Fast Takes | The Latest Clone of the Empowerment Zone

Call them what you will, creating investment opportunities in distressed areas has a long history. Their impact? Mixed. | Rural-urban divide overstated. | SNAP work requirements will hit urban and rural equally, report says.

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One issue that may crop up this election season is Trump’s Opportunity Zones. 

Well, they aren’t Trump’s, really, but they were in the president’s giant tax reform bill. The zones were concocted by some high tech moguls and then slipped in to the tax reform legislation by Republican Sen. Tim Scott of South Carolina.  

Under the law, governors can designate a limited number of “distressed” areas. Those who invest in these “opportunity zones” then get preferential tax treatment on capital gains. The whole deal is to cost $1.5 billion. 

If this all sounds vaguely familiar, it should. Some variation of a scheme aimed at revitalizing depressed places is offered with each new administration. There were Enterprise Zones and Empowerment Zones and Enterprise Communities in the 1990s and 2000s. Before those, we had the Housing Act of 1949 and the Model Cities Program of the 1960s. Lots of money has gone into these things in both rural and urban communities — and not a lot has come out. 

The Federal Reserve Bank of Richmond in 2016 noted that studies of empowerment zone programs have “found mixed effects.” Some show benefits, but that may be just because economic activity was shifted from one poor place to another. All in all, it’s a mixed bag. 

President George W. Bush signs H.R. 4440, the Gulf Opportunity Zone Act of 2005, while administration officials and legislative members look on Dec. 21, 2005 in the Dwight D. Eisenhower Executive Office Building. (White House photo by Paul Morse)

Annie Lowery reviews Trump’s version in The Atlantic. She skips the wealth of information on previous incarnations of these kinds of programs but makes points worth remembering. 

First, the Trump Opportunity Zones are essentially market driven. After the governors designate their zones, private capital makes all the decisions. In the Empowerment Zone program, communities had to create a plan. This time, it’s all up to business. 

Second, she quotes economist Tim Bartik, who suggests a wiser use of money would be for government to do its job.  “You can bulldoze your way through with subsidies or you can actually try to address the problems these communities have,” Bartik said.  

What a concept! 

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A conference committee in the U.S. Congress is trying to decide whether there should be more strict requirements on those who receive food stamps. The House wants more people who get the benefit to work. The Senate doesn’t. 

How does this issue affect urban and rural food stamp beneficiaries? The University of New Hampshire’s Carsey School of Public Policy says there is no rural/urban difference. 

Under the law proposed by the House, about 16 percent of those receiving food stamps in both rural and urban communities will be subject to the new work requirements, according to Carsey’s analysis.  

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Political scientist Samuel Abrams urges everyone to refrain from overstating the “urban-rural divide.” He writes 

“At first glance, the “urban-rural” divide seems reasonable. But the data don’t support this geographic line of thinking; opinion polls regarding President Trump and his values reveal widespread dislike for his worldview, and the notion that rural areas epitomize and are embracing his policies accordingly is false.” 

We should note here that Abrams falls on one side of a battle among political scientists. He is of the persuasion that the whole notion of a partisan divide among regular folks is overblown. Most people, Abrams would contend, fall near the center. 

Here, Abrams goes through all the polls showing that, yes, a higher percentage of people in rural areas like Trump or think he shares their values. But it is nowhere close to a majority, let alone a landslide.  

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Trade is a big deal in the politics of farm states. Here is a take on the issue by the Minot (North Dakota) Daily News editorial page:  

After almost a decade when “Red” states or “flyover country” were all but overlooked, minimized, or outright derided, it has been a relief to see the important North Dakota and other agricultural states on the front burner again in the Trump administration. 

That’s not random of course, nor does it have to do with a president who openly represents the best nature of rural America. Instead, it is a result of a coalition of the disaffected, the ignored and the insulted supporting a president who re-set the national view on agriculture, energy and traditional rural sensibilities. 

That’s why Trump’s gambit with trade and tariffs might be his riskiest move to date – and that’s saying something. If Trump fails on this front, ag states are likely to soon turn their backs on the president, costing him support he cannot afford to lose headed into the midterms and then his re-election campaign in 2020. 

 

 
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