Fiscal Federalism and Economic Crises in the United States: Lessons from the COVID-19 Pandemic and Great Recession

Mariely López-Santana and Philip Rocco

Publius: The Journal of Federalism, 2021, vol. 51, issue 3, 365-395

Abstract: The architecture of fiscal federalism in the United States represents an obstacle for prompt and comprehensive policy responses to economic crises, especially by subnational levels of government. As both a public health and economic crisis, the COVID-19 pandemic has put unique fiscal pressures on subnational governments. This article reviews the pandemic’s fiscal effects on these governments, as well as the federal government’s response. By comparing the response to the COVID-19 crisis during the Trump administration with the response to the Great Recession during the Obama administration, we show that while the speed and magnitude of federal aid was unprecedented in 2020, it was nevertheless conditional in nature and beset by familiar political and institutional obstacles. Despite major fiscal pressures, state revenues rebounded earlier than expected, in part due to the relaxation of public health measures and the collection of taxes from online transactions; yet, state resources remained strained throughout the year, especially in states reliant on the hospitality and the oil sectors. And while local property taxes were buoyed by a surging housing market, cities and counties were confronted with declining revenue from other sources and intense emergency spending needs. Thus, despite unprecedented levels of federal support for state and local governments, the legacies of “fend for yourself” federalism live on.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://hdl.handle.net/10.1093/publius/pjab015 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:publus:v:51:y:2021:i:3:p:365-395.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Publius: The Journal of Federalism is currently edited by Paul Nolette and Philip Rocco

More articles in Publius: The Journal of Federalism from CSF Associates Inc. Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().