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 8: Conclusion

Frank Fagan

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


The choice of temporary versus permanent legislation is strategic. This is a reflection of the interdependencies between the legislature and citizens, the legislature and a lobby, and a current legislature and a future legislature. In each relationship, the legislature’s decision to legislate temporarily or permanently depends on the action chosen by the other group. The strategic problem arises because the group’s choice of action is not independent; it is affected by the legislature’s choice of timing rule. Throughout this book, an action chosen by citizens, a lobby, or a future legislature has been conceptualized as a potential benefit that accrues to the legislature. It has taken the form of increased citizen compliance, revealed lobby information, and reduced political opponent popularity. In exchange for the benefit, the legislature pays a cost, i.e. the transactions cost of either temporary or permanent legislation. Here lies the opportunity for the legislature. Because each type of legislation allocates costs to different points in time, the legislature can wait for something favorable to happen before incurring the full cost of the legislation. In the case of an interaction with citizens, the legislature can wait for the law to manifest an update in normative behavior or citizen organization. In the case of an interaction with a lobby, the legislature can wait for the law to induce information revelation. And in the case of an interaction with a future legislature, the current legislature can wait for the law to reduce an opponent’s popularity.

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