Why did congressional Democrats upend the financial regulatory regime they had maintained since the New Deal? I argue that the congressional reforms of the mid-1970s paved the way for the Democratic Party’s turn against financial regulation. Prior to congressional reform, Democrats in Congress were especially parochial, and Southern populists dominated the House and Senate banking committees. These parochial and populist orientations complemented the radically decentralized banking system by New Deal financial regulations. The elimination of the seniority rule and other reforms reduced parochialism and strengthened Democratic leadership, enabling the party to enact deregulatory reforms that provided (short-term, at least) benefits to the diffuse interests of American savers and consumers at the expense of entrenched local industry groups. In the long run, however, these deregulatory reforms significantly accelerated the concentration of economic power held by the nation’s largest firms and wealthiest individuals.
Despite widespread speculation among pundits and politicians, statistical research finds little evidence that primaries are an important source of polarization in roll call voting. This manuscript moves beyond roll call votes by testing the effects of ideological primary challenges on partisanship in bill co-sponsorship in Congress. Moreover, while extant research generally focuses on the one-to-one effects of primary challenges on the incumbents who experience a challenge, I measure and test the effects of the mere threat of a primary challenge from the ideological extreme. I find that the increased threat of an ideological primary challenge accounts for about one-fourth of the rise in partisanship that occurred from the 1980s to the 2010s. These findings suggest the recent wave of ideological primary challenges is an important source of the escalation and intensification of polarization in recent Congresses.
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