1 Incentive problems are inherent in the political process because of the separation of power and responsibility. That is, political actors do not bear the major responsibility for the outcomes of their decisions. The incentive problem arises whether decision-makers are elected or appointed. For the elected official, the next election is a primary concern and actions taken are heavily influenced by re-election considerations. Indeed, political incumbents have manipulated Social Security payments, agricultural price supports, and other government programs in attempts to affect upcoming elections.
Politicians generally favor policies where the benefits are immediate and the costs are delayed.
This short-run bias in the political process has contributed to the growth of government deficits in the United States during the past fifteen years. Budget-balancing is politically unpopular because the costs to the public are immediate but the benefits occur in the long run when current legislators may be out of office. Non-elected public officials also have incentives to use the regulatory process to their own advantage. There is no single goal of bureaucrats, but salary, public reputation, and patronage are all associated with size of budget. Thus, it is no accident that government agencies once established tend to grow regardless of changes in economic conditions.