NTU Supports H.R. 661: Terminating the Economic Development Administration

The Honorable Mike Pompeo
United States House of Representatives
107 Cannon House Office Building
Washington, DC 20515
Dear Representative Pompeo:
On behalf of the members of National Taxpayers Union (NTU), I write in support of H.R. 661, your bill to terminate the Economic Development Administration (EDA) — a well-documented money pit whose attempts at reversing stagnation in “chronically depressed areas” of the country have often done more harm than good.
Founded in 1965 under the Johnson Administration, the EDA has become little more than an earmarking tool for particular local projects without real regard for the role of government or efficacy of the program. Too often, the recipients of the EDA’s grants and investments have been in the private sector where the EDA has picked winners and losers by industry, region, and community, regardless of the fact that the projects would have most likely occurred without federal government meddling. In 2008, then-Senator Obama pinned the EDA as “little more than a fund for corporate welfare,” and since 2007, the EDA has spent $2.4 billion on grants.
The grants provided by the agency often duplicate other federal, state, local, and private sources for economic development funding. The grants themselves are often so small that the GAO reports EDA grants “did not have  significant effect” on the success of projects, produced “inconclusive” results, and “may even detract” from the more flexible workforce our economy needs. Seemingly a glorified slush fund, an EDA Inspector General study showed that 29 percent of grant money had been wasted due to “accounting irregularities, conflict of interest, and improper procurement procedures” on projects like a $2 million “culinary amphitheater” in Washington State or $500,000 to replicate a Great Pyramid in Indiana. Repeated studies on the part of the Inspector General have found that EDA administered grants to grantees who had “material findings,” defined as “questioned costs greater than $10,000 or significant procedural or internal control findings,” and “questioned costs” to the tune of hundreds of thousands of dollars each 6-month period. And, a September 2013 report noted that $5.7 million in taxpayer funds could be “put to better use.”
Though NTU and U.S. Public Interest Research Group differ on the size and scope of government, in a 2013 deficit reduction study, the EDA was among the agencies that the two groups agreed should be in line for reductions. The Simpson-Bowles Deficit Reduction Commission also pegged EDA elimination as a commonsense source of much-needed savings. During this time of sky-high debt and the need for budgetary constraint, these are serious savings that Congress would be remiss in not trying to capture.
Legislators who are facing tough spending decisions ahead should jump at this money-saving “no brainer.” NTU is pleased to endorse H.R. 661 and urges all Representatives to cosponsor your bill and work toward its rapid enactment.


Nan Swift
Federal Affairs Manager