(November 2016)
The voters have spoken. As President-Elect Donald Trump prepares to act on his vision to make America great, we can wonder what that will mean for Philadelphia and America's cities. Far from the lyrical notion in "America, The Beautiful," our nation's cities are decidedly neither "alabaster" nor "undimmed by human tears." If America is to be great, America's cities need a Great Deal.
Like most Philadelphians, I did not support Trump's candidacy, but I was particularly struck by his words in accepting his presidential victory. "We are going to fix our inner cities and rebuild our highways, schools, hospitals," Trump said in New York City after his election. "We will rebuild our infrastructure. Which will become second to none, and we will put millions of our people to work as we rebuild it."
Great Effort
A few key initiatives that echo themes of the candidate's popular rhetoric could be part of a Great Deal and could make tremendous strides toward making America's cities greater than ever. Framing the initiatives to fit Trump’s view of government demonstrates that focusing on cities is neither Republican nor Democratic in approach. By investing in municipal infrastructure, we can grow opportunity and wealth. By reorganizing pension debt, we can unshackle city budgets to allow for reduction of burdensome taxation, which can help city firms and families thrive. By linking cities with highest-speed rail connections, we can best position our cities to compete economically.
A key assumption toward approaching a Great Deal is that the initiatives themselves and in combination would generate growth and future tax dollars, which can help fund the initial investment. In monetizing municipal growth, President Trump can bridge the ideological gap between the "tax-and-spenders" and the "no-government-like-no-government" crowd. Cities could essentially be great tax-increment-financing districts for America, with the nation reaping future revenues from the incremental growth encouraged by the initial investment.
Great Work
Investing in urban infrastructure grows jobs, creates wealth, and generates future tax revenues. As Philadelphia contemplates the creation of a new park on an abandoned rail corridor approaching Center City, the lessons from New York City's High Line at the Rail Yards park are instructive. Where, once, a derelict and abandoned scar of legacy infrastructure blighted neighborhoods and thwarted development, the reanimated High Line park has not only created an amenity for city dwellers, but has encouraged the redevelopment of surrounding blocks generating billions of dollars of new economic activity and hundreds of millions of dollars of new tax revenues. The jobs and investment and tax dollars that have resulted from the initial infrastructure expenditure have rippled out into the economy in exponential fashion. A Great Deal that incentivizes and tax-increment finances infrastructure improvements in America's cities can transform neighborhoods, remove barriers created by abandoned structures, and produce the jobs and wealth that have always made cities thrive.
Reorganizing municipal pension debt could allow cities to reduce high tax burdens which are necessary in part to pay for previous generations’ past financial irresponsibility in managing pension obligations. As a businessman, President-Elect Trump certainly understands that reorganizing and restructuring debt can be an important tool to promote future growth. In Philadelphia, for example, about one tenth of the city's $4 billion annual General Fund budget must be used to make payments toward the city's unfunded pension obligations. This is not money being used to pay for services enjoyed by city residents, nor funding for any investment in our city's future. Instead, the money is shoveled into the bottomless pension-debt hole. If Philadelphia did not have to make that annual payment to compensate for past financial mismanagement, the city could reduce the City Wage Tax by about 25 percent, which would put money back into the hands of Philadelphians -- especially the city’s low-income wage earners. A Great Deal that nationalizes municipal unfunded-pension debt in exchange for cities adopting best pension-management practices and agreeing to use the budgetary savings to reduce tax burdens, can unburden city residents and employers to promote growth in neighborhoods and investment in communities.
Linking cities with highest-speed rail connections would best position the American economy for future growth. Air travel is inefficient, environmentally ruinous, and frustrating for passengers. Airports, with their need for space to accommodate noise buffering, security, and safety, exist as development black holes that thwart growth in surrounding acreage. In Philadelphia, plans envision billions of dollars of investment to develop the air rights over the tracks surrounding the city's central train station. A national investment in faster and safer rail links between cities would further enhance the value of land in the urban core of cities across the country, spurring on investment, construction, and jobs while growing wealth and tax dollars.
Great Expectations
Investing in American cities will pay dividends that will benefit the entire nation. Even the deepest-red states have economies that depend on and are driven by the economic engines of deep-blue cities. Anyone intent on making America greater than ever must, therefore, do a Great Deal for American cities.
A Great Deal can help President Trump make good on his campaign promises and can make America's cities -- and America itself -- greater than ever.
