The Role of Market-Value Accounting in Reducing Potential Taxpayer Subsidies: The Case of Deposit Insurance

The federal deposit insurance program required billions of dollars in taxpayer subsidies in recent years. Unless reforms are initiated soon, the program will continue to incur losses and will likely sizeable require subsidies in the future. Some of the blame for the past losses of the deposit insurance program has been attributed to the regulatory discretion and lack of information on the potential losses arising from the exercise of regulatory discretion. It is often argued that market-value accounting can be an effective check on regulatory discretion and can minimize the future costs of the program to the taxpayers. This study examines the role market-value accounting can play in reducing the potential taxpayer subsidies to the program. It examines the relationship between accounting system and losses to the deposit insurance program, discusses the problems in implementing the market-value accounting, and shows how market-value accounting can improve the effectiveness of the system of public regulation and reduce the adverse financial consequences of regulatory discretion. While the direct focus of the article is on the deposit insurance reform, the discussion and the arguments have applicability to improving the regulatory effectiveness of other public agencies and programs.     

Book Reviews: Big Fears and Some Ideas

Books reviewed: Forrester, Viviane. The Economic Horror. Hirschman, Albert O. Crossing Boundaries: Selected Writings. Young, Jock. The Exclusive Society: Social Exclusion, Crime and Difference in Late Modernity. Worcester, Robert and Mortimer, Roger. Explaining Labour's Landslide. Parker, Noel. Revolutions and History: An Essay in Interpretation. Schneer, Jonathan. London 1900: The Imperial Metropolis. Taylor, Brandon. Art for the Nation: Exhibitions and the London Public 1747–2001. Major, John. The Autobiography. Lamont, Norman. In Office. Crick, Bernard. Tailpeace: Clearing Up After Myself. Montefiore, Alan and Vines, David (eds) Integrity in the Public and Private Domains. Goldsworth, Jeffrey. The Sovereignty of Parliament: History and Philosophy. Lynch, Philip. The Politics of Nationhood: Sovereignty, Britishness and Conservative Politics. Newsinger, John. Orwell's Politics. Jowell, Roger; Curtice, John; Park, Alison and Thomson, Katarina. British Social Attitudes, 16th Report: Who Shares New Labour Values?.     

Review Articles and Book Reviews

Books reviewed in this article: Tim Rowse, Notes on the Launch: Nugget Coombs: A Reforming Life 1 First published in Quadrant Magazine, October 2002.
Tim Rowse, Nugget Coombs: A Reforming Life Sam Scruton Richardson, No Weariness: The Memoir of a Generalist in Public Service in Four Continents, 1919–2000 Rae Wear, Johannes Bjelke–Petersen: The Lords Premier HK Colebatch, Policy (2nd edn) Jon Hawkes, The Fourth Pillar of Sustainability. Culture’s Essential Role in Public Planning David Burchill and Andrew Leigh (eds.), The Prince’s New Clothes: Why do Australians Dislike Their Politicians? Public Service and Merit Protection Commission, Serving the Nation: 100 Years of Public Service Gary P Sampson and W Bradnee Chambers (eds), Trade, Environment, and the Millennium Edward Elgar, Political Economy in Federal States: Selected Essays of Stanley L Winer     

Book Reviews: The Balance between Forgetting and Remembering

Books reviewed Gary Jonathan Bass, Stay the Hand of Vengeance: The Politics of War Crimes Trials Richard Goldstone, For Humanity: Reflections of a War Crimes Investigator Joanna Van Selm, (ed) Kosovo's Refugees in the European Union Peter Shore, Separate Ways: The Heart of Europe Tommaso Padoa‐Schioppa, The Road to Monetary Union in Europe: The Emperor, the Kings and the Genies Kenneth Dyson, The Politics of the Euro‐Zone: Stability or Breakdown? Stefano Bartolini, The Political Mobilization of the European Left, 1860–1980: The Class Cleavage Alexander Keyssar, The Right to Vote: The Contested History of Democracy in the United States Richard Little and Mark Wickham‐Jones, (eds) New Labour's Foreign Policy: A New Moral Crusade? Thomas Frank, One Market Under God: Extreme Capitalism, Market Populism, and the End of Economic Democracy Fritz W. Scharpf and Vivien A. Schmidt, (eds) Welfare and Work in the Open Economy Fritz W. Scharpf and Vivien A. Schmidt, (eds) From Vulnerability to Competitiveness Fritz W. Scharpf and Vivien A. Schmidt, (eds)Diverse Responses to Common Challenges Andrew Samuels, Politics on the Couch: Citizenship and the Internal Life John B. Thompson, Political Scandal: Power and Visibility in the Media Age Andrew Thorpe, The British Communist Party and Moscow 1920–43     

Book Reviews: Values for Public Administration Renewal

Books reviewed:
Richard Stillman II, Creating the American State: The Moral Reformers and the Modern Administrative World They Made .
Camilla Stivers, Bureau Men, Settlement Women: Constructing Public Administration in the Progressive Era .
David H. Rosenbloom, Building a Legislative-Centered Public Administration: Congress and the Administrative State—1946–1999 .     

Credit Reform, Negative Subsidies, and FHA

After several years' experience with the new budgetary treatment of federal credit activity, or credit reform, it is appropriate to consider how this innovation is working. One objective of the new approach was to provide both estimates of the cost of credit assistance and a means of monitoring the performance of those estimates over time. In at least one—admittedly difficult—case, FHA single-family mortgage insurance, the reform is not succeeding in reporting the performance of the subsidy estimate because the agency's budget submissions are not consistent with the new accounting. This failure may result from the agency's inability to accept or adopt the fundamental changes in accounting concepts affected by credit reform. This article attempts to explain some of those changes and to show how they may be used to provide relevant information in the budget.     

Policy Networks,Elections, and State Subsidies1

What are the effects of electoral competition on the disbursement of state subsidies in industrialized democracies? I argue that the scope of subsidies, which ranges from economy‐wide to regional and industry‐specific subsidies, is determined by the extent of political (electoral) monopoly conditioned by economic threats from foreign competition. The mechanism through which electoral competition is linked to subsidies is the policy network. I assess this argument by examining thirteen Organization for Economic Cooperation and Development (OECD) countries in the period 1990–1993. The findings offer amendments to models of policy networks and speak to the importance of domestic institutions on factor mobility and trade policy.     

Welfare and child support: Complements,not substitutes

In most states, child support paid on behalf of Temporary Assistance for Needy Families (TANF) participants is used to offset TANF and child support administrative expenditures; this policy primarily benefits taxpayers. In contrast, Wisconsin allowed most custodial parents to keep all support paid on their behalf. This policy, which treats welfare and child support as complements, was evaluated through an experimental design. This paper reports the key results of the experimental evaluation, using state administrative data to examine the effects on child support outcomes and governmental cost. We find that when custodial mothers keep all child support paid on their behalf, paternity establishment occurs more quickly, noncustodial fathers are more likely to pay support, and custodial families receive more support. These outcomes are achieved at no significant governmental cost. © 2008 by the Association for Public Policy Analysis and Management.     

Insurance Subsidies,the Affordable Care Act,and Financial Stability

This paper measures the effects of subsidies in the Affordable Care Act on adverse financial outcomes using administrative tax data and credit data on financial outcomes. Using a difference-in-differences design with propensity score reweighting, I find that at $100 per capita, ACA premium tax credits and cost-sharing reduction subsidies reduced consumer bankruptcies and severe auto delinquency by 8 percent and 7 percent, respectively, and substantially reduced right-tail delinquent debt and third-party collections. The value of recipients’ risk protection against medical debt payments amounts to approximately 16 to 21 percent of the cash costs of the subsidies, while the subsidies provided substantial indirect transfers to external parties.     

Rural Adjustment Schemes: Juggling Politics,Welfare and Markets

The Commonwealth government has offered support to farmers in the form of structural or business adjustment‐type schemes since the Loan (Farmers Debt Adjustment) Acts of 1935–1971. Since 1971, a series of more comprehensive rural reconstruction/adjustment schemes with a range of objectives from debt alleviation to encouraging some exits from agricultural industries, has been in place. While having little direct impact on the structure of these industries, the various schemes have been politically important and an indicator of how core values relating to agricultural production and rural life have changed. A review of the schemes shows an increasing focus on improving farm productivity and sustainability, accompanied by a discourse emphasising the need to promote the ‘farm business’, rather than to protect the ‘family farm’. On the other hand, governments have also used these schemes to deliver ‘welfare’ outputs.     

Local Government and Welfare Generosity: Municipality Spending on Social Welfare

Although it is difficult for local governments to give support for social welfare recipients top political priority, there are huge variations in the support recipients actually receive among Norwegian municipalities. However, local governments representing different party ideologies may prefer to support different dimensions of generosity. Some municipalities could have a liberal attitude to eligibility rules but be strict on time limits and the amount of money provided. Others may be generous regarding time limits or amounts received once one is accepted as a welfare client. Data from the mid 1990s indicate the variation in support is related to different generosity dimensions for different party groups. While the total number of clients seems unrelated to politics and basically correlates with local social problems, the duration and amount of support are related to the political composition of the municipality assembly. Devoid of any large variation, both time limits and the amount of support increase in accordance with socialist leanings, and the total budget used for social welfare support also increases with the proportion of women in the municipality assembly.     

Welfare Reform: Assessing its Political, Economic, and Social Effects

Books reviewed: Rebecca M. Blank, It Takes a Nation: A New Agenda for Fighting Poverty Anne Marie Cammisa, From Rhetoric to Reform?: Welfare Policy in AmericanPolitics Martha Shirk, Neil G. Bennett, and J. Lawrence Aber, Lives on the Line: American Families and the Struggle to Make Ends Meet Robert M. Solow, Work and Welfare     

Welfare State Legitimacy: Ranking, Rating, Paying: The Popularity and Support for Norwegian Welfare Programmes in the Mid 1990s

Welfare programmes are targeted at different beneficiaries and grounded on a variety of principles: universalism, means testing, needs testing, targeting, income supplements and income maintenance, to mention some of the most important. The first question asked is: who supports programmes targeted at the different groups? The second question concerns whether the support varies when different techniques are used regarding measuring support for welfare state programmes – those programmes that are recommendable, those people want to spend their tax money on and the programmes where increased spending is followed by acceptance of a tax increase. Basically the results are similar across different measurement techniques. But if an interest group is identifiable – such as parents with young children – there is a distinct tendency for the interested party to be more supportive when money and budget restriction are involved compared with the pure recomendability of the programme. Interested parties also tend to support programmes that they are or will soon be using, most obviously seen in support for day care centres, which are supported largely by families with children below the age of 7 years, and for schools and education, supported largely by families with children above the age of 7 years. Where no distinct interest group – beyond the actual beneficiaries – is identifiable, normative positions such as ideology are the best predictor of support for welfare state programmes.     

Public Opinion Polls,Voter Turnout,and Welfare: An Experimental Study

We experimentally study the impact of public opinion poll releases on voter turnout and welfare in a participation game. We find higher overall turnout rates when polls inform the electorate about the levels of support for the candidates than when polls are prohibited. Distinguishing between allied and floating voters, our data show that this increase in turnout is entirely due to floating voters. When polls indicate equal levels of support for the candidates, turnout is high and welfare is low (compared to the situation without polls). In contrast, when polls reveal more unequal levels of support, turnout is lower with than without this information, while the effect of polls on welfare is nonnegative. Finally, many of our results are well predicted by quantal response (logit) equilibrium.     

Decentralization,Local Government,and the Welfare State

Despite growing interest in decentralized governance, the local government systems that comprise the most common element of decentralization around the world have received little systematic attention. This article, drawing on the first systematic index of decentralization to local government in 21 countries, demonstrates a close relation between Social Democratic welfare states and an intergovernmental infrastructure that in important respects ranks as the most decentralized among advanced industrial countries. This empowerment of local government in these countries was less an outgrowth of Social Democratic welfare state development than a preexisting condition that helped make this type of welfare state possible.