Does Congressional experience lead to US governors securing higher state funding?

Harry Pickard - Research Associate, Department of Economics, University of Sheffield

The Democrat’s priority will be to retake Congress, but Trump and the Republicans face a test alongside the vote for the House: the gubernatorial elections – which occur on the same day as the mid-term elections. There are 36 state governors up for election, 26 of which are Republicans. In the US federal architecture, the governors play a vital role in the political system. The governor’s main function is to improve their state’s social and economic performance. However, in times of growing polarisation between the two parties, it is becoming much harder to have uniform policy at the federal and state level. Current Democratic governors are leading the way in the ‘resistance’ against Trump. For instance, Jerry Brown, governor of California, has opposed Trump on immigration and climate change, most notably. The states rely on the federal government and president for funds, grants and various loans to support the expenditure and revenue streams of each state, so taking such a combative stance could spell danger.

This scenario poses a question: what factors contribute to a given state’s federal transfer receipts? More specifically, what can a governor do to capture more of these federal funds to improve their state’s outcomes?

In a recent working paper, I use data on the 48 contiguous states from 1950 – 2008 to investigate how the federal transfers to a state are affected by the governor’s political experience. I focus primarily on the role of Congressional experience. That is, having served in either the House of Representatives or Senate, prior to taking office as state governor. In this time frame there are 61 governors with Congressional experience – 30 Republicans, 30 Democrats and 1 Independent.

Previous research on politician’s career backgrounds often uses more general background classifications (for example, politician or entrepreneur in Dreher et al. (2009)). Generally, the earlier work finds no effect for a politician having a political background on growth in the area they represent or enacting reform policies. One reason for this may be that their definition of career is too aggregated. By focusing on the US federal-state context, it allows me to provide a novel insight into a specific type of political career. I manually assembled a new dataset on governor’s Congressional experience from their profiles on the National Governors Association webpage. It is widely accepted that co-partisans  favour each other with redistribution from higher to lower tiers of government (co-partisan refers to when the state governor and president are both from the same party). I, however, extend the work on the role that the receiving politicians play as a determinant of sub-national transfers (Veiga and Pinho, 2007).

The main finding shows that when a state is led by a governor who has previously served as a member of Congress, they increase the growth rate of federal transfers to their state, on average, by 0.8 percentage points. For the fictive average state, the growth rate is 4.1 percentage points, so this effect is quite sizeable. To ensure this relationship is in fact a causal one rather than a correlative one, I conduct some econometric checks. I find no evidence that there is an increase in transfers in the years before the experienced governor enters office, similarly there is no effect after the experienced governor has left office. I also show that experienced governors are not more likely to be elected, thus there is no selection concerns, which would bias the estimate. I conduct placebo tests using a technique that randomizes ‘treatment’ status and, as expected, there is no effect. I also find the same positive effect for Congressional experience when using a different measure of transfers based on the state’s share of total transfers.

The explanation behind this causal relationship is quite straightforward. Governors, who have spent time in Congress, will have been able to hone and build their political capital working on fiscal and legal agendas. This technical experience will have provided insights into how the political machine functions and will develop skills in communication and cooperation. Moreover, spending time in the national legislature may have provided insights into the useful of federal funds for governors. Given that the federal budget is debated in both the House of Representatives and Senate, as well as passing through numerous committees and sub-committees, all Congress members will be acutely aware of state funding.

My study also sheds some light on which governors may be behind this relationship. I find that it is actually the experienced Republican governors that drive this effect. This is surprising as we typically associate right-wing politicians with having smaller governments. The explanation for this is that Republicans, who are ideologically constrained in increasing state expenditure, seek out more federal transfers as an alternative by using their skills gained during Congressional service. Democrats do not need to lobby for more funds to the same extent as they are less constrained in increasing their state’s expenditures.

The findings here should not necessarily be used to dismiss the benefits of having a more experienced governor. A career background in politics is very likely beneficial to one’s current human capital, political skill and, in turn, state outcomes. Instead, the impact of this research should be to raise awareness about the shortcomings of a political structure that allows, and encourages, lobbying from external recipients. The findings are particularly interesting when we consider them in light of the looming elections. A wave of new Democratic governors would spell trouble for Trump. Even more so if these new governors have political experience as my research shows that these Democrats would be able to capture more federal money to fund their resistance policies. We will have to pay careful attention to the gubernatorial election in New Mexico, where the Democratic candidate, Congresswoman Michelle Lujan Grisham, is ahead in the polls and will likely flip the state back to Democratic control.