The political process and the use of debt financing by state governments

Empirical evidence offered in this study suggests that decisions by state government officials to effect debt-financed spending depend in part on the state's gubernatorial election cycle. More specifically, the results reveal relative increases in state debt issues in anticipation of elections, and furthermore, they reveal that such increases are more significant for states characterized by high interparty political competition. While theoretical limitations preclude a definitive explanation for these results, the evidence is consistent with a view of state political markets where incumbent parties manipulate public policy so as to enhance the probability of success in pending elections. This insight is significant in that it suggests a relationship between public policy decisions and election cycles in a context heretofore unexplored.     

The Supreme Court Prohibits Gerrymandering: A Gain or a Loss for the States?

The 1986 Davis v. Bandemer decision of the U.S. Supreme Courtdeclared partisan gerrymandering to be justiciable, but overruledthe federal district court's judgment that the Indiana legislativeredistricting plan was unconstitutional. The Court split onthe question of justiciability, and those justices who favoredjusticiability disagreed on the appropriate tests to apply intesting a districting plan for unfair partisan gerrymandering.The Court did not specify a clear measure and standard for outlawinggerrymandering. This gives state districting authorities anddistrict courts little guidance in dealing with gerrymandering.If, however, a successful measure and standard are developed,this action is likely to be beneficial to the states.     

Actuarial status of the HI (hospital insurance) and SMI (supplementary medical insurance) Trust Funds

This article is adapted from the 1987 Annual Reports of the Medicare Board of Trustees. It presents a summary of the current financial and actuarial status of the Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) Trust Funds. The Board found that the present financing schedule for the HI program is sufficient to ensure the payment of benefits over the next 12-14 years if the intermediate (II-A and II-B) assumptions underlying the estimates are realized. Although steps have been undertaken to reduce the rate of growth in payments to hospitals, the Board urges Congress to take remedial measures to bring future HI program costs and financing into balance. The Board found the SMI program to be actuarially sound but recommends that Congress take action to curtail the rapid growth in that part of Medicare.