In many ways, this shift in where Americans choose to live is occurring despite policy, not because of it. Defenders of suburban sprawl have made much of the attention the Obama administration, and particularly its Transportation Department, have paid to principles of “livability.” But, as Kathryn Wolfe describes in CQ Weekly this week, “To this point…Obama’s transportation program has been long on rhetoric but short on resources…[T]he president himself has not made the political and financial commitment that would be necessary to actually change the direction of something as large as transportation policy.”

In fact, Obama administration policy has propped up the very (suburban) housing market some Americans are beginning to reject. The homebuyers tax credit wasted billions without turning the housing market around and the success of the administration’s other housing stabilization programs has been limited. As The Washington Independent’s Annie Lowrey documented on Thursday, policymakers are only now pursuing programs that address mortgage default and foreclosure and unemployment as two sides of the same coin.

It comes as no surprise that the challenge of the American economy is one of housing and jobs. Indeed, this is nothing new for the administration: just this week, HUD Secretary Shaun Donovan identified as a “fundamental problem” with the American economy “The mismatch between where we live and where we work.”

But this sentiment is relevant to the debate about fiscal expansion and contraction. The strengthening of cities – with its attendant economic and environmental benefits – is not immutable. If federal policy does not support the movement back to cities, however nascent, by focusing on job creation in urban areas and instead perpetuates an unsustainable housing market, the economy will continue to struggle. If it does support such job creation, however, the benefits will redound not only to the economy at large, but to the pocketbooks of ordinary Americans.