Reinvigorating Urban Cores

The glare of the Los Angeles riots spotlighted the devastating lack of jobs, businesses, services and housing in the impoverished urban core of this and other cities. These huge problems require massive attention, but public funds are in short supply.

The feds no longer do what government routinely did for decades--and, ever since the mid-1960s, through the Department of Housing and Urban Development. Changed national priorities and swollen federal deficits decimated the government’s largess to the cities.

President Clinton is expected to pay greater attention to the cities. With the help of a largely Democratic Congress, he can probably deliver on some promises unfulfilled by others in the aftermath of Los Angeles’ riots. But how much can a government hamstrung by huge deficits commit in new spending? Not much.

That’s too bad because substantial help is needed to reverse a steep urban decline hastened by 12 years of short-sighted federal policies, a lingering recession and the pressures of massive immigration and migration. Los Angeles alone needs jobs and homes in the hundreds of thousands to make this city a decent and livable place for all.

Given the huge scope of need, the President and the Congress must come up with other sources of big money. One proposal worth considering is being put forward (see today’s Op-Ed Page) by William McKenna, chairman of the Corporate Fund for Housing, and Mark Pisano, executive director of the Southern California Assn. of Governments. Though untested, their formula holds out at least in theory the promise of billions of dollars for investment in the cities.

It would work like this: Investors who purchased mortgage-backed securities would pay an additional fee. Those dollars would be used to target the nation’s problems. The investors would be rewarded with a tax break.

Losing those taxes would cost the U.S. Treasury about $232 million in Southern California alone the second year after the tax break was allowed. But that loss, according to the McKenna-Pisano proposal, would be more than offset by the additional taxes generated through the creation of thousands of new jobs. That potential makes the proposal worth debating in Congress, and in the White House.