Can politicians control bureaucrats? Applying theories of political control to Argentina’s democracy

Can politicians control bureaucrats? Applying theories of political control to Argentina’s democracy

Eaton, Kent


In the United States, an important literature shows that legislators use interest groups, courts, and budgets to assert political control over bureaucrats. Similar theories can be applied to study the scores of new democracies that have emerged in recent decades. In Argentina, politicians in the first administration of Carlos Menem (1989-95) rewrote administrative procedures and relied on both “police patrol” and “fire alarm” oversight to realign the behavior of tax bureaucrats in conformance with their own policy preferences. Whereas U.S. legislators generally prefer complex administrative procedures, different electoral incentives led their Argentine counterparts to support reforms that significantly streamlined those procedures. This finding challenges theories that attribute legislators’ bureaucratic preferences to the separation or fusion of powers between the executive and legislative branches.

Do politicians control bureaucrats? This simple question has given rise to a significant theoretical and empirical literature in the advanced industrial economies, particularly in the United States (Lupia and McCubbins 1994; Spiller and Urbiztondo 1994; Weingast and Moran 1983). Some participants in this debate emphasize the extent to which bureaucrats effectively escape from political control in complex economies because they are privy to more information than the politicians who seek to monitor them (Sundquist 1981). Others endorse the belief that politicians have the ability to make sure that bureaucrats do as they are bid. According to these scholars, politicians can rely on individual constituents and interest groups to produce the types of information that allow them to monitor bureaucratic performance (McCubbins et al. 1987).

Although this theoretical literature has yet to be applied systematically to Latin American bureaucracies, the relationship between politicians and bureaucrats has received considerable attention in the political science literature on Latin America. For analytic purposes, one can reformulate much of this literature as a debate between scholars who emphasize the freedom of bureaucrats relative to politicians, and those who find evidence of politicians controlling bureaucrats. In a sense, this differing assessment of which actor dominates, the politician or the bureaucrat, mirrors the split in the U.S. literature on political control.

Perhaps the most straightforward example of how bureaucrats can confound politicians’ attempts to control them is Peter Cleaves’s Bureaucratic Politics and Administration in Chile (1974). Cleaves found that Chilean bureaucrats in several key ministries were able to stymie attempts by four successive governments to change the status quo, regardless of the ideological direction in which these governments sought to take policy. But one could also place Guillermo O’Donnell’s classic work on bureaucratic authoritarianism in this category, in the sense that he attributed democratic collapse to coalitions of civilian and military bureaucrats who joined forces in a successful attempt to constrain the activities of politicians (O’Donnell 1973).

The work of other scholars, however, leads to very different conclusions. For example, Ben Ross Schneider shows how Brazilian presidents managed to use their vast appointment powers to achieve their industrializing goals, even in the absence of an institutionalized bureaucracy (Schneider 1991). Although Miguel Centeno emphasizes the autonomy of the bureaucracy in Mexico, he also shows how such disparate politicians as Luis Echeverria and Carlos Salinas were able to achieve their policy goals by reshaping and manipulating the bureaucracy (Centeno 1994). Perhaps not surprisingly, the view that policymakers do control policy implementers may find more support in Latin America’s authoritarian periods. In Schneider’s and Centeno’s work on predemocratic Brazil and Mexico, for example, bureaucrats were mostly unable to play politicians in the executive and legislative branches off one another in the attempt to maximize their own independence.

For all its limitations and imperfections, the wave of democratization the region experienced at the end of the twentieth century means that models of political control developed in other democracies have become relevant for this literature on Latin American bureaucracies. There are, however, good reasons to question whether these models are fully applicable. For example, the ability of politicians in the United States to depend on interest groups for information about bureaucrats may depend on the particular way these groups are organized. One does not need to subscribe to a naive version of pluralism to believe that interests have an easier time playing these roles in the United States than elsewhere, for a host of reasons ranging from political culture to federalism.

Despite the political and structural biases in the United States that influence which groups get organized and how (Bachrach and Baratz 1970), the corporatist heritage in Latin America has placed far greater limits on interest group arrangements (Collier and Collier 1977; Malloy 1977). For all the well-documented variety in corporatist Latin America, state leaders, in most cases, organized interests in ways that put interest group leaders in dialogue with top officials in the executive branch, and that mostly excluded politicians in national legislatures and subnational offices from the policy loop. As a result, interest groups in Latin America have traditionally privileged the executive branch over Congress in their attempt to be heard and to influence policy. Though marketization has undermined corporatism and democratization has increased the relevance of legislatures, one can conclude that the legacy of corporatism and authoritarianism for interest groups is mostly problematic for politicians who are seeking information about bureaucrats. Despite these caveats, democratization and the dismantling of corporatism do indicate the potential relevance of models developed to explain the U.S. case.

While it is worthwhile as a theoretical exercise, there are also empirical reasons to highlight the relationship between politicians and bureaucrats because of its direct bearing on the two big challenges facing Latin America: consolidating democratic rule and achieving economic development. In the study of democratic consolidation, it is the relationship between voters and politicians that has received a great deal of scholarly attention.

A central concern for many scholars is whether elections in new democracies serve as effective mechanisms through which voters can hold politicians accountable and ensure that they represent voters’ interests (Schedler et al. 1999). As Manin et al. argue, “Representation is an issue because politicians have goals, interests, and values of their own, and they know things and undertake actions that citizens cannot observe or can monitor only at a cost” (1999, 29). It is not enough, however, for voters to control politicians; politicians must also be able to control the bureaucrats who, in any relatively complex economy, will enjoy discretionary authority in implementing the policies that politicians adopt. Democracy demands that politicians hold these bureaucrats accountable, but we know relatively little about how legislators in Latin America are tackling this critical task.

The nature of the relationship between politicians and bureaucrats can also provide analytical leverage on economic development outcomes. In recent decades, students of economic development have focused a great deal on policy adoption, applying a variety of theoretical approaches in an attempt to understand the causal forces at work in policy reform (Bates and Krueger 1993; Haggard and Kaufman 1992). Despite differences in the causal weight placed on different actors, the degree of consensus about the importance of the policy environment makes for a striking contrast with earlier scholarship, which paid far less attention to policy choice than to structural factors and external constraints (Haggard 1990).

While this focus on policymaking is welcome, it is equally important to ask how bureaucrats implement the new policies that politicians adopt. In the event that bureaucrats routinely escape political control by politicians, we should expect slippage between the market-oriented policies that legislators pass and the content of the policies that bureaucrats actually administer. According to this perspective, cross-national variation in political control over bureaucrats can help account for cross-national variation in economic performance.

In an attempt to contribute to an understanding of the important and complex ties that bind politicians and bureaucrats, this article employs a simple method. It looks in depth at the strategies Argentine politicians used in the first half of the 1990s to assert control over bureaucrats in one critical agency, the Direction General Impositiva (DGI, General Tax Board). Tax bureaucrats’ resistance successfully tabled some of those reform efforts. Politicians in the governing Peronist Party backed away from reform during President Carlos Menem’s second administration (1995-99), with negative implications for the maintenance of fiscal stability later in the decade. Nevertheless, the record suggests that during President Menem’s first administration (1989-95), when the party moved aggressively to stabilize the nation’s fiscal accounts, the reformist impulse encouraged policymakers to change the relationship that bound tax bureaucrats to them. That few of these changes succeeded in the sense of constructing an effective tax bureaucracy should not detract from the usefulness of this earlier period as one in which politicians tried to alter bureaucratic performance by re-writing administrative procedures.

Because the executive branch dominated the reforms implemented in the 1990s in Argentina, this case represents an unlikely place to look for support for a theory of legislative motivation in the design of bureaucracies. For example, some of the reforms discussed in this article, including the redrawing of organizational charts, required no participation from the legislative branch.1 Other administrative reforms, however, did involve the legislature’s participation, with significant and politically charged debates. Despite the president’s unmistakable lead in the design stage, legislators endorsed those reforms; and their support cannot be understood without reference to the incentive structure they faced.

In particular, candidate selection procedures encouraged legislators to privilege the concerns of party leaders, even if this meant sacrificing constituents who did not want to see the tax bureaucracy strengthened. Because of these procedures, what was good for the party was good for individual legislators; and the leaders of the Peronist Party in the early 1990s clearly believed that the party’s electoral chances were closely tied to fiscal stability and tax reform. Although a majority of legislators (for example, the Peronists) were strongly motivated to improve the tax collection agency, party discipline and Menem’s status as Peronist Party leader made it unnecessary for these legislators to exert independent political control over bureaucrats relative to the executive branch.

In the U.S. case, more particularistic electoral incentives motivate legislators to protect their bureaucratic influence relative to the executive branch, even when the president is a member of their party. Although the Argentine executive is much more integrated into the legislative process of the assembly than in the United States (Cox and Morgenstern 2002, 458), it is still appropriate to consider legislative motivation in the redesign of bureaucracies.

The argument proceeds with a review of key aspects of the theoretical literature on the political control of the bureaucracy and the applicability of these theories to new democracies. Then it explains in greater detail the nature of the bureaucratic problem that faced governing-party policymakers in Argentina at the onset of the reform period in the early 1990s. It evaluates the various mechanisms through which these policymakers sought to alter bureaucratic behavior. Finally, this study assesses the broader applicability of the findings beyond the realm of tax collection. To put this Argentine case into comparative perspective, it also discusses political control activities in other Latin American countries.


With the U.S. case as their main empirical reference, scholars working within the principal-agent framework have identified a number of obstacles that politicians must overcome in order to control bureaucrats. The early public administration literature failed to problematize the relationship, asserting that bureaucrats simply implemented the policies that politicians adopted. Subsequently, however, scholars increasingly focused on the amount of actual discretion bureaucrats enjoyed (Allison 1971; Niskanen 1975; Schick 1976).

One of the chief problems politicians face is that it is costly to acquire information about how bureaucrats are doing their jobs. The information, moreover, is asymmetrical: bureaucrats are more likely to be experts in their policy areas than the politicians with whom they engage, and they always have private information about their own performance that they will not share with politicians (McCubbins 1985). How to detect shirking by bureaucrats, then, is the chief control problem facing politicians.

The first question to ask in assessing the applicability of political control theories to new democracies is whether the same obstacles are present in this larger set of countries. In general, the acquisition of information by politicians in new democracies would seem just as difficult. Rational self-interest encourages bureaucrats to guard private information about their own performance in new and more established democracies alike. Acquiring a sufficient amount of information on bureaucrats might be easier where they are fewer in number, but most of the developing countries that have become democratic in recent decades have large public sector bureaucracies (Geddes 1994).

Despite similar informational problems, some factors present in newer democracies might exacerbate attempts at political control. For example, to the extent that legislators in new democracies have shorter time horizons, either because reelection rates are lower (Morgenstern 2002) or because of perceived instability in the democratic regime itself (Ames 1987), acquiring information about bureaucrats might be more difficult for individual politicians and less important relative to other goals. Whereas incumbency advantage in the United States has facilitated the information role played by interest groups, repeated interruptions in democratic rule in countries like Argentina have impeded the development of ties between interest groups and legislators.

In addition to regime instability, legislators have had to contend with corporatism’s executive branch bias. In many new democracies, the problem for information-hungry legislators may extend beyond interest groups to include the way civil society is organized (or fails to organize). For example, politicians in many contexts cannot depend on a robust and independent press to produce information they might find relevant in their political control efforts, an ironic situation considering the hostility of politicians to press freedoms in many of these countries, including Argentina.

At the same time, other factors might attenuate informational problems in new democracies. For example, many of these countries in recent decades have experienced some stunning policy swings between radically opposed development models. When current policies differ radically and not marginally from previous policies, sufficient information about bureaucratic implementation should be easier for legislators to acquire, in comparison with politicians who attempt to monitor incremental policy change. Given the dismal performance of the DGI in the 1980s, for example, when Argentine politicians subsequently sought to improve tax collection, their monitoring efforts were facilitated by easy-to-acquire information on the number of corporations filing tax forms and the number and size of businesses shut down for tax violations.

On balance, it seems relatively safe to assume that information acquisition remains a problem for politicians in new democracies. If so, how do legislators overcome this disadvantage? Once again in the U.S. literature, scholars have identified a number of strategies that politicians use to overcome obstacles to political control, though these scholars are divided over the ultimate success of these strategies (Lupia and McCubbins 1994). According to McCubbins et al. 1987, there are two general types of controls at politicians’ disposal: oversight activities (monitoring, rewarding, and punishing bureaucrats) and the passage of administrative procedures that govern bureaucratic behavior.

With respect to oversight, politicians can either attempt to monitor bureaucrats directly and actively through hearings, referred to as “police patrol” activities; or they can engage in “fire alarm” oversight, according to which they rely on signals from third parties “who have an interest in and information about bureaucratic activity” (McCubbins and Schwartz 1984). According to McCubbins and Schwartz, when both a fire alarm oversight system and a police patrol system are equally informative, legislators will prefer the former because it enables them to avoid paying the costs associated with police patrol. Fire alarm oversight, however, depends on the ability and willingness of interest groups to produce the information that politicians need. When politicians can depend on this type of information, they can then use their budgetary control over authorizations and appropriations to punish or reward bureaucrats for neglecting or respecting their preferences (Weingast and Moran 1983).

Legislative design of administrative procedures is the second general type of control mechanism. According to McCubbins et al., “procedures can be used to mitigate informational disadvantages faced by politicians in dealing with agencies [and they] can be used to enfranchise important constituents in agency decisionmaking processes” (1987, 244). More specifically, U.S. legislators routinely use cumbersome administrative procedures to stack the deck in favor of well-organized and well-financed interests. According to this model, then, interest groups play a dominant role not just in politicians’ oversight activities but also in the procedures they write.

Procedures, however, are effective mechanisms for political control only if they are enforced by the courts (McCubbins et al. 1987). Courts must adjudicate conflicts that may arise over whether bureaucrats’ decisions fall within the law. Thus, in the U.S. model, interest groups and budgets, administrative procedures and courts are the most important tools that politicians use to retain political control over bureaucrats.

How useful are these tools in new democracies like Argentina? There are important reasons to doubt that interest groups play the same information-producing role in countries where individual legislators do not face strong electoral incentives to respond to these groups. In Argentina, the use of closed and blocked candidate lists composed by party leaders encourages legislators to privilege the concerns of party leaders, as opposed to those of particular constituents or groups (Jones 1997). Given this incentive structure, these constituents and groups should not be expected to produce the type of free information on which individual legislators in the United States routinely rely. Interest groups in Argentina that are unhappy about bureaucratic actions and that wish to bring this information to the attention of politicians who can act on it should concentrate their efforts on party leaders. If electoral success drives party leaders in Argentina, then they should solicit input from interest groups every bit as aggressively as individual legislators in the United States do. According to this view, Argentina would differ from the United States not so much in the amount of information produced by groups but in the centralized nature of the production of information.2

This study argues, however, that important differences do derive from the limited number of party leaders-and not all backbenchers-who are the key politicians that groups need to target in Argentina. Because they seek to promote the party’s collective interests, party leaders are likely to be more discriminating and cautious in their relations with interest groups than backbenchers can afford to be. Scholars have shown, for example, that when party leaders control backbenchers, parties can privilege diffuse and latent interests over narrow but well-organized ones (Shugart and Carey 1992; Cox and McCubbins 2001).

Putting it simply, party leaders can afford to ignore interests whose demands are incompatible with overall party goals; and over time, party leaders’ limited receptivity limits the amount of information that groups send their way. The limited entry for interest groups in legislatures like Argentina’s can be contrasted with the decentralized structure of the U.S. Congress, in which affected groups can seek to engage individual legislators at multiple entry points (Shepsle and Weingast 1994; Weingast and Marshall 1988). All else being equal, interest group-generated information about bureaucratic performance should be scarcer in Argentina, and as a result, legislators there should have to rely more extensively on “police patrols” rather than “fire alarms” in attempting to control politicians. Because police patrols are more expensive, we should expect more bureaucratic slack in Argentina.

As mechanisms that could help Argentine legislators assert control over bureaucrats, budgets and courts have been of limited use historically. In the pre-1990s era of chronic inflation in Argentina, the budget was no tool legislators could use to reward or punish bureaucrats because budgets were rarely approved on time and were subject to significant revision by presidents after passage (Jones 2001).3 The achievement of macroeconomic stability in 1991, however, transformed the budget into a potentially meaningful instrument of political control. As Jones shows, although legislators do not greatly alter the budget on the floor of the assembly, they influence budgeting in the earlier and critical design stage by intervening with the relevant ministries (Jones 2001). The profound economic crisis experienced in Argentina beginning in 1999 and the return of inflation in 2002 rendered budgetary control once again less than effective as a tool for political control of bureaucrats.

With respect to the judicial system, courts in Argentina apparently have not participated in the sounding of fire alarms in the way posited by the U.S. model. In the U.S. model, courts are understood as a neutral arbiter that enables aggrieved parties to prosecute bureaucrats for procedural lapses and to hold them to the law. The judiciary’s lack of independence from politicians in Argentina, combined with its extensive corruption (Verbitsky 1993), means that courts generally do not play this role there. Although the extent of judicial independence remains questionable, it may be changing with the recent establishment of new procedures for the selection of judges that reduce the influence of the executive branch (Tommasi and Spiller 2000, 199). A recent empirical study shows that courts do not always support the position of the executive branch in legal disputes (Molinelli et al. 1999, 716).4 For taxation in particular, the courts operated as an important check on the shared preferences of Peronist legislators and the Peronist president for more aggressive tax collection.


The different role interest groups play in Argentina has implications not just for how politicians try to control bureaucrats but also for the very type of bureaucracies that politicians want to establish. Not all legislators want to ensure that bureaucrats respond to narrowly defined interest groups. In extending the politician control model to new cases, therefore, it is good to keep in mind that political control takes on different substantive meanings in different institutional contexts.

The existing literature acknowledges that politicians in different contexts will prefer different types of bureaucracies, but it interprets this difference as resulting largely from the choice between presidential and parliamentary government. In parliamentary systems, the ultimate dependence of the executive on the confidence of the assembly is said to reduce legislators’ concerns that the executive might use the bureaucracy in ways that challenge legislators’ own interests. As a result,

according to Moe and Caldwell, parliamentarism gives rise to public agencies that are less encumbered by externally imposed rules, regulations, [and] timetables . . . and a bureaucratic system that is centrally controlled by political leaders and, taken as a whole, more closely resembles a simple, coherent, rationally designed hierarchy of administration. (Moe and Caldwell 1994, 178)

In presidential systems, by contrast, the reality that the executive branch does not depend on the assembly’s confidence means that legislators have greater cause to worry that presidents will try to use bureaucrats in ways that challenge their interests. As a result, legislators systematically saddle the bureaucracy with complex administrative procedures (Moe and Caldwell 1994). Many empirical studies in a range of policy areas concur with this finding about the streamlined bureaucracies generated by parliamentary systems and the more procedurally complex bureaucracies produced by presidentialism (Feigenbaum et al. 1993; Noll and Rosenbluth 1997; Vogel 1986).

The problem with this model is that it masks the significant institutional variation that exists among presidential systems, variation that in itself might lead legislators in these systems to prefer different bureaucratic arrangements (Shugart and Carey 1992; Eaton 2000). As Spiller and Urbiztondo argue, electoral rules, the timing of presidential and legislative elections, and the strength of regional legislative representation are all factors that might shape the struggle between presidents and legislators over political appointees and career civil servants (Spiller and Urbiztondo 1994, 468). The assumption that underlies the U.S. literature is that legislators value a bureaucracy that can satisfy the demands of important interest groups, which is why they demand the complex administrative procedures that stack the deck in favor of those groups. If not all politicians in presidential democracies care to be responsive to narrowly defined interest groups, we should not expect them to demand cumbersome administrative procedures or, more generally, the type of bureaucracies that facilitate personalized constituency service by legislators. Legislators in presidential systems may, indeed, have cause to prefer streamlined administrative procedures and bureaucracies that are relatively indifferent to the complaints of specific interest groups, their own separate election from the president notwithstanding.

In assessing the potential for conflict between the bureaucratic preferences of legislators and presidents, two factors emerge as especially relevant. First, understanding the types of bureaucracies legislators want requires understanding something about how legislators seek to advance their careers. In the United States, reelection is the dominant goal, and electoral rules encourage legislators to privilege the concerns of interest groups in striving toward this goal. In many of Latin America’s presidential systems, however, reelection is less often the goal, and party leaders displace interest groups as the actors legislators must please to further their careers (Morgenstern and Nacif 2002).

The second factor is whether party control of the executive and legislative branches is unified or divided. Although legislators in some presidential systems may be relatively indifferent to the demands of narrowly defined interest groups, when the executive branch is controlled by another party, they may still prefer administrative complexity in the attempt to check the president. For example, under divided government in Argentina, the legislature should seek greater regulatory specificity and complexity, as in the United States, despite the important differences between U.S. and Argentine electoral laws. Under unified government, however, which Argentina had for eight of Menem’s ten years in power (1989-97), party discipline assuages the concerns of legislative majorities about how the president may use the bureaucracy, facilitating reform efforts that are designed to streamline that bureaucracy.


In the early 1980s, Argentina experienced a transition to democracy that replaced policymakers in the previous de facto government with democratically elected politicians as the principals to whom bureaucratic agents were formally responsible. Beginning in the late 1980s and continuing through the 1990s, the new policymakers abandoned the statist policies that had held sway for most of the postwar period and adopted in their place a series of policies that placed greater emphasis on the use of market mechanisms. Putting this transformation into practice, however, involved not just rewriting the policies but getting bureaucrats to implement them faithfully.

For a variety of reasons, reforming tax administration proved to be particularly important for the Peronist government elected in 1989. Before Argentina’s experience with hyperinflation in the late 1980s and early 1990s, the country’s tax collecting agency, the DGI, represented one of the more prosaic parts of the federal bureaucracy. In that earlier period, marked by easy commercial finance and the widespread tolerance of inflation, chronic underperformance by tax collectors represented a less-than-serious problem for politicians. Lackluster tax collection surely increased the size of budget deficits, but these could be financed by inflation and loans from abroad. When the external situation tightened for developing countries after 1982, however, and when hyperinflation eroded citizens’ tolerance after 1989, Argentine politicians could no longer afford to be indifferent to the tax bureaucracy. By preventing the government from printing money to cover budget deficits, moreover, the convertibility regime adopted in 1991 dramatically increased the political salience of tax collection.

In order to defend macroeconomic stability in this post-inflation period, it was not enough for politicians to pass new taxes; they also needed to figure out how to force bureaucrats to collect the new taxes. In this sense, bureaucratic reform in the area of taxation posed greater challenges than in other policy areas. For example, deregulation in the first half of the 1990s significantly reduced bureaucrats’ discretionary authority but did not demand that bureaucrats perform additional tasks. Trade reforms that phased out quantitative import restrictions and replaced them with tariffs likewise automatically reduced the range of decisions in which bureaucrats were involved. In these policy areas, it was enough for politicians to rewrite laws in order to effect the types of changes they sought; for the most part, they did not need to contemplate serious changes in bureaucratic behavior to accompany the reforms. Although simply getting policymakers to agree to new policies was far from painless, reforms that required not just statute changes but actual changes in bureaucratic behavior were particularly difficult to achieve. In many cases, bureaucrats emerged as important obstacles to reforms that would force them to surrender acquired privileges. The DGI is a case in point.

The advantage of hindsight, however, shows that bureaucratic resistance was not the only obstacle to the creation of an effective taxcollecting operation in Argentina. Although the Peronists undeniably and aggressively sought to improve the tax bureaucracy in the first half of the 1990s, their interest would prove to be only temporary. After 1995, Peronist legislators refused to support additional and much-needed reforms in the tax bureaucracy, largely because the sources of their earlier support for bureaucratic reform disappeared. On the political side, Menem’s reelection in May 1995 immediately compromised his status as party leader, and the previous harmony of interest between the president and his copartisans in Congress began to dissipate. Rifts over taxation developed between Menem and the legislature over the course of his second term, though this phenomenon also characterized interbranch relations beyond the realm of fiscal policy.

The Peronists’ subsequent defeat in the 1997 elections showed that fiscal stability would no longer guarantee electoral victories for the party. On the economic side, the difficult economic times that erupted in 1995 and 1996 and returned and worsened later in the decade seriously challenged the “zero tolerance” policies toward tax evasion that politicians had earlier encouraged bureaucrats to adopt. In hindsight, the buoyant economy of the early 1990s appears to be no less significant a factor in facilitating efforts to crack clown on tax evasion than were party incentives and unified government.

The Problem: Inferior Tax Collection

When the Peronists took control of the executive and legislative branches in 1989 and began attempting to stabilize the economy, they quickly identified the weakness of the tax bureaucracy as an important problem (Cuello 1996b). Reducing inflation, which would prove to be the Peronists’ most critical achievement in the 1990s and the key to its electoral successes in that decade, required a more efficient and aggressive tax-collecting agency.

According to one study conducted in the late 1980s, the Argentine tax-collecting agency compared unfavorably with similar agencies in other countries on nearly every measure. For example, as a percentage of the total tax revenues it produced, the DGI’s budget in 1988 was nearly twice the comparable figure in Chile and four times that of the United States. One in 70 Argentines filed income tax forms, compared with 1 in 14 Chileans and 1 in 5 Spaniards. Argentina also ranked poorly in terms of the percentage of DGI employees who were inspectors and in the number of inhabitants per inspector (FIEL 1991, 306-8).

Much of the problem can be traced to the institutional instability that has had such important and wide-ranging consequences in Argentina (Tommasi and Spiller 2000). As governments with very different ideological orientations and political support bases alternated in power through relatively short cycles of coups and elections, the policies that tax bureaucrats were asked to implement remained highly volatile. As in other parts of the bureaucracy, regime instability led to much turnover in the director-general position, normally the only political appointment in the DGI (Cuello 1996a, 66). In the first two years of the Raul Alfonsin administration (1983-89), for example, four different directors-general were appointed. Between 1965 and 1989, only one director-general served more than two years (World Bank 1990, 53). Endemic political instability also increased the need to appoint people who could bring political support to the administration, whether or not they could bring the appropriate technical background to the position. Because the DGI director is empowered to interpret the legal system through general resolutions, furthermore, short tenure in the top position exacerbated the problem of broader policy swings.

Institutional instability, however, was not the only reason that tax bureaucrats were less than diligent. So long as the political cost of inflation did not exceed the political cost of enforcing strict tax collection, policymakers in democratic and nondemocratic periods alike may have actually preferred lackluster tax collection. This preference is reflected in the adoption of administrative procedures for tax collection that were extremely lenient toward the taxpayer. As the World Bank argued, “Argentina’s procedural rules foresee events such as deadline extensions or ad hoc changes in tax returns whose definition is at the will of the taxpayers; they also often allow the dilution of a case at no cost to the taxpayer” (World Bank 1990, 41).

Although the World Bank study concludes that legislators granted the tax administration excessive regulatory delegation, these procedures accurately reflected the substance of legislative preferences in the prereform period. Furthermore, a great amount of discretion in this period is compatible with research on the U.S. case showing that the amount of discretion bureaucrats receive varies indirectly with the controversial nature of what they do (McCubbins 1985). Before the 1980s, what tax collectors did was not perceived as particularly important in Argentina, and their failure to produce revenue was not a matter of controversy. Against this background, and considering the Peronists’ urgent need to increase and stabilize tax revenues in the early 1990s, their support for a revision of administration procedures is unsurprising.

Although the Peronists were frequently aggressive and sometimes creative in attempting to ensure bureaucratic compliance with their new policy preferences, the reform of the DGI itself was an uphill struggle. Two constraints proved particularly important. Job security provisions made it impossible to fire incompetent or corrupt tax bureaucrats, and a rigid civil service code made it impossible to reward tax bureaucrats through a steeper compensation curve (World Bank 1990, 60). Over the course of the 1990s, the Association of Employees of the DGI (AEDGI) steadfastly resisted attempts to create greater flexibility. Conflict with the AEDGI union over the negotiation of a new collective work agreement that would improve productivity involved the DGI management in lengthy court cases and appeals (World Bank 1993, 64). DGI employees’ opposition to bureaucratic streamlining, which can be seen as part of the broader resistance of government employees to state reform efforts, encouraged politicians to explore a variety of other means in the attempt to assert political control.

Redrawing Organizational Charts

One of the first reforms adopted by the Peronists in 1989 involved redesigning the chain of command that linked tax bureaucrats to governing-party politicians. As shown in figure 1, President Menem revised the status of revenue production activities in the economic bureaucracy relative to the expenditure side. Before this reform, the secretary of finance held authority over the Subsecretariats of Expenditures and Revenues. According to the head of the tax reform commission Menem appointed in 1989, this organizational configuration compromised tax collection activities because the finance secretary tended to focus on the expenditure side of fiscal policy to the neglect of tax collection (Cuello 1996b).

The intensely political process of imposing an annual budget on the various ministries tended to overshadow the less dramatic revenue side. It was officials on the expenditure side of the bureaucracy, furthermore, who historically exerted pressures on top policymakers to grant tax amnesties of the sort that greatly undermined tax compliance in Argentina. Considering this history, the commission recommended separating responsibility for revenues and expenditures into two different secretariats. According to Cuello, elevating the DGI within the overall bureaucracy also served symbolic ends, indicating the end of the era of political acceptance of inferior tax administration. After this organizational change, the secretary of public revenues reported directly to the economic minister. During the most important period of tax reform (1991-96), the Economic Ministry was led by Domingo Cavallo, who repeatedly identified tax collection as the achilles’ heel of his economic reform plan for Argentina. This episode can be understood as a case of asserting political control by redrawing hierarchical lines within the bureaucracy.

Appointing the Top Tax Bureaucrats

In addition to changing the organizational structure of the economic bureaucracy, President Menem used his sweeping appointment powers to select high-level officials with very public commitments to ending tax evasion, no matter the cost. In Argentina, the president has exclusive powers to appoint and remove cabinet ministers and secretaries without congressional approval.5 In late 1990, Menem named Carlos Taachi as the new secretary of public revenues. Nicknamed the “tax nazi” because of his near-fanatical obsession with rooting out tax evaders, Taachi moved quickly to instill among Argentines an awareness that the government would no longer tolerate their evasion of taxes. Just as Cavallo in the Economics Ministry was pronouncing the end of inflation in Argentina, Taachi was promising to eliminate tax evasion. In the opinion of a broad cross-section of politicians, academics, and public finance experts, Taachi was not only the most visible tax collector ever but also one of the highest-profile government officials in Menem’s first term.6

In 1989, shortly after the bureaucratic reorganization, Menem appointed Ricarclo Cossio as head of the DGI. According to one of the DGI’s administrative judges, Cossio shared Taachi’s approach to tax evasion by encouraging his underlings to tomarlos presos-get tough-in their dealings with tax evaders (Alegria 1996). As the sole individual empowered to interpret tax laws through bureaucratic resolutions, Cossio favored a much more limited view than his predecessors of the constitutional guarantees that protected individuals from arbitrary treatment by tax collectors. Under Cossio, many businesses were subject to search (allanamiento) for suspicion of evasion before thorough investigations had been conducted, a practice that in many cases later enabled evaders to overturn their convictions in court (Gonzalez 1996). While many tax bureaucrats expressed frustration with such guarantees, Menem picked as his top tax collectors officials who were willing actually to compromise a degree of legality for the sake of efficacy (Lisicki 1996). Many opposition legislators attributed what they considered the “totalitarian” tendencies of Cossio and his bosses, Taachi and Cavallo, to their service as bureaucrats in the former military government (Alegria 1996).

Facing a bureaucracy that was reluctant to change, Menem made great use of appointment powers by picking individuals like Taachi and Cossio. In contrast to the United States, the Argentine president’s exclusive right to appoint top bureaucrats means that opposition parties have much less chance to influence those appointments. The president’s more extensive appointment powers are an important tool for the governing party in its attempt to control bureaucrats, one that may partly compensate for interest groups and courts that are less useful as political control tools than they are in the United States.

Unleashing the Untouchables

In addition to organizational and personnel changes at the highest levels, the Peronists also looked inside the DGI for potential reforms that might improve tax collection. Below the appointed director-general, the DGI leadership is divided among six division heads, career bureaucrats, not all of whom are responsive to the president, let alone members of the president’s party (Montoya 1996; Clarin 1996b).

To deal with entrenched and relatively high-level bureaucrats who, for various reasons, resisted the shift away from lax tax collection, the Peronists’ response was to create an “island of competence” within the DGI in the form of a new Subdirectory of Fiscal Audits and to pit it against the others (Geddes 1994). Within this audit division, in turn, a special force of tax inspectors emerged in the early 1990s that came to be known in the press as “the Untouchables” (los intocables) for their ability to resist attempts by tax evaders to buy their complicity. Headed by veteran tax inspector Luis Maria Pena, the new Fiscal Audits Subdirectory hired almost 1,000 employees from among the existing pool of DGI employees, including 400 accountants, 35 lawyers, 25 engineers, 10 system analysts, and 300 university students to work beside the inspectors (Santoro 1996, 89). Using a special World Bank loan of US$28 million, the inspectors began their work. In 1993 alone, they conducted 1,900 inspections, detecting invasion of more than US$1 billion and bringing to the justice system more than 780 companies accused of evasion (Santoro 1996, 92).

The Untouchables were not only an attempt to pick up the slack from other divisions of the DGI; they can also be understood as a type of police patrol that top bureaucrats (for example, Cavallo and Taachi) used to discipline the rest of the agency. Although their chief purpose was to instill fear among tax evaders, the Untouchables also produced valuable information for policymakers about bureaucratic performance. That they disciplined their colleagues in the DGI, and not just tax evaders, was demonstrated in 1996, when they uncovered the attempt by IBM to bribe DGI officials over a computerization contract. According to Cuello, the Untouchables randomly turned up evidence of this scandal when investigating, at the behest of Economy Minister Cavallo, the tax returns of his political nemesis, the postal executive Alfredo Yabran (Cuello 1996b). The Untouchables can be understood as a creative attempt at political control by politicians who were seeking rapid behavioral change in the tax bureaucracy.

Modifying Administrative Procedures for Tax Collectors

Having created a special force of tax inspectors they hoped would be “untouchable,” politicians subsequently rewrote the procedures governing tax collection to make it easier for those inspectors to do their work. The rationale behind most of these changes was to help tax inspectors temporarily close businesses that were suspected of evading taxes. One of the central ways proposed to do this was to restrict the role of the judicial system in those closures, a move that opposition party legislators steadfastly resisted.

Over the first few years of Menem’s government, in a series of different actions, legislators delegated to bureaucrats the authority to use a broader set of carrots and sticks with taxpayers. As an example of the former, when legislators expanded the VAT to include services in 1991, they also enabled the DGI to establish special incentives for taxpayers to demand receipts when they purchased goods (Art. 11.7, Law 23,871). This legislative change fostered the creation of a popular lottery called LoterIVA, in which taxpayers could participate by submitting their VAT receipts (World Bank 1993, 62). A year later, legislators delegated to the DGI the right to grant bonuses for early payment of taxes (Art. 19, Law 23,905).

An example of the sticks that the DGI could use against taxpayers is the special procedures legislators approved to facilitate the collection of taxes from businesses operating partly in the black market. In particular, Peronist legislators authorized the DGI to use a set of presumptive indicators, such as a business’s energy consumption, salary payments, and acquisition of raw materials, to determine the accuracy of its reported tax obligations (Camara de Diputados 1992, 6051-55). At the same time, in recognition of the DGFs limited computer technology, legislators gave the agency the right to demand information from taxpayers about the software they used to prepare their taxes (Art. 41, Law 24,073). Finally, as part of the broader process of social security reform, in April 1993 legislators delegated to the DGI the authority to collect social security taxes in addition to all other taxes, enabling the agency to take advantage of important cross-checking capabilities in monitoring compliance (Taachi 1995). Peronist legislators also gave the executive branch the right to require of individuals proof of tax payment (acreditacion de cumplimiento fiscal) in order to conduct certain activities.

More controversially, Peronist legislators voted in the early 1990s to redesign administrative procedures to make it easier for inspectors to close businesses suspected of evading taxes (Law 23,905). First, they extended the period for which businesses could be closed and determined that the closing of businesses was an appropriate punishment for much less serious infractions (Camara de Diputados 1991, 4620). In particular, businesses would be closed for failing to print receipts and for not registering with the DGI under the new VAT system when they were required by law to do so. By adopting a very blunt set of criteria to close businesses, legislators increased the public’s perception that closures would become more routine and widespread (Camara de Diputados 1991, 4555). When opposition legislators criticized closing businesses for what they considered minor infractions, such as the failure to print receipts, Peronist legislators responded that correctly printing receipts was vitally important for the success of the entire VAT system (Camara de Diputados 1991, 4620).

Second, Peronist legislators enabled inspectors to close down businesses in a timelier manner by limiting the courts’ participation in the process. If the business in question appealed the closure, judges would have only 24 hours to decide whether to suspend the action, a difficult deadline for a seriously backlogged judicial system. In response to concerns that too many judges were suspending business closures, Peronist legislators in April 1992 voted further reductions in their role. As Peronist Deputy Marcelo Lopez Arias argued, restricting the role of the judicial system was necessary because judges had refused to respect lawful closures for formal infractions like failing to print receipts (Camara de Diputados 1991, 4583). Legislators from opposition parties opposed these measures. Deputy Hector Siracusano used the phrase “juridical barbarism” (barbarismo juridico) to characterize Peronist proposals that would close businesses for 30 days for simple infractions (Camara de Diputados 1991, 4583).

According to this reform of administrative procedures, if the DGI had evidence that a business had failed to print receipts on two separate occasions, it could close clown that business, and regular judges could not suspend the closure (Art. 44, Law 11,683). Tax inspectors would simply need to acquire the approval of an “administrative judge.” According to the administrative procedures approved by Congress, moreover, the director-general could delegate this title to any DGI employee (Art. 10, Law 11,683). Thus, a director-general with a strong interest in closing businesses should choose as his “administrative judges” officials who were willing to apply a lower standard in the closing of businesses.

Opposition legislators argued that administrative judges were a fiction because they were employees of the executive branch and not real judges. For this reason, opposition legislators steadfastly opposed that bill as undermining an individual’s constitutional right to protection by the judicial system against arbitrary actions by the executive branch (Camara de Senadores 1992, 5967). In 1996, Peronist legislators further broadened the DGI’s ability to close businesses immediately on learning of alleged cases of evasion (Clarin 1996c).

As a result of these changes in administrative procedures, many businesses were closed for failing to comply with the tax system in Argentina. As Table 1 shows, the number of closures per year exploded in the early 1990s. Armed with the new tools given them by governing-party legislators, tax inspectors presented to the judicial system eight hundred large cases of evasion between 1991 and 1996 (Santoro 1996, 18).

Restricting the role of the courts undoubtedly made it possible for Peronists to produce this spike in the number of businesses closed for evading taxes in the first half of the 1990s. Furthermore, the closing of so many businesses in such a spectacular fashion probably increased tax compliance overall, particularly in the high-growth years 1991 to 1994. Despite the efforts of governing-party legislators, however, the judicial system continued to play a role in these closures after they took effect. In their zeal to perform in ways that would please top bureaucrats, tax inspectors committed a number of irregularities in closing businesses that later led judges to throw out many of the cases against alleged tax evaders (Alegria 1996; Gonzalez 1996).

The judicial system also played a role in ending the aggressive model of business closures led by the Untouchables. In late 1995, when Argentina was suffering through the recessionary effects of the Mexican peso crisis, attempts by these inspectors to close businesses in towns and cities in the interior triggered widespread riots. Siding with the rioters against the inspectors, the courts dealt a serious public relations blow to the DGFs “fear model” of tax collection (Clarin 1996a).

When the recession continued through 1996, the DGI subsequently downplayed its efforts to close businesses for tax evasion. Thus, despite the sensational packing of the Supreme Court by President Menem, at a lower level the judicial system continued to operate as a constraint on the ability of the president and governing-party legislators to use the bureaucracy however they pleased. Whereas courts enhance political control in the U.S. model, in this Argentine case the courts actually complicated politicians’ efforts to control and reform bureaucratic behavior.

Acquiring Information on Bureaucratic Performance

According to theories of political control of the bureaucracy, constituents and interest groups routinely share with politicians the type of information about bureaucratic performance that would be costly for politicians to acquire on their own. This mechanism depends on constituents and interest groups to complain when government bureaucrats’ provision of goods and services fails to please them, which typically occurs when these groups get too little of the goods or services in question. The bureaucratic collection of taxes does not lend itself to the pulling of these “fire alarms,” however. While citizens are likely to complain to politicians about inadequate schools, roads, or health care, they are unlikely to complain about tax bureaucrats who fail to collect their taxes. Politicians accordingly are denied an important source of information about performance in this part of the bureaucracy. While a latent and sizable group of taxpayers who oppose the tax evasion of well-connected firms does exist, the costs of mobilizing and organizing such a group are usually prohibitive.

Peronist legislators responded to such informational disadvantages in two significant ways. First, they relaxed the principle of “fiscal secrecy” that had long been enshrined in the law governing administrative procedures. Thanks to this change, the DGI could share information about taxpayers’ tax declarations with designated third parties (Art. 101, Law 11,683). Second, legislators delegated to the executive branch the authority to publish lists specifying the names of individuals and firms and the amounts they paid in income, asset, and wealth taxes (Law 23,905). Publication of these lists gave unwanted publicity to some of the country’s wealthiest businesses that were not paying their share of taxes, and served to encourage businesses to complain about competitors whose names did not appear (Santoro 1996, 142).

Table 2 suggests that this list had a positive effect on the number of denunciations (that is, “fire alarms”) received by the DGI. According to the economy minister, who went to Congress to advocate this change, the purpose of this “honor roll of taxpayers” was to get competitors in the market to denounce cases of evasion and thereby level the playing field (Camara de Senadores 1991, 5370). In addition to being a cheap way of producing information, a published list of who actually paid taxes in Argentina would serve as a very public record of the performance of tax bureaucrats, which politicians could use as an information source.

Inviting the participation of third parties was not without risks, however; some legislators feared that informants would inaccurately denounce competitors simply to make trouble for them. As Lupia and McCubbins note, the drawback is that

once a legislator provides an informed third party an opportunity to report on bureaucratic activity, the legislator also provides that person an opportunity to pursue his possibly distinct self-interest by misrepresenting bureaucratic actions in an attempt to mislead the legislator. (Lupia and McCubbins 1994, 93)

Nevertheless, publishing lists of taxpayers was a creative attempt by legislators to deal with the special informational problems in the area of tax collection.

Having identified private citizens as possible informers who could provide valuable information about evaders and about the performance of the DGI itself, legislators also reworked the relationship between the DGI and other government actors. In February 1991, legislators authorized the DGI to sign agreements with provincial and municipal governments and with various official banks at the national, provincial, and municipal levels. In particular, legislators approved compensation mechanisms that would essentially give these actors a share of any tax revenues they could produce for the national treasury (Art. 19, Law 23,905). This allowed legislators to bypass the internal DGI conflict that prevented management from using such compensation packages as an incentive to improve collection. Thanks to this legislative change, the political appointee at the head of the DGI could shift collection tasks onto other actors with preferences more similar to his own, and thereby undermine the bargaining position of his opponents in the agency.

Increasing Funds for the Tax-collection Agency

Peronist legislators’ support for improved tax collection is also reflected in their behavior regarding the budget. During the long years of chronic inflation and economic chaos, budgets were often finalized in the last months of a fiscal year and infrequently had much direct impact on actual expenditures. The achievement of fiscal stability in the early 1990s made it possible for presidents to submit budgets in a timely manner, and therefore to begin to use the budget as a more effective mechanism of political control.

In a time of fiscal austerity and budget cuts for government ministries, it is significant that the legislature agreed to sizable increases in the DGI’s budget. Table 3 documents the increase in budgeted amounts in inflation-adjusted figures. In just two years, between 1990 and 1992, the budget for the tax-collecting agency more than doubled. This increase occurred in the same years that the government imposed important expenditure cuts in the areas of education, public enterprises, and the military (Hunter 1997, 163; World Bank 1993, xxi). These increases made possible the purchase of sophisticated information systems to improve the monitoring of taxpayers (Berman 1996). Furthermore, during the first Menem administration, the number of employees in the tax-collecting agency increased from 9,814 in 1990 to 17,305 by 1995 (DGI 1996, 47).

This 76 percent increase occurred at a time when the Peronist government was cutting the number of employees throughout the federal bureaucracy. Between 1990 and 1993, for example, total federal government employment experienced a 53 percent reduction, from 1,128,258 employees in April 1990 to 528,495 in January 1993 (World Bank 1993, 299). One can conclude from these figures that, as in the U.S. model, politicians’ ability to appropriate monies for the bureaucracy represented an important tool for political control.


The two central findings of this article are relevant to the broader study of how legislators assert political control over bureaucrats. First, in contrast to their counterparts in the United States, who consistently insist on complexity and specificity in the administrative procedures they write, the behavior of Argentine legislators reveals clear preferences for a streamlined bureaucracy. In the 1990s, governing-party legislators endorsed a variety of changes in administrative procedures, all of which sought to free tax bureaucrats from the constraints that previously hindered their efforts.

With these changes, for example, legislators made it possible for bureaucrats to share information about taxpayers with third parties, and they made it much easier for bureaucrats to close businesses temporarily for tax evasion. According to the World Bank, these new tools helped the DGI substantially to increase the government’s tax effort in the critical years of the early 1990s (World Bank 1993, 55). Whereas legislators in the United States depend on the courts in their struggles with bureaucratic agents, furthermore, in Argentina the overriding goal of governing-party legislators to improve tax collection through the streamlining of administrative procedures encouraged them to restrict the participation of the courts in those procedures.

Legislators’ aggressive support for bureaucratic streamlining is of interest because it challenges theories that attribute legislators’ bureaucratic preferences to the separation or fusion of powers between the executive and legislative branches. The Argentine case suggests that not all legislators in presidential systems need complex administrative procedures to protect their political interests, for the simple reason that not all legislators in presidential systems are equally beholden to interest groups.

Extending theories of political control to cases outside the United States shows that legislators’ bureaucratic preferences in presidential systems are not homogeneous. In the United States, even when the same party controls the legislative and executive branches, electoral incentives encourage legislators to intervene in the bureaucracy on behalf of constituents in their home districts and narrowly focused interest groups. These incentives have led to a notoriously porous bureaucracy. In Argentina, the absence of particularistic incentives freed governing-party legislators from the need to use the bureaucracy in this way. Thus, understanding the type of bureaucracies that legislators want to establish requires shifting the focus from the form of government (for example, presidential or parliamentary) to lower-level institutions (for example, electoral rules and party structure).

Although the absence of particularistic incentives had positive implications for improvements in tax collection during Menem’s first administration, this same incentive structure had negative implications outside the tax bureaucracy. The same harmony of political interests between President Menem and the Peronist majority that facilitated streamlining reforms in the DGI led to anemic oversight by the legislature of executive branch activities (Ferreira and Goretti 1998; Vidai 1995). Although opposition legislators repeatedly called for investigations into executive branch wrongdoing over the course of the 1990s, Menem’s political control over Peronist legislators prevented serious inquiries.

The absence of effective oversight activities is particularly striking given the corruption Argentina experienced in the 1990s. Although Menem was ultimately placed under house arrest for his role in illegal arms sales to Croatia and Ecuador, it was the judicial system, not legislative oversight, that produced information about his actions. Pervasive corruption is itself a major disincentive to the activating of fire alarms, in two senses: it convinces constituents that it would be useless to sound those alarms, and it gives corrupt politicians financial cause not to respond to the alarms that are sounded.7 The absence of particularistic electoral incentives thus limits the use of fire alarms in Argentina, and corruption renders less effective the limited alarms that do exist.

Corruption in the DGI itself has had devastating implications for politicians who wanted to transform that agency to signal a new era of limited tolerance for tax evasion. Although he sponsored the crackdown on evasion as head of the DGI, Cossio was himself implicated in the DGI-IBM corruption scandal and forced to resign in late 1995. His successor, Hugo Gaggero, was also forced to resign over a similar scandal between IBM and the Banco de la Nacion, which Gaggero headed before becoming DGI director-general.

What does the experience of other countries say about the types of bureaucracies legislators prefer? For example, if the absence of particularistic incentives led Argentine legislators to prefer a streamlined tax bureaucracy, do similar incentives lead to similar outcomes elsewhere? One can find this general dynamic at play in the Venezuelan case. According to Crisp, tight party discipline and the frequency of legislative majorities for the president’s party led to significant delegations of governing authority from Congress to the executive branch (Crisp 1998). The sweeping nature of delegation in Venezuela reflects legislators’ disinterest in complex administrative procedures and the absence of institutional jealousy between the executive and legislative branches over control of the bureaucracy.

In Brazil, very different electoral incentives have generated predictable differences in the types of bureaucracies that legislators seek to build. Because of the profound credit-claiming imperative in Brazil (Ames 1995; Samuels 2002), legislators prefer administrative complexity for the simple reason that complex procedures provide them with entry points into the bureaucracy.

Rinne emphasizes electoral rules and the lack of party discipline in his explanation of legislative opposition to attempts by Presidents Collor and Cardoso to streamline the bureaucracy in the 1990s (Rinne 2001, 165-68). For instance, in response to proposals that would weaken job stability in the public sector, Brazilian legislators successfully inserted a series of procedural steps that the government would have to take in order to fire bureaucrats (Rinne 2001, 198). In the area of taxation, Brazilian legislators opposed reforms that would lift the banking secrecy laws that hamstrung tax collectors.

In Chile, although legislators seek to perform intervention services for their constituents and therefore have cause to prefer a more porous bureaucracy, Siavelis’s research raises questions about the relevance of these preferences in the postauthoritarian period, given the limits on Congress’s role imposed by the 1980 Constitution (Siavelis 2000).

Apart from the question of the type of bureaucracies legislators prefer, this study has also addressed the question of whether legislators actually get what they want. If scholars are divided over whether bureaucrats escape the control of legislators in the United States, where legislators are more powerful as policymakers than their counterparts in most presidential systems, then we would expect little effective political control in countries where legislators are much weaker. In new democracies, it often seems that legislators are barely able to shape policy adoption, let alone the more difficult task of controlling how bureaucrats implement policy.

The Argentine case study presented here offers a slightly more optimistic assessment. Not completely unlike legislators in the United States, Peronist legislators depended on a mix of fire alarm and police patrol oversight in their attempts to force bureaucrats to align their behavior with legislative preferences. Research into the different nature of these two types of oversight in the United States helps explain why legislators in Argentina came to depend so heavily on police patrol in the case of taxation: constituents simply do not complain when bureaucrats fail to collect taxes from them. In this respect, authorizing the publication of lists of taxpayers in order to expose the firms that were absent can be understood as an attempt by politicians to compensate for the relative silence of their constituents in the area of tax administration.

Although Argentine legislators are disadvantaged relative to their U.S. counterparts in a number of ways, in at least one important sense the obstacles to political control for them were less serious. The Peronist majority in the legislature in the 1990s needed to figure out how to bring about a speedy improvement in tax collection, but it did not need simultaneously to check the president’s influence in the bureaucracy relative to that of Congress. During Menem’s first administration, there was much greater overlap between the political interests of the president and a majority of legislators than is common in the United States, even in periods of unified government.

The return of high rates of tax evasion in the second half of the 1990s, together with the persistent weakness of the tax-collecting agency, indicate that it would be a serious mistake to overstate the success of the politicians’ earlier efforts to improve tax collection. Instead, the first Menem administration should be thought of as an important window of opportunity for the establishment of a more effective tax bureaucracy. Incentives and motivations aligned in this period in ways that were highly advantageous for reform: a Peronist majority in Congress shared with the president the view that improving tax collection was critical in the party’s attempt to defend fiscal stability and win elections. After 1995, the window of opportunity closed with the growing rift between Menem and his own copartisans in Congress, and with evidence that campaigning on a record of fiscal stability was not enough to win elections indefinitely.

Despite the redrawing of organizational charts and the unleashing of the Untouchables, in the end there were serious limits to how much legislators could alter the work environment of tax bureaucrats. As Tommasi and Spiller argue, reforms of the labor code in Argentina lagged far behind reforms in virtually every other policy area (Tommasi and Spiller 2000, 132). With Argentina’s rigid labor code, as Economy Minister Roque Fernandez complained, more than one hundred DGI officials who had been indicted for corruption continued to work in the agency as of 1998. A civil service code that made it impossible to reward and punish individual bureaucrats for their performance seriously limited how much legislators could transform the tax administration, even in the brief but important period when they actually sought to do so.


1. Even though they are not strictly germane to the evaluation of theories of legislative motivation, this article includes unilateral actions taken by the executive branch in order to give a more complete account of attempts to control bureaucrats by politicians as a class of actor (for example, politicians in both branches).

2. I am grateful to an anonymous reviewer for raising this question about the likely informational imperatives of party leaders.

3. In contrast to the U.S. Congress, which can use the regular reports of the General Accounting Office for information about how bureaucratic agents use public funds (Lupia and McCubbins 1994, 110), the Argentine Congress’s over- sight capabilities are quite limited.

4. According to that study, the state lost 36 percent of the trials in which it was a party between 1996 and 1998.

5. Senate approval is required only for ambassadorial appointments. 1853 Constitution, Article 86, Inc. 10.

6. Much of Taachi’s impact can be traced to his effective use of the news media, including the memorable appearance on a television talk show in which he used graphic language to describe how he would deal with evaders.

7. I am grateful to an anonymous reviewer for the point that corruption can disable alarms.


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