Unequal States, Unequal People: Fiscal Inequity and the Values of Federalism

Abstract

The fields of regulatory federalism and fiscal federalism have developed largely in isolation from each other. Building on the new scholarship of federalism in the legal academy, this Article seeks to integrate the insights of the two areas. The financial dimension offers a crucial perspective for the problems of governmental organization at the heart of regulatory federalism. One of the most important elements of fiscal federalism, generally unappreciated in legal scholarship, is the vast disparity in the financial resources of the states. The United States stands alone among industrial federal systems in not seeking to equalize resources among the states. This fiscal inequity means that in fundamental ways states are not equal. Using the examples of education and health care, the Article demonstrates the significance of this inequality and how it threatens the protection of human rights and other values associated with federalism. The Article argues for a new approach to federalism that seeks to mitigate these inequalities, while continuing to benefit from the advantages of decentralization. The fiscal disparity among states demands attention, not because states have inherent dignity, but because the inequality of states diminishes the dignity of their people.