An Emerging “Pragmatic Caucus”

With midterm elections in high gear, Washington appears headed for several years of nasty partisanship and policy gridlock.

A robust recovery could be the casualty. Action is stalled on critical issues like energy and trade and on sound proposals like President Barack Obama’s recent call for a National Infrastructure Bank and new incentives for business investment.

Yet federal paralysis does not signal the end of policy innovation or economic progress. The elections could signal the emergence of a “pragmatic caucus” — led by governors, mayors and their allies in the business, university and civic sectors.

There are 37 gubernatorial races this year. New governors are certain to take the helm in major states such as California, Colorado, Florida, Georgia, Michigan, Minnesota, Nevada, New York, Pennsylvania, Tennessee and Wisconsin.

Judging from their campaigns, some prominent candidates appear ready to act decisively on the economy while Washington either can’t or won’t.

Leading candidates in four disparate states show the potential triumph of pragmatic strategies over ideological posturing.

In Colorado, Democrat John Hickenlooper wants public- and private-sector leaders to design “regional business plans” that could leverage the natural advantages of their economies, be it geographic location, aerospace, energy or agriculture.

In Tennessee, Republican Bill Haslam echoes this call for local strategies, advocating regional “jobs base camps” to coordinate and fine-tune state economic and work-force development strategies to the business strengths, or clusters, of different parts of the state.

In New York, Democrat Andrew Cuomo has a detailed economic plan, including a state infrastructure bank to make transformative investments that could link the state’s metropolitan centers to one another and the world.

In Michigan, Republican Rick Snyder has an ambitious agenda to streamline government and subject economic development incentives to high standards of performance and accountability.

What unites all these approaches is a heavy dose of common sense — from leaders grounded in place rather than rooted in ideology.

Hickenlooper and Haslam are well-regarded mayors of Denver and Knoxville, respectively. Before serving as Housing and Urban Development secretary in the Clinton administration, Cuomo was recognized for his innovative responses to homelessness. Snyder helped create Ann Arbor SPARK, one of the nation’s leading public and private partnerships focused on economic development.

These leaders understand the need to build a different kind of U.S. economy from the rubble of this recession. They recognize that economic restructuring requires a business-friendly climate as well as smart investments in the assets that matter — like infrastructure or clean energy or education — in the metropolitan communities that drive the economy.

This pragmatic caucus stands in sharp contrast to the “no government” tea party movement and the predictable stances of the traditional parties. Their practical ideas — for example, regional innovation clusters and infrastructure banks — represent smart ways to marry the innovation of the private sector with critical public-sector support and bolster the international competitiveness of U.S. firms and communities.

Success of the caucus is by no means assured. The election, of course, is not over. These four candidates and others who hold similar views still need to win.

Daunting fiscal challenges are also likely to require new governors to “cut and invest” — by both balancing budgets and pursuing voter referendums that enable state investments in the next wave of economic growth.

That is tricky but doable. Ohio voters, for example, approved a $700 million bond issue this year, to extend the state’s Third Frontier venture-capital financing program.

However, state and metropolitan actions alone are not enough to rebalance America’s economy. Plans to boost exports will require Washington to get smart on trade and currency. Progress on carbon and energy will be essential to catalyzing markets in clean and green technology.

Yet U.S. history has demonstrated that the state and metropolitan innovations of today have a tendency to become federal policies of tomorrow.

During the late 1920s, New York Gov. Franklin D. Roosevelt experimented with interventions that foreshadowed the New Deal.

Throughout the 1950s, public university systems, established by states like California and North Carolina, set the stage for the federal technology investments of the 1960s and 1970s.

And during the 1980s, a bipartisan network of governors experimented with welfare and health care reforms, paving the way for federal advances in the next decade.

The next few years could see the similar effects of bottom-up innovation. If Washington’s polarization can be mitigated, and ultimately replaced, with the pragmatism of state capitols, city halls and their business and nonprofit allies, the United States may emerge from this recession stronger than ever.

The payoff will be greater economic vitality and sustainability — and more and better jobs.