Law and the Limits of Government

Law and the Limits of Government

Temporary versus Permanent Legislation

Frank Fagan

Why do legislatures pass laws that automatically expire? Why are so many tax cuts sunset? In this first book-length treatment of those questions, the author explains that legislatures pass laws temporarily in order to reduce opposition from the citizenry, to increase the level of information revealed by lobbies, and to externalize the political costs of changing the tax code on to future legislatures. This book provides a careful analysis which does not normatively prescribe either permanent or temporary legislation in every instance, but rather specifies the conditions for which either permanent or temporary legislation would maximize social welfare.

Chapter 4: Information and commitment

Frank Fagan

Subjects: economics and finance, law and economics, law - academic, constitutional and administrative law, law and economics


In the previous chapters we examined the use of temporary legislation during strategic interaction between the legislature and citizens. We now turn to the use of temporary legislation between the legislature and interest groups. While the public can be considered an interest group, the distinction we draw by definition is that citizen behavior is malleable through residual effects like legal expression, while interest group behavior is not. Interest group behavior can certainly reflect normative updates due to an expressive effect, but this chapter focuses on the strategic problem when their behavior is fixed and independent of those effects. The interaction we examine falls under the general heading of asymmetric information. Interest groups or their lobbies possess information that may influence a legislative outcome, and they must decide whether or not to reveal it. This problem has been studied extensively, but the option to legislate temporarily or permanently is a nuance that has received little attention.

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