For metropolitan America, it’s been a disappointing primary season. Except for one cursory call for a new “flexible federalism” by Democrat Hillary Clinton, candidates in both camps have neglected to discuss the ways in which the federal government might empower cities, our nation’s undisputed engines of economic growth and social progress.
Political dysfunction in Washington has left cities to tackle our nation’s most difficult challenges on their own, and longer term budgetary trends will result in cities having to take on even greater responsibilities in the future. Growth in mandatory spending (Medicare, Medicaid, and Social Security in particular) has increasingly crowded out federal contributions to housing, infrastructure, research and development, and many other economy-boosting investments, forcing cities to invest in these areas without much (if any) help from Washington. This dynamic will only become more dramatic as our elderly population continues to grow.
Have we heard anything about these critically important trends—and what to do about to them—from our presidential candidates? Of course not.
For a truly stunning contrast, look at the conversation around the devolution of central government power currently happening in the United Kingdom. In the few past years, devolution has gone from an abstract goal to a central part of the national agenda. George Osborne, chancellor of the Exchequer, has been the driving force behind its rise to prominence, first initiating the process of “city deals,” which created the opportunity for metro areas in Britain to negotiate for greater powers and discretion, then striking detailed devolution agreements with Manchester and Sheffield. During Britain’s election season, both the Conservatives and Labour unveiled competing proposals for how best to decentralize power.
The Tories, emboldened by their resounding victory in May, have continued with their push for devolution, and Osborne continues to be the cause’s principle flag-bearer. Just a few days ago, he delivered a speech to the Conservative Party conference that introduced a number of bold new approaches to advance the devolution agenda.
First, the establishment of an independent infrastructure commission, a Labour idea, and the appointment of Andrew Adonis, one of Labour’s most prominent devolution advocates, as its leader:
“If we’re going to build, then we have to shake Britain out of its inertia on the projects that matter most. There’s an idea, put forward by many people, including some Labour politicians, and its time has come. An independent National Infrastructure Commission. A commission, set up in law, free from party arguments, which works out calmly and dispassionately what the country needs to build for its future and holds any government’s feet to the fire if it fails to deliver.
Like working with northern councils on how we are going to make a reality of High Speed 3 the new link we want across the Northern Powerhouse. Like working with London on the next big public transport projects after Crossrail, and how we are going to fund them.
…I’ve asked the new National Infrastructure Commission to start its work today. And I am delighted that the former Labour cabinet minister and Transport Secretary Andrew Adonis has agreed to be the commission’s first chair. He’ll now sit as a cross bench peer and help us create Britain’s plan for the future. Working together in the national interest.”
Then, the importance of establishing a balance of power that reflects the nation’s strengths:
“In the end it all comes down to where the power lies. To who makes the decisions … It’s time to face facts. The way this country is run is broken. People feel remote from decisions that affect them. Initiative is suffocated. Our cities held back. There’s no incentive to promote local enterprise.
It’s time we fixed it.
And I’ll work with anyone, from any political party, to make that happen. That’s why we’re devolving more power to Scotland, Wales and Northern Ireland. That’s why the people of Greater Manchester will elect their first ever mayor, in just 18 months’ time. That’s why just last Friday we reached agreement on a new elected mayor across the whole of South Yorkshire. We’re putting the power into the Northern Powerhouse.”
Later, the outdated relationship between British cities and Whitehall, and a bold proposal to allow local areas to collect their business tax receipts:
“Right now we have the merry-go-round of clawing back local taxes into the Treasury and handing them out again in the form of a grant. In my view, proud cities and counties should not be forced to come to national government with a begging bowl.
Today I am embarking on the biggest transfer of power to our local government in living memory. We’re going to allow local government to keep the rates they collect from business. That’s right, all £26 billion of business rates will be kept by councils instead of being sent up to Whitehall. Right now, we collect much more in business rates than we give back in the main grant. So we will phase out this local government grant altogether.
But we will also give councils extra power and responsibilities for running their communities. The established transfers will be there on day one, but thereafter, all the real growth in revenue will be yours to keep.
So this is what our plan means. Attract a business, and you attract more money. Regenerate a high street, and you’ll reap the benefits. Grow your area, and you’ll grow your revenue too.”
And finally, the termination of the uniform business tax rate in favor of allowing local areas to determine their own rates:
“We’re going to abolish the uniform business rate entirely. That’s the single, national tax rate we impose on every council. Any local area will be able to cut business rates as much as they like to win new jobs and generate wealth. It’s up to them to judge whether they can afford it. It’s called having power and taking responsibility.
And for those big cities with elected mayors, like London, Manchester, and now Sheffield, I will go even further. Provided they have the support of the local business community, these mayors will be able to add a premium to the rates to pay for new infrastructure and build for their cities’ future.
Yes, further savings to be made in local government, but radical reform too. So an end to the uniform business rate. Money raised locally, spent locally. Every council able to cut business taxes. Every mayor able to build for their city’s future. A new way to govern our country. Power to the people. Let the devolution revolution begin.”
Perhaps it should not come as a surprise that devolution has gained so much momentum in Britain. It was previously one of the most centralized countries of the OECD nations and operated for decades with an outrageously outdated balance of power between local governments and Whitehall. In some ways, it was only a matter of time. And there are some who contend that devolution has served as merely a fig leave for austerity and budget cuts. But the extent to which devolution has taken hold, the conviction of those pushing it forward, and the speed at which the process has advanced has been remarkable.
Where is this conversation in the United States? It’s true that Britain and the United States are at very different starting points—power is already much more decentralized in America. But Washington’s political paralysis and budgetary ossification have already resulted in a de facto devolution of responsibilities to cities. The fact that there has been so little debate over how to make this a de jure devolution of power is a testament to the shallowness of our current political debates.
"Washington has left the building. You’re going to have to leverage your own assets. You’re going to have to unlock your own capital. You cannot rely on anyone anymore at, quote-unquote, higher levels of government."