I have highlighted this buildup of US fiscal union in other posts as well. Many authors have written on it.
Harold James and Hans-Werner Sinn simplify the lessons further:
The choice of the fiscal mechanism to service a federalised debt potentially raises deeply divisive issues about the distributive effects of the tax or tariff on the constituent states. It requires a well-constitutionalised system of restraint on fiscal behaviour, both at the federal level and at that of individual states. In particular, a commitment not to renew the assumption of state debts is a condition for stable financial and political development of the union.
Nice read. Harold James has written some nice pieces on this issue of political union in Europe recently…
