The democratic dilemma: How to gain public support to implement difficult, but necessary, reforms.

Those of us who have been in frontline politics hope that those who stand for office fight for what they believe will make society better. But to achieve anything, politicians must first win elections by earning the trust of their citizens. This creates a fundamental dilemma. Our advanced economies face huge fiscal challenges, from rising debt to new spending pressures. Securing our fiscal sustainability will require difficult choices. Yet politicians who implement unpopular measures, like cutting popular programmes or raising taxes, may not be re-elected. This is at the core of the fiscal challenges facing many countries.

In a democracy, what is politically possible depends entirely on voter support. Politicians naturally seek this support by promising more spending or lower taxes. Such promises are credible if fiscal space exists. Conversely, they can strengthen sustainability through reduced spending or higher taxes.

But here lies the dilemma. Genuine consolidation is unpopular. Incumbents who implement these measures risk losing the next election. Yes, fiscal rules and independent institutions can help. But the decisive factor is whether voters will support politicians who implement difficult, but necessary, reforms.

This political challenge is running into a wall of new fiscal pressures. Many countries already have high public debt. Now, structural trends will add significant new challenges.

We can all be grateful that more people live longer. However, as populations age, pension outlays increase and health and care for older people needs rise. Climate change necessitates major economic restructuring. Heightened security tensions require stronger defence. Each of these trends implies significantly higher public spending. Unless we create budgetary space, deficits and debt will rise further. This directly challenges fiscal sustainability.

A failure to act carries multiple risks: higher future taxes, weaker growth, and burdens shifted to our children. It reduces our fiscal space to respond to future crises.

Managing a nation's finances is different from managing a company or a household, but there are similarities. If a household fails to pay its mortgage, the bank takes the house. The challenge faced by the state is recognisable. If a country continues down a path of persistent deficits, financial markets may question its ability to meet its obligations.

What happens next? Interest rates could rise abruptly. This would make it difficult to finance government operations, benefit payments, and other critical spending. This outcome would likely require drastic tax increases and decreases in government services. This is what we must avoid. And most importantly, this is what the public must understand could happen.

This brings me to the core of my message. 

Fiscal sustainability cannot be secured unless voters understand that difficult measures are necessary. Moreover, such measures cannot be delayed. If citizens do not grasp the consequences of inaction, they will resist reform. But if they do, they may accept and even demand responsible policies.

For decades, I have been surprised how often professionals treat economics and politics separately. Economists focus on economic solutions, while others focus on political dynamics. Too few have understood that economic solutions can only be implemented if we acknowledge the boundaries of what is politically feasible. The challenge is not primarily to identify the best economic solution. The most important task is to help voters acknowledge the challenges. Fiscal literacy is therefore essential.

Who conveys this message is of considerable importance. People listen more readily to those they trust. Supreme Audit Institutions (SAIs) and Independent Fiscal Institutions (IFIs) have a unique advantage. They are trusted, independent, and respected across political divides. This independence allows them to present their own assessments, not merely echo government views.

This new role requires caution. Independence is our greatest strength. If these institutions are perceived as advocates for specific policy solutions, their credibility will suffer.

The line must remain clear: diagnose challenges but do not prescribe solutions. Communicating systemic sustainability requires entering the public debate on the problem, not on the preferred policy. 

This is not easy. There will be resistance, especially from those who prefer to postpone hard choices. Institutions must act with wisdom to preserve their reputations. But it is their duty to inform legislators and the public so that decisions rest on sound knowledge.

Transparency by itself is not enough. Releasing material can achieve little unless it is made accessible to, and actually reaches, the relevant audiences.

Citizens do not need full expertise. They may not know the details of defence strategy, but they know defence is necessary. They may not master climate science, but they see the need for action. So too with fiscal sustainability. People must simply understand that persistent deficits and rising debts are dangerous.

This brings us to the fundamental question. If citizens do not understand the importance of fiscal sustainability, politicians who pursue responsible policies will be punished, and debt will grow. But if we increase fiscal literacy, citizens may recognise the need for action.

The public debate can then shift from whether measures are needed to which measures are preferable. That choice belongs to politics, not to independent institutions. But it is only possible when the public accepts the necessity of action. The real challenge is timing: the consequences are tomorrow, but the resistance is today. Our shared responsibility is to bridge this time gap, to help citizens understand the need for action before it is too late.

This blog is part of a series of opinion pieces that highlight diverse perspectives on the need to restore public finances. Building public support for budget reforms has become a pressing need for OECD countries. This collection offers insights into some of the most promising ongoing efforts to empower public understanding, featuring contributions from thought leaders and practitioners in national governments, multilateral organisations, academia, and civil society.

A key reference in this discussion is the OECD report “The People and the Budget: Empowering Public Understanding of Public Finances”, which offers practical guidance for governments on improving the communication of public finances, strengthening citizen engagement, and highlighting the vital role of independent bodies in an environment of high fiscal pressure and low trust.

This blog article should not be reported as representing the official views of the OECD or of its Member countries. The opinions expressed and arguments employed are those of the authors.