Balanced-budget rules alone are not sufficient to ensure states’ long-term fiscal health.

Remarks at the Quarterly Regional Economic Press Briefing, New York City.

Remarks at the Quarterly Regional Economic Press Briefing, New York City.

Contrary to simple theoretical predictions, previous empirical research has found that state government public spending is increased far more, often dollar-for-dollar, by federal grant receipts than by equivalent increases in constituent private income. This anomaly has come to be known as the...