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Letter of Support: Rep. Pompeo's EDA Elimination Act, H.R. 3090

Dear Representative Pompeo,

On behalf of more than 1.8 million Americans for Prosperity activists in all 50 states, I applaud your introduction of the EDA Elimination Act, H.R. 3090. Your bill would end the wasteful, backdoor earmarks at the Economic Development Administration (EDA) and thereby save taxpayers more than $300 million annually.

The EDA was created in 1965 to provide development grants to local governments, nonprofits, and businesses in regions facing severe economic distress. The program has since expanded far beyond its original intent. Now that about 80 percent of the country is eligible as “economically distressed,” it serves as merely an alternate tool for politicians to dole out federal dollars for pet projects and favored businesses in their districts.

In just one week in September, for example, the EDA distributed $47 million in taxpayer-funded grants to 46 different projects in 23 states and Puerto Rico. A brief glimpse at the list of projects reveals that there is little economic logic in the EDA’s actions. The San Jose Environmental Innovation Center in California, a green technology and green job training center, wants to install solar panels on its renovated building. Instead of securing private funding for the investment, the federal government is picking up two-thirds of the project’s $3.4 million tab.

Bismarck, North Dakota received $611,000 to start up a welding program at a local technical college. The students will likely benefit from the training, but it’s hard to see the pressing need for federal “economic distress” grants for a city with a 3 percent unemployment rate, less than a third of the national average. A $1 million “Jobs Accelerator” grant for Portland, Oregon claims to leverage local, regional, and national resources to “increase the region’s competitive advantage in the global marketplace.” But by the grantee’s own estimates, the funding will generate just $187,000 in private investment, enough to create, at best, a small handful of jobs – hardly a worthwhile payoff. All this in just one week’s worth of grants!

The EDA would counter that these are atypical cases; their most recent annual report claims that every EDA dollar invested generates $6.70 of additional private investment. However, if the payoffs were indeed this high, then entrepreneurs, venture capitalists, and local governments would fund such projects with no need for federal help. Bureaucrats in Washington are simply unlikely to find high-value investment projects that these groups have somehow missed. It’s no surprise, then, that the Government Accountability Office has continually expressed concern about the program’s effectiveness over the years.

As Barry Goldwater once said, federal “development” programs like the EDA merely “substitute for our free enterprise system the awful specter of the planned superstate.” If we want to avoid the large-scale waste, fraud, and scandal that inevitably result from bureaucratic central planning, then the funding should come from the private sector.

It’s time to end this wasteful program. Americans for Prosperity is proud to support the EDA Elimination Act, H.R. 3090, and similar measures to stop the federal government from picking winners and losers in the economy. I urge your colleagues to support passage of this important legislation, and I look forward to working with you in the future.

Sincerely,

James Valvo
Director of Government Affairs
Americans for Prosperity

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