Bruce Katz is the director of the Nowak Metro Finance Lab at Drexel University and the co-author of The New Localism: How Cities Can Thrive in the Age of Populism.
Even after the current occupant of the White House moves on, the federal government will be severely limited in its ability to deal with the nation’s most pressing problems.
Last week, City Observatory’s Joe Cortright provided a caustic review of our book, The New Localism: How Cities Can Thrive in the Age of Populism. In his piece, “Cities Alone Can’t Fix What’s Wrong with American Government,” Joe acknowledges the rising power of cities as problem solvers, but also argues that fighting to preserve a “competent, generous, fair and functional” national government must be the highest priority during these dangerous times. He contends that “[t]he clarion call to act locally diverts our political attention from the national stage and perhaps, unwittingly, becomes an excuse to stand by and watch these foundational programs be destroyed.”
We have been big admirers of Joe’s work over the years and welcome his voice in the debate. We echo his fervent belief that a strong federal partner—performing redistributive roles and market- and society-shaping functions that only a national government can do—is a critical foundation for a strong localism and a prosperous society. We also share his deep concern that we are living through a period “when the fundamental functions of the national government are being steadily undermined.”
This might be unpopular in progressive circles, perhaps, but in the end we strongly contend that cities must “walk and chew gum” at the same time. They must, as Joe admonishes, fight the fight to preserve an effective federal government. To that end, we commend the cities, counties and urban constituencies that are already involved in legislative advocacy.
Yet there are three reasons why the burning need to engage at the national level must not divert practical attention from designing and delivering the next generation of public, private, and civic initiatives on the local stage.
First, cities and counties—and their diverse networks of public, private, and civic institutions—are now responsible for investing in many things that drive their competitive futures. For all the mythology of an omnipotent federal government, the fact is that burdens for funding the future—particularly for activities that support entrepreneurs, retrofit or build infrastructure, and close the achievement gap among young children—increasingly rest at the local and metropolitan level.
This division of responsibilities across levels of government and sectors of society is even more important to recognize given that the federal government has little “fiscal freedom” to shift investments to the country’s pressing challenges given the rising share of elderly in our population. In his book Dead Men Ruling, the Urban Institute’s Gene Steuerle shows how growth in the non-child portions of Social Security, Medicare, and Medicaid programs and payment on the national debt are fueled by decisions made by prior Congresses; hence the title of his book. He bases his assumptions on Congressional Budget Office forecasts that by 2026, the federal government will be spending $4.1 trillion a year on safety-net programs such as Social Security, squeezing investments in housing, infrastructure, education, children, and research and development.
In our view, cities and counties and their networks of public, private, and civic institutions need to own up to their growing responsibilities. Young children, in particular, cannot wait for federal resources that are simply not coming.
Second, cities need to get better at funding these responsibilities, because innovations in municipal and metropolitan finance could have outsized economic, social, and environmental effects now. Our recent CityLab piece on how cities can fund the future reveals how cities like Los Angeles, Copenhagen, and Cincinnati are tapping voter investment, unlocking public wealth and organizing private and civic wealth in to rebuild their cities and reshape their economies. Despite Joe’s protests, these examples are the antithesis of small-scale interventions; if adapted and adopted by other cities, they could unlock hundreds of billions of dollars in direct investments and generate trillions more in returns over the long haul.
Finally, enhancing local innovations may be the best long-term way to secure smart federal policies. We believe that in the future we will have enough authentic urban practice to reverse-engineer federal policy. Imagine if U.S. cities already managed and leveraged their public assets in ways that enabled infrastructure finance without raising taxes, as in Copenhagen. Or imagine if harnessing our vast stores of private and civic capital for local investment became more the norm than the exception. An infrastructure or tax bill circa 2025 would begin with what works locally and then structure federal investments in such a way that enhances and better supports local initiative.
We are building this new federalism today. One day, we will have a federal partner with whom we can reconstruct inter-governmental and multi-sectoral relationships on a more affirmative and pragmatic basis.
In the end, we believe that cities and their stakeholders must balance a focus on the federal government with one on the federal republic. Even should enlightened leadership return, the federal government is in the process of a structural change that will dramatically limit the scale and range of its actions for years to come. It might become more rational and less reactionary, but it will increasingly be limited with respect to scope and capacity. At the same time, we believe that cities are just beginning to flex their market and civic power and harness public, private, and civic wealth in new and transformative ways.
We treat Joe’s contribution seriously because the messages we send cities and city leaders really do matter. Why take risks—and expend political and corporate capital—if there is hope that higher levels of government will do the heavy lifting? The sooner we accept the new reality of a changed national government, the more powerful local innovations will become.