By Bruce Katz
The following brief is part of Election 2016 and America’s Future— an institution-wide initiative in which Brookings scholars have identified the biggest issues facing the country this election season and are providing individual ideas for how to address them.
Donald Trump will assume the presidency at a time of enormous challenges for our country. But as all eyes focus on the president-elect himself, the actors most capable of confronting these challenges—and the ones best positioned to heal the divisions plaguing our country—are our metropolitan areas.
Metropolitan areas are the engines of our economy and stand at the vanguard of our national progress. If President-elect Trump and the Republican Congress hope to create more jobs and generate greater prosperity, they will need to develop productive relationships with the urban, suburban, and rural communities contained within our metropolitan areas.
But metropolitan areas cannot do everything on their own. They need a reliable partner in Washington that upholds the core responsibilities of the federal government, empowers local communities to live up to their full potential, and helps leverage badly needed investments in innovation, infrastructure, and children and youth.
Many of President-elect Trump’s campaign positions stand in opposition to these principles and priorities. It remains to be seen whether he and the Republican Congress understand that for our nation to thrive, our metropolitan areas must succeed.
Over the course of the past decade, American cities and metropolitan areas have firmly established themselves as the engines of the nation’s economy and as the centers of technological innovation and global trade and investment. Donald Trump’s election and Republicans’ continued control of the House and Senate put cities in uncharted territory.
Our country is facing a convergence of massive economic, demographic, and environmental challenges. The global economy becomes more competitive by the day while economic mobility at home remains stagnant. Our elderly population is growing while underserved minority groups represent a larger share of our nation. The effects of climate change disrupt the functioning of our society ever more frequently and dramatically.
These unprecedented challenges will not be overcome without an array of new investments. We must spur innovation through greater contributions to basic science and applied research, entrepreneurial startups, and business incubators and accelerators. We must improve the standing of our middle- and lower-income populations, not just through higher wages and more affordable housing but also through greater educational investments in specialized high schools, community colleges, and vocational training. We must provide a strong platform for sustainable growth through new transportation, energy, water, and other infrastructure.
Even by conservative estimates, these investments will cost trillions of dollars over the next decade. Until these resources are raised and allocated, this “investment gap” should be at the forefront of policymakers’ minds on both sides of the aisle.
The confluence of Donald Trump’s winning the presidency and Republicans holding the House and Senate—along with increased Republican control of governorships and state legislatures—suggests that cities and metropolitan areas will be increasingly on their own in making these investments. In contrast to the partisan gridlock that characterized much of President Obama’s time in office, Washington is now poised for a burst of conservative legislative and administrative activism not seen in decades.
In a few areas, like infrastructure and defense spending, it is conceivable that greater federal investments will be forthcoming. If properly structured and implemented, these investments could be helpful to metropolitan communities. It is also possible that traditional Republican support for local control could lead to initiatives that give city and metropolitan leaders greater flexibility to combine federal resources with fewer prescriptions, a freeing up of decision making that could potentially create better outcomes on the ground.
But for the most part, the Trump era looks as if it will usher in a toxic mix of tax cuts, reductions in several types of entitlement spending, and policy shifts— like reducing our commitment to mitigating climate change—damaging to our long-term national interests. If this is the case, the responsibility for addressing major societal challenges will fall to local and metropolitan actors like never before.
THE NEW AMERICAN LOCALISM
Over the past several years, as partisanship hijacked the federal government and decimated its ability to serve as a partner to communities around the country, cities and metropolitan areas developed the capacity to take matters into their own hands. A New American Localism has emerged, filling the vacuum created by Washington’s departure from normal functioning. In cities and metropolitan areas, collaborative networks of business, civic, university, and political leaders have joined together to become the vanguard of national problem solving and policy innovation. They are taking on issues as diverse and complex as economic competitiveness, social mobility, climate change mitigation, and immigrant integration.
Signs of this New Localism can be seen throughout the nation.
Montgomery County, Md. and Sacramento and San Jose, Calif. are reducing income inequality by raising the minimum wage. Broward County in Florida, King County in Washington, and San Antonio, Texas are generating hundreds of millions of dollars in local revenues to provide children with high-quality early education and other proven programs. In this election cycle, voters in Columbus, Ohio; Los Angeles; and Seattle approved $180 billion in additional taxes to spur ambitious transit expansions and more sustainable patterns of development. Private and civic investors in Indianapolis, Pittsburgh, and St. Louis are sharpening relationships between universities, companies, entrepreneurs, and business incubators, turning their cities into global centers of medical device, robotics, and genomics technology. Like Detroit a hundred years ago and Silicon Valley 60 years ago, these cities are leveraging their distinctive advantages—often in innovation districts close to universities and medical centers—to be on the ground floor of technologies that will generate growth, wealth, and jobs for decades to come.
These examples represent just a few of the places creating innovative solutions to our toughest problems. Every day brings new bottom-up approaches to the skilling of workers, the education of children, the mitigation of climate change, the commercialization of research, the financing of infrastructure, and the development of quality places for our diverse population.
The emergence of New Localism is particularly potent given the fact that our nation’s 388 metropolitan areas house 84 percent of our population and generate 91 percent of our gross domestic product. The top 100 metropolitan areas alone contain two-thirds of our population and generate three-quarters of our gross domestic product. The bottom line—as metropolitan areas succeed, so does the nation.
While the federal government must lead in many areas of national life—protecting the homeland, maintaining a strong military, providing a robust safety net for the elderly and disadvantaged, ensuring civil rights, and investing in basic science—our federalist system is an exercise in shared power. In many of the matters most critical to our future prosperity and shared growth, Washington is a small player, providing, for example, only 12 and 25 cents of every public dollar spent on K-12 education and transportation infrastructure, respectively. State and local actors play a much more important role in promoting the vitality of our businesses, the education of our children, the quality of our infrastructure, the vibrancy of our public spaces, and the skills of our workers.
By definition, localism manifests itself differently in every community across the nation. But the leading examples of the New American Localism share a number of common principles and characteristics.
First, cities and metropolitan areas are addressing tough issues through the full power of their government, business, civic, philanthropic, university, and community networks in collaboration. This contrasts with the old approach, which relied on public-sector solutions alone and focused on more traditional federalist relationships between levels of government (particularly the federal government and the states).
Second, cities and metropolitan areas are forging their own responses to local problems that are holistic, multidisciplinary, and guided by community priorities. Cities are recognizing that spurring a local economy, improving outcomes for disconnected youth, or improving economic mobility require comprehensive, tailored approaches to the specific circumstances at hand. This energetic response sharply contrasts with strategies employed in the past—taking on problems through siloed, narrowly defined, one-size-fits-all programs often administered by slow-moving, inflexible federal agencies.
Finally, cities and metropolitan areas are rethinking their approach to financing public activities by raising, pooling, and deploying capital from an array of public, private, and civic sources at the local, national, and even global levels. They have recognized that rising mandatory spending at the federal level will inevitably push down spending on infrastructure, education, and other competitive levers, and that rising demand and population growth require greater investments. Our cities and metros are already demonstrating that the financing of critical investments will increasingly come from an unprecedented degree of collaboration across sectors and require a heightened burst of experimentation around new forms of innovative finance.
Taken together, New Localism has demonstrated the power of metros to invest in solutions to our toughest problems, boost our economy, and generate quality jobs. It represents a striking contrast to the economic insecurity and fears about globalization that drove the 2016 election.
WHAT DO METROPOLITAN AREAS NEED FROM THE TRUMP ADMINISTRATION?
In the past, “urban policy” has often been consigned to the margins of the federal agenda, amounting to a handful of empowerment zones, affordable housing programs, or small block grants overseen by the Department of Housing and Urban Development. But to view our nation through a localist perspective is to see urban and metropolitan purpose and power cutting across nearly every area of domestic policy and federal government agency. Issues as diverse as health care, immigration, research and development, and climate change are all “urban” in their impact. Our cities recognize this, and they must be vigilant in articulating the ways in which changes to these policies will affect their communities.
As the Trump administration begins to develop its platform of policy priorities, cities and metropolitan areas need to insist that the federal government lead where it must.
Cities and metropolitan areas need to insist that the federal government lead where it must.
Many of the disruptive forces affecting communities across the nation—global trade, wage stagnation, technological change, environmental tumult, and international migration—transcend parochial borders and require thoughtful policymaking at the federal level. The Trump administration must see its core job as acting with vision, direction, and purpose on the things that cities and metropolitan areas cannot do on their own. This includes promoting American interests overseas, investing in research and development, devising and enforcing sensible immigration policy, providing a robust safety net, and addressing climate change.
Many of the president-elect’s campaign positions on these issues are deeply troubling. Repealing the Affordable Care Act would take away health care from millions of Americans, many of whom live in metropolitan areas. In such a scenario, responsibility for emergency care treatment for the uninsured could shift back to cities and urban counties, likely swamping local budgets that are already under enormous stress. Reversals of climate policy could remove valuable incentives for investments in renewable energy. Shifts in immigration policy could divide communities, remove badly needed workers from local businesses, and distract local leaders from the many more pressing issues at hand.
Cities and metropolitan areas need to describe—with evidence, granularity, and vigor—the implications of changes to these policies. Then they need to engage in the legislative debate. Ideally, our urban communities would find a way to speak with one voice, raising practical and widespread concerns that cross the artificial boundaries of cities, counties, suburban municipalities, and rural towns.
Second, cities and metropolitan areas need to demand that the federal government empower where it should.
Given the extent to which cities have improved their performance over the past decade or so, President-elect Trump has a unique opportunity to reform Washington’s relationship with metropolitan areas. He should consider providing them with greater flexibility to adapt federal discretionary investments in transportation, housing, workforce development, education, and other areas to their specific needs and local priorities. The federal government is the largest single investor in cities, but the resources it provides are heavily prescriptive and compartmentalized, reaching their intended communities through stove-piped funding mechanisms that often roll out incoherently. This approach is fundamentally out of sync with the localist dynamic that has taken hold, and it often holds cities back. Our metropolitan areas should call for greater flexibility in exchange for greater accountability.
Any change in the provision of federal resources should be based on the principle of making federal investments more effective—not reducing their size. With the same total quantity of resources but more flexibility in how resources are spent, locally designed approaches have the potential to be more effective than federally administered ones. With regard to a wide range of particularly difficult social problems, conservative thinker Yuval Levin has written, “The absence of easy answers is precisely a reason to empower a multiplicity of problem-solvers throughout our society, rather than hoping that one problem solver in Washington gets it right.”
President Trump and the Congress should consider emulating the “City Deals” and devolution agreement process underway in the United Kingdom, which has created a vehicle for British cities to gain greater discretion in how central government funds are used locally. To qualify for a City Deal, British cities are required to organize themselves as a region, directly elect a mayor, and develop distinct plans for how centrally provided resources might be better allocated around a specific purpose. If they are able to make the central government “an offer it cannot refuse,” they are granted the flexibility to carry out their strategy. The process has incentivized the building of local capacity and has created the foundation for more effective, bottom-up solutions to tough local problems.
Congress could authorize a similar process, providing the opportunity for metropolitan areas to “apply” for the ability to allocate federal discretionary resources to a specific social, economic, or environmental outcome. This contrasts with the current system, where cities are forced to braid together many small federal grants with rigid determinations into a coherent local strategy. One community, for example, might argue for aggregating funding in a particular neighborhood to boost youth employment or educational achievement. Another might integrate housing and social service funding in a concerted effort to end homelessness. City Deals—perhaps more appropriately labeled “Community Deals” in the United States—could better align federal resources with local priorities and fully unleash the problem-solving creativity of local actors. The flexibility could be granted solely to a local government, a large non-profit, or to a consortium of public, private, and civic leaders. Regardless of the specifics from place to place, Community Deals would serve as a corrective to the notion that the dizzying array of small federal grant programs provided to local governments can somehow match the drastically varying needs and conditions on the ground.
Community Deals could also provide a vehicle for greater cross-party collaboration. In the United Kingdom, the Tory central government often worked closely with local councils controlled by the Labour Party. A similar dynamic could take hold in the United States.
In the United Kingdom, the Tory central government often worked closely with local councils controlled by the Labour Party. A similar dynamic could take hold in the United States.
Finally, cities and metropolitan areas should demand that the federal government help leverage private and civic capital to the maximum extent possible. As described above, our nation needs dramatically greater investments in a range of policy areas, and these funds cannot be provided exclusively by the public sector.
President-elect Trump has, to date, recognized this new reality inconsistently. His still-evolving infrastructure agenda seeks to provide incentives to private investors to engage. But his tax proposals follow a more traditional Republican penchant for general cuts rather than ones designed to achieve specific leverage.
From a city and metropolitan perspective on infrastructure, several things are clear:
The infrastructure deficit is very deep and differs from place to place. Reliance on tax incentives might favor certain revenue-raising investments (e.g., toll roads) rather than others (e.g., mass transit). Congress should allocate resources in such a way that enables cities and metropolitan areas to set their own priorities in accordance with market conditions and local preferences.
Several tax expenditure programs, like the Earned Income Tax Credit and the Child and Dependent Care Tax Credit, have proven successful and should be expanded as part of any tax reform package.
Several tax incentive programs, like the Low Income Housing Tax Credit and the New Markets Tax Credit, work quite well and should not only be preserved but expanded.
If tax reform proceeds, cities and metropolitan areas need their own proposals. Why not, for example, offer tax incentives for investments in qualified companies that seek either to grow jobs in distressed areas or craft market solutions to challenges in these communities?
WHAT CAN METROPOLITAN AREAS DO TO FILL THE INVESTMENT GAP AND STRENGTHEN NEW LOCALISM?
As noted above, a Trump presidency and a Republican Congress could produce greater investments in certain areas and significant cutbacks in others. In either case, cities and metropolitan areas will still need to raise substantial capital on their own in order to make meaningful and durable investments in innovation, infrastructure, human capital, children, and quality places—in other words, the investments needed to fuel productive, inclusive, and sustainable growth.
The financing strategies used by cities and metros are becoming increasingly sophisticated. Oftentimes, resources are pooled and combined in intricate ways, enabling communities to make necessary investments. A new field of “Metropolitan Finance” is emerging which needs to be captured, codified, and leveraged across the nation.
First, new financial instruments and practices have the potential to channel private and civic capital toward a number of nontraditional activities, like initiatives related to inclusivity or environmental sustainability. Much attention has been paid to impact investing and Pay for Success bonds, recently used in Salt Lake County to expand prekindergarten to economically disadvantaged children. New instruments are also springing up in other areas of policy. Green Bonds, for example, have emerged as a way to fund clean energy and energy-efficiency projects. Consensus is also building around treating large regeneration projects as a single asset class, lowering the barriers to investing in massive, economy-shaping projects like London’s Kings Cross.
Second, new intermediaries are emerging to bring disparate sectors of society together, a process essential in improving access to capital, creating opportunity, and spurring economic growth. Connectors like the Cambridge Innovation Center in Massachusetts have matched startups to experts and seed funding. Hubs like Chicago’s 1871 have paired large companies like United Airlines and State Farm with entrepreneurial firms and talent. Social innovators like LaunchCode in St. Louis have linked newly minted coders to good jobs in mature companies. Other intermediaries like the Texas Medical Center in Houston and Bio CrossRoads in Indianapolis are acting as the connective tissue between large anchor institutions (like hospitals and universities) to achieve greater innovation through collaboration.
Finally, new breeds of special-purpose public, quasi-public, and civic institutions are forming to unlock the value of underutilized public assets and finance a wide range of transformative projects. HafenCity Hamburg GmbH, a company owned by the City of Hamburg, is overseeing the largest inner-city regeneration effort in Europe through the redevelopment of former port and industrial sites. In Copenhagen, CPH City and Port Development, a company jointly owned by the municipal and national governments, is developing areas along the waterfront. In the United States and elsewhere, community land trusts have provided stable foundations for affordable housing. And CORTEX in St. Louis and 22@ in Barcelona have governed the build-out of innovation districts in those two cities.
BRIDGING THE URBAN-RURAL DIVIDE
The 2016 election showed that our country needs more than jobs and economic security—we need to bridge the chasm that divides cities and rural areas as well as racial and ethnic groups. This will not happen in our nation’s capital. The national political parties often regard distinct places and demographic groups as constituency groups to be scared, manipulated, and mobilized against each other.
We need to bridge the chasm that divides cities and rural areas as well as racial and ethnic groups. This will not happen in our nation’s capital.
Unlike the federal government, metropolitan areas unite geographies and disparate groups. They encompass central cities, suburbs, exurbs, and, due to sprawling development patterns, hundreds of rural communities. Fully half of the people living in rural areas are actually part of greater metropolitan regions. Everyone within a specific metro area is bound together by shared labor and housing markets, they are stuck in the same traffic jams; they root for the same sports teams; and they share an interest in improving their mutual quality of life.
Localism by its nature engages stakeholders across ideological and jurisdictional lines. In communities like Denver and Minneapolis/St.Paul, Democrats and Republicans have learned to do at the metro level what they seem incapable of doing at the national, namely recognizing common interests and compromising to get things done. It is not always easy and there are often loud, impassioned detractors. But local community networks—unlike ideologically rigid national parties—ultimately reward action and punish obstruction.
Particularly in this time of raw division, metropolitan communities need to perfect a new style of collaborative governance, one that works across jurisdictions and alongside businesses and civic institutions. Coming together as a nation is not solely dependent on the federal government getting its act together—cities and metros have enormous potential here that has yet to be realized.
As Washington springs back to life under one-party rule, the notion that the president and Congress run the country will no doubt take hold. But the reality is more complicated. Washington is large, but it is not in charge.
America’s resiliency is strengthened by a division of responsibilities that empowers communities to come together in improving the lives of their residents. Over the next several years, the hard business of investing in the future and uniting the nation will most likely not be conducted in Washington. Rather, it will occur in our metropolitan regions, where leaders and residents in our cities, suburbs, exurbs, and rural areas will work together to find common ground and purpose. It remains to be seen if Republicans, now in control of our national institutions, will choose to strengthen or stymie this dynamic.
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The Centennial Scholar Initiative cultivates a new style of scholarship at Brookings, fostering work that is cross-program, inter-disciplinary, international, and intensely focused on impact.