Back in the pre-recession days before he was elected, Barack Obama went before a meeting of the U.S. Conference of Mayors and told them they shouldn't look to any Obama Administration for great outlays of new money for cities. He wasn't kidding.
Jacob Lew, the director of the White House Office of Management and Budget, had a recent op-ed piece in the New York Times forecasting some of the cuts Obama will propose in his budget for the 2012 fiscal year. The article was titled, "The Easy Cuts Are Behind Us," and it contained a sampling of budget cuts that Obama will propose to reduce a crippling federal deficit, which is forecast to be $10.4 trillion over the next decade.
Some of these cuts will go straight to the heart of what Midwestern cities do. At least one will impact the future of these cities' single greatest resource, the Great Lakes. Whether these cuts are wise or not will be debated in the months to come. Some will become reality, which means Midwestern cities have to start thinking now how they are going to reach important goals without the winds of Washington behind them.
The three areas that Lew singled out are:
- The Great Lakes Restoration Initiative. This sends about $500 million per year to help protect and clean up the Great Lakes. It's hard to imagine anything more important to major Midwestern cities -- Duluth, Green Bay, Chicago, Milwaukee, Michigan City, Muskegon, Detroit, Cleveland, Erie, Buffalo -- than the health of the Lakes. The new budget will call for a one-quarter reduction, about $125 million per year, in this work.
- The Community Development Block Grant program. This is a $4 billion annual program of grants that help cities pay for infrastructure, like streets and sewers, for housing, and for economic development in poorer neighborhoods. According to Lew, Obama will ask for a 7.5 percent reduction, amounting to about $300 million per year. If cities need to do this vital work, it looks like they'll have to pay for it themselves. There may be some cities in the country with the spare cash to do this: the Midwest doesn't have many of them.
- The Community Service Block Grant program. This sends money to local and neighborhood groups working to contain poverty or to deliver services to the poor. Obama wants to cut this $700 million annual program in half, cutting out $350 million. In addition, he wants to turn the remaining half into a competitive grant program, with the money going to communities doing the best job.
It's tempting to think that Obama has targeted this latter program for political reasons, because he himself got his start working for one of these neighborhood service groups. When members of Congress complain that their pet ox is being gored, he can point to a program that is close to his own heart and that he is cutting in half.
These service block grants are basically welfare programs, aimed at soothing the wounds of poverty and helping people damaged by the economy. In themselves, they do nothing to eliminate poverty or to stimulate the economy in the inner city areas where the agencies and their employees, like the young Obama, do their work. Few of their administrators are sophisticated managers or are skilled at writing grant proposals. All would have trouble pointing to any real success stories. The best that can be said -- and it's important -- is that they often keep bad situations from getting worse and at least give the poor the sense that somebody, like their government, cares.
But the other programs are aimed at solving the problem, not easing it.
The Great Lakes are more than a pleasant scenic amenity. Properly preserved and exploited, they hold the promise of jobs and industry, not just in tourism but in any area of economic life that requires fresh water. Not many places on the globe have plenty of fresh waters. The Midwest does. It should be promoting the developing this resource at warp speed. These cuts in government funding put the eventual revival of the Midwestern economy further away.
Ditto for the community development block grants. All Midwestern cities are old places with old infrastructures -- public transit, airports, streets, sewers, buildings -- that have to be brought up to date. Too many lag the rest of the world in the kind of infrastructure -- fiber optics, green economies -- that are part of the future.
For the Midwest, these projects are life-and-death issues. The whole region is trying to overcome the legacy of its heavy industrial past and retool for the global future. It needs all the help it can get. That help just became more scarce.
There are a couple of things to say about this.
One is that whatever our representatives in Congress are doing, they aren't earning their pay. The decision to short-change the Great Lakes is a blow to the entire Midwest, not just to one state or another. Midwestern representatives and senators desperately need to form a Midwestern caucus and start lobbying for Midwestern needs. Lobbying a Midwestern president shouldn't be that hard, but nobody seems to be doing it.
If Washington is determined to put the Midwest on short rations, then Midwestern states and cities have to figure out how to do more for themselves. Especially cities, because most Midwestern states are in deep deficit already and don't have the money to pick up the slack: in addition, most compete fiercely with each other, so they lack the sense to join forces to rebuild the region.
Not that cities are flush. But they have the ability to create efficiencies by sharing services within metropolitan areas, to raise money through user fees on urban services, and to focus spending: too much spending by states is spread across the states for political purposes, with sparsely-populated rural areas getting the same treatment as cities, where most people live.
None of this ignores the fact that all governments -- national, state and local -- have big budget problems, some stemming from the recession, most the result of bad governance in the past. As the Obama aide, Jacob Lew, says, a $5.6 trillion projected surplus in 2001 has turned into a projected $10.4 trillion deficit now, mostly because of the Bush tax cuts and the decisions to fight two wars and create a Medicare prescription drug benefit without paying for them.
Tax increases are needed at all levels. No matter what politicians say, they're coming, because there's no way to close these budget gaps without them.
But spending cuts are coming, too. Everyone will feel the pain. Some will feel it more than others. If Lew is right, that pain looks likely to be concentrated right here, in the Midwest.