Obama Presidency May Quickly Impact State and Local Governments

Large public works projects and federal backing for state and local bonds could be among new president's early priorities.

by / November 11, 2008

Barack Obama's presidency will have a large and nearly immediate impact on state and local governments, according to David Sanger, chief Washington correspondent for The New York Times.

Sanger -- who covered both the Bill Clinton and George W. Bush administrations for the newspaper -- spoke Monday, Nov. 10, at re:public, the Center for Digital Government's annual leadership retreat in Tucson, Ariz. He said he expects Obama to move quickly on issues vital to state and local officials once the president-elect takes office in January. Among the early targets: shoring up ailing U.S. automakers, providing federal backing for state and local bond issues, and launching public works infrastructure projects.

"In President Obama's first 100 days, he'll need to worry about the domestic economy, national financial markets and world financial markets," Sanger said. "He'll move quickly because within six months, the recession won't be the 'Bush Recession' anymore. It'll be the 'Obama Recession.'"

With that in mind, Sanger predicted the Obama administration's first significant economic move will be to pump money into ailing automakers GM and Ford, in an effort to preserve jobs for 2.5 million to 3 million workers employed by the domestic auto industry.

"Next will be help for state and local governments themselves," said Sanger. With the credit crisis making it difficult for governments to borrow money, the federal government may provide backing for state and local bond issues, he said, much as it did for beleaguered mortgage corporations Freddie Mac and Fannie Mae.

Furthermore, Sanger expects Obama to launch an economic stimulus plan based on FDR-style infrastructure investment, rather than sending stimulus checks to individuals. "I think you'll see significant public works infrastructure projects -- bridges highways, etc. -- and also significant investment in alternative energy," he said.

Whether that investment will include IT infrastructure is less clear. Sanger questioned whether direct federal involvement in IT development is desirable, contending that the feds often lag behind the curve on technical issues. Federal involvement in cyber-security issues is more likely.

"My guess is you'll see federal money go into cyber-threats first," he said. "I think they'll take more time to figure out the [IT] infrastructure investment."

Sanger also questioned the effectiveness of Obama's proposal to appoint a federal chief technology officer -- an "IT czar" -- to guide federal policy on technology. He said it's unlikely the CTO would gain budget authority over the huge amount of IT spending that's spread across federal agencies, and lack of that authority would ultimately render the post ineffective.

"Any big problem in the U.S. leads to calls to establish a 'czar.' But if they don't have budget authority, it doesn't work," Sanger said. "The bigger the problem, the harder it is to fall to a czar solution. And there's no part of the U.S. government that doesn't include IT infrastructure."

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