'Investing forward' despite huge budget hits.

• Author: Peirce, Neal
• Position: Commentary

How do we do it all?

On one hand, how do we batten down the hatches, from town halls to statehouses to Capitol Hill, accepting severe budget cutbacks to cope with our near-paralyzing budget deficits?

That's most of the talk these days. But there's another question: How do we simultaneously prepare for competitive cities, regions, states and nations? How do we afford serious new investments in high tech and "clean" tech, neglected infrastructure, promoting exports, regenerating cities, and education from kindergarten to college?

Fail to invest soon and smartly across those fronts--and we're clearly slipping in many--and more ambitious and strategic world powers, from China to India to Brazil, will be poised to eat our collective lunch. Translation: declining American living standards, dramatically diminished opportunities for our children and grandchildren.

The role of the states in solving the dilemma got an airing at a Brookings Institution forum in late February on the states' fiscal challenges.

"The governors and states are under tremendous pressure," said Bruce Katz, Brookings' director of metropolitan policy, "not just to balance their budgets, to restart their economies, but in fact to transform their economies." There's no going back, he suggested, to the pre-recession economy with its heavy debt and "hyper-consumption."

First, there's lots of repair to be done. Brookings' "Hamilton Project" released a short but challenging strategy paper saying that avoiding deficit spending is not the states' only problem. It's also an alarming slowdown since the 1970s in the robust investments in education, health, and infrastructure that characterized U.S. development most of the century. Spending on infrastructure slowed down dramatically; government support for universities declined. And while spending on schools increased, the century's dramatic early gains in citizens' educational attainment weren't sustained.

So what shifts are necessary to lay the groundwork for a growth economy, educating the next work force, building the necessary roads and bridges, assuring access to a stable power supply, and the pressing new need--universal broadband access?

First step, the report proposed: Set priorities in such fields as education (with a strong focus, for example, on community colleges to build basic work skills).

A second focus: To get our infrastructure straight, don't just build roads and bridges. Rather, get the "best bang for the buck" by...