The Price of Federalism

Paul E. Peterson

Rowman & Littlefield, Jan 1, 2012 - Political Science - 268 pages

What is the price of federalism? Does it result in governmental interconnections that are too complex? Does it create overlapping responsibilities? Does it perpetuate social inequalities? Does it stifle economic growth?

To answer these questions, Paul Peterson sets forth two theories of federalism: functional and legislative. Functional theory is optimistic. It says that each level of the federal system is well designed to carry out the tasks for which it is mainly responsible. State and local governments assume responsibility for their area's physical and social development; the national government cares for the needy and reduces economic inequities. Legislative theory, in contrast, is pessimistic: it says that national political leaders, responding to electoral pressures, misuse their power. They shift unpopular burdens to lower levels of government while spending national dollars on popular government programs for which they can claim credit.

Both theories are used to explain different aspects of American federalism. Legislative theory explains why federal grants have never been used to equalize public services. Elected officials cannot easily justify to their constituents a vote to shift funds away from the geographic area they represent. The overall direction that American federalism has taken in recent years is better explained by functional theory. As the costs of transportation and communication have declined, labor and capital have become increasingly mobile, placing states and localities in greater competition with one another. State and local governments are responding to these changes by overlooking the needs of the poor, focusing instead on economic development. As a further consequence, older, big cities of the Rust Belt, inefficient in their operations and burdened by social responsibilities, are losing jobs and population to the suburban communities that surround them.

Peterson recommends that the national government adopt policies that take into account the economic realities identified by functional theory. The national government should give states and localities responsibility for most transportation, education, crime control, and other basic governmental programs. Welfare, food stamps, the delivery of medical services, and other social policies should become the primary responsibility of the national government.

Contents

• The Evolution of Modern Federalism: 1
• The 1991 Fiscal Crisis: 2
• The Price of Early Federalism: 5
• The Rise of Modern Federalism: 10
• The Contemporary Price of Federalism: 13
• Functional and Legislative Theories of Federalism: 16
• Functional Theory: 17
• Locus of the Developmental Function: 18
• Locus of the Redistributive Function: 27
• An Empirical Theory: 35
• Legislative Theory: 39
• Legislators and Development: 41
• Legislators and Redistribution: 43
• A Theory of Change: 47
• Conclusions: 48
• The Changing Federal System: 50
• The Adolescence of Modern Federalism: 51
• Classifying Government Expenditure: 64
• The Redistributive Focus of the National Government: 67
• The Developmental Focus of State and Local Governments: 69
• Intergovernmental Grants: 75
• Conclusions: 83
• Why States Choose Different Policies: 85
• The Variation in State Expenditure: 86
• Determinants of State Developmental and Redistributive Policy: 89
• A Comprehensive Explanation of State Expenditure: 104
• Conclusions: 106
• Welfare A Race to the Bottom?: 108
• Trends in Welfare Policy: 109
• Slowdown in Economic Growth: 111
• Changing Perceptions of the Poor: 112
• Politics Turns Conservative: 114
• States Offset Federal Increases: 119
• The Welfare Magnet: 121
• The Future of State Welfare Policy: 126
• National Grants Is Equity Possible?: 129
• National Determination of State Role: 130
• Appropriate Units of Analysis: 131
• Factors Affecting the Distribution of Federal Grants: 134
• A Comprehensive Explanation of Federal Aid Policy: 143
• Conclusions: 152
• Big Cities Is the Problem Financial?: 153
• The Urban Political Economy: 154
• The Cost of BigCity Government: 157
• The Cost of BigCity Schools: 162
• Federalism and Big Cities: 164
• National Politics and the Fiscal Future of Big Cities: 172
• Reducing the Price of Federalism: 175
• The Future of Redistributive Policy: 179
• Stability and Change in American Federalism: 183
• Things That Should Not Be Changed: 186
• Things That Cannot Be Changed: 189
• Things That Can and Should Be Changed: 191
• Appendix: 197
• Notes: 203
• References: 219
• Index: 233

About the author

Paul E. Peterson is the Henry Lee Shattuck Professor of Government at Harvard, the director of PEPG, and a senior fellow at the Hoover Institution. He is author or editor of numerous books, including The Education Gap: Vouchers and Urban Schools, with William G. Howell (Brookings, 2004 and 2006). He is coeditor (with Martin West) of No Child Left Behind? The Practice and Politics of School Accountability (Brookings, 2003).

Bibliographic information

• Title: The Price of Federalism; A Twentieth Century Fund Book
• Author: Paul E. Peterson
• Publisher: Rowman & Littlefield, 2012
• ISBN: 081579164X, 9780815791645
• Length: 268 pages
• Subjects: Political Science / American Government / General; Political Science / American Government / National; Political Science / American Government / State