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Abstract: 

The federal-state relationship was undergoing changes even before the recession and fiscal crisis hit. At the height of the crisis, with the Treasury Department, the administration, Congress, and the Federal Reserve all taking unprecedented actions to improve liquidity and provide stimulus to the economy, the federal-state relationship veered powerfully in a direction not quite like any previously seen. The authors discuss what the state of the relationship was before the crisis and how the crisis has changed the dynamics of federal-state interactions. They consider whether the change is permanent or if things will go back to normal. Will the federal government usurp states’ rights through changes in municipal financing alternatives? How much policy influence does the federal government want at the state or local levels of government?

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Affiliations:  1: Loop Capital Markets; 2: Rockefeller Institute of Government; 3: Staff of Senator Jeff Bingaman (D-NM) and Staff Director of the Senate Finance Subcommittee on Energy, Natural Resources, and Infrastructure; 4: New Mexico Finance Authority; 5: National League of Cities Center for Research and Innovation.