ABSTRACT
This chapter examines theoretically and empirically the relationship between a state's political extraction and its ability to attract federal money. All money flowing to a state from federal sources was examined, regardless of the classification of those resources. The chapter offers preliminary support for the notion that American federalism combines strands of hierarchy and individualism. It examines the effect of an often cited but little studied variable that may substantially affect these decisions: the influence of political extraction on the effectiveness of the state in attracting aggregate-level federal funds. Relative political extraction (RPE) reflects exogenous factors by taking into account the relative performance of state governments, and illuminates endogenously driven circumstances among the states which are subsumed under and standardized by the RPE index. The important factor to be explored is administrative efficiency, operationalized as the ability of state government to extract economic resources in the form of taxes from its population.
