“There is a stalemate. Let’s not kid ourselves,” explained John Boehner late last week. The House speaker hardly was breaking news. “Dysfunction” has been the operative word the past two years in the nation’s capital. The current Congress has been one of the least productive ever.
Now looms the “fiscal cliff,” a collection of problems kicked down the road. Practically everyone can guess the ending — last minute, unsatisfying, to be continued.
Perhaps they will surprise. And what would a constructive and creative response entail? Bruce Katz, Mark Muro and their colleagues at the Metropolitan Policy Program of the Brookings Institution have put together a package of ideas and proposals, “Remaking Federalism/Renewing the Economy,” that addresses the challenges of the budget deficit and the struggling economy in fresh, forward-thinking ways.
Two themes stand out. The first involves getting beyond what Muro recently described as “a bloodless crash course of bean-counting and budget-balancing.” He points to the larger opportunity of rebooting the role of the federal government.
And that gets to the second theme, Washington seeing that the drivers of a renewed economy reside in cities and metropolitan areas, or three-quarters of the overall economy, where new methods and approaches already are in motion. Look at Akron and Northeast Ohio, from the Austen BioInnovation Institute to the arrival of foreign capital to PRISM bolstering advanced manufacturers.
Brookings sees the federal government more in the role of catalyst, its resources advancing the work of cities and metro areas in forging the “next economy,” industry clusters pushing innovation, exports becoming a greater focus, energy burning more cleanly and efficiently.
What, precisely, might the federal government do?
Brookings is in the midst of unveiling a range of proposals along the lines of “cut to invest,” “invest but reform” and “strengthen federalism.” One of the first proposals calls for the creation of a bipartisan commission to identify $200 billion in savings over 10 years. Half of the sum would go to deficit-reduction. The other half would be pumped into high-priority investments, including public works, education and research.
The savings is there, and so is the need. Brookings notes that the Government Accountability Office has identified roughly $400 billion a year in wasteful, duplicative and inefficient spending. The analysis adds that the United States ranks 27th in the generosity of its tax incentives for research and development. This country spends far less on public works as a percentage of its overall economy than Europe and China.
The commission would have the task of locating the savings, operating much in the way the Base Closure and Realignment Commission has successfully trimmed military facilities. The panel also would recommend areas for investment to improve the country’s long-term prosperity.
Brookings reminds that 60 years have passed since the federal government has received such scrutiny, the productive bipartisan effort led by former president Herbert Hoover. More, the Simpson-Bowles panel has proposed its own version of a “cut to invest” commission.
Among the other ideas unveiled by Brookings in some detail is a modest carbon tax, generating around $150 billion a year. The proposal calls for routing $120 billion to deficit reduction, leaving room for tax cuts or other relief to ease the bite.
The remaining $30 billion would be set aside for research and development in clean energy and energy efficiency. The combination of a carbon tax and accelerated research reflects an understanding that “cap and trade” has proved too cumbersome, politically and practically.
A carbon tax is simpler, winning support from the left and right. Yet a higher price isn’t enough to address the greenhouse gases spurring climate change. New technologies must be pursued more aggressively.
With that in mind, Brookings proposes opening up master limited partnerships and real estate investment trusts to renewable energy projects. These vehicles long have been available to oil, gas and other traditional energy sources. Brookings argues for expanding the use of property assessed clean energy financing to residences, speeding energy efficiency and clean energy upgrades.
In the coming weeks, other ideas will be rolled out, including a “Race to the Shop” competition for advanced manufacturing, consolidating trade and commerce agencies and designating 20 “manufacturing universities.” All may not be ready for prime time. What they represent is a serious effort to get past the political short-sheeting to align the federal government more effectively with the potential of metro economies and the realities of the global market.
In his book, Better, Atul Gawande, a Boston surgeon and a writer for The New Yorker, examines how to improve the performance in medicine. He identifies “three core requirements”: diligence, to do right and ingenuity. Examine the Brookings proposals, and you recognize what is missing in Washington.
Douglas is the Beacon Journal editorial page editor. He can be reached at 330-996-3514, or emailed at email@example.com.