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(1)NÚMERO 241. ANA CAROLINA GARRIGA Y JUAN J. NEGRI MALBRÁN. “Unite and Reign”: When do Presidents Ask for Delegated Decree Authority?. Importante Los Documentos de Trabajo del CIDE son una entre las comunidades académicas. A partir avances de investigación se busca que los retroalimentación de sus pares nacionales temprano de la investigación.. herramienta para fomentar la discusión de la difusión, en este formato, de los autores puedan recibir comentarios y e internacionales en un estado aún. De acuerdo con esta práctica internacional congruente con el trabajo académico contemporáneo, muchos de estos documentos buscan convertirse posteriormente en una publicación formal, como libro, capítulo de libro o artículo en revista especializada.. NOVIEMBRE 2012. www.cide.edu.

(2) D.R. © 2012, Centro de Investigación y Docencia Económicas A.C. Carretera México Toluca 3655, Col. Lomas de Santa Fe, 01210, Álvaro Obregón, México DF, México. www.cide.edu Dirección de Publicaciones [email protected] Tel. 5081 4003.

(3) Acknowledgements Paper prepared for the delivery at the 2012 Annual APSA Meeting. New Orleans, August 30-September 2. Previous versions of this paper were presented at the 2007 Annual Conference of the Southern Political Science Association (New Orleans, January 3-6, 2007), and at the 65th Midwest Political Science Association Conference (Chicago, April 1215, 2007). This is part of a work in progress. Any suggestion is very much appreciated. The authors thank Scott Morgenstem and Gilles Serra for their thoughtful comments, and Ludwing van Bedolla for his research assistance. All errors and ambiguities remain our responsibility..

(4) Abstract Why do presidents ask for delegated decree authority (DDA) when they already have a majority in Congress that will allow their legislation to pass? This paradox has not been addressed yet, despite the fact that executives’ demands for legislative special powers from the Congress are a common feature in Latin American politics. The literature suggests presidents demand DDA to overcome gridlock and stalemate. However, presidents demand legislative delegations in situations other than gridlock and stalemate. We argue that presidents ask for DDA when environmental factors give them the opportunity to generate audience costs for the Congress. Our explanation has implications not only about the timing (when presidents ask for DDA), but also about the scope of the delegation. We derive expectations from a formal model. The preliminary analysis of the cases of Argentina, Perú and Venezuela provides evidence supporting empirical implications of our theory.. Resumen ¿Por qué los presidentes solicitan la delegación de autoridad para emitir decretos (delegated decree authority o DDA) cuando ya tienen mayorías legislativas que les permitirían aprobar cualquier proyecto de legislación? Esta paradoja no ha sido analizada aún, a pesar de que las demandas de los ejecutivos de poderes legislativos especiales es una característica común en la política latinoamericana. La literatura sugiere que los presidentes piden DDA para superar situaciones de estancamiento o bloqueos en la toma de decisión. Sin embargo, los presidentes solicitan delegaciones legislativas no sólo en situaciones de estancamiento o bloqueos en la toma de decisión. Los autores sostienen que los presidentes piden DDA cuando factores contextuales les dan la oportunidad de generar costos de audiencia al Congreso. Esta explicación tiene implicaciones no sólo sobre el timing (cuándo los presidentes piden DDA) sino también sobre la amplitud de la delegación legislativa. Las expectativas se derivan de un modelo formal. El análisis preliminar de los casos de Argentina, Perú y Venezuela proporciona evidencia que apoya las implicaciones empíricas de la teoría..

(5) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. Introduction When do presidents ask for delegated decree authority ( DDA) and what explains the extent of the delegation they receive? These important questions have not been addressed yet, despite that executives’ demands for special legislative powers from the Congress (DDA) are not uncommon in presidential systems. The literature suggests that gridlock and stalemate cause president’s demand for DDA. However, presidents demand legislative delegations in situations other than gridlock and stalemate. Others suggest that presidents use DDA to overcome an opposing legislature. However, presidents ask for decree power when they have legislative majorities that would allow them to pass ordinary legislation. We argue that presidents ask for DDA when the political context gives them the opportunity to generate audience costs for the Congress. Our explanation has implications not only about the timing, but also about the scope of the delegation. Our findings suggest that the request for DDA is not related to the need of overcoming a hostile Congress or to solve gridlocks, but to difficult times. In addition, Congress is not willing to appear as blocking necessary reforms. This paper proceeds as follows: The second section explores the literature on delegation and on DDA. The third section presents a formal explanation for DDA. We present a simple model of bargaining “behind closed doors” and we explain the necessity of introducing audience costs in the Congress utility function to account for DDA. Then we derive some empirical implications of the proposed model regarding the scope of delegation. In the fourth section, we describe the Argentine, Venezuelan and Peruvian instances of DDA and analyze those cases in the light of the proposed hypotheses. The fifth section concludes our paper summarizing the findings and describing the next steps for this project.. Literature review According to Carey and Shugart, decree is “the authority of the executive to establish law in lieu of action by the assembly” (Carey and Shugart 1998a:9; see also Shugart and Carey 1992). They distinguish between constitutional (CDA) and delegated (DDA) decree authority. CDA is “the constitutional authority to legislate by decree in specified policy areas, whereby the decree is law unless it is overturned by congress” (Shugart and Carey 1992:140).1 Decree authority is delegated (DDA) if assemblies “pass legislation giving the executive the authority to make new laws by decree –and thus to change policies explicitly set by (or outside the bounds of) existing statutes” in lieu of 1. As stipulated by the 1988Brazilian or the 1989 Chilean constitutions, for example. DIVISIÓN DE ESTUDIOS POLÍTICOS. 1.

(6) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. passing legislation allowing the executive to make decisions on the rules for implementation (Carey and Shugart 1998a:13). Legislative delegation to the executive has traditionally been a matter of concern for understanding presidential systems, 2 and it has been considered one of the variables to measure presidential powers (Johannsen and Nørgaard 2003; Metcalf 2000; Shugart and Carey 1992). In particular, some analysts consider decree authority as deleterious for the institutional health. For example, Linz (1990) believes that one of the perils of presidentialism is the temptation to overcome deadlock by resorting to decree authority, 3 whereas O’Donnell finds the unilateral use of decrees as evidencing authoritarian political cultures (O’Donnell 1994). Legislative delegation has been studied from two main perspectives, attributing delegation mainly to the assemblies’ or to the presidents’ initiative. On the one hand, some scholars study delegation focusing on the assembly — what Pereira et al. (2005) call “delegation theories.”4 The “delegation perspective” claims that the principal (the assembly) delegates institutional power to the agent (the president) expecting to receive benefits, and that legislators weight the cost of legislating directly against these benefits (Carey and Shugart 1998a; Epstein and O’Halloran 1999; Kiewiet and McCubbins 1991; McCubbins et al. 1987, 1989; Protsyk 2004). Said benefits could include information, flexibility in time budgeting, resolution of complex bargaining problems, expediting action on specific policies, overcoming gridlock, absence of responsibility for public policy (especially under critical circumstances), satisfying legislators’ electoral ambitions or showing support to a same party president (Carey and Shugart 1998a; Pereira et al. 2005). However, these explanations of legislative delegation focus on the legislators’ incentives for giving up their own prerogatives and not on the presidents’ decision of asking for decree authority. Studies focusing on the legislator suffer from a selection problem because, in the case of DDA, the initiative for legislative delegation corresponds to the president and not to the legislature: if the president does not ask for delegation, the assembly never gets to consider the delegation.5 A satisfactory explanation of this phenomenon 2 A sizable share of this literature deals with the events prompted by the economic depression. After the Roosevelt administration lead to the New Deal policies, some scholars pointed out that due to the “necessity of a political dynamism,” the “political ascendancy of the executive” amounts to a merger of the executive and legislative functions (Loewenstein 1938:567). Although his overall conclusion is that in the United States the expansion of the executive powers is not conducible to an authoritarian situation (contrary to the European experience at the time), Lowenstein agrees that the executive took over previous congressional attributions. 3 Shugart and Carey (1992) disregard this normative concern by arguing that legislative delegation does not have a substantial impact because presidents obtain such delegations only when the president’s and the Congress’s preferences are aligned. 4 Although Cheibub and Limongi consider that in both unilateral action and delegation theories the president has the initiative without even involving the Congress (2010:47), delegation theories tend to model delegation as a legislative majority’s decision. 5 On the contrary, Eaton interprets an Argentinean DDA (authorizing president Raul Alfonsín to reform the tax incentive system for regional development) as a Congress initiative (Eaton 2001). According to Eaton, Argentine. 2. CIDE.

(7) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. should account for the first stage, namely, the executive’s decision to demand the legislative delegation. On the other hand, some studies conceive decrees as one of presidents’ available instruments to pursue their legislative agenda. This approach is known as the “unilateral action theory” (Moe and Howell 1999; Pereira et al. 2005).6 The literature stresses two contexts in which presidents rely on decrees. First, presidents use decrees to avoid conflict-prone political environments, such as lack of congressional support, distance from congressional median voters (which affects the likelihood of being overturned) (Deering and Maltzman 1999), or when executive departments or agencies are more responsive to the Congress than to the president (e.g., Cooper 1986; Wigton 1996). This perspective, known as the “strategic model” of decree authority (Deering and Maltzman 1999; Krause and Cohen 1997), assumes unilateralism emanating from the president, who takes advantage of constitutional prerogatives to usurp Congress, even in “constitutionally provocative ways” (Cox and Morgenstern 2002). However, there is a series of objections to this approach. For example, presidents often need greater majorities in the Congress to obtain DDA than the ones they need to pass legislation. This implies that at least a tacit consent of the legislature is needed. Furthermore, Shugart and Carey (1992) find that presidents obtain DDA only when the president’s and the Congress’s preferences are aligned. Finally, in the United States, several studies find a positive association between legislative support (or unified government) and executive orders (Krause and Cohen 1997; Krause and Cohen 2000; Mayer 1999; Shull 1997), and suggest that executive orders are a means of reinforcing legislative majorities (Shull 1997:103). Second, others argue that presidents rely on decrees when they face a series of “circumstantial factors” (Cheibub and Limongi 2010:47), such as low presidential popularity (Deering and Maltzman 1999; Johnson and Crisp 2003), beginning of the presidential term (Krause and Cohen 1997; Mayer 1999), elections, etc. Compared with the developments in American politics literature and with the literature on delegation in general, research on DDA in comparative perspective is scant. In a comparative effort, Carey and Shugart compiled a volume dealing with executive decree authority, both delegated and Congress had the initiative to give DDA to president Alfonsín to overcome gridlock caused by a distributional conflict between provinces. A discussion about this particular is an empirical matter. Furthermore, even if we agreed with Eaton’s interpretation, this exceptional case would lay outside the scope of our model (the incentives for the Congress to propose delegation are not considered in this paper). 6 There is a sizable amount of literature dealing with delegation in the American case. However, this US based literature deals primarily with the delegation of powers from the Congress to bureaucratic agencies (Fiorina 1986; Hart 1942; Loewenstein 1938 [strictly on delegation to the executive]; Shull 1997; Stephenson 2006; Volden 2002a, 2002b) or between the federal government and sub national units (Culp 1933). These explanations rely on variables such as risk aversion and ideological consistency of the involved actors, the need to reinforce legislative victories and uncertainty about the implementation of the legislation. DIVISIÓN DE ESTUDIOS POLÍTICOS. 3.

(8) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. constitutional (Carey and Shugart 1998c). Some studies focus on the use of constitutional decree authority (e.g., Kubicek 1994; Negretto 2004; Pereira et al. 2008) and there are a few case studies of DDA (e.g., Conaghan and Malloy 1994; Rubio and Goretti 1996). It seems evident that variation across cases is not only a consequence of institutional design, but also of incentives to use of different legislative instruments: some presidents take more advantage of their authority than others do, and some legislatures delegate their powers more than others do. Although they identify bargaining problems and agency loses as the main reasons for delegation from the legislative branch to the executive one, the political process behind the delegation of decree authority remains underexplored. In this paper, we advance a general explanation of the process of delegation of decree authority. We conceive the process of delegation as a sequential game with complete information7 in which the president is the first mover. We show that the president will ask for DDA when she is able to impose audience costs on the Congress if the Congress refuses to delegate authority to her. We illustrate some implications of our model with the cases of Argentina, Perú and Venezuela.. The delegation game We assume that in normal circumstances, the assembly prefers to legislate over delegating legislative authority. This assumption is not arbitrary: legislators may want to legislate to serve their constituency, to promote their ideal policies, to get pork barrel, or to get personal political o economic benefits for their vote. We also assume that the president always prefers to legislate herself. By relying on decrees, the presidents can get the policy outcomes of her choice, without the obstacles imposed by the assembly. Even under unified government, the passage of legislation through the assembly implies delays, bargaining and eventual need for side payments, and uncertainty about the final outcome (Saiegh 2011). We first present a simple game (delegation “behind closed doors”) that shows the basic dynamics of the delegation process, and the need to take into account a third actor in the decision of the president to ask for DDA.. 7 The assumption of complete information is reasonable considering that the president and Congressmen are informed about each other’s preferences. This assumption has been held in models dealing with vetoes. Whether most models introduce uncertainty either in the Congress or in the voters, most of them consider the president to have complete information (Groseclose and McCarty 2001:103, fn. 9).. 4. CIDE.

(9) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. Game 1: Delegation “behind closed doors”8 We first analyze the case of the president asking for DDA to the assembly without making a public appeal for the approval of DDA. Note that the name “behind closed doors” does not imply secrecy of the negotiations, but the lack of public appeal by the president to the assembly to receive DDA.9 There are two players, the president and the Congress, and two strategy profiles: the president may ask for DDA or not, and the Congress may give her DDA or not. Let v be some arbitrary value representing the value of giving/receiving DDA. v is strictly positive (v> 0) and the President chooses the value of v. We assume that v works as the president’s bid. Asking for DDA is not costless for the president because it involves the use of political capital and eventual reputation costs associated to not receiving DDA. If the president “wins,” she receives DDA that equals v, and the Congress loses the ability of legislating on these issues (and may show subordination to the president, incurring in some reputation loss). For the sake of simplicity, the Congress’ loss is worth also v. If the president does not receive DDA, she will lose v and the Congress will win v. FIGURE. 1. DELEGATION BEHIND CLOSED DOORS. N: {President, Congress} AP: {Ask, Not ask} AC: {Give, Not give} Let v:  R++. President Ask. Not ask. Congress Give v, –v. Congress Not give –v, 0. Give v, –v. Not give. 0, 0.. 8 Other models have dealt with the differences between bargaining behind closed doors or publicly. Although the traditional thought suggests that mechanisms promoting bargaining behind closed doors makes it harder for parties (firms) to collude, McCutcheon (1997) explains how mechanisms promoting bargaining behind closed doors (such as the Sherman Act, which prohibits firms from discussing prices in meetings) may help the parties to collude. 9 The general public may learn about the president request to the Congress and that a negotiation is ongoing, but the president does not address the public requesting the assembly to give her DDA.. DIVISIÓN DE ESTUDIOS POLÍTICOS. 5.

(10) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. Given that the dominant strategy for the Congress is Not give, the subgame perfect equilibrium is (Not ask; Not give, Not give). Therefore, “behind closed doors,” the president would never ask for DDA. Although simple, this game shows the Congress needs incentives for DDA to happen. We argue that by asking DDA in front of the electorate, the president can generate audience costs for the Congress that would induce the Congress to give her DDA. To explain the existence of DDA, we need to consider a non-informed third actor whose presence alters the Congress’s payoffs.. Game 2: Delegation with audience costs We argue that the president can generate audience costs for the Congress. By asking publicly for DDA, the president adds a third actor to the game and can generate incentives for the Congress to delegate authority. The literature has developed models that depend directly or indirectly on the presence of a third uninformed actor: the electorate or audience. For example, there are cases where the Congress makes legislative proposals even if it will almost certainly be vetoed –what Smith called “blame-game politics” (Cameron 2000; Groseclose and McCarty 2001; Smith 1988). The general argument is that voters use outcomes as a signal of their leaders’ quality (Fearon 1997; Mayhew 1974; Smith 1998).10 Few studies actually model the electorate (Cai 2000; Groseclose and McCarty 2001). More often, the electorate’s behavior is assumed and considered just as an audience for the political dynamics to be modeled. Our argument relies on two additional assumptions. First, the electorate is uninformed. Second, congressmen make decisions anticipating the reactions of the electorate to signals they send. Regarding the first assumption, we assume the electorate has (at best) incomplete information about the actual preferences of the congressmen and the president.11 Voters are “more aware” when they face elections or crises (Iyengar 1996). Particularly in those cases, the electorate witnesses salient controversies between the executive and the legislature and use their outcomes as a signal of their leaders’ actual preferences (Mayhew 1974; Smith 1998). Therefore, by generating a public controversy, politicians may alert the electorate and, eventually, create audience costs (Fearon 1994, 1997).12 In addition, presidentialism maximizes direct accountability between voters and the executive branch, as the latter Iyengard (1989) has shown that attribution of issue responsibility is a significant determinant of individuals’ issue opinions and attitudes. According to him, citizens asses two dimensions of issue responsibility: causal responsibility focuses on the origins of the issue, while treatment responsibility focuses on alleviation of the issue (Iyengar 1989). 11 This assumption about the behavior of the electorate is common in the literature (Groseclose and McCarty 2001:103, fn. 9) and it is not extremely arbitrary. 12 Notice that the notion of audience costs is used in International Relations as a means to signal a party’s preferences/intentions to the adversary (Eyerman and Hart Jr. 1996; Fearon 1994, 1997; Schultz 2001; Smith 1998). In our model, audience costs are not a signal. 10. 6. CIDE.

(11) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. is directly elected. Therefore, direct appeals from the president opposing Congress are more common in these systems (Samuels and Shugart 2003). The second assumption (congressmen make decisions anticipating the reactions of the electorate to signals they send) is consistent with the “accountability representation” idea (as opposed to a mandate representation) in presidential systems. According to this idea, voters reward or penalize incumbents in a retrospective voting fashion (Samuels and Shugart 2003). Studies about veto found that “a key component of veto bargaining revolves around the response of the electorate” (Groseclose and McCarty 2001:102). Given that “taking positions” is at the core of politician activities (Mayhew 1974), models that omit signals to third parties do not accurately account for political dynamics (Groseclose and McCarty 2001:102). In order to threaten credibly with audience costs to the Congress, the signal needs to be likely to influence the electorate. Canes-Wrone shows that US presidential appeals generate influence, but that this influence depends on presidents strategically choosing issues to promote to the public. 13 In our model, the president asks publicly for DDA and forces the Congress to decide not only on the grounds of the delegation, but also considering the signal it is going to send to the electorate. We argue that the signal is going to be better perceived close to elections or in situations of economic crisis. Notice however that, although the president may choose the opportunity to ask publicly for DDA, she cannot determine the repercussions of her decisions. The level of audience costs is assumed to be exogenous, and determined by factors that “warn” the audience, particularly, electoral cycle, and economic crisis. Game 2 includes audience costs in the Congress utility function. Let a be a strictly positive value representing “audience costs” of not giving the DDA. If a = 0, this game would be the same as Game 1. As said, the president can impose a by generating audience costs, but she cannot determine a’s magnitude.. 13 She argues that “in particular, a president will promote issues on which his position is popular, but for which Congress would not otherwise enact his preferred policy” (Canes-Wrone 2001).. DIVISIÓN DE ESTUDIOS POLÍTICOS. 7.

(12) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. FIGURE. 2. DELEGATION WITH AUDIENCE COSTS. N: {President, Congress} AP: {Ask, Not ask} AC: {Give, Not give} Let v:  R++ a:  R++ If a < v President Ask. Not ask. Congress Give. Congress Not give. v, –v. Give. Not give. –v, –a v, –v. 0, 0.. If a ≥ v President Ask. Not ask. Congress Give. v, –v. Congress Not give. Give. –v, –a v, –v. Not give. 0, 0.. The probability that the Congress gives DDA is a function of the Congress’s payoffs. If the President does not ask for DDA, the Congress will never give it. If the President asks for DDA, the Congress will be willing to give DDA only if a≥v. If a>v, then the Congress dominant strategy is to give DDA. Therefore, the equilibrium is (Not ask, Not give|a<v), (Ask, Give|a>v). 8. CIDE.

(13) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. Empirical implications As said, the president can impose audience costs, but the magnitude of these costs is assumed to be exogenous. There is another implication of this model. Let’s assume for simplicity that the bid is the scope of delegation. In a context with low audience costs (a), the President’s “bid” has a ceiling (v). However, if the circumstances allow generating high audience costs (A), then the President can ask for a “larger” DDA (V). [See Figure 3] FIGURE. 3. SCOPE OF THE DELEGATION AS A FUNCTION OF AUDIENCE COSTS. Scope of the delegation. V9 No DDA. v'6. 3v. Inefficient DDA 0 a. a'. A. Audience costs DDA. In other words, the model shows that the probability of getting DDA is a function of the relation between v and a. If a <v, the President will not ask for DDA because she can anticipate he is not going to receive them. However, the level of a also conditions the scope of the DDA. If a >v, the President will receive DDA, but the delegation will not be efficient for the president (she could have asked for a larger DDA) [See Figure 3]. We suggest that audience costs (a) are determined primarily by two factors: socioeconomic crises and the electoral cycle make the electorate more aware of politicians’ preferences.. DIVISIÓN DE ESTUDIOS POLÍTICOS. 9.

(14) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. Audience costs and economic crises We argue that the presence of economic crisis make the electorate demand responses from politicians. The electorate cannot deal with all the complexity of economic crises; however, it takes politicians’ decisions as signals. If facing a crisis, the president demands DDA from the Congress, arguing inefficiency or the need to expedite solutions, she can use the denial of DDA to blame the Congress. This hypothesized behavior is consistent with findings in American politics. West investigated credit-claiming and blame-shifting on controversial policy decisions involving redistribution to determine public assessments of the decision and attributions of institutional responsibility. He found significant differences in whom the public is crediting and blaming for actions. For instance, regarding budgetary issues, citizens tend to give credit to the president and to blame Congress (West 1990). Krause and Cohen (1997) also found that poor economic performance is associated with more executive orders. We derive two hypotheses from this reasoning. First, regarding the likelihood of observing DDA, we hypothesize that the president will be more prone to ask for DDA in periods of economic crisis because she can generate audience costs to the Congress (she can blame the Congress for the lack of support to implement solutions). Second, regarding the scope of the delegation, the presidents could generate higher audience costs during periods of severe economic crises. Therefore, presidents should ask for broader delegations when crises are more severe. In other words, the extent of the delegation is a function of the magnitude of the economic crises. Hypothesis 1: Delegations of decree authority are more likely to happen during periods of economic crisis. Hypothesis 2: Delegated decree authority scope is positively associated with the severity of the economic crisis.. Audience costs and electoral cycle Congressmen should be more concerned about audience costs the closer it is to congressional elections. The president can try to impose audience costs to the congress anytime, but audience cost can hurt more the congressmen electoral aspirations before elections. Therefore, we expect to observe more laws delegating decree authority closer to congressional elections, holding other things constant. Hypothesis 3: Delegations of decree authority are more likely to happen before congressional elections.. 10. CIDE.

(15) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. It is also possible that presidents do not ask for DDA only when they can impose audience costs on the Congress, but also when they dispose of a larger political capital. In case of losing the bid, the cost of not receiving the DDA (-v in the model) would not leave them extremely weak. Therefore, we hypothesize that the president will be more prone to ask for DDA (and DDA of broader scope), when he still enjoys the popularity of having won elections (Canes-Wrone and Marchi 2002; Groseclose and McCarty 2001). Hypothesis 4: Delegations of decree authority are more likely to happen at the beginning of the presidential term.. Empirical evidence In this section, we present some evidence of the relation between economic crisis, electoral cycle, and DDA in Argentina, Venezuela and Perú. Although this is not an empirical test of our model, it provides some support for the plausibility of the argument.. The case of Argentina Although Argentina’s Constitution prohibits the President to exercise legislative capacities (Article 99), it authorizes the Congress to delegate legislative faculties to the executive under special conditions. 14 Notice that the Constitution prescribes DDA as a Congress’s attribution, while CDA is the executive’s attribution. While DDA needs an ex ante authorization from the legislative, CDA (in theory) needs an ex post intervention of the assembly (ratifying or rejecting the decree). In the following paragraphs, we analyze the scope of five DDA. Table 1 describes the content and the scope of delegation in Argentina.. This delegative legislation was incorporated by the 1994 constitutional reform. The conditions under which this delegation is allowed are the following: A law must state that the delegation refers to matters of administration or emergency, the deadline for the delegation, and the grounds for the delegation. 14. DIVISIÓN DE ESTUDIOS POLÍTICOS. 11.

(16) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. TABLE. 1. OVERVIEW OF DELEGATION IN ARGENTINA. LAW DELEGATING DECREE AUTHORITY (DDA) NUMBER ADMINISTRATION. DATE. DESCRIPTION. OF ARTICLES. Carlos Menem (1989-1995). July 1989. Carlos Menem (1995-1999). February 1996. Fernando de la Rúa (1999-2001). 12. March 28th 1999. Hyperinflation and Law of Economic Emergency. Authorization to decide privatizations, liberalization of the economy, the amount and size of public subsidies, tax reform. Tequila Second Reform Restructuration of the national administration, taxation. Tax powers, the possibility of reforming the Law of Ministries, privatizing entities, firing public employees, or amending. DECLARES EMERGENCY?. CONGRESSIONAL OVERSEEING POWER?. LENGTH OF DELEGATION. SCOPE OF THE DELEGATION. 70 and 94. Yes. No. 6 months. Broadest. 17. No. Yes. 9 months. Narrow. 9. Yes. Yes. 11 months. Medium. CIDE.

(17) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. labor and social security laws.. Eduardo Duhalde (2002-2003). Néstor Kirchner (2003-2007). January 2002. November 10, 2004. Restructuration of the financial and banking systems, and the exchange market. Power to revise the leases of privatized companies and to control prices. The Chief of Cabinet can reallocate the budget (without generating deficit).. 22. Yes. No. 23 months. Broad. 6. Yes. Yes. 12 months. Narrowest. DIVISIÓN DE ESTUDIOS POLÍTICOS. 13.

(18) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. The context of DDA in Argentina Menem’s first administration (1989-1995): Hyperinflation and Law of Economic Emergency. After the elections held on May 14 1989,15 President Raúl Alfonsín was supposed to transfer power to Carlos Menem in December of that year. By the end of Alfonsín’s presidency, Argentina was experiencing the most devastating economic crisis in its history, with hyperinflation, unions’ opposition, and social unrest. Consumer prices increases reached 114.5% in June 1989 and 196.6% in July (Echegaray and Elordi 2001). Both the economic and social crisis, and the lame duck president Alfonsín once Menem was elected, yielded to the anticipated transference of power.16 Immediately after taking office in July 8th, Menem sent to Congress two bills. The first one is known as the “State Reform Law” (afterwards Law 23696), the second the “Economic Emergency Law” (Law 23697). The executive strongly pressed to avoid a detailed discussion of each single article. Menem imposed a “take it or leave it” approach: the laws were to be rejected or approved in their entirety (Palermo and Novaro 1996). Although the opposition legislators (members of the Radical Civic Union or UCR) voted against the laws,17 they gave quorum for the session, in compliance with the governability agreement between both parties. Both laws were passed with the vote of the senators and deputies of the Justicialist Party (PJ), including pro-union legislators (despite the fact that the laws included the privatization of hundreds of public enterprises, something they strongly opposed during Alfonsín’s tenure).18. 15 Carlos Menem, the candidate from the opposition Partido Justicialista (PJ), was elected for the term 1989-1995 with 47% of the vote. His platform was a populist and heterodox program intending to straighten the economy, following the traditional lines of his party. 16 This deadlock came to an end after a secret negotiation between both parties. They agreed that Alfonsín would step down from office five months in advance. However, given that the new congressmen (elected in concurrent elections with Menem) were not going to take office until December, the UCR agreed that its deputies would play a “constructive role” and would not block Menem’s projects. 17 During the debate, UCR congressmen opposed the laws on institutional and instrumental grounds, but did not oppose the substantive content of them. They complained about the enormous delegation these laws implied, the level of executive discretion, and the lack of parliamentary control. 18 Law 23696 was passed August 17 th, 1989, and promulgated the day after. Law 23697 was passed September 1 st, 1989 and promulgated the day after.. 14. CIDE.

(19) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. The socioeconomic crisis allowed the easy delegation of powers. The Congress did not want to absorb the political cost of delaying the passing of the bills, a necessary result if they had decided to revise article by article. Regarding the scope of the delegation, the laws gave enormous attributions to the executive, who could modify legislation without the subsequent intervention of Congress. Even more important, these laws launched the privatization process. The president could decide whether public utilities were going to be privatized, when and how. He could decide about the eventual implementation of foreign debt capitalization associated to those privatizations, the liberalization of the economy, the amount and size of public subsidies. These laws also granted the president with authority over tax reforms. This delegation was the largest that Argentina had known in democratic times so far. During the first year, the government privatized two enormous public companies with absolutely no control from the Congress.19. Menem’s second administration (1995-1999). In May 14th 1995, Menem was reelected with more than 50% of popular vote. The country’s inflation was stabilized, and the economy grew significantly during 1991-1994. The 1994 Mexican crisis caused recession, and unemployment peaked 18.6% in 1995. Menem announced the need of a “second reform of the state” to combat structural problems. By the end of 1995, Menem sent to Congress a bill known as the “superpowers” bill. This bill granted leeway to restructure and rationalize the national administration during 1996. Among other things, the executive could suppress public agencies if it considered that they overlap or were inefficient; eliminate public employment, transfer funds to the subnational governments, and, more importantly, attributions to modify the tax structure (for example, to extend the VAT to previously exempted areas). Said set of superpowers instigated divisions within the government. 20 PJ legislators were less willing to accept the pressures from the executive. The lower chamber finally approved the articles regarding the tax reform of the Second State reform law in March 1996. In spite that the UCR and the second opposition party, center-leftist FrePaSo, considered this law to be against the Constitution, Law 24629 was passed with the help of provincial parties.21 19 Both Aerolíneas Argentinas and the Empresa Nacional de Telecomunicaciones (ENTel), the state airline and telephone companies, were privatized with Congress having absolutely no say in the process. 20 Since its beginning, the second Menem administration was characterized by a fight within the PJ for Menem’s succession. On the one hand, the governor of the Buenos Aires (and former Menem’s vice-president) Eduardo Duhalde aspired to the party nomination for 1999, and started a process of differentiation from Menem’s unpopular measures. Duhalde commanded a relatively large number of legislators in the Chamber, and resisted the approval of the superpowers. On the other hand, Minister of Economy Cavallo also tried to build his own political space in the party. 21 Despite the fact that the PJ had the majority of seats in the Chamber of Deputies, the law was passed thanks to the support of provincial parties. This was not costless: an article allowing the executive to manipulate internal taxes. DIVISIÓN DE ESTUDIOS POLÍTICOS. 15.

(20) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. In comparison with the situation in 1989, the resistance inside the party and the lack of cooperation from the opposition can be interpreted as larger latitude for the Congress when the socioeconomic context was less challenging than the one in 1989.. De la Rúa administration (1999-2001) Fernando de la Rúa took office in December 1999. For fifteen months, he ruled with a coalition of his own party (UCR) and center-leftist FrePaSo. In March 2nd 2001, the economic crisis that had started in 1998 led to the dismissal of his minister of economy and the appointment of an orthodox economist, Ricardo López Murphy. López Murphy’s harsh package of orthodox measures was strongly opposed by members of the ruling coalition, and the FrePaSo left the coalition. On March 18th, de la Rúa called for an emergency coalition government to cope with the crisis. He offered the PJ and the center-rightist Acción por la República (APR) to participate in the government. The PJ refused, but Domingo Cavallo (former Menem’s Minister of Economy and APR’s leader) accepted to be appointed to the same position he left five years before. The economic crisis was dire. As soon as he took office, Cavallo asked for ‘special’ powers to deal with the crisis. He invoked Article 76 of the Constitution (which states that in case of emergency the Congress might delegate powers to the executive) to modify labor and social security laws arguing that the Congress was too slow to deal with the critical situation. The Congress refused delegating the whole set of special powers that Cavallo asked for. The Congress delegated tax powers and the possibility of reforming the Law of Ministries, but kept for itself the possibility of privatizing entities, firing public employees, or amending labor and social security laws. These special powers were granted only for eleven months. Although the Congress limited the original proposal, the executive was granted with enormous administrative and tax powers through Law 25414.22. The Duhalde administration (2002-2003): Economic crisis and economic emergency Law. After the resignation of Fernando de la Rúa on December 21 st, and the succession of three other presidents, Senator Eduardo Duhalde was elected by was eliminated. The Senate approved the law with two modifications strongly demanded by the executive: a mechanism of parliamentary control of delegations relative to taxation, and a deadline for the reformulation of the whole tax system. 22 Only Cavallo’s APR voted for the complete delegation. The PJ, UCR and FrePaSo voted limited delegations. Some legislators proposed creating a commission to study executive delegated actions (they still wanted the assembly to have a final veto on the actions taken by the executive) but this proposal did not succeed. 16. CIDE.

(21) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. the Assembly as Interim President (January 1st 2002). In a context of a violent political and economic crisis, Duhalde sent to Congress the National Emergency Law (NEL) that declared the “social, economic, administrative, and financial public emergency.” This law gave special powers to the president until December of 2003. The law entitled the executive to restructure the financial and banking systems, and the foreign exchange market, and to revise the leases of privatized companies. Article 2 allowed the president to determine the exchange rate, whereas Article 7 allowed creating new taxes. Finally, Article 14 permitted the executive to apply price controls to the economy. On January 4th was passed by the House and two days later the Senate made it Law 25561.. Kirchner administration (2003-2007): Economic emergency and budget superpowers The National Emergency Law (Law 25561), passed under Duhalde’s interim administration, was extended twice under Kirchner’s presidency. Kirchner also asked for further special delegation of powers regarding the budget. Four months after taking office (September 2003), the Kirchner administration sent the 2004 budget proposal to the Congress. This proposal included superpowers that would enable the chief of cabinet to reallocate funds23 without consulting Congress.24 The only limitation was that the executive could not raise the total expenditure if there were not enough funds. However, the executive could raise the total amount of expenditures if there were available funds, or if it was expected more funds to be available. This proposal raised criticisms. The opposition and the media pointed out that if enacted, the budget law would not inform any more how much the administration was investing in each sector, given that the funds could be freely reallocated. Another concern was that the executive could unilaterally decide (only informing the Congress every month) the amount of money used to pay the public debt. Furthermore, if there were a surplus larger than This proposal empowered the chief of cabinet to reallocate funds, i.e., from salaries to equipment purchases. Notice that the possibility of reallocating funds was a chief of cabinet’s attribution since the creation of the position in the 1994 Constitutional Reform. The new element was the autonomy he will enjoy for doing so. Therefore, since 1994 the modifications were limited by law and the Congress had a final veto power for the executive’s proposal. In the new proposal, the only limitation is the prohibition of increasing the budget if there are no funds available. 24 Interestingly, the original 2004 Budget Law proposal included the superpowers clause. This clause was eliminated by the Budget Commission and was incorporated latter in the floor by the governing PJ. Also, although the main opposition party, the UCR, voted against it, some of their deputies abandoned the floor to favor the PJ quorum. Although the head of the UCR representation emphatically rejected the possibility of an agreement with the PJ, the UCR decided to pass the bill, because they did not want to block a government main administrative tool. Center-left opposition parties ARI and the Socialist Party (PS) strongly opposed the approval of the article that granted the special attributions to the Chief of Cabinet. The law was passed with 90 votes in favor, 74 against, and 7 abstentions. 23. DIVISIÓN DE ESTUDIOS POLÍTICOS. 17.

(22) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. expected, the executive could arbitrarily allocate such surplus. 25 A few weeks later, the Budget Law including superpowers was passed by the Senate without modifications. Senators from the UCR voted in favor of the project but against specific articles, including the delegation one. In October 2003, Kirchner asked for an extension of the NEL. 26 Opposition parties argued that economic emergency was over. The PJ had majority in both houses (and in the lower house, it almost had its own quorum). The executive could vote any modification in the budget law, without superpowers. The bill was introduced by the executive in the Senate. In November 2004 the Senate considered the extension of the NEL. Although the PJ had the majority in the upper chamber, all the opposition parties resisted the initiative. The UCR, MNP and PRS senators did not attend the session where the extension for the whole 2005 was planned. The initiative was finally approved for 34 against 27 votes. On November 23rd, the lower chamber approved the extension of the NEL while the Senate approved 41 to 25 the Budget Law, which included the superpowers (Law 25820), in what was dubbed a “super-Wednesday”. The Argentina delegation cases provide support for hypotheses 1 and 2. With the exception of the delegation under Kirchner, profound economic crises were at the core of the delegations. During the Kirchner administration the economic situation had improved substantially and might have not justified the DDA. However, the scope of the delegation was much narrower than the previous laws approving DDA, and decree authority was delegated five months after he took office, taking advantage of the honeymoon period, which is also consistent with hypothesis 4.. The case of Venezuela At first glance, DDA is a useless device in Venezuela: except for the 1993 deep political crisis, DDA should not have been used. Although the president has extremely weak legislative powers,27 it has de facto strong powers (Shugart. The chief of cabinet, Alberto Fernández, considered that the possibility of redirecting funds was nothing strange and in the line of powers that Finance Ministers had in the past. He insisted that the superpowers approved in 2001 allowed creating new taxes, deciding the merge of public entities, and deregulating capital markets, while the present law only authorized to reallocate expenditures and to fund the raise in public salaries. 26 The executive argued that both the superpowers included in the Budget Law, and the continuity of the NEL, were necessary because Argentina was still in default, and that poverty indexes were high. Opposition parties considered that the NEL was approved under exceptional circumstances in 2002 and that Argentina had largely overcome that situation. Furthermore, superpowers would not reduce poverty. 27 Notice that, in addition to DDA, Venezuelan presidents also have CDA. However, Venezuelan presidents can evade Congressional oversight under exceptional circumstances. Venezuelan presidents have used their prerogatives of suspending some constitutional guarantees and legislate through decrees related to the rights suspended (Crisp 1997:181; 1998:146). These prerogatives have been used more widely to persecute the left in the early years of the regime and by legislate in economic issues by Caldera in his second term (1994-1999). 25. 18. CIDE.

(23) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. and Carey 1992:156) and enjoys a strong discipline.28 Party discipline coupled with unusually strong political parties helped the system avoid the deadlock and eventual legislative circumvention that could be expected with one of the weakest set of presidential powers in the region.29 This “efficient” combination enhanced political stability in difficult times for democracy in Latin America (Shugart and Carey 1992:197). If Venezuelan presidents enjoy a majority in the assembly, presidents can safely assume that their bills will pass smoothly. Therefore, DDA seems redundant. However, the first three DDA (under article 190.8 of the 1961 Constitution) were asked by presidents from Acción Democrática (AD), the largest and most important party during the Punto Fijo years that controlled the majority in the Assembly at the time of the delegations (Coppedge 1994a; 1994b:332; Crisp 1997:187). More recently, president Chávez asked, and received, DDA despite the fact he enjoyed a comfortable majority in Congress. Two delegations, in 1993 and 1994, took place under minority governments.. DDA. under majority governments: Betancourt, Pérez and Lusinchi. Rómulo Betancourt (1959-1964) Betancourt was one of the founders of AD and the first president after the Punto Fijo agreement of 1958, which inaugurated the Fourth Republic. Betancourt enjoyed a majority in both chambers.30 Although divisions within AD made Betancourt lose his majority, opposition party COPEI remained loyal throughout his administration. Despite these majorities, Betancourt was the first case of DDA. Apart from this majority in the assembly, Betancourt years were unique in certain aspects. First, he enjoyed a large legitimacy because he was considered the father of the Venezuelan democracy because of his participation in overthrowing military dictator Pérez Jiménez in 1958 and of founding AD. More importantly, when he democratically assumed power in 1959, the old authoritarian Constitution of 1953 was still in place. A new As Argentina, the Venezuelan Fourth Republic (1958-1999) had one of the most disciplined party systems in Latin America. Even more, Venezuela was probably one of the most disciplined competitive party systems in the world (Coppedge 1994a, 1994b). The levels of discipline were so high that according to some accounts of Venezuelan politics at the time, the Speaker of both Chambers used not to count the votes after a debate, as he knew how seats were distributed among parties and that legislators were not going to defect (Coppedge 1994a:24). 29 Using the terminology of the comparative analysis of presidentialism, Venezuela is the example of presidents with strong partisan powers and extremely weak formal powers (Crisp 1997:160; Mainwaring and Shugart 1997). For a brief overview of the instauration of the Venezuelan democracy, its party system, electoral rules, formal and informal powers of the presidency and institutions see Crisp (1997). For an account of the strict discipline of Venezuelan democracy see Coppedge (1994a). 30 AD had 57% of seats in the lower chamber and a 63% in the Senate. The main opposition party, Comité de Organización Política Electoral Independiente (COPEI) was loyal to the president coalition, which meant he enjoyed a working majority of 97% of seats in the House and 96% in the Senate (Coppedge 1994b:337). 28. DIVISIÓN DE ESTUDIOS POLÍTICOS. 19.

(24) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. Constitution did not go into effect until 1961. Therefore, Betancourt enjoyed a constitutional vacuum plus wide support from the two most important parties in his first two years in office. Although the leftist opposition parties denounced persecution and abuse of powers, in the early sixties there was a cooperative political climate both main parties, and Betancourt did not want to polarize the political game (Crisp 1997:188). 31 In June 1961, under the new Constitution, Betancourt asked for DDA to rule economic aspects for one year. Despite the fact that the enabling law (Ley Habilitante) loosely defined the terms of the delegation, Betancourt was careful in his use of those special powers. During that year, he ruled on a myriad of economic issues such as salaries, taxes, contracts, and home credit.32. Carlos Andrés Pérez (1974-1979) When Carlos Andrés Pérez took power (first term, 1974-1979), the Venezuelan democracy was more consolidated, and enjoyed generous oil revenues. Although he enjoyed a majority of seats in both Chambers33 during his first three months in office he issued an average of two new decrees, resolutions or draft laws per day (Coppedge 1994b:333). In his second month in office, impatient with the legislative process, Pérez required DDA to rule the economy by decree. According to Coppedge, Pérez had an extremely ambitious plan aimed at quickly developing the country taking advantage of the oil revenues(Coppedge 1994b:333). Scholarly research has argued that Pérez wanted to avoid accountability from his own party (Coppedge 1994b:334; Karl 1986). Another possibility is that he wanted to avoid the process of power erosion Venezuelan presidents suffer since their second year in office, as argued by Coppedge (Coppedge 1994a). His party accepted after a long hesitation, and under some conditions: The powers were restricted to one year and a multiparty commission would discuss the bills. Pérez ignored the commission when issuing decrees (Coppedge 1994b:334; Crisp 1997:188). According to Coppedge, the only reason for AD to accept the delegation was that Pérez had recently taken power and popular president who had won by a landslide (Coppedge 1994b:334).. 31 It reasonable to think that if Betancourt, AD and COPEI had not compromised to moderate rule, Betancourt would probably have been an extremely personalist and dominant ruler. The fact that he did not take advantage of the constitutional vacuum is a clear example of his moderation. 32 The suspension of constitutional guarantees were not included in the DDA but on his constitutionally granted decree authority, as mentioned above. We are indebted to Aníbal S. Pérez-Liñán for clarifying this point. 33 His party controlled 51% of the Chamber of Deputies and 60% of the Senate.. 20. CIDE.

(25) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. Jaime Lusinchi (1984-1989) After Pérez’s abuse of powers, AD was less willing to concede such a broad DDA. Lusinchi asked for DDA in 1984 to deal with the debt crisis. Despite the fact that the economic situation in the eighties was much worse than during the seventies all major parties (including AD) voted against the blind delegation, discussing in detail and in advance the content and scope of the decrees (Coppedge 1994b:334).34. Delegation under minority governments: Velásquez and Caldera The other two cases of delegation took place under extremely different circumstances. During the eighties and early nineties, political parties started to lose legitimacy. Parties and politicians were regarded as being corrupt and isolated from their popular bases. This erosion resulted in a dramatic collapse of the Venezuelan party system. This process started with the violent Caracazo in 1989 and two coup attempts in 1992, continued with the step down of president Pérez in 1993, and the implosion of the Venezuelan traditional party system; and ended with the election of an outsider as president in 1999 and a constitutional reform that inaugurated the Fifth Republic. In the unstable years of 1993-1999, Venezuela underwent a difficult transition, as the old regime was slowly cracking down. In this context, we find two more cases of delegated decree authority.. Ramón Velásquez (1993-1994) The fourth DDA was asked in one of the most critical moments in Venezuela’s political life: Ramón Velásquez took office as interim president to finish Pérez’s second term after the political crisis in the nineties (including the Caracazo riots and two failed coups) that ousted him from office. His case is the first one of a minority government asking for DDA. Velásquez inherited the AD representation in Congress that existed under his predecessor (48% in both chambers). According to Crisp, the delegation can be explained in the desire of the main parties of saving the democratic system which was seriously threatened (Crisp 1997:189). Party leaders in Congress decided to avoid slowing progress by taking rapid action. Velásquez asked and obtained restrictive DDA for just four months to pursue some economic reforms (tax reform, banking regulation, provision of credit, privatization of Viasa). The enabling law in this case was detailed and restricted to four months.. Notice that Lusinchi did not abuse of his powers: The 71 decrees issued were used exclusively for economic matters, such as cutting government spending, raising government revenue, debt refinancing and the emission of bonds (Crisp 1997:189). 34. DIVISIÓN DE ESTUDIOS POLÍTICOS. 21.

(26) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. Rafael Caldera (1994-1999) Caldera was elected president in 1994 under the label of Convergencia, a coalition which included the Movimiento al Socialismo (MAS) and supported by COPEI. He ran a strong anti-party campaign denouncing the corruption of the “political class.35 The new fractionalization of the party system meant that he had a very weak position in Congress. His party controlled the 24% and 22% of the seats in the lower and upper chambers, respectively. A financial crisis and the collapse of several banks struck the country soon after Caldera took office. Caldera asked and was granted a Ley Habilitante for only one year to increase some taxes, which he did with only four decrees (Crisp 1997:190). Table 2 summarizes information on DDA in Venezuela.. 35 Notice however that he was one of the founders of COPEI and that he had served as president under the label of that party in 1969-1974.. 22. CIDE.

(27) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. TABLE. 2. OVERVIEW OF DELEGATION IN VENEZUELA LAW DELEGATING DECREE AUTHORITY (DDA). ADMINISTRATION. DATE. Rómulo Betancourt (1959-1964). June 1961. Carlos Pérez (1974-1979). April 1974. Jaime Lusinchi (1984-1989). June 1984. 36. DESCRIPTION. Economic and financial matters: reorganize the decentralized public administration, reorganize public services, defer collective contracts, fix prices of good or primary necessities, modify Property Tax Law, modify inheritance and other national taxes, establish an insurance system for deposit and savings account. Decree a tax reform, reform national finance system and capital markets, modify the organic law of the national public finance, create Venezuelan Investment Fund, arrange and invest funds of the treasury, stimulate the transformation of sectors of production, nationalize the iron ore industry, pay off the debt of the Venezuelan social security institute, uphold the seniority and pension right of workers, and to determine minimum salaries Cutting government spending, raising government revenue, and refinancing public debt.. NUMBER. NUMBER OF. OF. DECREES. ARTICLES. ENACTED. 7. 15. One year. Medium/ Broad. 10. 53. One year. Broadest. 20. 7136. One year. Narrow. LENGTH OF DELEGATION. SCOPE OF THE DELEGATION. Thirty six of these were used to issue government bonds to refinance public debt (Crisp 2007). DIVISIÓN DE ESTUDIOS POLÍTICOS. 23.

(28) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. Ramón Velásquez (1993-1994). August 1993. Rafael Caldera (1994-1999). April 1994. 24. Tax reform, banking regulation, provision of credit for low cost housing, sale of airline, stimulation of agricultural sector. Establish luxury taxes, wholesales sales tax, and tax on savings accounts. Reform existing taxes. Abolish VAT.. CIDE. 7. 13. 4 months. Medium/ Narrow. 7. 4. One month. Medium/ Narrow.

(29) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. The Venezuelan case also provides support for hypotheses 1 and 2. Two instances of delegation took place under dire economic circumstances as predicted by the model (Velázquez and Caldera). Although not regime threatening as the latter, the delegation asked by Lusinchi also took place during very difficult times, amidst the debt crisis. In addition, the delegations under Betancourt and Pérez took place with popular presidents at the beginning of their terms, which is consistent with hypothesis 4.. The case of Perú Perú is another example in the region of a powerful president that initiates a sweeping program of neoliberal reforms in which Congress has a limited role, notwithstanding the significant power of the assembly (which can impeach cabinet members) and the limited veto of the president (Shugart and Carey 1992:112-3). It is important to note, however, that Perú deviated from the path initiated by other Latin American countries as it suffered a significant process of democratic erosion. In the Peruvian case, the “delegative democracy” elements (O’Donnell 1994) were aggravated by the profound antiestablishment stance and authoritarian attitudes of President Alberto Fujimori (1990-2000), who closed Congress in 1992 and achieved a second reelection in 2000 with constitutional provocative methods (Tanaka 2005). Despite these severe derailments, Perú also experienced with democracy, albeit one with shortcomings. In such, the figure of the president concentrated considerable amounts of power not as the result of presidential usurpation or a weakened assembly, but as the result of the latter delegating ample powers to the executive (Schmidt 1998). Perú’s 1979 constitution specifically allowed Congress to delegate to the executive legislative authority through an enabling law specifying the subject and the time span of the delegation. After Congress passes the enabling law, the president can issue decretos legislativos (Article 188).37 In addition, the president can approve the budget through a decreto if the Congress does not act (a sort of DDA by omission). This happened in 1985 and 1989, during Alan García´s first term (1985-1990). This happened while García enjoyed support in both chambers and is explained by the profound economic crisis in both years. In 1993, a new constitution was issued which maintained the DDA arrangement. It is important to note that under both constitutions Congress oversees and may repeal any decreto legislativo that the president signs to execute DDA. Table 3 summarizes information on DDA in Perú.. 37 Peru’s 1979 Constitution also grants the president with wide constitutional decree authority (Article 211, provision 20).. DIVISIÓN DE ESTUDIOS POLÍTICOS. 25.

(30) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. TABLE. 3. OVERVIEW OF DELEGATION IN PERÚ LAW DELEGATING DECREE AUTHORITY (DDA). ADMINISTRATION. DATE. Fernando Belaúnde Terry I (1963-1968). May 1968. Fernando Belaúnde Terry II (1980-1985). 16 specific delegations. Alan García (1985-1990). Several specific delegations. Alberto Fujimori (1990-1995). 26. May 1991. NUMBER. CONGRESSIONAL. OF. OVERSEEING. ARTICLES. POWER?. 1. No. 1. No. DESCRIPTION. Solve public finances structural disequilibrium, strengthen balance of payments and foster integral economic development. Solve public finances structural disequilibrium, strengthen balance of payments and foster integral economic development.. LENGTH OF DELEGATION. 60 days. SCOPE OF THE DELEGATION. Broad. Narrow. Narrow National pacification (5 articles), fostering employment (3 articles) and increasing private investment (5 articles).. 16. CIDE. Yes (approval of Council of Ministers and Congress needs to be informed). 150 days. Broadest.

(31) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. Executive-Legislative relations under Belaúnde (1963-1968 and 1980-1985) and García (1985-1990) Fernando Belaúnde Terry was elected president for the first time during tumultuous years. Perú during the sixties was characterized by clashes between left leaning party Alianza Popular Revolucionaria Americana (APRA) and conservative factions who feared the possibility of the former’s access to power. Belaúnde lacked a congressional majority and was constantly pressed by extreme right and left sides. As the 1969 elections approached, APRA shifted from an obstructive to a collaborative stance (dubbed the “AproCarlista alliance”) with the government’s party Alianza Popular (AP) (Collier and Collier 1991; McClintock 1994). APRA believed that by doing so it reduced the omnipresent risk of a coup d’état, maximized its chances in the incoming elections and would avoid inheriting fiscal disorder (Schmidt 1998). Therefore, it voted in favor of DDA that authorized the president to solve the “structural disequilibrium in public finances.” In May 1968, Congress passed Law 17044 voted by AP and APRA that granted the president authority for sixty days to stabilize and reactivate the economy. The new cabinet (formed with APRA´s consent38) issued nearly 300 decrees, which were afterwards ratified by Congress (Collier and Collier 1991). The decrees encompassed a tax and monetary reorganization, restricted foreign capital, renegotiated foreign debt and reformed the monetary system. It also gave the first steps towards a much needed agrarian reform. However, this collaboration between parties that had been archrivals could not avoid the military coup that deposed Belaúnde and instated a military dictatorship until 1980. Belaúnde was again elected in 1980 as the first post-transition president with a new constitution (1979) that gave the president enlarged executive decree authority, both constitutional and delegated. During his second term (the first post transition term, though) he enjoyed a majority in Congress with the support of rightist Partido Popular Cristiano (PPC). Legislators delegated authority on modifications of the budget and key tax legislation. During this period, there were sixteen delegation laws and 336 Decretos Legislativos that dealt with more substantive issues than ordinary laws passed by Congress. However, these delegations were supported by government and opposition parties in Congress and were extremely specific in the matters that the executive was allowed to deal with.39 The reasons were complexity, technical character, urgency and the desire to evade broad deliberation on sensitive matters (Schmidt 1998). The situation was dire. Per capita GDP fell 11% and inflation rose to 3584% (Kenney 1996). 38 This administration took place under the 1933 Constitution, under which cabinets were dependent on Assembly confidence. This parliamentary provision was softened by the 1979 Constitution (McClintock 1994; Shugart and Carey 1992). 39 Examples include the authority to reorganize ministries (Law 23224) or issue a new sport law (Law 23978).. DIVISIÓN DE ESTUDIOS POLÍTICOS. 27.

(32) An a C a r o l i n a G a r r i g a a n d Ju a n J. Ne gr i Ma l b r á n. The same pattern took place during Alan Garcia’s first term (1985-1990), whose mismanagement of the economy left an annual hyperinflation of 3800% and a fall in GDP of 15% (Kenney 2003). Legislators “supported or at least accepted” DDA during both Belaúnde’s and García’s administrations (Schmidt 1998), given the severity of the economic crisis and the escalating political violence. García issued 127 legislative decrees only in his first three years in office (McClintock 1994). The attitude of Congress towards both presidents Belaúnde and García was labeled as “complacent” (McClintock 1994), as the assembly issued DDA more regularly, on broader issues and for longer periods of time (although Congress passed six Leyes Habilitantes or delegating laws). When Alberto Fujimori took office in 1990, conflict between the executive and Congress rocketed.. Fujimori’s first term (1990-1995) Alberto Fujimori won surprisingly the 1990 elections as a political outsider who differentiated himself from (and constantly attacked) established parties and politicians. He founded a new political party, Cambio 90, from scratch. The latter was supported by the association of small and middle-size enterprises, middle classes. He was helped by informal channels of communication where evangelical protestants played an important role (Cotler 1995; McClintock 1999; Schmidt 1998) and was able to place himself second in the presidential run in only one month. He defeated rightist candidate Mario Vargas Llosa in a runoff and took office amidst a severe crisis, which included hyperinflation, a cholera epidemic and communist peasant terrorism. Cambio 90 had the second largest congressional delegation after APRA and therefore did not enjoy a congressional majority (Kenney 2003). However, he was able to gather support for significant DDA. Although he found resistance to his counter terrorist actions included in the delegation, his economic program passed easily. According to some authors (Schmidt 1998), Fujimori specifically avoided making a coalition which would have given him a congressional majority. He had received the support of APRA and Izquierda Unida (United Left) in the runoff (when he was campaigning against neoliberalism), and once in office he mustered support from rightist parties such as AP and the PPC when he started implementing a sweeping neoliberal program (Kenney 1996; McClintock 1999). However, he preferred to maintain his deeply anti-political persona and harshly attacked opposition parties and staffed his cabinet with political independents (Tanaka 2005). In addition, his party was more an electoral vehicle than anything else, and it therefore did not exercise any power over the president. Nevertheless, fragmented Congress was very collaborative with Fujimori. This situation resulted in a paradox: despite the fact that he consistently enjoyed congressional support for many of his initiatives (especially the economic measures), relations with the Congress 28. CIDE.

(33) “ U n i t e a n d R e i gn ” : W h e n d o Pr e s i d e n t s As k f o r D e l e ga t e d D e c r e e Au t h o r i t y ?. were acrimonious (especially in public) from the beginning. Fujimori vetoed 52% of bills passed by Congress, compared to 9% by former presidents Alan García (1985-1990) and 5% by Fernando Belaúnde (1980-1985) (Schmidt 1998). In May 1991, the Congress overwhelmingly approved Law 25327 which delegated decree authority to Fujimori for 150 days on national pacification, job creation and the promotion of private investment. Opposition parties acknowledged the urgency of these matters. The fragmented nature of the assembly might have collaborated with the decision to delegate authority (McClintock 1999). However, Congress also started to exercise an unprecedented supervisory role (Cotler 1995; Schmidt 1998) on the president’s controversial initiatives related to counterinsurgency, which were much more to the right than his campaign promises. The president issued 117 decretos legislativos which enacted a broad neoliberal policies and a “pacification program” that granted extensive powers to the armed forces, which at its turn resulted in human rights violations (Cotler 1995). Congress refused the extensive powers granted to the military and tensions between branches grew. Despite the fact that APRA had supported the DDA in May, it tried to reject the decretos legislativos when they reached Congress in November. Nonetheless, the economic related ones were supported by the president’s parties plus AP and PPC, happy with the sweeping market oriented reforms. On the other hand, Congress was able to repeal some of the decrees related to counterinsurgency. In all, Congress repealed 16 of the 117 counterinsurgency decrees issued under Law 25327, modified 14 of them and delayed action on 9 until resuming sessions in April 1992 (McClintock 1994). Additionally, a bicameral commission was formed on the counterinsurgency issue which proposed a new bill. The bill was widely endorsed and Congress passed Law 25397 which redefined DDA procedures by giving Congress increased oversight powers (Schmidt 1998). The law was voted by all parties except Cambio 90. In addition, Congress censured Fujimori’s minister of Agriculture (but Fujimori decided to keep him, contesting the provisions of the 1979 Constitution) and disagreed over the 1992 budget law. Fujimori insulted the Congress and the latter suggested he might be declared unfit to govern and therefore removed (McClintock 1994). Despite these defeats and public bickering, Fujimori agreed with rightist parties in Congress to soften the language of the counterinsurgency decrees and to remove Supreme Court justices sympathetic to APRA. But when Congress formed a special committee to investigate corruption allegations against the president, fueled by First Lady Susana Higuchi, and Fujimori decided to close down Congress on 5 April 1992. He also closed down the Supreme Court and ruled by decree until a new legislature was elected. 40 The autogolpe (self-inflicted coup) was born. 40 Following strong international pressure, Fujimori accepted calling for new elections although he did not intend to do so at the beginning.. DIVISIÓN DE ESTUDIOS POLÍTICOS. 29.