As we continue our discussion of tax burdens and government spending—looming belt-tightening at the federal level will constrict state and local governments at their time of greatest need. Stimulus kept teachers hired and enabled road paving, but still red ink flows. With federal stimulus ending, governors and mayors go into full triage mode, preparing to cut programs across the board—schools, police, transit, road crews, health care, parks and recreation-- =you name it.

It’s one thing to talk about less government and lower taxes, it’s quite another to feel the impacts when they hit home. First off, local government program reductions translate directly into more unemployment and shoddier service. Teachers get canned and class sizes increase. The DOT struggles to plow streets in the blizzard and it takes longer to fill potholes after the snow melts. Fewer garbage pickups lead to dirtier streets. Parks don’t open in the summer or have shorter hours. Crime increases because of police layoffs and the neighborhood is more nervous since the fire station closed. You see more homeless people and mental cases on the streets, more poor people do with less medical care, senior citizens get squeezed on home visits and nursing care. Forget about new capital projects—like the proposed light rail system or the sewage treatment plant, which oh by the way create lots of private sector jobs.

After nearly two decades of renaissance, the key U.S. economic-engine gateway cities now potentially face a major crisis. Will government retrenchment lead to an ugly regression back to the mean, dirty street days of the 1970s and 1980s when urban America looked like a goner? And this time round, the suburbs don’t appear like a ready refuge. Streets and sewers need repair there too, while crime and class size could become just as big issues. In the Sunbelt suburban agglomerations congestion threatens to strangle growth—they need reconfigured roads and mass transit, but who is going to pay?