TOWARD THE PUBLIC INTEREST: REDEFINING RURAL POLICY NEEDS

From the perspective of a political theorist, the author advances a basic concept of the public interest derived from the work of Brian Barry. Policies for rural areas are too often monopolized by agricultural income support programs which go to an assignable interest. They, however, do little to benefit or advantage the bulk of the rural populations whose interests are quite heterogenous.     

Income tax concessions for owner‐occupied housing

Abstract

This article considers arguments for and against the major tax concessions for owner‐occupied housing in the Internal Revenue Code—concessions that have a significant effect on the federal budget. It recommends retaining two of the concessions— nontaxation of net imputed income and exemption of capital gains—and abolishing two others—the mortgage interest and real estate tax deductions.

After a review of the market impact of removing each deduction, the article concludes that an appropriate phase‐out period of 15 to 20 years would virtually eliminate adverse effects on house prices and homeowners.     

A political theory of intergovernmental grants

This paper formulates a political theory of intergovernmental grants. A model of vote-maximizing federal politicians is developed. Grants are assumed to buy the support of state voters and the ‘political capital or resources’ of state politicians and interest groups which can be used to further increase the support of state voters for the federal politician. The model is tested for 49 states. Similarity of party affiliation between federal and state politicians and the size of the Democrat majority in the state legislature increases the per capita dollar amount of grants made to a state. Likewise, increases in both the size of the state bureaucracy and union membership lead to greater grants for a state. Over time, the importance of interest groups (bureaucracy and unions) has increased relative to political groups (state politicians).     

Comment on Steven C. Bourassa and William G. Grigsby's “income tax concessions for owner‐occupied housing”

Abstract

Federal income tax deductions for mortgage interest and property taxes are defensible on grounds of both economic efficiency and the social benefits of homeownership. Homeowners should be treated as landlords renting to themselves; as such, they benefit because they do not pay a tax on the imputed rental income they receive, while rental property owners do. Both receive deductions for mortgage interest and property taxes, and both should.

The mortgage interest deduction generates symmetry between debt and equity financing of a home; if interest were not deductible, those whose income derives largely from property would have an advantage over those whose income comes from labor. Because workers would be disadvantaged, repeal is unlikely to generate the revenues Bourassa and Grigsby expect or modify the distribution of the tax burden in the way they favor. Finally, the deductions promote homeownership, which is socially desirable.     

The Consequences of Shifting Control: Federal and State Distribution of Small Cities CDBG Funds in Four Southern States

Following the shift of the Small Cities Community DevelopmentBlock Grant program in 1982 from federal to state control, foursouthern states—Alabama, Georgia, Louisiana, and NorthCarolina—adopted policies intended to reduce, if not eliminate,the federal emphasis on housing rehabilitation and other activitiesthat benefit lower income groups. These states now emphasizepublic works projects, which benefit a broader spectrum of thepopulation, as well as policies designed to spread funds broadlyacross communities. As a result, the share of funds going tosmaller communities has increased substantially. States alsoappear to be allocating fewer funds to poorer communities thandid federal officials, although to date the difference is notsubstantial.     

Negotiating climate legislation: Policy path dependence and coalition stabilization

This article investigates the nature of policy path dependence through analysis of climate policy formation in the United States. In 2008 the US Congress attempted to pass the Lieberman–Warner bill, a comprehensive climate and energy package that would have capped greenhouse emissions and established a nationwide cap and trade program. In the same year, California successfully enacted the Global Warming Solutions Act. This article explores the circumstances of both cases and raises the question of why legislation at the state level was successful and took such a divergent form from legislation at the federal level. The divergence of these cases is used to highlight the nature of coalition formation and policy path dependence in the legislative process. Explanations of policy tend to gravitate toward either the generalizability of game theoretic approaches or the empirical depth of case studies. This article suggests a combined approach that uses case studies to analyze the positions and motivations of actors and to then model policy development over time. The approach examines policy through the formation and negotiation of policy coalitions. Drawing on the Advocacy Coalition Framework and omnibus analysis, the approach expands these coalition theories first by analysing legislative development at the interface of legislators and constituent interest groups, and second by adding temporal dimension to the analysis. The findings suggest that policy is path dependent in that it is negotiated between coalitions that in turn create stability in the policy process and insulate policy fields from external shocks. Policy path dependence suggests that theory alone is insufficient to predict policy outcomes; policy results depend strongly on prior policy efforts, historically and socially contingent coalitions, and the resulting framing of policy possibilities.     

FEDERALISM, POLICY, AND INNOVATION IN CORRECTIONS

State governments have historically dominated corrections policy, with little federal intervention. But over the past two decades, the trend has been toward "nationalizing" corrections policy, with less interstate variation and more federal standards, through the Safe Streets Act and other legislation. As federal funding declines, it may be expected that there will be a hiatus in state corrections reform, though national standards may survive if the federal courts continue to require state correctional systems to comply with federal laws previously implemented.     

Variation of employee benefit costs by age

Health care, pension, and disability plans account for the bulk of employers' benefit costs, as defined in this article. Because those costs tend to rise as employees get older, the age structure of the workforce affects not only employers' costs but ultimately their competitiveness in global markets. How much costs vary depends in large part on the structure of the benefits package provided. The method a company chooses to finance benefits generally varies with its size. This article focuses primarily on the benefit practices of large, private employers. In the long run, such employers pay the costs associated with the demographics of their workers, whereas small employers can often pool costs with other companies in the community. In addition, small employers often offer fewer benefits, and the costs and financing of those benefits are subject to the insurance markets and state regulations. The discussion of benefit packages is illustrated by case studies based on benefits that are typical for three types of organizations--a large traditional company such as steel, automobile, and manufacturing; a large financial services company such as a bank or health care organization; and a medium-sized retail organization. The case studies demonstrate the extent to which the costs of typical packages vary and reveal that employers differ radically in the incentives they offer employees to retire at a specific time. An employer can shift the variation in cost by age by changing the structure of the benefit program. The major forces that drive age differences in benefit costs are the time value of money (the period of time available to earn investment income and the operation of compound interest) and rates of health care use, disability, and death. Those forces apply universally, in the United States and elsewhere, and they have not changed in recent years. However, the marketplace and the prevalence of various types of benefit programs have changed, and those changes have generally resulted in less cost variation by age and more frequent employer selection of benefit packages that exhibit less variation by age.     

EXEMPT PROPRIETARY COMPANY ANNUAL REPORTING REQUIREMENTS: PUBUC INTEREST OR BUREAUCRATIC EMPIRE-BUILDING?

Abstract: Australian small business enterprises, operated as exempt proprietary companies, are exposed to numerous statutory requirements. The Corporations Law Simplification Taskforce has proposed a number of changes with the stated objective of minimising the statutory burdens faced by small business. One of the recommendations of the taskforce is that most exempt proprietary companies be exempted from the requirement to supply key financial data in annual returns lodged with the Australian Securities Commission. This paper provides a review of the existing statutory responsibility for exempt proprietary companies to prepare annual returns including key financial data and lodge them with the ASC. A common justification offered for the introduction and continued maintenance of annual reporting requirements has been the protection of the public interest. The “public choice” theory of regulation provides alternative explanations for the regulation, including the promotion of producer interests or the promotion of the interests of the regulatory agency responsible for the administration of the legislation, the Australian Securities Commission, and other government departments such as Attorney-General's, Finance and Treasury. The existence of alternative explanations raises the possibility that the regulation is not motivated exclusively by the public interest. Indirect evidence of the usefulness of the annual reporting requirements was gathered with a consideration of the quality of the key financial data disclosed in annual returns. More than 40% of the annual returns lodged by a sample of exempt proprietary companies, during the years 1986 to 1989, contained key financial data which was inconsistent with being extracted from a properly prepared balance sheet (where assets minus liabilities equal shareholders' equity). The possibility that the maintenance of annual reporting requirements is not in the public interest, and the limited reliability of key financial data disclosures made, offers some support for the recent recommendations of the Corporations Law Simplification Taskforce that annual reporting requirements for small business enterprises be modified.     

Cue‐Taking in Congress: Interest Group Signals from Dear Colleague Letters

Why do some pieces of legislation move forward while others languish? We address this fundamental question by examining the role of interest groups in Congress, specifically the effect of their legislative endorsements in Dear Colleague letters. These letters provide insights into the information that members use to both influence and make policy decisions. We demonstrate that endorsements from particularly well‐connected interest groups are a strong cue for members with limited information early in the legislative process and help grow the list of bill cosponsors. As bills progress, such groups have less direct weight, while legislation supported by a larger number of organizations and a larger number of cosponsors is more likely to pass. Thus, we illuminate the usage of Dear Colleague letters in Congress, demonstrate how members use interest groups in the legislative process, and shed new light on the varying impact of groups on public policy.     

Intergovernmental Relations and Clean-Air Policy in Southern California

In 1989, California adopted a bold and comprehensive Air QualityManagement Plan (AQMP) to bring southern California into compliancewith federal air-quality standards by 2007. California's effortto control air pollution, as outlined in the AQMP, significantlyinfluenced the formulation of the 1990 federal Clean Air Act.This article analyzes the nature of this influence as well asthe way the new federal legislation bolsters specific provisionsof the AQMP. Also examined is whether the AQMP and the CleanAir Act are likely to bring southern California into compliancewith federal air-quality standards.     

FEDERAL COURT INVOLVEMENT IN THE APPLICATION OF SURFACE MINING LAW

This article surveys 122 federal cases reported in the Surface Mining Law Summary from the earliest legislation under SMCRA to the end of 1987. The analysis distinguished between cases in which all OSMRE regulations or applications of SMCRA were upheld by the federal courts, and those in which one or more regulations/applications were overturned. The analysis further classifies the cases according to whether the decisions were favorable to industry (or, conversely, to environmental/citizen groups), according to whether the issues involved were primarily of narrow private right (or, conversely, of broad public policy), and according to state-of-origin. Finally, separate examination of those cases in which OSMRE's discretion in the enforcement of SMCRA was restricted is provided. The author concludes t h a t both the federal courts and OSMRE have been reasonably even-handed in their application of SMCRA, contrary to the earlier expectations of some proponents and opponents of surface coal mining regulation in the United States.     

Rural Development Policy: Rationale and Reality

America's rural communities have fared poorly in economic termscompared to metropolitan areas. After a spurt of growth in the1970s that seemed to be closing the gap, rural areas are againlosing ground. Rural communities have argued for special helpfrom the national government. Such help can be justified tofacilitate balanced economic growth, create "more equal" standardsof living, and benefit small farmers, a group for whom the nationhas a special regard. The counter-arguments are that specialhelp to rural areas postpones adjustments to an increasinglyurban world and that federal rural programs subsidize a favoredlife-style. In fact, several federal development programs serverural areas. President Carter announced a rural policy in 1979.In 1980 the Congress enacted legislation requiring future administrationsto address rural concerns systematically. The Reagan administrationhas sent Congress the rural development strategy required bythe law, and two annual updates. However, if having a policymeans having a systematic approach to reaching defined objectives,the U.S. has had no rural policy. The objectives of federalrural efforts have never been settled on, and approaches torural problems continue to be unsystematic.     

The Retention of State Level Concealed Handgun Laws: Empirical Evidence from Interest Group and Legislative Models

The present research extends the work of Lott and Mustard (1997) by offering the first categorical examination (using an ordered logit model) of various types of right-to-carry handgun legislation across the50 states for 1997. Such an examination is based on the “market for laws” construct built by Crain (1979) and Benson and Engin (1988), which points out that various interest group (demand side) and legislative (firm, supply side) considerations are important in modeling legislation activity at the state level. To that end, we include a number of property rights, demographic and legislative institutional variables as explanatory factors in ordered log it models and tests for nonnested hypotheses. In general, we find that the property-rights movement has significantly shaped these statewide laws as pointed out by variables which measure the amount of federal land present within each state, per-capita income, and death-row inmate executions. Population density, Republican representation, length of legislative sessions and female legislative representation have also had significant impacts on the retention of various forms of right-to-carry legislation.     

Cities as Lobbyists

Individual cities are active interest groups in lobbying the federal government, and yet the dynamics of this intergovernmental lobbying are poorly understood. We argue that preference incongruence between a city and its parent state government leads to underprovision of public goods, and cities need to appeal to the federal government for additional resources. We provide evidence for this theory using a data set of over 13,800 lobbying disclosures filed by cities with populations over 25,000 between 1999 and 2012. Income inequality and ethnic fragmentation are also highly related to federal lobbying activities. Using an instrumental variables analysis of earmark and Recovery Act grant data, we show that each dollar a city spends on lobbying generates substantial returns.     

ECONOMIC MOTIVES FOR "SOCIAL" PROGRAMS: THE NEW FEDERAL DIRECTION

The Job Training Partnership Act (JTPA), passed by Congress in 1982, is significant federal employment and training legislation for a number of reasons. Most noticeably, it substantially enhanced private sector and state government roles in the administration of such programs. In order to understand both the programmatic impact of JTPA and its likely consequences on subsequent federal employment and training initiatives, it is necessary to look at the politics of the legislation-especially those interests that are strongly represented through its implementation and those that are not. By doing this, one obtains a better sense of the dimensions of conflict around future employment and training legislation. General guidelines within which Congress should act in subsequent legislative activity are laid out.     

Federal Deficits, Debt and Interest Costs

Current federal government deficits are of a size unprecedented since World War II. While budget surpluses have been infrequent, deficits before 1982 were small enough that the federal debt shrunk in relation to the size of the economy. Now, however, the federal deficit is stuck at about 5 percent of gross national product, and the ratio of federal debt to gross national product (GNP) is growing rapidly. These large deficits are driving up interest rates, hurting American exports, turning the United States into a debtor nation, and causing government interest outlays to spiral. The possibilities are limited for lowering interest costs through directly reducing interest rates or introducing new Treasury debt management strategies. The only way to cage the interest monster is to enact a substantial package of tax increases and cuts in noninterest spending. We list some possible elements of such a package and show how they might be combined to tame the growth of debt.     

Voters AS A Hard Budget Constraint: On the Determination of Intergovernmental Grants

Recent empirical literature has shown that the determination of intergovernmental grants is highly influenced by the political bargaining power of the recipient states. In these models federal politicians are assumed to buy the support of state voters, state politicians and state interest groups by providing grants. In this paper we provide evidence that the fiscal referendum reduces the reliance of states on matching grants received from the central government and thus the possibility of interest groups and state bureaucrats to obtain more grants. If referendums are available, voters serve as a hard budget constraint.     

Niches of agency: managing state-region relations through law in Russia

State-region relations involve negotiations over the power to (re)-constitute local spaces. While in federal states, power-sharing ostensibly gives regions a role over many space-making decisions, power asymmetries affect this role. Where centralization trends may erode regional agency, law can provide an important tool by which regions can assert influence. We examine a case where, in response to a proposed Russian federal law highly unpopular with a regional population, the region's government sought to ameliorate its potential impacts by using opportunities to co-produce the law, amending regional legislation, and strategically implementing other federal and regional laws to protect its territory.