N14 as with the horizontal separation of powers that

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Unformatted text preview: Northwestern Law School, and Assistant Professor of Law, George Mason University School of Law, 2004 (NORTHWESTERN LAW REVIEW, Fall, pp. 117-8) Federal subsidies to the states undermine interstate competition in two major ways. First, to the extent that horizontal competition is motivated by a desire to increase state tax revenue by attracting migrants or preventing emigration, the existence of an alternative source of revenue necessarily diminishes state incentives to compete. In addition to serving as a substitute source of state revenue, federal grants can sometimes undermine interstate competition more directly by enabling the states to establish a cartel by acceding to a common federal grant condition. The federal government in this scenario acts as the cartel manager, punishing defecting states by withdrawing their funding. For example, states seeking to avoid tax competition can create a cartel by the adoption of a federal policy that denies grants to states with tax rates below a certain level. The federal government can often crush vertical competition simply by paying the states not to compete with it. Federal grants to states are a particularly effective tool for restricting competition because, unlike in the case of preemptive mandates, state governments are actually likely to support them due to their desire to acquire additional federal funds. Finally, federal grants to state governments can undermine diversity by attaching conditions that force dissenting states to conform to the preferences of the majority. Both liberal and conservative interest groups can use such conditions to impose their preferences on recalcitrant minority states. 12 | P a g e Federalism DA BDL Link – Domestic Action [____] Domestic issues are reserved for the states Ellis Katz, 1997 (AMERICAN FEDERALISM: PAST, PRESENT, AND FUTURE, p. The powers granted to the federal government are relatively few in number and deal mainly with foreign and military affairs and national economic issues, such as the free flow of commerce across state lines. Most domestic policy issues were left to the states to resolve in keeping with their own histories, needs and cultures. 13 | P a g e Federalism DA BDL Answers to: Federal-State Power Not Zero Sum [___] [___] Federal exercise of power reduces state power John Yoo, law professor, 1997 (SOUTHERN CALIFORNIA LAW REVIEW, p. 1352) It is important to note that Justice Kennedy did not differentiate between laws that r egulated states qua states and those that regulated private parties in areas that might be thought to lie within state power. Following Chief Justice Rehnquist's majority opinion, Justice Kennedy's concurrence treated the exercise of any federal power as a diminution of the power of the states and hence a reduction of state sovereignty [____] Expansion of federal power reduces states’ rights Rex Lee, Fmr Solicitor General, 1996 (Rex, Brigham Young U. Law Review, p....
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