Education vouchers might seem like a natural extension of the liberal welfare model of the United States and American society generally; but they might also seem like a contradiction for the social democratic welfare states in Scandinavia with their state and public sector dominated principles of welfare provision. Nevertheless, school vouchers have faced severe resistance in the United States—with no legislative success as a national education reform—but sporadic and limited state level developments can be observed. On the other hand, in the early 1990s the social democratic welfare state of Sweden adopted a universal public voucher scheme. The goal of the present paper is to explain this counter intuitive and counter theoretical empirical puzzle. It is argued that the different ways political institutions affect political decision-making in these two countries affects the varying policy output on school vouchers in the United States and Sweden.