Vice President Biden’s chief economic advisor Jared Bernstein seemed loathe to make headlines during a forum the Metro Program staged last week in Washington with the National League of Cities (NLC) on the nation’s deepening local government fiscal crisis. Instead, he stuck close to his text, raised smart academic questions about possible courses of action, and emphasized he was not expressing any official administration preferences about how to proceed.

 And yet for all that, Bernstein committed news. Most notably, in a sign of gathering momentum for additional economic stimulus, he expressed a surprising openness to more direct federal forays into job creation as unemployment continues to rise.

First, Bernstein seemed to entertain the possibility of some sort of special fiscal relief for cities and other municipalities, acknowledging the possibility raised in a framing paper produced for the Brookings-NLC event that local government service cuts and layoffs could well impose a significant drag on the nation’s economic recovery just as the extraordinary interventions of the $787 billion American Recovery and Reinvestment Act of 2009 (ARRA) trail off. Said Bernstein: “We’ve got to do more to translate economic growth and continue helping states and localities meet the deep fiscal challenges they face so as to [help them] avoid taking steps that make getting out of this mess that much harder.”

State government budget problems have been a well-publicized element of the nation’s ongoing economic crisis. Less remarked upon has been a lower-profile meltdown: the nation’s soon-to-be ugly local government fiscal mess. And now it’s time to tune in. 

How do things look? The short answer is: brutal! And that is why four of America’s toughest-minded mayors--Mayors Michael Nutter, Elaine Walker, Scott Smith, and Chuck Reed of Philadelphia, Bowling Green, Ken., Mesa, Ariz., and San Jose respectively--will travel to Washington Thursday (read the joint Brookings/National League of Cities background paper here) and review what they are dealing with prior to remarks to be delivered by Vice President Biden’s chief economic advisor Jared Bernstein.

The mayors’ messages will likely be tart. With nearly nine in 10 city finance officers reporting a declining ability to meet local fiscal needs, city budget officers across America are projecting nearly a 3 percent average budget shortfall in 2009, and much deeper shortfalls in 2010 and 2011. What is more, while there is regional variation, the pressure is building in virtually all corners of the country, shaped by differences in metropolitan economies, state-local tax structure, and service demands. In Philadelphia Mayor Nutter has been hit by rising unemployment which has hurt income tax collections. In Mesa, Mayor Smith has been managing through the fiscal chaos generated by a colossal sales tax crash and maybe the nation’s worst foreclosure mess. And in all quarters things are almost certainly going to get much, much worse. That’s because while income and sales taxes are typically the earliest sources of city revenue to decline as job losses in a community increase and consumer purchases decrease, property tax collections--which make up the bulk of city revenue nationwide--decline much more slowly as real property assessments are adjusted to reflect declining housing values and have only just begun to slump.

Barack Obama has the type of mind--orderly, analytical, well-read--that takes naturally to the study of ideas. But he's always been uncomfortable describing himself in ideological terms. Is he a liberal? During the campaign, Obama would mock those who applied the label to him: "There's nothing liberal about wanting to reduce money in politics," he'd say. "There's nothing liberal about wanting to make sure [our soldiers] are treated properly when they come home." Is he a moderate?

It's been a month since Democrats swept the elections, right about the normal time for internecine warfare to break out. Last time the party won power, moderate deficit hawks and liberal neo-Keynesians immediately set out to wage a War for the Soul of the Clinton Presidency. Things got pretty vicious. There were no reported cases of knife wounds or tire-iron beatings, but furious memos exchanged hands, bitter memoirs were written by the losers, and medium- grade warfare simmered throughout the remainder of the decade at think tanks and magazines.

Earlier this summer, when the Obama campaign announced that Jason Furman was joining its staff as director of economic policy, the storyline seemed to write itself: Centrist adviser will pull Obama to the right. Furman had first made a name for himself as a wonky twentysomething wunderkind in the later years of the Clinton administration--a period when, to the consternation of many liberals, Clinton emphasized balanced budgets, free trade, and welfare reform.