Gonna Party LIke It's 1937

If true, this is not a promising development:

President Barack Obama plans to announce in next year's State of the Union address that he wants to focus extensively on cutting the federal deficit in 2010 – and will downplay other new domestic spending beyond jobs programs, according to top aides involved in the planning.

The president's plan, which the officials said was under discussion before this month’s Democratic election setbacks, represents both a practical and a political calculation by this White House.

"Political calculation"? Jesus. Then again, I guess when your Beltway ruling and media classes fret incessantly over "budget-buster" legislation, I suppose the natural reaction from the executive is to reassure all the assorted Broders and Hiatts of your fiscal responsibility. God forbid we should have a real progressive tax code in our country again.

Around the rest of the country, however, we are looking at a recovery that won't happen for years, budgets be damned.

Cities and towns face one of the most daunting and widespread fiscal crises in decades—and it’s only just beginning. Nearly nine in 10 city finance officers recently surveyed by the National League of Cities (NLC) report difficulties meeting fiscal needs in 2009. In aggregate, these cities face nearly 3 percent budget shortfalls on average this year. And the sense of trepidation is ubiquitous across a diverse range of metros, regardless of which aspect of the national crisis impacts them the most: declining consumption rates and increased property foreclosures; job losses in manufacturing or financial services; or record state budget shortfalls. Yet this is only the beginning of what will likely be a slow-moving crisis. That’s because while income and sales taxes are typically the earliest sources of city revenue to decline as job losses in a community increase and consumer purchases slow, property tax collections—which make up the bulk of city revenue nationwide—decline much more slowly as real property assessments are adjusted to reflect declining housing values. These have only just begun to slump, meaning that cities and other localities will be contending with increasing budget pressure for the next several years.

In most places, the local response to deteriorating conditions has consisted of a predictable round of unfortunate but unavoidable service cutbacks and layoffs. The vast majority of city officers report spending cuts for 2009 and expect further reductions in 2010 that will result in workforce reductions, delayed or canceled infrastructure projects, or general service cuts. As the full impact of the national economic crisis degrades city fiscal conditions over the next 18 to 24 months, these sorts of responses will continue—and likely spread.

However, some far-sighted city executives are making hard choices and trying to turn the crisis into an opportunity to innovate. Some innovative leaders are leveraging budget stress to proactively restructure government management, strategically modernize delivery systems, and find creative ways to raise new revenues to better serve residents and support greater growth and prosperity over the long haul. Through these efforts some of America’s best local leaders are pursuing tough-minded governance reforms that at once seek to reduce harm to the local economy while attempting to bring about longer-term effectiveness and efficiency.

The nation needs a partnership between all levels of government to ease the local government fiscal crisis. Local governments are innovating. And yet, city and suburban leaders are unlikely to avoid severe service pull-backs, major workforce reductions, and various capital project delays—retrenchments that will reduce economic demand, undercut metropolitan vitality, and place a drag on national recovery. For that reason both the national interest and the realities of American federalism call for national engagement. In keeping with this spirit, a number of options exist by which federal policymakers could lessen the extent to which cities must take actions that harm the economy. For example, federal policymakers could:

• Target temporary fiscal assistance directly to cities to stabilize local budgets

• Establish a public service employment program to fund local hiring for positions needed to respond to the consequences of the economic downturn

• Strengthen and stabilize the housing market by opening up mortgage finance markets, investing in neighborhoods, and protecting homebuyers from predatory lending

• Invest in transportation and transit in ways that provide flexibility for meeting city- and metro-specific goals

• Enhance municipal credit to lower borrowing costs for municipal bond issuers and facilitate financing for local capital projects.

Fuck deficit reduction. We are going to need a much bigger stimulus package next year.

---Vitelius