The U.S. Department of Commerce’s $400 million Economic Development Administration provides grants and loans to state and local governments, nonprofit groups, and businesses in regions that are supposed to be economically distressed. The EDA is a relic of the 1960s belief that the federal government can solve the problems of distressed urban centers. Its legacy is one of wasteful and politicized spending. Former EDA director, Orson Swindle, called it a “congressional cookie jar,” and the legendary anti-pork Democrat Senator William Proxmire argued that it “deserves to die.”
But the EDA did not die and its spending is as wasteful as ever. The EDA’s current administrator, John Fernandez, recently gave a speech on economic development under the Obama administration:
Over the past decade, we let our infrastructure crumble…our schools languish…our small businesses fend for themselves. Instead of building foundations, we chased bubbles.
By acting decisively, President Obama and his team pulled us back from the brink. Independent economists have just confirmed that the Recovery Act has saved or created more than 1.5 million jobs. The jobs picture is still sobering, but the unemployment trend is nowhere near as bad as it was when President Obama took office. One year ago, our economy was shrinking at rate of 6 percent. Today, it’s growing at a rate of 3 percent.
As the president points out, we need to do more than get America back on its feet…We need to take big steps: we need to modernize our education system, revitalize our infrastructure, invest in industries of the future, and create a new entrepreneurial culture in which innovation can flourish…For centuries, we’ve attracted, developed, and nurtured the world’s best talent, and given our citizens a chance to build a better life for themselves and their families.
Our political system rewards mayors, members of Congress, and governors for how much good they did for their constituents in the short term—you don’t get credit for fostering long-term growth. And in recent years, a virtual cottage industry has developed in ranking states on how attractive they are as places to do business: who’s got the lowest labor costs, who’s got the lightest tax load or regulatory burden, and so on.
[F]or the past decade, federal support for these regional efforts has been too limited. Too fragmented. Too inconsistent. The federal government has not been a reliable partner… What Washington can do—and under President Obama, what Washington has begun to do—is to facilitate collaboration. To provide a framework for that discussion among all the stakeholders. To help regions assess their competitive strengths. To help them design a strategy to bring together the technology, the human capital, and the financial capital it will take to compete. And to provide seed money for turning a region’s unique strategy into reality.