How do fiscally decentralized federations fare in times of crisis? Insights from Switzerland

This article examines federal dynamics during times of crisis in fiscally decentralized federations using Switzerland as an example. Based on qualitative research, we analyse how the relationship between the federal government and the cantons evolved during the recent ‘Great Recession’ and ensuing financial crisis. We contend that fiscally decentralized structures, as well as the consensus-oriented institutions of the political system, protect the federal balance of power. Our results show that Switzerland indeed adapted well to the crisis of the 2009 economic recession. However, the deficit crisis has revealed challenging coordination problems, notably in the areas of fiscal equalization and corporate taxation, which have the potential to put federal stability under stress. So far, the system has adapted well and safeguarded the federal order. Due to its combination of fiscally decentralized institutions and a strong consensus culture, Switzerland has proven to be a particularly robust federation.     

The Federal Civil Service: The Demise of an Institution

Recent changes in federal personnel practices, ostensibly for the purpose of "performance," serve to deprive the civil service of its moral content and hence to undermine its viability as an institution.     

"Federal Character" and Management of the Federal Civil Service and the Military

The "federal character" principle, which has been enshrinedin Nigeria's Constitution since 1979, seeks to ensure that appointmentsto public service institutions fairly reflect the linguistic,ethnic, religious, and geographic diversity of the country.Application of the principle in the federal civil service andthe military has amounted to a confused balancing of the meritprinciple and the quota system, based essentially on statesof origin. This has had adverse consequences for both institutionsin terms of discipline, morale, and overall effectiveness andefficiency. Faithful implementation of universal primary educationand imaginative rehabilitation of secondary and tertiary educationare required to ensure equal opportunities for all citizensto compete for civil service positions on the basis of merit.With regard to the military, only rapid implementation of theconstitutional provision on compulsory military training anda definitive end to military rule can help to reduce the salienceof the "federal character" principle.     

The Savings and Loan Debacle and Erosion of the Dual System of Bank Regulation

The crisis in the banking and thrift industries is catalyzinga shift in the traditional system of dual state-federal bankregulation toward the federal government and away from the states.Erosion in this system has been evident for the past decadedue to actions of the Congress, federal regulators, and thejudiciary. The dual system has two sets of flaws. One is regulatorycompetition that encourages weak monitoring of financial institutionsby states. The other is created by the "moral hazard" of thecurrent system of federal deposit insurance. There are two pathsto reform. One is continued erosion of the power of the states.The alternative is to provide incentives that reinforce thedual system of regulation and deter the sources of "moral hazard."     

Informing Public Health Policy and Practice: The Strategic Management of Research Processes and Organizations

Better health depends on how well federal public health organizations perform both scientifically and organizationally. The performance challenges of public health science organizations are not carbon copies of those facing public service organizations. This article examines how one federal science agency in the public health field has instituted a performance orientation over a dozen years, offering a detailed illustration of how the in-principle advantages of the "managing for performance" approach can be realized in practice. In taking science more seriously as a basis for public policy, the new administration should not lose sight of lessons it can learn from its predecessors about managing science organizations for performance.     

Is ABCM Destined for Success or Failure in the Federal Government?

The days of ballooning federal budgets are over. Today, both the president and Congress continue to strive for a balanced budget, while encouraging federal agencies to improve service delivery of the various programs and entitlement benefits provided to their customers. Stakeholder involvement and public opinion about how agencies run their "businesses" are increasingly scrutinized. Trends such as competition for service delivery through franchizing, privatization, and outsourcing are causing an entirely new way of looking at how support and program services are managed. This article explains how the success or failure of activity-based costing management (ABCM) is dependent upon its ability to link the resolution of these external factors with internal business needs, while providing government managers with a better understanding of how to use ABCM to steer their organizations into the future. We also describe the current and future status of ABCM installations at various federal entities where ABCM was recently introduced and where interviews, conducted a year ago, were updated to describe how ABCM is helping these entities align external factors to internal needs. These federal entities are the Immigration and Naturalization Service, the Financial Management Service, and the Veterans Benefits Administration.     

Results and lessons from Canada's PS2000

Canada has been a world leader in administrative reform, eager to experiment during turbulent times in public administration. Public Service 2000, an attempt to instill the Canadian public service into a people- and results-oriented management culture, has been widely heralded as among the boldest of recent Canadian administrative reforms. Results from implementing PS2000 were expected within a decade of its 1990 launch. Halfway through that timeframe, the results are surprising, complex, contradictory and paradoxical. For example, in the second year of implementation, the longer term solutions of PS2000 conflicted with a financial crisis demanding fast results, and PS2000 principles, throughout implementation, contradicted certain traditional public service values. Reflecting on their experience, individuals who participated in PS2000 confirmed lessons in the extant literature, and suggested lessons specific to Canadian circumstances. PS2000 has been an unavoidable and much-needed effort to reform the Canadian public service, though perhaps inevitably it fell short of expectation. Yet, inside opinion remains mixed, seeking rationalist explanations, and expressing dissatisfaction over the progress of implementation. PS2000 has been absorbed into a much broader plan to reinvent federal government administration and the role of the state in Canadian society. Continuing difference of opinion may well call for a more fundamental change in administrative and managerial doctrine, especially with respect to launching future comprehensive administrative reform projects.     

Revenue Strategy on the Gold Coast: The Case of Stamford, Connecticut

This study investigates the effects of federal policy and budgetchanges during the Reagan years as well as the revenue strategiesof governmental and private, nonprofit agencies in Stamford,Connecticut. Systematic examination of agency budgets and interviewswith agency directors in 1982 found widespread anxiety aboutpossible revenue decline, but few departures from traditionalrevenue strategies. In Stamford, federal changes produced revenueproblems for only a few agencies, most of which went about "businessas usual" and did not experience a budget crisis. This situationremained unchanged in late 1985.     

Senior Civil Servants and Bureaucratic Change in Belgium

The Belgian civil service used to be a Weberian bureaucracy, with a strict division of labor between civil servants and politicians, administrative careers based on both seniority and partisan patronage, and a technocratic culture coupled with a high level of alienation from both politics and politicians. Administrative reform came in the wake of the constitutional reform that transformed unitary Belgium into a federal state with several governments, each with a civil service of its own. The fiscal crisis prompted them to look favorably on the promises of New Public Management (NPM). The new Flemish government was first to take advantage of this opportunity, as it had the financial resources, the tendency to refer to Anglo-Saxon and Dutch examples, and the right political and administrative leadership.The staying power of these as yet precarious reforms depends on the continuity of political leadership, the establishment of an administrative culture matching the institutional innovations, and resistance to the endemic temptation to use them for partisan purposes.     

The Rise of Competitive Federalism

This article challenges the prevailing view of increasing political and fiscal centralization in the federal government. Since 1978, the authors argue, the nation has entered a new era of "Competitive Federalism" with federal, state and local governments locked in a competitive struggle for taxpayer resources and support. The new era has emerged largely because of the loss of the tremendous fiscal advantage held by the federal government during its centralization period, 1929 to 1978. Although "deregulated" and free to move into any area of domestic policy, the federal government is constrained by necessary budget pressures and a "reformed" income tax structure. Competitive Federalism has emerged as a new balancing force between Washington, D.C. and the fifty state-local governments and will govern the federal system for the foreseeable future.     

Federal dynamics in times of economic and financial crisis

The global economic and financial crisis is a challenge for all governments, but particularly for federal states because divided and/or shared territorial powers make federations susceptible to coordination problems in fiscal policy making. This article explores the effects of the ongoing crisis on federal relations. Three kinds of problems that may become the cause of federal tensions and conflicts are evoked: opportunism of subgovernments, centralisation and erosion of solidarity among members of the federation. Our analysis of fiscal policies and federal conflicts of 11 federations between 2007 and the present reveals three kinds of coordination problems: shirking in the use of federal government grants, rent‐seeking in equalisation payments, and over‐borrowing and over‐spending. Our results show that shirking remained limited to few cases and occurred only in the first part of the crisis. However, rent‐seeking and over‐borrowing and over‐spending led to a reduction of solidarity among subgovernments and to increased regulation of the fiscal discretion of the members of the federation. Subsequently, tensions in federal relations increased – although only in one case did this challenged the federal order.     

National Childhood Vaccine Injury Act of 1986: Using Tax Revenues to Assure Vaccine Availability

The National Childhood Vaccine Injury Act of 1986 was funded with an earmarked tax in an attempt to prevent a perceived crisis that was developing in the United States regarding the availability and affordability of vaccines for life-threatening childhood illnesses. The federal government felt compelled to intervene in a perceived failure of the private marketplace. In short, the inability of several pharmaceutical firms to obtain liability insurance due to high damage awards forced them to leave the marketplace or self-insure. This article details the history of the vaccine tax policy issues and updates the experiences of the financing mechanism. As the federal government attempts to broaden its role in the health care delivery system, the possibility of similar interventions exist.     

The State of U.S. Federalism, 2000-2001: Continuity in Crisis

Despite the 2000 presidential-election crisis, basic continuityprevailed in American federalism, including survival of theelectoral college and furtherance of the more recent shift offederal policymaking from places to persons during today's eraof coercive or regulatory federalism. The year revealed theenduring salience of political parties and the prominent roleof interest groups in the politics of federalism, as well asthe ways in which the federal system shapes, and is shaped by,policy debates. The U.S. Supreme Court continued its state-friendlydecision-making while Congress continued to preempt state authority,attach new conditions to federal aid, federalize criminal law,and nationalize power even while giving state and local governmentsmore administrative discretion. The year also illustrated thedeclining impact of federal aid on state-local revenues comparedto the increasing fiscal impact of the federal government'ssubstantive, monetary, and fiscal policies.     

Electronic Funds and Benefits Transfers,E‐Government,and the Winter Commission

This article examines how electronic funds transfers and electronic benefit transfers have become integral components of digital government. These technologies have forwarded many of the principles of the Winter Commission, including the development of lean, responsive government. The greater efficiency and cost savings for the federal and most state governments have not been achieved without encountering and dealing with serious matters related to customer service, contracting, collaboration, management, and implementation. These issues arise in the normal daily use of electronic payment technologies, but they are magnified in crisis situations, as demonstrated by disaster relief operations during Hurricane Katrina.     

Recommendations Forestalled or Forgotten? The National Commission on the Public Service and Presidential Appointments

Nearly two decades after the first Volcker Commission issued its report on the federal public service, the presidential appointment and confirmation process remains long, cumbersome, intensive, and embarrassing. As the evidence presented in this essay suggests, the process may attract people who are motivated more by personal rewards than by the intrinsic value of public service. Although recent administrations have displayed little enthusiasm for reforming the federal appointment process, the best hope for change may reside in future presidents' desire to assert tight political control over executive departments.     

Federal Use of Implied Guarantees: Some Preliminary Lessons from the Current Financial Distress

The U.S. financial crisis and recession that began in 2007 poses profound challenges for public policy and administration. It also provides useful information about the effects of economic policies. This paper considers the implications of current developments for the use of implied guarantees as an instrument of public policy. It draws on experience with Fannie Mae and Freddie Mac to argue that implied federal guarantees have a severe disadvantage. Their costs are largely unmeasured, unrecognized in the budget, and unmanaged. Yet their use appears to be increasing in the current crisis. To minimize the costs of the expanded financial safety net, government should measure and manage those costs more effectively. To that end, this paper proposes new budgetary treatments of federal implied guarantees.     

Federal Intervention in the Municipal Bond Market: The Effectiveness of the Build America Bond Program and Its Implications on Federal and Subnational Budgeting

The American Recovery and Reinvestment Act of 2009 (ARRA) included several new federal programs intended ostensibly to “unfreeze” the credit markets as a result of the global financial crisis. One such program, the Build America Bond (BAB) program, aimed to lower the borrowing costs for state and local governments by increasing their access to capital and providing a more generous federal subsidy than the traditional indirect tax exemption subsidy. BABs are taxable bonds sold by subnational governments, which carry a 35 percent direct federal payment subsidy to the borrower. In creating this program, the federal government hoped that the large direct federal subsidy along with greater potential investor interest in taxable securities would result in lower borrowing costs for state and local governments vis‐à‐vis traditional tax‐exempt bonds. This research study examines the relative effectiveness of the BAB program and details the various quantitative and qualitative implications on federal and subnational budgeting by moving from an indirect to a direct federal subsidy approach in facilitating state and local government capital raising.     

Presidential Bureaucratic Power and Supreme Court Justice Voting

Presidency scholars suggest that the federal bureaucracy has become presidentialized and that the federal agencies have become a primary tool for presidential policy implementation. However, in its review of federal agency litigation, the Supreme Court stands as an important monitor of executive bureaucratic action. Here, the conditions under which Supreme Court justices choose to facilitate executive bureaucratic action are assessed. This study tests the proposition that Supreme Court justices' voting decisions to support the president's bureaucratic agents are conditioned upon theoretically interesting extra-legal factors. Logistic regression analysis was conducted on justices' votes from Supreme Court cases involving cabinet and independent agencies during the years 1953–1995. The results indicate that Supreme Court justices' voting decisions to favorably review bureaucratic actions are influenced by extra-legal factors including attitudinal, political, and external concerns.     

Retrofitting the Administrative State to the Constitution: Congress and the Judiciary's Twentieth-Century Progress

One of the twentieth century's "big questions" for United States government has been how best to retrofit, or integrate, the full-fledged federal administrative state into the constitutional scheme. The public administration orthodoxy initially advocated placing the executive branch almost entirely under presidential control; Congress and the federal judiciary responded otherwise. Congress decided to treat the agencies as its extensions for legislative functions and to supervise them more closely. The courts developed an elaborate framework for imposing constitutional rights, values, and reasoning on public administration practice. As the challenge of retrofitting continues into the twenty-first century, public administrators might profitably play a larger role in the constitutional discourse regarding the administrative state's place in constitutional government.     

The Burger Court and Younger Abstention: Enhancing the Role of State Courts in Constitutional Adjudication

An important determinant of federal balance is the degree ofstate court authority to decide federal constitutional issues.This study traces the development of the Younger abstentiondoctrine, one of the primary vehicles by which the Burger Courtrestricted federal court jurisdiction and enhanced the authorityof state courts in constitutional adjudication. The Youngerdoctrine was adopted by the Supreme Court in 1971 for reasonsof comity and equitable restraint. Throughout the Burger Courtyears, Younger was expanded from an initial denial of jurisdictionto litigants seeking injunctive relief in state criminal proceedings,to litigants in cases "akin" to criminal proceedings, and thento litigants in cases "important to state interests." By relyingon Younger abstention, the Burger Court has reduced the roleof the federal courts as the primary enforcement of U.S. constitutionalrights.