. Based on these factors, it seems very unlikely that strong party competition about the overall direction of pension reform will re-emerge in Germany in the 2006 federal election. Since there is a relatively solid “restructuring consensus” between the Social Democrats and the Christian Democrats, it is unlikely that the major pension reforms enacted by the Schröder government in the present legislative period will become a contested issue in next year’s election.

38

they share the same policy goals), for distributive strategies (since voters value quid pro

quos more if they have no alternative to turn to), and for discursive strategies (since

voters are more easily convinced by discourse if parties offer similar arguments and

solutions). Finally, an analysis of these indirect causal mechanisms, especially of the

impact of collusion on discourse and voters’ preferences,54 would improve and expand

the existing models. The study of blame avoidance would focus not only on the sequence

that links the blame-generating context to electoral outcomes, it would also look at the

feedback effects: the impact of retrenchment and restructuring reforms and party

collusion on voters’ opinions and other contextual factors that start and reinforce the

sequence of blame generation, blame avoidance, and electoral retribution.

54 On to the possible effects of party collusion on policy discourse and public opinion, see James N. Druckman, "On the Limits of Framing Effects: Who Can Frame?" Journal of Politics 63, no. 4 (2001); Suzanne Mettler and Joe Soss, "The Consequences of Public Policy for Democratic Citizenship: Bridging Policy Studies and Mass Politics," Perspectives on Politics 2, no. 1 (2004); John Zaller, The Nature and Origins of Mass Opinion (Cambridge: Cambridge University Press, 1991).

Appendix A. A Model of Blame Avoidance in Welfare State Reform

Blame-Generating

Context

Blame-Attracting Decisions

Blame-Avoiding Strategies

Blame-Generating Strategies

Blame-Attributing Decisions

Public Opinion

Party System

Political

Institutions

Policy Legacies

Refinancing

Retrenchment

Restructuring

Collusion

Cooperation

Distribution

Discourse

Competition

Defection

Discourse

Retribution

Reelection

Appendix B. Blame-Attracting Decisions and Blame-Avoiding Strategies in German Pension Policy, 1989-2004 Reform Act Type of Reform Blame-Attracting Decisions Blame-Avoiding Strategies

Pension Reform Act 1992 (1989)/ Pension System Transfer Act (1991)

Refinancing Contribution rate increases Increases of general government revenue

Immediate increase of general government revenue

Collusion Refinancing alternatives offered by all major parties Cooperation Grand coalition for refinancing Discourse Prevention of cutbacks in the level of pension benefits Gradual phasing-in of contribution rate increases Automatic increases of contribution rates and general revenue transfers No increase of general taxes

Retrenchment Retirement age increases Benefit cutbacks

Reduction of wage indexation in pension benefits Increase of the retirement age from 60/63 years to 65 years (for the unemployed and for women) Reduction of education credits from 13 to 7 years

Cooperation Grand coalition for retrenchment Distribution Targeting of retirement age increase at politically weak groups (unemployed) Discourse Delay of benefit cutbacks after the next election (effective in 1992) Gradual phase-in of retirement age increases (over an 11 year-period) Long delay of retirement age increases (by 11 years)

Restructuring — —

41

Appendix B. (continued) Reform Act Type of Reform Blame-Attracting Decisions Blame-Avoiding Strategies

Growth and Employment Promotion Act (1996)

Refinancing Contribution rate increases Use of reserves

Immediate increase of the contribution rate from 19.2 to 20.3 percent (1997)

Discourse Reduction of the reserve fund

Retrenchment Retirement age increases Service cutbacks

Immediate and fast phasing-in of retirement age increases, just before the next election Reduction of education credits (from 7 to 3 years)

Distribution Targeting of retirement age increase at politically weak groups (unemployed) Targeting of service cutbacks increase at politically weak groups (disabled) Discourse Delay of retirement age increases after the next election (women and long-term contributors)

Restructuring — —

Pension Reform Act 1999 (1997)

Refinancing Increases of general government revenues

Immediate increase of the VAT (1998), for the specific purpose of funding pensions

Cooperation Grand coalition for refinancing Discourse Prevention of contribution rate rate increase in the short-term

Retrenchment Benefit cutbacks Retirement age increases

Across-the-board cutback of the benefit level from 70 to 64 percent, without grandfathering current retirees or near-retirees Short phase-in period for benefit cutbacks

Distribution Targeting of retirement age increase at politically weak groups (disabled, unemployed) Discourse Delay of benefit cutbacks after the next election (1999) Disguise of benefit cutbacks by manipulating indexation formula (“demographic factor”) Delay of retirement age increases after the next election (2000 and 2012) Gradual phase-in of retirement age increases (disabled)

Restructuring — —

42

Appendix B. (continued) Reform Act Type of Reform Blame-Attracting Decisions Blame-Avoiding Strategies

Social Insurance Correction Act (1998)

Refinancing Increases of general government revenues Inclusion of previously exempted groups

Immediate introduction of an “eco tax” (1999), for the specific purpose of funding pensions Immediate introduction of employer contributions for part-time employees

Distribution Immediate reduction of the contribution rate from 20.3 to 19.5 percent Immediate reversal of benefit cuts Restriction of payroll tax liability to the employers of part-time employees Discourse Gradual phasing in of “eco tax” (1999-2003)

Retrenchment — —

Restructuring — —

Budget Consolidation Act (1999)

Refinancing — —

Retrenchment Benefit cutbacks

Immediate across-the-board reduction of the benefit level from 70 to 67 percent before the next election, without manipulation of indexation formula

Distribution Immediate reduction of the contribution rate from 19.5 to 19.1 percent Targeting of some benefit cutbacks on politically weak groups (unemployed)

Restructuring — —

43

Appendix B. (continued) Reform Act Type of Reform Blame-Attracting Decisions Blame-Avoiding Strategies

Old-Age Provision Act (2001)

Refinancing Use of reserves

— Discourse Reduction of the reserve fund

Retrenchment Benefit cutbacks

Across-the-board cutback of the benefit level from 70 to 64 percent, without grandfathering of current retirees and the near-retirees Short phase-in period for benefit cutbacks

Collusion Restructuring alternatives offered by all major parties Distribution Prevention of contribution rate increase in the short-term Long-term stabilization of the contribution rate at 20 percent (2020) Compensation for benefit cuts by creating private pension tier Compensation for benefit cuts by introducing a mean-tested basic pension for low-income employees Discourse Prevention of contribution rate rate increase in the short-term Disguise of benefit cuts by manipulating the definition of the benefit level

Restructuring Addition of tiers

Collusion Restructuring alternatives offered by all major parties Distribution Large tax subsidies and direct grants for private pension contributions Discourse No obligation to make contributions to private pension tier

Reserve Fund Act (2001)

Refinancing Use of reserves

— Distribution Prevention of contribution rate rate increase in the short-term Discourse Reduction of the reserve fund

Retrenchment — —

Restructuring — —

44

Appendix B. (continued) Reform Act Type of Reform Blame-Attracting Decisions Blame-Avoiding Strategies

Contribution Stabilization Act (2002)

Refinancing Contribution rate increases Use of reserves

Immediate increase of the contribution rate from 19.1 to 19.5 percent (2003) Increase of the income level up to which contributions are payable

Distribution Targeting of contribution increases on higher-income employees Discourse Reduction of the reserve fund

Retrenchment — —

Restructuring — —

Social Insurance Reform Act (2003)

Refinancing Use of reserves

— Discourse Reduction of the reserve fund

Retrenchment Benefit cutbacks

Immediate across-the-board reduction of the benefit level (2004), and thus before the next election (2006)

Collusion Restructuring alternatives offered by all major parties Distribution Prevention of contribution rate increase in the short-term Discourse Partial disguise of benefit cuts by doubling the long-term care contributions paid by pensioners

Restructuring — —

45

Appendix B. (continued) Reform Act Type of Reform Blame-Attracting Decisions Blame-Avoiding Strategies

Sustainability Act (2004)

Refinancing — —

Retrenchment Benefit cutbacks Retirement age increase

Across-the-board reduction of the benefit level from 67 percent to 59 percent, starting immediately and before the next election Immediate and fast phasing-in of retirement age increases before the next election Abolition of education credits

Collusion Restructuring alternatives offered by all major parties Distribution Prevention of contribution rate increase in the short-term Discourse Disguise of benefit cutbacks by manipulating indexation formula (“sustainability factor”) Disguise of benefit cuts by manipulating the definition of the benefit level Prevention of absolute cutbacks in pension benefits Targeting of retirement age increase at politically weak groups (unemployed) Delay of retirement age increases Early retirement age increase for the unemployed from 60 to 63 years (phased in between 2006 and 2008) Postponement of decision on retirement age increase from 65 to 67 years until 2010

Restructuring — —

46

Appendix B. (continued) Reform Act Type of Reform Blame-Attracting Decisions Blame-Avoiding Strategies

Retirement Income Act (2004)

Refinancing — —

Retrenchment Benefit cutbacks

Across-the-board reduction of the benefit level from 67 percent to 52 percent, starting immediately (2005), and thus before the next election (2006)

Collusion Restructuring alternatives offered by all major parties Distribution Compensation for benefit cuts by expanding private pension tier Discourse Disguise of benefit cuts by manipulating the definition of the benefit level Gradual phasing-in of taxation of pensions (2005-2040)

Restructuring Expansion of new tier

— Collusion Restructuring alternatives offered by all major parties Distribution Increase of tax subsidies for private pension contributions Discourse No obligation to make contributions to private pension tier

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