Cities without Suburbs
Rusk's "Solution" to the "Urban Problem" Is a Sham
MAY 01, 1994 by DEAN STANSEL
Filed Under : Government Spending, Subsidies
Watch out, suburbanites. New, multibillion-dollar federal program proposed to solve America’s urban crisis by putting public housing projects in the suburbs.
Though we haven’t seen that headline yet, it’s not because the idea does not exist. For decades America’s cities have been in decline, in mocking defiance of the explosion of new government-spending programs designed to save them. Nevertheless, many urban advocates still seem to think some elusive new government program will miraculously reverse the cities’ decline.
One such person is David Rusk, former mayor of Albuquerque and the author of a new book entitled Cities without Suburbs. Rusk says the solution to the urban crisis lies in “regional governance.” That is, he wants cities to annex their thriving suburbs—with or without their consent—or consolidate with their counties, thus creating “cities without suburbs.” According to Rusk, that will transform declining cities into booming cities by forcing suburbanites to pay what he feels is their “fair share” of the costs of urban decline.
Though some cities—most notably, Nashville, Indianapolis, and Jacksonville—have successfully annexed their suburbs or consolidated with their counties, the political and legal obstacles are usually prohibitive. So Rusk suggests other ways—short of suburban annexation or city-county consolidation—to reduce the racial and economic segregation that he thinks is “the heart of America’s ‘urban problem.’”
One such plan would put public housing projects in the suburbs. Rusk argues that this would integrate the underclass into mainstream society, exposing them to the positive role models therein.
However, having subsidized housing in their neighborhoods is nearly as objectionable to most suburbanites as is annexation. Therefore, Rusk suggests the provision of federal “incentives” to get suburbs to cooperate. That’s the catch. (Even Rusk admits that “‘incentives’ is a euphemism for federal money.”) According to Rusk, the so-called “incentives” would cost federal taxpayers $23 billion a year.
Though touted as a new approach, Rusk’s proposal is just another big spending program. To make matters worse, his expensive proposals have support in high places. Speaking at a Spring 1993 conference on urban policy sponsored by President Clinton’s favorite think tank (the Progressive Policy Institute), Secretary of Housing and Urban Development Henry Cisneros explicitly endorsed Rusk’s proposal, saying, “If we cannot open up suburban communities to subsidized housing . . . , we will not succeed.”
Since then, Cisneros has proposed a massive expansion of “Moving to Opportunity” (MTO), a program created by his predecessor Jack Kemp. MTO will be tested in six major cities over the next two years, moving 6,200 households from inner-city public housing units to suburban ones, at a cost of $234 million.
While Rusk contends that “in any constitutional sense, the federal government has no role” to play, he advocates implementing these types of programs through either the provision of federal dollars or “new requirements on federal grants in aid.”
In further contradiction, Rusk calls for larger, more centralized governments, while gushing that “in many ways the belief that ‘smaller government is better government’ resonates emotionally within me” (emphasis added). He even muses that larger government “may be less efficient and less responsive as a deliverer of services than smaller governments.”
Rusk is correct about that. Studies have consistently shown that large, centralized governments have significantly higher unit costs of providing public services than small, decentralized governments. Nevertheless, Rusk insists that larger, more centralized governments are the answer, listing as “key goals: unification of the tax base and centralization of planning and zoning authority . . . under a dominant local government” (emphasis added).
Only in America do you still hear arguments such as Rusk’s for larger, more centralized government. The last few years have witnessed a worldwide revolution. People have been throwing off the yoke of big, centralized government with rampant enthusiasm. Rusk ignores that reality, or perhaps he was too busy researching and writing his book to notice.
Rusk states that his primary motivation in creating cities without suburbs is the elimination of economic and racial segregation. He cites statistic after statistic to “prove” that cities that have annexed their suburbs are less segregated than those that have not. But what does that really mean? Few would disagree that redrawing the borders of a central city to include its suburbs will create a new “city” that has a greater proportion of middle- and upper-class whites than the old central city. Thus, by definition, Rusk’s solution does indeed reduce measured segregation in “the city.”
However, isn’t that just semantics? After all, “the city” is no longer the central city. It is now the central city plus its suburbs. There is no reason to believe that creating cities without suburbs will in any way reduce the racial and economic disparities between the central city and what used to be the suburbs. Rusk’s so-called solution to what he sees as the “heart of the urban problem”—racial and economic segregation is, to be kind, a sham.
As Rusk himself says, his real goal in creating cities without suburbs is “tapping a broader tax base.” He further states that “sustained success requires . . . moving dollars from relatively wealthy suburban governments to poorer city governments.” Although Rusk uses the term “suburban governments,” it is suburban taxpayers who will take the hit. Could Rusk’s rhetorical chicanery be intended to camouflage the fact that his plan is simply a Robin Hood-esque effort to take from the suburbanites and give to the city dwellers? And what about the phrase “moving dollars”? Most people would call that stealing.
Furthermore, Rusk’s proposals are imbued with the traditional left-wing notion that the solution to the problems of the inner city (or any problem for that matter) is more government spending. However, that argument rests on the assumption that the cities simply have not been spending enough. Nothing could be further from the truth.
In 1960 the average city government spent $470 per resident (in inflation-adjusted dollars). By 1991 that amount had more than doubled, rising to $1,070. Few city residents would argue that the quality of municipal services has doubled. Most would say just the opposite.
Twenty-five years ago Harvard’s John Kenneth Galbraith said that there was nothing wrong with New York City that doubling the city’s budget wouldn’t solve. Apparently, New York City’s leaders took him to heart; since then their budget has nearly tripled (in real terms). Surely, no one believes that New York City is in better shape today than it was twenty-five years ago. In fact, the recent efforts of the boroughs of Queens and Staten Island to secede from the city are damning evidence to the contrary.
Rusk admits that “cities, in the battle over middle-class America, have lost to their suburbs.” To many, the central question of the “urban crisis” is why. Why are Americans voting with their feet by fleeing the inner cities in such large numbers?
Rusk seems to realize that higher taxes and spending are part of the problem, not the solution, saying, “Many middle-class families . . . went to the suburbs to flee high city taxes” (emphasis added). However, Rusk then goes on to say, “Admittedly, some factors in suburban growth in the early postwar decades were nonracial . . . [but] racially motivated ‘White flight’ was undeniably a major factor in suburban growth” (emphasis added).
While racial prejudice certainly exists, the idea that it is a major factor in the decline of America’s cities smacks of a conspiracy theory. Besides, it is no longer just whites who are fleeing the inner city; middle-class blacks have been leaving in droves as well. Does Rusk really contend that suburban exiles from declining cities such as Oakland, New Orleans, and Birmingham are more racist than their same-state neighbors in the more prosperous cities of San Diego, Baton Rouge, and Mobile? Or could it be that the high tax burdens in declining cities—often twice as high as in booming cities—are simply forcing middle-class Americans to flee to areas with lower taxes?
Many urban advocates argue that America’s large, declining cities cannot cut their taxes without slashing crucial municipal services. However, one reason taxes are so high in those cities is that the per unit cost of providing municipal services is often twice as high as in smaller cities.
The underlying problem is that most city governments are simply too big and centralized. They are too far from the people they govern. As a result, residents of large, centralized cities have relatively little ability to influence their leaders and to control how well their government is run. In contrast, public employee unions have substantial influence in such cities. For example, in New York City, some public employees get as many as 51 days off a year. That means they work the equivalent of a four-day work week. Such generous spending of city taxpayers’ dollars on members of public employee unions is well documented in other large cities as well. It is a major factor driving up the cost of providing municipal services in large cities.
Rusk’s solution would create more wasteful centralized governments. Thus, the cost of providing public services such as trash collection and police protection in Rusk’s cities without suburbs would be even higher than it is now. Those higher costs would require still higher taxes. Since tax hikes cause residents and businesses to leave, Rusk’s solution would only perpetuate the downward spiral of America’s cities. It is the exact opposite of what should be done. Cities should move, instead, toward more decentralized governments and seek to privatize municipal services. That would enable them to enact the pro-growth tax cuts necessary to make the cities places where the middle class and businesses again want to, and can afford to, live and work.
Ignoring that centralization leads to inefficiency and higher costs, and that taxes have consequences, Rusk’s “solution” to the urban crisis is ultimately just an elaborately constructed house of cards. He fails to even consider the possibility that many suburban businesses and residents, faced with higher taxes after being annexed by their central city, would simply choose to move farther and farther away from the inner city to avoid those tax hikes. Perhaps Rusk plans to build a Berlin Wall around the new cities without suburbs to ensure that businesses, people, and capital cannot escape. Without such police-state restrictions, Rusk’s proposal is doomed to failure. His house of cards will inevitably come crashing down.
Nevertheless, given the huge amount of tax dollars at stake and Rusk’s powerful supporters, at a short 130 pages, Cities without Suburbs is a worthwhile read—especially for suburbanites. The proposals it contains are a haunting harbinger of things to come.
If Rusk, Cisneros, and Clinton have their way, we will all soon be living in cities without suburbs. So start forming your grassroots organizations now, suburbanites. And hold onto your wallets. The tax man cometh. 
Mr. Stansel is a fiscal policy researcher at the Cato Institute in Washington, D.C., and co-author of a recent Cato study entitled “The Myth of America’s Underfunded Cities.”