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The joint-decision trap has not prevented the emergence of a substantial EU tax policy regime. Three key actors have contributed to this outcome: the European Court of Justice, by substituting judge-made tax law for deadlocked Council tax legislation (exit by judicial bypass); the European Commission, by using its powers as ‘Guardian of the Treaty’ and legislative agenda setter to break Council deadlock over tax legislation (exit by nudging); and the governments of the member states, by employing various negotiation techniques to prevent intergovernmental conflict from leading to Council deadlock (exit by self-extrication). The effects on problem-solving capacity are mixed. European market integration has improved but national tax autonomy has declined. The balance of costs and benefits depends on the normative convictions of the observer, as well as the structural position of member states in the single market and their institutional traditions.

The book's concluding chapter offers a metalevel analysis, revisiting each of the mechanisms that may facilitate an exit from the EU's joint-decision trap or similar pitfalls. The findings show that the most potent mechanisms are supranational-hierarchical actions taken by the European Court of Justice or the European Commission that bypass the political arena. Also important are Treaty base games, arena shifting, and nudging the Council into agreement via changes to opportunity structures. This chapter ranks these mechanisms by availability in various policy areas, propensity to overcome veto players, and degree to which decision-makers and further practitioners of European integration can purposefully make use of them. The book concludes by discussing if and when the exits from the EU's decision traps do in fact serve as problem-solving vehicles for the policies concerned and how new challenges may arise as secondary effects.

Chapter Six offers a preliminary exploration of how Balanced Federalism theory would depart from the status quo, imagining the strongest judicial role within such a model. It sets forth the theoretical ideals, factors for consideration, and mechanics of how judicially-enforceable Balanced Federalism constraints could work in lieu of existing doctrine, focusing on the Tenth Amendment. It proposes replacing the bright-line anti-commandeering rule with a judicial standard for evaluating commandeering and even preemption claims. Where dual federalism asks the Tenth Amendment to police a boundary between mutually exclusive spheres of state and federal authority, Balanced Federalism asks the Tenth Amendment to patrol regulatory activity in the gray area between for impermissible compromises to federalism’s underlying values—checks, accountability, localism, and problem-solving. The chapter illustrates the balancing test through application to four concrete controversies: the regulation of stormwater pollution, climate governance, the Katrina response, and national health insurance reform. The chapter concludes with a defense of judicial balancing as a tool of constitutional interpretation in the federalism context. It rebuts the most powerful critiques of judicial balancing, including indeterminacy, judicial bias, and separation of powers. In a world with any judicial federalism constraints, explicit judicial balancing is preferable because values-balancing is inevitable—either covertly in application of a set doctrinal rule or through the initial act of balancing that produced the doctrinal rule. Nevertheless, legitimate concerns about expansive judicial discretion lay the foundation for later discussion of when the judiciary should defer to the federalism determinations of political actors.

The state is said to be in crisis. The early 2010s have witnessed considerable crises that highlighted the limited problem-solving capacity of contemporary states. How, then, can governance innovation be considered to overcome these challenges? This chapter introduces the notion of administrative capacity within bureaucracy and suggests that administrative capacities have to be understood in terms of four subtypes, namely delivery, coordination, regulatory, and analytical capacities. This chapter further argues that governance innovation could be fruitfully explored by looking at generic policy instruments. Various instruments, however, have distinct implications for public administration in terms of administrative prerequisites.

Rescuing democratic capitalism and rescuing the European Union are two sides of the same coin. If the project is to succeed, we will have to make a clearer distinction than hitherto between demands for economic and for political liberalism. Prioritizing democracy to the same extent as capitalism, however, will involve more than just developing a political problem-solving capacity. It will also mean defending the space for opposition, as well as protecting the different national varieties of capitalism as legitimate expressions of political liberalism. We will need an element of informality as to the vertical conflict of law. A ‘living’ constitution, in this regard, will be critical for our ability to pursue a democratic reformist approach to the rescue operation, and to avoid falling into either authoritarianism or utopian maximalism.