Why the sovereign debt crisis could lead to a federal fiscal union : the paradoxical origins of fiscalization in the United States and insights for the European Union

Published online: 09 Feb 2017This paper shows that the emergence of the federal power to tax is the result of a sovereign debt crisis at the state level. I analyse the fiscal history of the early United States (US) to demonstrate how the institutional flaws of the Articles of Confederation, mainly the central budget based on contributions from the states, so-called ‘requisitions’, led to a sovereign debt crisis on the state level, which triggered taxpayers’ revolts in 1786/1787. This social unrest, in turn, was perceived by the political élite as an endogenous threat to the union and paved the way for the fiscalization of the federal government, i.e., the creation of a fiscal union with the federal power to tax based firmly in the Constitution of 1789. This analysis concludes with four insights for the European Union (EU).This work was supported by the US State Department and the Directorate-General for Education and Culture of the European Commission, under Fulbright-Schuman Grant [25.04.2014], administered by the Commission for Educational Exchange between the United States and Belgium; the European University Institute under the Exchange Programme with University of California, Berkeley [04.02.2014]; Ministry of Foreign Affairs of the Republic of Poland, under PhD Scholarship [09.07.2012]; College of Europe and Arenberg Foundation under ‘College of Europe-Arenberg European Prize: Exploring Federal Solutions’ (24.02.2015); and Fondation Jean Monnet pour l’ Europe under the Henri Rieben Scholarship (19.06.2015)

Explaining the Absence of Inertia in European Union Legislative Decision-making

Starting from the observation that supermajorities are needed to pass legislation in the European Union (EU), this article tries to answer the question why this organization passes as many new laws as it does. A possible pattern of explanation is mapped out which focuses on dissimilarity between actor preferences in relation to the legislative "status quo". Using power index analysis and computer simulation, the potential for passing new legislation under the different procedural arrangements is first evaluated. Principal component analyses is then used to focus on likely coalition patterns of the actors who are involved in the EU legislative process and to locate the positions of these actors in relation to the position of the current state of affairs. The findings show that the absence of legislative inertia in the European Union can be explained, firstly, by the relative distance between a majority of EU policy-makers to the legislative "status quo"; and, secondly, by the dimensionality of the underlying issue space. Copyright 2005 Blackwell Publishing Ltd.