Fiscal Federalism

Fiscal Federalism

Research

Daniel Sutter | Jun 21, 2016
Medicaid was established in 1965 as a joint state and federal program to provide medical insurance to Americans who are poor and have disabilities, and it has grown from 1 percent to 3 percent of GDP. The source of Medicaid’s growth over the past 50 years must inform efforts to reform the program and slow spending. The literature on the political economy of Medicaid provides strong evidence of interest group and political ideological influence, enabled by the open-ended federal match for state spending.
Eileen Norcross, Olivia Gonzalez | Jun 01, 2016
A new study for the Mercatus Center at George Mason University ranks each US state’s financial health based on short- and long-term debt and other key fiscal obligations, such as unfunded pen­sions and healthcare benefits.
Robert Krol | May 05, 2016
Economist Robert Krol examines the problem of highway congestion, looking at how congestion pricing has been successful in the past and why it could be an attractive option in the future. There is mixed evidence about whether congestion pricing is regressive, but governments implementing congestion pricing could use several policy solutions to help reduce inequity. These include reducing other regressive taxes such as the gasoline tax and giving commuters the option to choose between toll lanes and toll-free lanes.
Jason Sorens | Feb 09, 2016
When local governments in the United States and other developed nations become more dependent on the central government’s grants, they tend to become less efficient, spending more and taxing more for the same level of services. Voters can also find it difficult to understand which level of government is responsible for which policy.
Stephen Miller, Zachary Gochenour | Jan 19, 2016
A new study written for the Mercatus Center at George Mason University analyzes North Carolina’s performance on key issues, the way in which the state government manages itself, and opportunities for improvement. North Carolina has recently implemented proactive reforms to its tax system, indicating that state lawmakers are capable of executing the other positive policy changes outlined in this study.
Marc Joffe | Sep 17, 2015
In a new study for the Mercatus Center at George Mason University, policy analyst Marc D. Joffe examines state financial data to better understand the effects these trends in Medicaid are having on state budgets. The study finds evidence that growth in state Medicaid spending is crowding out spending on other major state programs, most notably education and transportation infrastructure. However, there is little evidence that growing state Medicaid expenditure is increasing state debt burdens. As the ACA continues to drive increasing enrollment in all states, those states that have opted for the Medicaid expansion will experience a greater fiscal burden as federal assistance for the expansion gradually shrinks.

Testimony & Comments

Research Summaries & Toolkits

Expert Commentary

Jun 08, 2016

... when it comes to a state's fiscal health, appearances are deceptive. Whether your state is at the top, at the bottom or in the middle of this fiscal ranking, chances are that its fiscal health is worse than state officials claim. The good news is that it is never too late for a state to make improvements to limit fiscal shock down the road.
Jun 01, 2016

The information is right in front of us, but if we don’t pay attention, we risk missing the warning signs of the next state or territorial fiscal crisis.
May 24, 2016

To better understand what it takes to pass comprehensive tax reform at the state level, new research published by the Mercatus Center at George Mason University examines five recent cases: Utah, Rhode Island, Michigan, Kansas and North Carolina.
Feb 25, 2016

Evidence suggests that intergovernmental transfers can adversely affect the total level of government spending, government debt, the tax burden, government efficiency, public knowledge about government, and economic growth.
Jan 04, 2016

Most Ohioans would probably agree that their state’s finances are managed relatively well. According to Mercatus Center at George Mason University research, which ranks states’ fiscal health, they’re right. Ohio ranks seventh nationwide, and several of the states placed higher have the advantage of massive oil and gas revenue.
Sep 01, 2015

How serious was the default by Puerto Rico on its bond obligation? As a member of parliament and associate minister of finance during the recovery in New Zealand during the mid-1980s when the commonwealth almost went bankrupt, I have firsthand knowledge of how difficult recovery is — but I also know that it is possible.

Charts

This week’s charts use data from a National Public Radio compilation of public Department of Defense records of grants issued to state and local law enforcement bodies through its Excess Property Program, also known as DoD 1033. The charts display the total value of all known grants to municipalities in real 2013 dollars along with the total value and number of mine-resistant and combat vehicles distributed from 2006 to April 2014.

Experts

Podcasts

| July 23, 2015
Michigan’s fiscal solvency lags behind numerous other states. Ted Bolema analyzes the situation for the Frank Beckman Show on WJR in Michigan.

Recent Events

Books

Michael S. Greve | May 22, 2015
This essay examines the sources and the scope of federalism’s failures. It provides a trenchant, constitutionally grounded analysis with profound implications for a range of current policy debates. Federalism’s restoration requires not merely rebalancing the federal-state relationship through decentralization. Rather, we must restore the structure of federalism to competitive federalism—which encourages states to compete to enhance freedom and economic growth—in response to the rise of cartel federalism, which squashes competition between the states and makes states dependent on the federal government.

Media Clippings

Sarah Arnett | Jan 17, 2014
The Mercatus Center cited at Philly.com.
Sarah Arnett | Jan 16, 2014
The Mercatus Center cited at Investor's Business Daily.
| Jan 16, 2014
Mercatus cited at Union Leader.
Eileen Norcross | Aug 30, 2012
Eileen Norcross cited discussing high risk financing.
Charles Blahous | Jun 14, 2012
Charles Blahous comments on President Obama's recent statement that state and local governments are the prime source of weakness in the economy.
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