The 5 Conduits for the Next New Deal: Balancing Urgency and Longevity
Consider the possibility of another large economic stimulus in the United States being discussed by policy makers circa 2029 to 2032. This seems likely if the United States elects a progressive government in 2028. The scale of the next economic stimulus may be an order of magnitude larger than anything we’ve seen in the history of America. Given the converging societal problem sets that are growing in complexity and urgency, it is worth our time to consider how the federal government might go about injecting capital into the economy strategically.
To start, let’s look at what could be the most effective conduits for a portfolio of economic stimulus programs.
One. State and Local Governments
State and local governments control approximately three-fourths of the nation’s public infrastructure, making them essential partners in a comprehensive strategy for stimulating economic activity and creating jobs. However, many states face severe fiscal constraints, with limited revenues and rising demand for services such as health care, education, transportation, and social services. Local governments are also struggling with growing demands for services and limited revenue growth, and property tax revenues—the leading source of local financing—have fallen sharply.
Flexible funding through block grants is the best mechanism for investing in state and local governments. The provision of large federal economic stimulus packages through state and local governments has significant historical precedent including as recently as the Bipartisan Infrastructure Law and the Inflation Reduction Act. Each instance involved distributing funds using a politically acceptable formula-based allocation method to reflect localized needs, allowing state and local governments to complement or amplify assistance through their own budgets. State and local governments will be able to invest more precisely and creatively in the communities and problem sets that are in most need of attention.
Two. Regional Planning Organizations
Regional planning organizations typically are established by agreement among the jurisdictions they serve. Regional planning organizations span multiple counties and in some cases across state lines. These organizations are vital for coordinating infrastructure projects across large geographies. For example, a highway that goes through multiple counties or an electricity grid that serves multiple states. Regional planning organizations often receive federal grants under the Metropolitan Planning Program or the Economic Development Administration planning grant program, requiring the organization to engage in coordination at the regional level. Most have evolved to address a range of investment programs spanning multiple sectors, and many develop public–private partnerships to attract private capital to projects that serve the public. Regional planning organizations can efficiently mobilize capital for the Next New Deal through public-private partnerships, regional bond issuances, targeted grants, and performance-based funding.
Three. Universities
Universities will likely receive large amounts of funding for research and technological advancement. Universities also play a central role in regional and national innovation ecosystems. They can lean into this central role by helping to design the technology and the programs needed to address societal problem sets and simultaneously educating and training the needed workforce. They can also map regional research and innovation ecosystems and advocate for policies and investments that would maximize the benefits of academic research. Universities are also the anchors of many communities in the United States, so when the Next New Deal funnels capital to universities, it is also bringing jobs to those communities.
Four. Community Foundations
There are over 900 community foundations in the United States that act as civic catalysts and resource hubs within their region. They play a significant role in local grantmaking, with a large portion of their funding dedicated to expanding the capacity of the nonprofit sector to address social problems. Community foundations inherently build relationships that promote equity, facilitate community engagement, and gather and mobilize resources. They promote community conversations and planning efforts and assess priorities, trends, and aspirations specific to each place. The emphasis on place-based funding establishes community foundations as important civic catalysts. Community foundations haven’t traditionally been direct conduits for Federal economic stimulus programs, but they are good candidates for the Next New Deal’s dissemination of capital to local communities, particularly when thinking about the urgency of funding certain programs.
Five. Newly Created or Re-created Institutions
A Next New Deal recognizes that empowering institutions is a prerequisite for genuine reform, democratizing state capacity, advancing justice across all dimensions, and creating a more interdependent world. Institutional reform, including redesigning existing agencies and creating new instruments, should support these objectives by catalyzing transformative advances in governance, funding, and accountability.
Institutions like USAID and the Centers for Disease Control (CDC) should receive significant attention from 2029 to 2032 as those agencies have in the past had a global impact and addressed massive societal problem sets. Continuing to iterate and scale effective programs with USAID and CDC will enable the United States to lead the world in poverty alleviation, public health, and economic development.
In addition to rebuilding and iterating on old institutions, a New Climate Fund could provide the resources that a true whole-of-government response to the climate crisis requires, operating outside standard budget constraints. Such a fund would mobilize public finance for investment in both mitigation and adaptation. Understanding the scale and complexity of the climate problem should determine the scale of the Fund, not the perceived fiscal constraints of the day.
The next New Deal will require substantial investments to meet pressing needs while enhancing long-term quality of life and reducing socio-economic disparities. State and local governments, regional planning organizations, universities, community foundations, and newly created (or re-created) institutions possess unique capacities to fulfill six vital roles of a major economic stimulus package: strategic implementation, operational coordination, knowledge production and sharing, catalyzing reform at the local and state level, mobilizing resources, and innovating the governance of important institutions.
The current moment affords an opportunity to experiment with the political economy in a bold, new direction and at a grander scale than ever before. To maximize the societal return on federal resources, the United States should iterate on the historical example of the New Deal with a longer-term view.
