The Saints’ victory celebration continues today as Coach Sean Payton, Drew Brees, and his teammates get feted at the Saints Super Bowl parade in New Orleans. The Saints’ remarkable win Sunday has literally served as New Orleanians’ proud cry to the nation: We are back!

But, did you know that last Saturday they also elected a new mayor?

Lost in all of the euphoria is another pivotal moment for the city. Mitch Landrieu, the state’s lieutenant governor, won the mayoral seat in a landslide, capturing the support of two-thirds of the city’s voters, thus avoiding a run-off among five other candidates. He won all but one of the city’s precincts and attracted the vast majority of the city’s black voters. Landrieu will serve as the New Orleans’ first white mayor since his father held the perch 36 years ago.

Perhaps some of the recent jubilation (or bead throwing) comes from the sheer relief that the Nagin era is over. Yet just because Nagin has set the bar so low doesn’t mean that Landrieu doesn’t have the job cut out for him.

The mayor-elect confronts two major tasks when he assumes office in May.

First, Landrieu will need to restore confidence in city government and city services. Like all new mayors, he must get “the basics” right, such as providing quality schools, safe streets, and the efficient delivery of public services. Without these, businesses and families will choose to locate elsewhere and, in New Orleans, patience for such basic functions is wearing thin. To his credit, Landrieu has already signaled that reducing violent crime and restoring public safety will be one of his first priorities in office.

Second, Landrieu will need to unify the city around a common, forward-learning vision and action agenda for New Orleans that goes beyond disaster recovery and puts the city and region on a path to long-term prosperity.

At the core, the city’s ultimate turnaround rests less on how many school roofs have finally been fixed or how many water and sewer lines have been repaired since Katrina. Instead, Landrieu must make sure that all of the tireless rebuilding efforts, hundreds of citizen meetings, and billions of investments over the last five years are truly moving New Orleans toward a future that is more promising than it was before the storm. This means building a more diverse, export-oriented, and innovation-fueled economy with good-paying jobs (beyond the rebuilding-related industries that are bootstrapping its economy now). It means improving opportunities for lower-income families by providing quality neighborhoods and strong cradle-to-career pathways that do not replicate recent decades of extreme poverty. And he should push for meaningful progress on coastal protection and restoration so that families and businesses can reside safely and sustainably in greater New Orleans for generations to come.

These are difficult goals and they need to be matched with practical strategies and outcomes. Further, Landrieu cannot achieve these goals alone. To be effective, he must harness the energies of citizen and civic groups, leverage the goodwill of private and philanthropic partners, and build bridges with federal, state and local governments, including his own city council and neighboring parish leaders.

In conversations prior to the election, I heard Landrieu supporters argue that he “gets” what the job is, and he has the skills and experience to build such critical partnerships.

Let’s hope he proves them right. When Saints fever fades, all eyes will be on Landrieu to channel all that overflowing New Orleans pride and fully demonstrate that, indeed, the Big Easy is back.

In his State of the Union address, President Obama announced the creation of a “National Export Initiative,” as part of an ambitious goal of doubling exports in five years. (The real value of exports typically double every 13 years, and a five-year doubling hasn’t happened since the years immediately following World War II, an anomalous period to be sure). However, he was not clear on how this initiative will differ from long-standing export promotion activities--many of which are handled by the International Trade Administration (ITA), the Department of Agriculture, and the Export-Import Bank, as a previous post discussed.

For the fiscal year 2011 budget, the administration has proposed to increase funding to ITA by 20 percent to $534 million. Of this, according to the more detailed appendix, they call for no less than $258 million to go directly towards export promotion through the Foreign Commerce Service. That would be only a very modest increase from 2009 and 2010 when the amounts were $248 million and $253 million respectively. But the Department of Commerce has now posted what is presumably the preferred allocation: They are calling for $321 million to be spent on trade promotion--which would be an increase of almost a quarter--and the addition of 97 full-time employees.

The new Commerce document also provides some much-needed elaboration on what the National Export Initiative (NEI) would involve. The NEI would reportedly increase the overseas presence of Commercial Service liaisons, support legal challenges to trade violations, boost public-private partnerships, and provide market intelligence.

In addition to budget changes, the president called for “strengthening” trade agreements, the better enforcement of current rules, and reviewing regulations on the exports of militarily relevant equipment. These are all fine ideas. White trade agreements between two countries aren’t as useful as broader multi-national agreements, there is strong evidence that trade agreements increase trade flows, and as the International Trade Administration points out, U.S. trade is more balanced when conducted under free trade agreements. So while it remains to be seen whether or not the administration will actually promote exports with more alacrity and success that its predecessors, it has certainly signaled that it is an important goal, while making some initial and welcome strides towards achieving some measure of success. It is doubtful that even a more aggressive stance would lead to the doubling of exports by 2015, but no one ever accused the Obama administration of selling itself short.

The president’s proposed budget for FY2011 contains a few key provisions that will mean good news for low-income working families at tax time, even after the American Recovery and Reinvestment Act (ARRA/stimulus bill) runs its course. It also proposes to terminate an ineffective program for these families, but stops short of advancing a much-needed replacement.

Top 10 States and Metro Areas for Increases in EITC Dollars due to ARRA Changes in Eligibility

First, ARRA temporarily expanded two important tax credits for working families that the Administration now proposes to make permanent. It expanded the Earned Income Tax Credit (EITC)--a refundable federal tax credit for workers with low-incomes--by:

• Allowing married couples making up to $5,000 more than their unmarried counterparts to claim the credit (an increase over 2008, when the amount was $3,000)
• Increasing the maximum amount of EITC for families with three or more children by more than $600

ARRA also expanded the refundable Child Tax Credit (CTC) for lower-income workers by dropping the earnings “floor.” In 2008, only families with incomes above $8,500 could receive the credit through their refunds, but ARRA lowered that threshold to $3,000.

These expansions make a lot of sense (and had been proposed in different forms long before ARRA came about), and shouldn’t expire with ARRA.  They eliminate some of the “marriage penalty” implicit in the EITC’s structure; help alleviate the greater poverty experienced by larger families; enhance the economic and racial/ethnic equity of the CTC; and do it all in a way that continues to emphasize the importance of work. These changes will provide a real boost to the take home pay of these families.

Over seven million filers stand to benefit from the EITC expansions, with Western states and metro areas likely to see the biggest increases in EITC dollars, including Utah, California, and Nevada and Salt Lake City, Boise, and Bakersfield. The CTC expansion also stands to benefit seven million working families, with states like Mississippi, Montana, and Louisiana and metro areas like Jackson, El Paso, and Buffalo seeing the largest upticks in CTC dollars to be claimed.

Again, making these expansions permanent means good news for low-income working families at tax time. But only at tax time.

That’s because the budget also proposes the elimination of the Advanced Earned Income Tax Credit (AEITC). The AEITC allows some filers to get a portion of their EITC in their paychecks throughout the year.  Efforts to get low-income workers tax credits periodically throughout the year, instead of in one lump sum, are a response to how most recipients use the proceeds--to pay bills.  But the execution--at least in its current incarnation--has been a challenge. At best, 3 percent of EITC filers use the AEITC option, and it can be a cumbersome process prone to error. Some have argued for keeping the AEITC, but making it work better and for more people. Another idea is to design something new. Refundable tax credits are playing a bigger part in our tax code and policy process--whether for working families, education, health care, or a whole host of other policy areas (like climate change) where they’ve been proposed.

While the AEITC may not be the way forward, we can’t just “cut and run.” If Washington intends to build on the successes of the EITC and CTC, it ought to put some new energy into making these programs more effective year-round supports for the nation’s low-income working families.

President Obama’s pledge to cap domestic non-defense spending in the FY 2011 budget did not mandate an across-the-board freeze, and nowhere is that fact more welcome than in the area of innovation investments. In lean times the new budget strongly favors basic science and applied research. Because it does, the budget represents an important step toward delivering on Obama’s signal commitment last spring to boost U.S. public and private R&D to 3 percent of gross domestic product and so recoup the sort of investment that made America the original innovation nation.

To be sure, the budget’s top-line R&D numbers do not inspire. Overall, the 2011 request provides for only a scant 0.2 percent increase in R&D efforts over FY 2010. However, because the new outline trims defense-related research, the document manages to propose a major 6.4 percent increase in civilian R&D that would boost that activity by another $3.7 billion to reach $61.6 billion. Thanks to that boost, the 2011 request at once expands support for R&D in the short run but also continues the Obama administration’s promise to double the funding for the nation’s three most crucial basic research agencies: the National Science Foundation (NSF); the Commerce Department’s National Institutes of Standards and Technology (NIST); and the Department of Energy’s Office of Science.

All three key agencies will see important gains.

An 8 percent increase in the requested NSF budget will maintain its doubling trajectory and expand the foundation’s support of basic science and the training of scientists.

At NIST, a 7.3 percent increase over 2010 appropriation reflects Commerce Secretary Gary Locke's commitment to fostering innovation to both create jobs and enhance the long-term competitiveness of the U.S. economy. To that end, the budget proposes significant growth for NIST’s well-regarded programs for fostering technology adoption, manufacturing advances, applied research, and the Hollings Manufacturing Extension Partnership for diffusing best practices.

And perhaps most notably, the Department of Energy’s Office of Science is slated for a 4.6 percent budget bump that would invest some $5.1 billion in FY 2011 in increased support for the advanced and applied clean energy research and technology deployment that will be essential to invent the next economy, create jobs, and increase American energy independence. Embedded here or related to the Office of Science are a series of noteworthy proposals arrayed all across the troubled energy innovation pathway. Along this continuum the budget calls for:

• $140 million for more Energy Frontier Research Centers linking together small groups of researchers to clear scientific roadblocks that prevent energy breakthroughs.
• $300 million for the newly created Advanced Research Projects Agency-Energy (ARPA-e), modeled on the fabled Defense Advanced-Research Projects Agency (DARPA) to support high-risk research in search of transformational discoveries. This moves closer to direct assaults on possible breakthroughs
• $141 million for Energy Innovation Hubs aimed squarely at the development and deployment of promising energy-related technologies. Here, the budget proposes the creation of a new fourth hub ($34 million) to focus on batteries and energy storage to complement last year’s start-up suite of three other themed hubs. Somewhat as proposed by a Brookings paper, each of the hubs will bring together a multidisciplinary team of researchers in an effort to speed research and shorten the path from scientific discovery to technological development and commercial development

Beyond these breakthrough-aimed, applied-science-leaning initiatives, meanwhile, the budget includes solid new investments in energy efficiency and renewable energy programs, which will grow by an aggregate 5 percent and $113 million over the next year if Congress sees fit. Across these programs, solar energy investment is recommended to grow by 22 percent; wind spending by 53 percent; geothermal by 25 percent; vehicle and building technology programs by 5 and 4 percent.

As to how all this will be paid for, the new budget suggests: the old-fashioned way--through the regular appropriations process. Last year, the president’s budget plan provoked the ire of congressional appropriators by assuming that at least $646 billion in revenue would be available to support growing domestic spending, thanks to the projected sale of pollution allowances from a proposed cap-and-trade system to reduce U.S. carbon emissions. This week no such assumption was advanced, given the very uncertain status of comprehensive climate legislation on Capitol Hill. Perhaps that reasonable call will reduce tensions and encourage lawmakers in Congress to support some well thought-out spending that will help a troubled nation regain its leadership among the world’s most innovative nations.

In his State of the Union, President Obama made reducing the budget deficit one of the priorities of the administration for next year. The announcement of budgetary caps and potential cuts in federal non-national security programs worried communities that rely on discretionary federal spending. The FY 2011 budget proposal released this past Monday shows the highly anticipated figures.

For transportation, however, it is not a clear story. Part of the reason is the schizophrenic nature of the major surface transportation programs that hold contract authority. While their budget authority is mandatory, the spending for highways and transit is discretionary. In the current context of the budgetary caps on discretionary programs, which category gets “frozen”? If it is the funding, then surface transportation is not under the incidence of the freeze. If the cap refers to actual outlays, surface transportation is on the chopping block with other federal discretionary programs.

Either way, the Department of Transportation (DOT) does not seem frozen. For sure, some of the funding will be down next year, given the expiration of stimulus money or chopped programs. But the main surface transportation programs will receive at least the same amount of funding as last year, based on their obligation limitations. The proposed National Infrastructure Innovation and Finance Fund (a.k.a. National Infrastructure Bank) helps too. Without its $ 4 billion of funding in FY 2011, DOT would have $ 2.4 billion less than this year in its proposed budget. As a result, both the proposed funding and the estimated outlays for DOT will be higher in FY 2011 than this fiscal year.

All this discussion of caps on transportation funding does not address the main problem of surface transportation: revenue. The freeze tackles only one side of the budget deficit equation--the spending side. There is nothing on the revenue side, and surface transportation is in a dire situation. The Highway Trust Fund will be in the red again this year and every year until 2020, if no legislative action is taken. More funding from the general fund means not only money taken from another discretionary program or increased public debt, but more budgetary quandaries.

Yet, before calls for a gas tax increase become deafening, DOT needs some real reform of the way it does business, prioritizing projects of real significance and managing for successful outcomes and accountability. That would restore some true responsibility and likely reduce unneeded spending.

In a FY 2011 budget that freezes non-defense discretionary expenditures, the Department of Education has attracted some attention for being one of the few places in the federal government that would attract an increase in funding if the plan is enacted. But the old stuff in the administration’s proposal is at least as interesting as what’s new.

The budget foresees about a $3 billion increase overall for the department, a 6 percent rise over the FY 2010 request. More money for K-12 programs authorized by the Elementary and Secondary Education Act (ESEA), more recently known as No Child Left Behind, accounts for all of this increase, and the administration is signaling that it will put a good deal of energy behind its proposal to strengthen teaching standards as part of a broader ESEA overhaul.   

Meanwhile, next year’s budget seeks to build on some of the significant, competitive education programs that were embedded in the stimulus package (ARRA) and are just coming online now. With the first round of state applications for the competitive $4.35 billion Race to the Top (RTT) Fund recently arrived at the department, the budget requests another $1.35 billion to continue the race in FY 2011. States will probably welcome the opportunity to compete for additional federal education funds next year, with their budgets still in crisis, just as the administration would surely relish the opportunity to continue its signature domestic “reform” program. And cash-strapped local governments could jump at the chance, too, as the budget signals that the next round of RTT would make school districts eligible for awards as well.

For many, what makes a neighborhood or a community a great place to live is a mix of people, activities, and physical forms. Quality places are those neighborhoods and communities that have a range of housing types, so that people who live in small households or on tight budgets aren’t excluded; many transportation options, so that cars are a convenience, but not a necessity; and houses, stores, and offices interspersed and within easy reach of each other, again so that daily life doesn’t require getting behind the wheel. 

Public policies, from local decisions about zoning codes to national decisions about light rail and highways, can facilitate or hinder the growth of these places. Generally, the federal government has been more of a hindrance because it focuses on housing and transportation programs, rather than the places in which housing and transportation come together.  (If housing and transportation aren’t connected, why do suburban houses have driveways?)

The administration’s 2011 budget proposal shows some movement away from this narrow focus on programs and towards a greater understanding of the need to integrate what different agencies do to create great places to live and work. The administration has allocated close to $690 million for its Sustainable Communities Initiative, a partnership between the Department of Transportation, Department of Housing and Urban Development, and the Environmental Protection Agency to promote regional planning efforts that integrate housing, transportation, and other investments. That more than quadruples the $150 million allocated to the initiative in FY 2010.

From its opening pages, the Obama administration’s FY2011 budget request adopts a stance that pervades this blog. Declares the document: “We need to recognize that competitive, high-performing regional economies are essential to a strong national economy.” (See page 20 of the federal budget.)

In line with this recognition, the new budget unveils not one, but several proposals to support regional industry or innovation “clusters” through multiple federal departments. Clusters, as we have noted previously, are a fundamental fact of national economies, and a critical enhancer of regional economic performance. However, as we have also noted, the U.S. lags other nations in providing support to these “bottom-up,” region-based systems of business development, innovation, and talent matching. And so the 2011 budget seeks to change that by applying cluster approaches across multiple segments of the federal delivery system--rather than anchoring it in a single agency. 

Along these lines, the administration’s new approach marks a welcome advance over last year’s initial budget request. Last year, the administration seemed to regard “clusters” as a discrete single program to be implemented by only the Economic Development Administration (EDA)--and so took its lumps en route to obtaining only a small portion of its request. This year’s budget, by contrast, treats regional industry networks as more of an operating paradigm for multiple activities, and as more a means to the important end of linking and aligning multiple federal interventions to maximize their impact in support of regional prosperity. (See page 22 of the federal budget.)

When it comes to infrastructure, President Obama faces a tricky balancing act. On one side he needs to invest in the kind of infrastructure that the nation needs to remain competitive and put us on the path to a low-carbon future. On the other he has to operate in a constrained fiscal environment with programs that are in fundamental need of reform.

With that as a backdrop the president’s proposed 2011 budget is an interesting collection of investments and reforms.

In the former, there is a proposal to create a $4 billion National Infrastructure Innovation and Finance Fund which appears to be this year’s iteration of the National Infrastructure Bank idea. The fund would support projects of regional or national significance based on merit. While we have written extensively about the need for such a reformed process, the narrow focus on transportation-only projects is somewhat disappointing.

Other areas of infrastructure investment are worth noting including a bump in loans and grants to connect rural communities with broadband infrastructure, an additional $3.3 billion for the Clean Water and Drinking Water State Revolving Funds, and an additional $1 billion to fund competitive high speed rail projects.

Friday’s economic news warranted only lukewarm to cold comfort for those of us hoping for a sustainable, broad-based economic recovery with steadily spreading opportunity.

Top line, the U.S. economy grew at its fastest pace in six years in the last three months of 2009, expanding at 5.7 percent yearly rate over the previous quarter, as businesses accelerated their exports and began to replenish drawn-down inventories and invested more in equipment and software.

Consumer spending was up a bit and exports were up a lot. In fact, exports grew at an annual rate of 28 percent in the fourth quarter, which the National Association of Manufacturers said was the fastest increase and the largest contribution to economic growth in 30 years. Of the 5.7 percent rise in gross domestic product, in this connection, trade accounted for 0.5 percent of the growth, since while exports added 1.9 percent of the growth imports subtracted 1.4 percent. At this rate, the economy probably won’t slide back into a recession and it might even hit President Obama’s State of the Union goal of doubling exports over the next five years.

With much excitement across the country, this week marked the true beginning of America’s recommitment to passenger rail service.  Eight billion dollars in stimulus funding was doled out to 31 states in every region of the country.  Those investments ranged from a massive down payment on true high-speed rail in Florida to planning grants in Kansas.

However, conspicuously absent were concrete investments in the Intermountain West.  Specifically, the peanut-butter spreading missed two of the country’s 10 most traveled air corridors: Los Angeles-Las Vegas and Los Angeles-Phoenix. As we argued in a special Mountain-region brief on the nation’s air traffic, heavy traffic on short-haul air corridors may not by itself indicate rail-readiness but it begins to point to potential loads that might be switched to rail.

Irrespective of some in-house squabbling out West, Washington needs to pay attention to these high-volume aviation corridors.  Their enormous passenger volumes present viable locations for ample rail ridership, and interconnectivity to the local airports, transit systems, and highway network will only further enhance metropolitan mobility.  

A great way to maintain public support for national rail investment is to build ridership with focused investments--and these two corridors hold out great potential for such building. 

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Whispered in July, rumored in December, and nearly shouted earlier this week, today marks the official announcement of Florida’s high-speed rail investment by the federal government. Many will talk about what this day means for a new age of American infrastructure, and even more, including my colleagues, will debate the overall efficacy of such an investment. For me, I’d rather get into some of the nitty-gritty of what appears to be, thanks to the president’s Tampa event, the flagship project in Florida. 

First off, there’s much to like for Florida’s current residents and future tourists. The Tampa and Orlando metropolitan areas, along with their sandwiched neighbor Lakeland, were home to almost 3.4 million people in 2008. That year their economies produced $230.6 billion of economic output, more than the Czech Republic. A huge part of this is the vibrant tourist industry: Few places in the world give visitors simultaneous access to many top theme parks, multiple world-class beaches, and bona fide big city culture all within 120 miles. A pleasurable and useful train ride won’t just benefit Floridians, and could become an additional beacon to visitors across the country.

Florida also offers the Federal Railroad Administration, the official administrator of the high speed rail (HSR) stimulus grants, a well-prepared recipient. Florida already owns over 90 percent of the route’s right-of-way, they’ve already completed the environmental impact assessment, and the deal is structured to take advantage of private donations and operational risk. Just as importantly, Florida projects to open the line in 2015, making sure these funds get spent in short order and users will see the benefits quickly. Florida also has wanted this for some time; they originally passed a ballot initiative back in 2000.

But, let’ be clear--this isn’t a perfect plan. A major problem is that the Orlando Convention Center station is over eight miles from a soon-to-open SunRail commuter rail station. This disconnect represents a missed opportunity for intermodal linkage, especially since SunRail reaches downtown Orlando and the HSR route does not. Intermodal links, including the ease by which one can rent a car at the HSR stations, are critical in a state like Florida that’s been developed in an auto-centric manner.