Ideas for the New Administration: Urban Policy
America’s 486 “urbanized areas” were home to more than 70% of the population, according to the 2010 census; another 9.5% of the population resided in 3,087 smaller “urban clusters.”[1] The fortunes of both are so intertwined that the fate of downtowns matters to suburbs and small towns, and vice versa. Given the overwhelming importance of cities, large and small, to the country, urban policy is a useful lens through which a new Congress and administration can forge changes and reforms in three key areas:
• Public finance • Infrastructure • Housing
*This issue brief was completed before the inauguration and updated as of January 26.
1. Public finance
Congress should provide aid, not bailouts, to preserve basic services to cities and states threatened by the Covid-19 pandemic.
As a result of the coronavirus, U.S. states alone face a depression-level budget shortfall that could total some $434 billion between 2020 and 2022, according to one estimate.[2] Federal relief to states and localities in the new year should have one overriding purpose: to preserve basic services. This aid should not, however, attempt to repair long-standing, preexisting budget shortfalls. This holds true for transit agencies that are in imminent danger of collapse without additional federal aid. Many jurisdictions never learned their lessons from the 2008 recession, choosing to keep in place bad budgetary practices and volatile tax regimes.
Federal aid might best be in the form of loans, rather than grants—even if these loans will have to be repaid gradually, given the fragility of state and local finances. Loans will encourage states and cities to be cautious in their spending. Congressional dollars also should be tied to reforms, such as ending the unlimited liability of defined-benefit public pensions and embracing mechanisms to force savings on spendthrift jurisdictions, including incentivizing the use of rainy-day funds.
In any event, what support Congress does provide should not lose sight of Covid-19 as the ultimate reason it is being extended. This suggests that a not-insignificant sum of aid should be targeted at public health, enabling states and cities to become more resilient in the face of future shocks, such as through better testing capacity and replenished stockpiles.
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Steven Malanga, “The Wrong Way to Help,” Eye on the News, City Journal, May 26, 2020
Malanga, “Covid’s Impact on State and Municipal Budgets,” Eye on the News, City Journal, Aug. 31, 2020
Brian Riedl, “No Rush for State Bailouts,” Eye on the News, City Journal, June 1, 2020
2. Infrastructure
Help fix what’s broken and fix it fast—but avoid throwing good money on bad transportation projects.
Joe Biden has promised to “revitalize America’s infrastructure,” and it is true enough that a lot of roads, bridges, and the like are in need of repair.[3] Some transportation infrastructure needs reimagination— particularly in older metros such as New York—to make mass transit fiscally sustainable. But some transportation infrastructure needs a fundamental rethink.
Urban light rail is an example of the last point. Most Americans choose wheels over rails—the average ridership for U.S. light rail systems is a small fraction of what European and Canadian systems enjoy. Successful light rail networks have two basic ingredients that many U.S. cities lack right now: a high density of jobs and workers within a half-mile of transit stops; and frequent, reliable service. Any transit corridor lacking sufficient ridership to fill a bus every few minutes should not have a light rail line; for those systems that already exist, federal funding should be directed toward more frequent off-peak service or helping to reconfigure the network to denser corridors. Better yet, cities might go with a bus– rapid transit network, particularly when trying to service low-density suburbs. Federal funding for urban transit should insist that jurisdictions eliminate regulatory barriers to more housing around transit stops in the big cities where most working people live.
Federal infrastructure funding should aim to “fix it first and fix it fast.” That is, funding should emphasize maintenance over new projects; streamline projects and avoid costly overruns; and prioritize the infrastructure itself over ancillary job creation or economic development goals, which rarely pencil out for taxpayers. New or high-use infrastructure, such as airports, should be the remit of independent, focused, local public and private entities funded primarily by user fees rather than by federal tax dollars.
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Connor Harris, “The Economics of Urban Light Rail: A Guide for Planners and Citizens,” Manhattan Institute, May 2020
Edward L. Glaeser, “Ideas for the New Administration: Private Infrastructure Provision,” Manhattan Institute, January 2017
Glaeser, “If You Build It . . . Myths and Realities About America’s Infrastructure Spending,” City Journal, Summer 2016
3. Housing
The federal government should encourage cities large and small to loosen land-use regulations that keep housing prices out of reach for many Americans.
The Biden administration’s plan recognizes that high housing costs are rooted in regulatory barriers—in particular, zoning—that limit supply where there is demand, including in America’s most in-demand metros.[4] Minorities, working families, and low-income Americans, in particular, have fewer choices for where and how they live, thanks to various regulatory barriers that affect the supply of housing. Meanwhile, below-market “affordable housing” is often unaffordable to build—not only because of government inefficiencies, but because such developments face many of the same regulatory barriers as market-rate housing.
Removing barriers that restrict the supply and price of housing is ultimately the responsibility of states and localities. Nevertheless, the federal government’s Department of Housing and Urban Development (HUD) can give jurisdictions a forum to share the ways in which they are reducing regulations and streamlining approvals. HUD can also set clearly defined and simple metrics on housing availability and affordability; cities showing actual progress in improving their metrics will have a leg up in the competition for federal dollars, such as for Community Development Block Grants. In sum, consolidating and focusing federal housing assistance programs should be paired with zoning reform in high-cost markets.
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Michael Hendrix, “Testimony Before the House Financial Services Committee,” Jan. 14, 2020
Howard Husock, “Public Housing Becomes the Latest Progressive Fantasy,” Atlantic, Nov. 25, 2019
Stephen Eide, “Housing First and Homelessness: The Rhetoric and the Reality,” Manhattan Institute, April 2020
Endnotes
- Nate Berg, “U.S. Urban Population Is Up . . . but What Does ‘Urban’ Really Mean?” Bloomberg.com, Mar. 26, 2012.
- Heather Gillers and Gunjan Banerji, “U.S. States Face Biggest Cash Crisis Since the Great Depression,” Wall Street Journal, Oct. 28, 2020.
- “The Biden Plan to Invest in Middle Class Competitiveness,” joebiden.com.
- “The Biden Plan for Investing in Our Communities Through Housing,” joebiden.com.
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