Symposium on public finance after the crisis: U.S.A. introduction.

Author:Seligman, Jason S.
Position:Conference news

    In the aftermath of the Financial Crisis and Great Recession, Public Finance has strained amid declining tax revenues and increased demand for transfer payments and service. At the federal and the municipal level government finances have weakened. This special issue is devoted to consideration of financial hardship of both government and citizens. The articles target various aspects of governments' challenges and suggest legitimate reason for concern in areas of thpublic finance thought to have been stable or at least improving, over the 20t Century--a period sometimes called "The American Century."

    This introduction aims to help the reader appreciate themes and lessons broadly from the three articles included herein. The authors themselves target different levels, programs and aspects of public finance. Useful overlaps across the pieces help contribute to the connections of challenges. What unifies them above all is that they each contribute careful and detailed evidence in support of a theme of increasing fiscal volatility and commensurate challenge as we near the midpoint of the second decade of the 21st Century.

    Describing the articles briefly, in alphabetic order by lead author, the article by James Alm, Timothy Hodge, Gary Sands and Mark Skidmore focuses on property tax collections in a once proud American city which has an economy that has shrunk dramatically since about 1970, Detroit. As documented by these authors, the city finds itself challenged to administer tax collection and basic government function. The authors explore the challenges faced by citizens and government collectively and as counterparties. They assemble and test many important hypotheses regarding citizens' willingness to fund government and governments' ability to provide services. They find that a devolutionary spiral and shrinking tax base have lead to tremendous dysfunction in tax policy.

    The second set of authors, Akheil Singla, James Comeaux and Charlotte Kirschner work to understand bankruptcy in three medium sized communities in a single state, California. Their clever and straightforward approach to the work controls for state law over a concentrated time frame. Comparing their sample to governments of near size who avoided bankruptcy, affords these authors the opportunity to offer insights into fiscal stress and its relation to bankruptcy, from what is a relatively large sample. Their remarkable finding is that fiscal stress and bankruptcy are less correlated than might be useful.

    In a final contribution, I consider reliance on the US Social Security system in the aftermath of the Great Recession. In comparing the financial well-being of retirees who report having been dislocated from their careers for health or other reasons over the Great Recession to those of the same group over the 1992-2008 period, I find recent retirees to be more challenged. Further, the relative severity of involuntary retirees' financial outcomes depend on their access to both Social Security retirement and...

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