This illustration, although humorous, illustrates quite a bit about the spirit of federal politics. The legislator's comments reveal the state government's need, apparently dire, for obscure revenue sources. The recycling program itself indicates legislators' concerns about providing a public good such as a cleaner environment. The comments about Michigan indicate an awareness of policy diffusion among states. The comments about the connections between recycling and welfare and jobs programs reveal elected officials' policy linkages, which can be creative. Finally, the comments about Pennsylvania's lack of a "bottle bill" indicate New Yorkers' worries that although a policy might initially appear good for the Empire State, its interaction with other states' policies, or lack thereof, could portend unintended negative consequences. This book asks two questions central to the understanding of federal politics and political representation in federal systems. First, how do relationships among political institutions alter the politics and collective decisions that involve cooperative or competitive endeavors among different governments? Second, how does the public sector's responsibility for the provision of nonexclusionary public goods-from clean air to roads to education to health services-change federal politics?
Federalism changes politics. The structures and arrangements among political institutions change the incentives and constraints individual politicians face when developing public policy (Chubb 1985). Yet few scholars have investigated how elected representatives respond to these objective, or structural, changes in policy parameters. On a more subjective level, federalism changes the issues politicians face and the views voters hold about various programs and policies. National politics spill into state politics. Local politics bubble up to the state level, forcing state legislators to contend with issues they had not foreseen or sought and sometimes do not welcome.
Federalism changes politics within political institutions. Federal financing, funding formulas, regulations, and court rulings influence from above the agendas and collective decisions of state legislatures. From below, demands from and the resource limits of municipalities and local governments alter the agendas and decisions made by locally elected state representatives. Legislatures may consider a response but fail to agree on an alternative; they may agree on a response that only symbolically addresses a problem emanating from another level of government; or they may attempt to act only to find changing national or local politics preclude their responses. Sometimes, however, the legislature and other state elected officials will agree on a major policy alternative as a response and enact it, as Michigan did with education finance reform or Tennessee did with Medicaid.
Scholars (Peterson 1981; Chubb 1985) have presented models of federalism focusing on the structures and purposes of federalism. Although these models describe the structure of federal politics and the purposes of federal policies, they provide less information about how actors in political institutions view federal politics on a day-to-day basis and about how elected representatives use the avenues federalism creates. I present a model that offers important new insights into how intergovernmental relationships create and change politics, how the structural relationships among governments influence elected officials' thinking about policy alternatives, and how these changes in thinking affect both the politics observed and the policies governments produce. I also consider how legislators' views about the scope of program benefits, their inclusiveness in providing public benefits, and their responses to incentives to assist particular constituencies translate into collective decisions to determine mixes of public goods, particular benefits, and tax systems.
Federal politics are creative politics. The structural arrangements among governments and the more informal, often competitive, relationships among subnational governments create new politics that would not exist in centralized or unitary governments. Institutional arrangements allow for debates about how to provide goods and services, and federalism frames these debates differently than would centralized or unitary governments. The relationships among governments create competitions not just across equivalent governments but among government levels, as elected officials claim credit for popular programs, shift blame for unpopular policies, and avoid responsibility for financing them with taxes.
Federalism changes the provision of public goods by creating a desire among officeholders to claim credit for programs and their benefits and to avoid responsibility for imposing taxes. These incentives and constraints frame several questions for political science. How do representatives define public goods? How do elected representatives decide which government should provide which goods, how should these goods be financed, and how should benefits flow? The critical point about public goods is that they are nonexclusionary. In federal systems, the nonexclusive nature of public goods complicates governing because elected officials seek credit for the benefits from public goods while avoiding responsibility for the taxes that finance them. Also, subnational elected representatives attempt to exclude their public-goods' benefits from citizens outside their jurisdictions yet are only too happy to export the tax burdens necessary to finance these goods.
Economists have paid considerable attention to public goods (Samuelson 1954; Buchanan 1968). Because demand for public goods is derived differently than demand for private or exclusionary goods, governments better provide an economically efficient level of public goods than do private markets (Gramlich 1990). But economists have not investigated how public goods "firms"-governments and their ostensible managers, elected officials-approach their task. What do politicians consider exclusionary goods best provided privately and what do they consider public goods? Many government programs provide benefits that are neither strictly private goods nor public, nonexclusionary goods. Thus a good deal of gray area exists inside and outside legislative chambers about what government should provide and how.
State legislators spend considerable time determining, debating, and evaluating the prices and price systems for both public goods and particular benefits programs. These price systems are taxes. State legislators spend considerable energy discerning whether the public will accept these price (tax) systems and attempting to connect specific taxes with specific government programs and benefits.
To understand how federal structural arrangements and the nonexclusionary nature of public goods change subnational politics, I focus on the collective decisions of legislatures in four policy areas-taxes, economic development, education finance, and Medicaid.
Taxes are fundamental to government operations of any sort (Levi 1987). All state governments face the same federal tax system and its structural constraints and incentives, yet a great deal of variance persists among state tax systems and the changes in them during the 1990s. Also, states create localities and in many cases design and shape local tax parameters. The relationship of state systems to the federal system and states' responsibility for defining local tax options, if not the tax systems themselves, offer substantial reasons to investigate how states respond to national and local tax politics.
Economic development efforts have become a second universal among the states, and these efforts illustrate the horizontal competition that has developed in the U.S. federal system (Eisinger 1988; Peterson 1981; Dye 1990). While scholars have done much to identify policies and estimate their efficacy, I examine them to illustrate how state legislatures can choose either a "public goods" or a "particular benefits" approach to achieve the same outcome-an improved economy.
The later chapters focus on education financing and health care, respectively. These policy contrasts illustrate several points germane to the investigation of how institutional arrangements and perceptions about public goods create subnational politics and influence policy choices. In the case of education, legislators sought to change financing to preserve public support for a program, primary and secondary education, they perceived as having broad political support at both the elite and mass levels. In the case of Medicaid, legislators sought to Although the primary units of analysis are the legislatures' collective decisions, I present considerable data about representatives' individual positions and policy preferences. I do so to establish a better foundation for understanding the legislatures' collective decisions and to offer readers a means to see how individual positions mapped onto the collective decisions and how those positions were translated via the policy process. With respect to legislators' positions for specific policy alternatives, I attempted to determine the legislators' ideal policies for any given issue and then sought explanations as to why each legislator supported one viable alternative over another. What principles guide state legislators' decisions about financing their governments? How does federalism affect state politics and policies? These governing principles and positions provide the foundation for understanding legislatures' policy decisions.
After establishing both the policy background and the explanations legislators offered for their individual positions, I turn to the primary unit of analysis-the collective policy decisions of legislatures. Legislators perceptions of the program, their governing principles, and their responses to intergovernmental politics interacted with institutional politics, their state constitutions, policy histories, and opportunities for citizen and interest-group influence on the policy process to produce the policy changes and failed attempts at policy changes on which I focus in the policy chapters.
Research Methods
To acquire adequate data on legislators' individual positions and their collective decisions, I conducted case studies of eleven state legislatures during 1994 and 1995. The issues with which I was concerned included taxes, economic development, education, and health care. I consider a case to be a "state issue." I consider all of the states dealing with tax policy and economic development in chapters 4 and 5. In chapter 6, which examines school financing, I present cases from Massachusetts, Vermont, New Jersey, Michigan, Mississippi, Colorado, and Oregon. To a lesser extent I provide supporting information about school finance from New York and Florida, although in neither state was school finance reform a central issue. I examine Florida, Tennessee, Vermont, Washington, Oregon, and Colorado in chapter 7, which deals with health care and Medicaid.
I conducted open-ended interviews with 123 state legislators. In addition, I interviewed several dozen legislative staffers, state lobbyists, local officials, and political activists. The interviews focused on taxes in every state and to varying degrees on education financing, economic development, health care, and government mandates. The interviews yielded an understanding of legislators perceptions about both their representative roles in the federal system and their individual positions on various state policies particularly germane to the interest in federal politics. The interviews collectively explained policy outcomes and decisions in specific states for specific issues.
Representatives acted as informants for decisions their legislatures either made or were in the process of making from 1992 through 1994. Based on the initial criteria that a state consider changing its income, sales, business, or property taxes during that period, nineteen states were considered as potential case-study states. I selected eleven to provide geographic and political variance in the cases as well as the capability of investigating different outcomes in the process.
Had I focused on a single state or case, the interviews with legislators might have been more numerous within a single state, but I could not have generalized about legislatures' collective decisions. By using a range of cases and by collecting both primary and secondary evidence, I offer an analysis with greater external validity.
By going to the states, I achieved far more depth using interviews and primary-source data collection than aggregated outcome data allows. The interviews demonstrated the consistent presence of the six governing principles outlined in chapter 3. To corroborate the interview data, I collected materials to confirm and contrast the information supplied by the legislators. These sources included interviews with lobbyists, staff, and journalists as well as source documents such as bills, committee reports, administrative memoranda, and budget briefings.
The case studies strengthen the assessment of the relationship between federalism and legislators' positions, and they illuminate how federalism and public goods change legislatures' collective decisions. By conducting individual interviews, I could better ascertain a legislator's most preferred policy and contrast it with the policy alternatives considered by a legislature or the final roll-call vote on a single alternative. Moreover, I can estimate a spectrum of possible positions and ideal policy preferences among legislators across states for different policies. Roll-call analyses would not provide this latitude.
With respect to the generalizability of the case studies, I have provided sufficient breadth with respect to who was interviewed and among the fifty states to conclude that the basic principles and politics observed can be generalized beyond the specific cases. Legislators' emphasis among the principles they use in formulating positions and in responding to federal-state and state-local policy proposals comport across several states for any given issue and across the issue areas. For example, concerns about revenue dependability surfaced in discussions about taxes, Medicaid reform, and local school financing. Readers with an interest in the case-study methodology may wish to read appendix A.
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Excerpted from Creative Politics by Glenn Beamer
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