PUSHING BACK AGAINST LEVIATHAN
Effective federalism requires that state officials be able to secure relief from national directives that impose undue burdens on state governments or improper constraints on state policy discretion. Many analysts focus on clearly legitimate and occasionally effective tactics such as lobbying or lawsuits. Some activists consider discredited tactics, such as nullification, which is a nonstarter in the 21st century. In “How States Talk Back to Washington and Strengthen American Federalism” (Policy Analysis no. 744), John Dinan, professor of politics and international affairs at Wake Forest University, calls attention to the various ways that states push back against the federal government. “First, when state and federal governments both possess regulatory authority, states can enact measures decriminalizing certain practices, hoping officials will not enforce federal statutes,” he writes. Dinan also notes that states can decline to participate in federal programs and accept the designated penalties, hoping statutes will be revised or moderated. In addition, when federal judicial doctrine is uncertain or in flux, states can enact measures inconsistent with Supreme Court precedents, hoping the Court will reconsider. Finally, these states can also enact measures inconsistent with federal statutes, hoping the Court will invalidate or limit them. “In recent years, state officials have relied on each of these tactics and with some success in responding to federal directives relating to marijuana, education, abortion, and health care, among other areas,” he writes. In short, state officials have resources to push back against national officials, thereby improving American federalism.
Many, if not most, accounts of the financial crisis of 2008 include a prominent role for the U.S. residential mortgage market. While other U.S. property markets, such as commercial and retail, exhibited similar boom and bust patterns, the elevated level of defaults and associated costs borne by the taxpayer have brought a particular emphasis on American single‐family mortgage finance policies. It should be of little surprise that the Dodd‐Frank Act contains multiple provisions related to mortgage finance. In a working paper, “Mortgage Reform Under the Dodd‐Frank Act” (Working Paper no. 15), Mark A. Calabria, director of financial regulation studies at the Cato Institute, offers a review of those provisions, as well as an evaluation of their likely impact and effectiveness. “The Dodd‐Frank Act institutes the most significant changes to the federal oversight of mortgages in at least 20 years,” he writes. Much of the details, however, have been left up to financial regulators, with the new Consumer Financial Protection Bureau playing a lead role. Calabria notes that while the proposed Qualified Mortgage and Qualified Residential Mortgage rules will likely increase the cost of mortgage credit—particularly due to increased litigation, compliance, and foreclosure costs—their impacts on reducing foreclosures during the next housing bust are likely to be modest and may even increase foreclosures. “Despite the significant changes in Dodd‐ Frank to the mortgage market,” Calabria concludes, “those features of the American mortgage market most relevant to the financial crisis, such as lack of market discipline, remain unaddressed and in many cases have been made worse.”
IS DEMOGRAPHY DESTINY?
In a standard median voter model, lowincome immigration increases the size of the welfare state. Other research suggests evidence for a group‐interested voter model, which predicts that welfare will shrink with an increase in low‐income immigration. In their new working paper, “The Political Externalities of Immigration: Evidence from the United States” (Working Paper no. 14), Alex Nowrasteh, an immigration policy analyst at the Cato Institute, and Zac Gochenour, a PhD candidate in economics at George Mason University, contend that neither model accurately describes political reality after testing these theories with United States data from 1970 to 2010. The authors use a variety of measures for welfare and related public spending such as K-12 education, Medicaid, and unemployment insurance. “Contrary to expectations from previous work focused on Europe, we find that the amount of immigrant‐driven ethnic and racial diversity does not have a significant effect on these spending areas,” they write, “whether considered in total expenditure or per capita.” This suggests that countervailing pressures from different sources of voter motivation, as well as the varied political institutional environment of the United States, work to balance any effect of immigration on the welfare state. “When it comes to how polities choose the size of welfare benefits, our results show that an increasingly diverse demography is not destiny,” they conclude.