The expenditure and revenue effects of defense spending in the Federal Republic of Germany

This article examines three questions. First, is there evidence of systematic defense tradeoffs in West German budgetary outputs? Second, exactly which programs - or types of program - have been the primary victims of tradeoffs? Finally, is there evidence that expenditure tradeoffs are avoided by raising taxes or reallocating tax burdens within the West German system of fiscal federalism? Evidence of expenditure tradeoffs is weak, but those that do occur seem to be based on the simplifying decision rules characteristic of complex organizational and political environments. Change in taxation is related to change in the defense burden, but the strength of the relationship is not overwhelming. The findings for the German case indicate a need to reevaluate the theoretical basis of tradeoff studies. They also suggest an agenda for comparative research on the tradeoff question.