The Honorable Mike PompeoUnited States House of Representatives107 Cannon House Office BuildingWashington, DC 20515
Dear Representative Pompeo:
On behalf of the 362,000 members ofthe National Taxpayers Union (NTU), I write in support of your bill, H.R. 3090,the “EDA Elimination Act of 2011.” Your bill would phase out the EconomicDevelopment Administration (EDA), a well-documented money pit whose attempts atreversing stagnation in “chronically depressed areas” of the country have oftendone more harm than good.
The EDA was created in 1965 as partof President Johnson’s “Great Society” to help stimulate growth in economicallydistressed places by providing grants and loans to state and local governments.Despite the program’s high-minded intentions, the EDA, like many other grant-basedfederal agencies, was quickly co-opted by parochial interests seeking influenceover the award determination process. The ensuing pork-barrel politics erodedthe program’s original intent by watering down the definition of “depressed” inorder to expand the number of districts that qualified for grants.
There is also little evidence toassuage taxpayers’ fears that the program too often operates as a glorifiedslush fund. In fact, the EDA’s claims of job creation and investment returns havebeen the subject of repeated criticism by several government watchdogs. Arecent audit of 10 EDA funded programs by the Inspector General tasked withoverseeing the agency found that 29 percent of the money was lost due to“various violations of EDA grant requirements such as financial accountingirregularities, conflicts of interest, and improper procurement procedures.”Furthermore, a recent Government Accountability Office report criticized theEDA for relying on questionable reporting mechanisms to assess theeffectiveness of its grants, which may “lead to inaccurate claims about programresults, such as the number of jobs created.”
Even if we accept the EDA’s claimsas correct, it does not follow that the government should continue to have its’heavy hand involved in trying to direct economic activity. Doing so ignores theinvisible effects of taxpayer-financed “job creation” – namely, the jobs lostdue to resources being taken out of the private sector through higher taxes andmarket distortions. Furthermore, as seen in the Solyndra debacle, these sortsof investment decisions, and the risks they entail, are best reserved for privatebusinesses and industries, not central planners who often lack sufficientinformation and profit motive.
The Economic DevelopmentAdministration is a program whose results cannot justify its exorbitantpricetag. NTU applauds your introduction of the EDA Elimination Act and urgesyour colleagues to work toward passage of this common sense defense oftaxpayers’ hard earned money.
Sincerely,
Brandon GreifeFederalGovernment Affairs Manager