The Global Debt Crisis
Haunting U.S. and European Federalism
Publication Year: 2014
Debt crises have placed strains not only on the European Union's nascent federal system but also on the federal system in the United States. Old confrontations over fiscal responsibility are being renewed, often in a more virulent form, in places as far flung as Detroit, Michigan, and Valencia, Spain, to say nothing of Greece and Cyprus. Increasing the complexity of the issue has been public sector collective bargaining, now a component of most federal systems.
The attendant political controversies have become the debate of a generation. Paul Peterson and Daniel Nadler have assembled experts from both sides of the Atlantic to break down the structural flaws in federal systems of government that have led to economic and political turmoil. Proposed solutions offer ways to preserve and restore vibrant federal systems that meet the needs of communities struggling for survival in an increasingly unified global economy.
Contributors: Andrew G. Biggs (American Enterprise Institute); César Colino (National Distance Education University, Madrid); Eloísa del Pino (Instituto de Políticas y Bienes Públicos, Madrid); Henrik Enderlein (Hertie School of Governance, Berlin); Cory Koedel (University of Missouri); Carlos Xabel Lastra-Anadón (Harvard University); Daniel Nadler (Harvard University); Shawn Ni (University of Missouri); Amy Nugent (Government of Ontario, Canada); James Pearce (Mowat Centre, University of Toronto, Canada); Paul E. Peterson (Harvard University); Michael Podgursky (University of Missouri); Jason Richwine (Washington, D.C.); Jonathan Rodden (Stanford Uni versity); Daniel Shoag (Harvard University); Richard Simeon (University of Toronto, Canada); Camillo von Müller (University of St. Gallen, Switzerland, and Leuphana University, Germany); Daniel Ziblatt (Harvard University)
Published by: Brookings Institution Press
Title Page, Copyright Page
Table of Contents
As this volume was going to press, Detroit, unable to pay creditors as much as $20 billion in outstanding debt, announced in July 2013 that it was filing for bankruptcy protection in federal court, thereby declaring the largest municipal bankruptcy in U. S. history. It remains uncertain whether it will be...
Part I: Federalism and the Pension Crisis in the United States
1: Federalism's Emerging Fiscal Crisis
Paul E. Peterson and Daniel J. Nadler
It is well understood that defaults, bankruptcies, and fluctuations in interest rates are shaped by business cycles, banking management, and financial engineering. However, credit risk among the lower tiers of government within a federal system also has political determinants and political consequences. Without...
2: Competitive Federalism under Pressure
Paul E. Peterson and Daniel J. Nadler
It is, of course, no longer politically correct to characterize anything American as exceptional. In days gone by, however, descendants of the Pilgrim faithful spoke easily of their country as a “city upon a hill,” a “New Jerusalem”3 whose hallowed light shone as a beacon for all nations to see. It was not difficult...
3: Can Market Discipline Survive in the U.S. Federation?
A rare point of agreement among progressive and conservative ideologues in the United States is that the U.S. system of federalism is dysfunctional. Credit-constrained states are responsible for implementing ambitious federal programs that are funded through inflexible grants that create bad incentives...
4: Putting a Price on Teacher Pensions
Andrew G. biggs and Jason Richwine
Public employee pension funds across the nation suffer from unfunded liabilities that are large by any measure, but a growing number of economists, government agencies, and bond raters point out that even so, official figures significantly understate actual liabilities. The movement for “fair market valuation” of pension liabilities argues that financial disclosures must account for...
5: Structural Flaws in the Design of Public Pension Plans
Cory Koedel, Shawn Ni, and Michael Podgursky
The cost of retiree benefits in the public sector is under increased scrutiny in states and municipalities across the United States. In a 2010 report, the Pew Center on the States estimates that the unfunded liabilities of state and local governments for retirement benefits total roughly $1 trillion. Novy-Marx and...
6: Past and Present High-Risk Investments by States and Localities
The years between 1824 and 1841 were a period of enormous public investment by state governments.1 The Erie Canal, completed in 1825, proved substantially more profitable than projected. New York initially set aside revenues from existing sources to meet the canal’s financing costs, but to the state’s...
Part II: The Federalism Crisis Worldwide
7: Between Centralization and Federalism in the European Union
In the European Union (EU) today, what are the prospects for the type of decentralized federalism described by Peterson and Nadler in the introduction to this volume? Can a robust multi-tiered political system be created and sustained in which the center and lower-tiered units have constitutionally protected...
8: German Federalism at the Crossroads
Henrik Enderlein and Camillo Von Müller
Germany’s fiscal situation in the aftermath of the recent financial crisis and the subsequent “Great Recession” is a paradox. While the debt of the federal government (henceforth the Bund) has remained relatively stable in comparison with that of many other industrialized countries and the national outlook is...
9: Spanish Federalism in Crisis
César Colino and Eloísa Del Pino
Spain has been hit very hard by the current fiscal crisis. Although Spanish federalism has faced a number of challenges before—for example, in accommodating territorial and ethnic differences and promoting economic efficiency—today it is having to deal with a combination of fiscal and political...
10: Regional Identity and Fiscal Constraints in Spanish Federalism
Carlos Xabel Lastra-Anadón
A majority of Catalans want to build a new country.” With 54 percent of the popular vote going to parties that favor independence in the November 2012 elections, that assertion by Artur Mas i Gavarró, the reelected president of Catalonia, is undoubtedly true. Mas added, “The great purpose of a new country...
11: The Resilience of Canadian Federalism
Richard Simeon, James Pearce, and Amy Nugent
This volume explores the idea that federal or decentralized systems of government may pose special difficulties for countries experiencing a fiscal crisis of the sort that has disrupted North America and Europe in recent years. On the one hand, autonomous subnational units—states and provinces—may use...
Page Count: 241
Publication Year: 2014
OCLC Number: 870898541
MUSE Marc Record: Download for The Global Debt Crisis