The Electoral Consequences of Centrist Policies: Fiscal Consolidations and the Fate of Social Democratic Parties

In the last few decades, many moderate left parties adopted centrist strategies. These strategies did not only involve a programmatic repositioning but also the implementation of a set of economic policies with substantial distributive effects. What are the consequences of these policies? This chapter assesses the electoral costs associated with centrist policies by focusing on the case of fiscal consolidations. It considers the relationship between different types of fiscal consolidations and the electoral performance of social democratic parties. The results suggest that implementing fiscal consolidations is risky for social democratic parties but that not all fiscal consolidations are equal. Social democratic parties lose particularly badly when they implement spending-based consolidations that cut investment spending or public sector wages. Fiscal consolidations centered around tax increases are not associated with losses. Most forms of fiscal consolidations have a smaller or no effect on the likelihood to win office, but they still decrease the size of the left field. Overall, this suggests that fiscal consolidations, which hurt key constituencies of social democratic parties, are particularly costly for social democratic parties.