Cleveland comeback

February 22, 2011 at 12:00a.m.

As city recovers, who gets the credit?

Chicago Tribune

CLEVELAND

The narrative that haunts Cleveland, former empire of iron and steel, shipping and rail, has followed it for decades: the collapse of the manufacturing economy, the erosion of jobs, the exodus of residents.

But, in fact, Cleveland has weathered this recession much better than past slumps, as local industries have retooled and reinvented themselves. Old shops and factories have embraced new technologies. And for the first time in a while, there are grounds for optimism.

That new story line is what draws President Barack Obama to the city today, as he works to sell his new budget plan and the broader philosophy on which it relies. The American economy should update itself Cleveland-style, he believes, and the federal government should nudge it along with smartly placed investments.

Republicans such as Speaker John Boehner, an Ohioan, believe quite differently. They maintain Cleveland’s success owes to innovation by business, and that the best way for government to help is to get out of the way — in budget terms, by cutting spending and taxes.

Each man’s plan appears to be partly responsible for Cleveland’s fortunes, and both are pushing to advance their own approach. Obama’s budget for 2012 ups investments in infrastructure, technology and education. Boehner’s House last week proposed slicing $61 billion from the government’s budget for the rest of 2011, cutting local economic-development programs in the process.

The debate is anything but esoteric for this region. The outcome of the battle playing out in the capital stands to be keenly felt here, as a city perched on the edge of recovery wonders whether the prevailing political tide will rush it forward or knock it back.

“We feel like we’re turning a corner,” said Brad Whitehead, president of the Fund for Our Economic Future, a northern Ohio economic development group. “We’re doing something that’s working. We can’t stop now.”

Like every other city, Cleveland has suffered joblessness and underemployment the past three years. In dramatic contrast with other downturns of the past 30 years, however, the jobless and productivity rates here have tracked with the national average instead of being much worse.

In Cleveland, the remaining steel mills have come to specialize in higher- end materials. Old plastics and glassware factories now make things such as cell-phone heat shields that compete with the best products coming out of Japan. A Lake Erie wind farm soon could stand just miles away from where the Cleveland Browns football team plays.

The Cleveland Clinic, a global health-care titan, along with the local Cleveland Hospitals, has spawned a growing biomedical industry.

It’s private businesses such as those that Obama thinks the government should invest in to urge the economy toward jobs and industries that will be globally competitive over the long haul. The area has taken a regional economic approach, setting aside community-based rivalries that have stymied past efforts.

“The reinvention you’ve seen is being driven by smaller-sized businesses, as opposed to the big factories reopening,” Austan Goolsbee, chairman of the president’s Council of Economic Advisers, said in an interview.

“It’s not that government is the main driver of private-sector innovation,” said Goolsbee. “But in a lot of areas, the government sets the rules of the road and provides incentives to encourage them to reinvest in the workforce and to locate their investments in the U.S. President Obama has been doing that.”

During his term, Obama has trimmed taxes for small businesses and focused small-business lending programs on community banks in post- industrial regions such as Northeast Ohio.

The Recovery Act boosted construction in mass transit, light rail, highway and home-energy improvements, which the administration says helped to create or protect 133,000 jobs in greater Cleveland.