Abstract
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).
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I thank Cliff Walsh, Ed Olsen, Dan Usher, Dennis Leyden, Peter Kenyon, and an anonymous referee whose comments improved this paper. I am responsible for any remaining errors or omissions. Financial support from a University of Western Australia Special Research Grant is gratefully acknowledged. Part of the work on this paper was undertaken while the author was a Visiting Research Fellow at the Centre for Research on Federal Financial Relations, Australian National University.
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Grossman, P.J. A political theory of intergovernmental grants. Public Choice 78, 295–303 (1994). https://doi.org/10.1007/BF01047760
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DOI: https://doi.org/10.1007/BF01047760