February 7, 2005

February 7, 2005 | WebMemo on Federal Budget

President's Plan to Consolidate Federal Economic Development Programs Is Long Overdue

Redundant and duplicative programs, especially between different cabinet departments, are a significant source of waste within the federal government. In the case of regional economic development programs, responsibilities-and money-are distributed among the offices and divisions of the Departments of Housing and Urban Development (HUD), Labor, Commerce, Agriculture, and Interior, as well as several smaller administrative agencies, including the Small Business Administration. President Bush's proposal to consolidate these programs under the Department of Commerce is long overdue and should receive the support of Congress. Consolidating responsibility for economic development in a single department will yield two immediate and important benefits to communities throughout the nation: more money for needy beneficiaries and less pork.


First, by combining 18 of the far-flung federal community and economic development programs into a single enterprise, millions of dollars of savings will be realized through the elimination of 17 of the bureaucracies that now administer these redundant programs. Their 17 program directors can be eliminated, as well as all of the subalterns who head the 17 offices devoted to public affairs, congressional affairs, inter-governmental affairs, research, administration, budget, personnel, civil rights compliance, and so on. The savings, once devoted to Washington bureaucracies, can now be spent on cost-effective economic development projects.


Second, by consolidating the resources and responsibility for economic and community development within a single entity, the federal government will be better able to coordinate assistance and to focus on legitimate projects. Under current arrangements, characterized by dispersed responsibilities, federal development programs have degenerated into a grab-bag of wasteful pork-barrel projects designed to reward influential constituencies and Washington lobbyists-at the expense of those the programs were initially designed to help.


For example, consider the Community Development Block Grant (CDBG) program. It was created in 1974 as a replacement for HUD's failed Urban Development Action Grants to provide housing assistance to low-income families and improve the economic environment in their communities. In its early days, CDBG largely focused on the poor, but in 1984, the law was changed to a formula-based distribution that would allow it to provide funds for affluent communities with "pockets of poverty." As the GAO noted in 2000, one of the consequences of this change was that "Greenwich Connecticut received five times more funding per person in poverty in 1995 than that provided to Camden, New Jersey, even though Greenwich, with per capita income six times greater than Camden, could more easily afford its own community development needs."


Since that 2000 report, the CDBG has drifted even further from its basic purpose, as a survey of recent earmarks reveals.


In the most recent (FY 2005) House appropriations bill for HUD, committee members included 1,032 location-specific earmarks for the Community Development Block Grant program (CDBG), up from the 606 in the FY 2004 bill. These include such projects as the Mark Twain House and Museum, the Lost River Cave Improvement project, the Salvador Dali Museum, the Helen Keller Birthplace Foundation, the Finger Lakes Open Lands Conservation project, and the B.B. King Museum. Also included in the list is funding for dozens of university construction projects-dormitories, libraries, and classrooms-and several Audubon nature centers.


There is a note of welcome hypocrisy in all this. In response to the President's proposal to allow faith-based organizations to receive federal funding to provide social services, some members of Congress invoked the First Amendment and its proscription on government-sponsored or -funded religion as a bar to the plan. But when Congress views religious organizations as local (and voting) constituents, such constitutional qualms quickly disappear, as the FY 2005 CDBG earmarks reveal. Among the earmarks to religious organizations are funds for the Sacred Heart Village (Wilmington), Catholic Charities (New Orleans), St. Ambrose Housing (Baltimore), Presbyterian Medical Services (Santa Fe), United Jewish Organizations (Brooklyn, NY), United Methodist Elder Care (East Providence), St. Anne's Children/Family Center (Spokane), St. Francis Medical Center (Peoria), Covenant House (Atlanta) and Ministers Alliance of Charles County (Maryland).


As to the overall focus of some these recipients, an affiliate of Sacred Heart (Wilmington) notes that "Recognizing that in addition to meeting economic and physical needs of the poor it is essential to foster the spiritual growth of clients, staff and the community at large, the Ministry of Caring began an evangelizing program in November 1997." In comparison to many of other CDBG earmarks, the ones targeted to faith-based organizations often more closely fulfill the program's legislative mandate.


Still, CDBG and similar programs simply waste too much money on pork barrel spending. President Bush's proposal to consolidate these programs and tighten their focus would go along way toward redirecting resources to those people and communities in need.


Ronald D. Utt, Ph.D., is Herbert and Joyce Morgan Senior Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

About the Author

Ronald D. Utt, Ph.D. Herbert and Joyce Morgan Senior Research Fellow

Related Issues: Federal Budget