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Overview  

The Economic Development Administration (EDA) is an agency within the United States Department of Commerce and heads the federal economic development agenda. The EDA’s goal is to encourage private capital investments in the United States’ most economically distressed areas.   Through its targeted investment assistance, it helps create and maintain jobs that require higher skills and pay higher wages. One way the EDA accomplishes this goal is by awarding grants, and the second way is through cooperative agreement with Investment Programs.  

An example of one of EDA’s investments programs was in Stockton, California, in 2004. The EDA invested $6 million in order to help build the South Stockton industrial area. Total project costs were $9.5 million. This project area is now home to 200 industrial companies employing 7,500 people, which has decreased the area’s dependency on agriculture. Total private investment is expected to reach $485 million.
 
 EDA also supports cities’ or regions’ post-disaster long-term economic recovery. For example, in 2006 the EDA gave $23 million to the reconstruction process in areas affected by the Gulf Coast Hurricanes, Hurricane Katrina and Rita.
 
A more recent example of an EDA investment project was in Santa Clarita, California. On January 4, 2008.,the EDA gave an investment check of $1.38 million to the Santa Clarita Community College District for the College of the Canyons. The money will help the college purchase high-tech training equipment to teach students kills that are required by regional employers. The project is expected to create 300 jobs and generate $6 million in private investments.
 
Although the EDA has assisted countless development projects that have created new jobs as well as stimulated the economy, in the past decade or so the EDA’s motivation for several projects has been called into question. The main question is who is benefiting more from these projects, the wealthy corporations who receive the grants and tax cuts or the laborers who are provided with an increase in job opportunities.
 
 
History  

President Franklin Roosevelt’s New Deal programs were the first to focus on the depressed regions of the U.S. Economic development was also a focus of the government after the end of WWII because of concerns that regional economies would suffer from the breaking down of the war industry. 

In 1943, the National Resource Planning Board (NRPB), proposed that the federal government should develop a national policy that assists people moving from depressed regions to ones with greater opportunity. However, Congress had the NRPB come to an end that same year and created special House and Senate committees to control post war economic policy and planning. Around this time, Henry A. Wallace, who was secretary of Commerce, proposed developing a comprehensive federal strategy for depressed areas. In 1945 two legislative proposals on depressed areas reached Congress, both which were largely driven by Henry S. Wallace and other administration officials. The first bill became the Full Employment Act in 1946 and the second was the Hays-Bailey Bill. 
 
The Eisenhower administration had favored providing technical assistance and loans to depressed areas, which led to a new Area Assistance Program that was created to better assist communities that had experienced continual and substantial unemployment. 
Under President Kennedy, in the early1960’s, the Area Redevelopment Act (ARA) was established within the Department of Commerce with the purpose of providing direct loans to rural and urban depressed areas, as well as technical and retraining assistance grants. However, the ARA failed greatly at reducing unemployment in depressed areas. This led to the replacement of the ARA with the Economic Development Administration (EDA) and the passing of the Public Works and Economic Development Act (PWEDA) of 1965.
 
The EDA was similar to the ARA. They were both part of the Department of Commerce, both focused on rural areas and both were supply-side oriented and led to the increase in the government’s role in supplying infrastructure to high-unemployment areas. 
The original goals of the EDA since it was established in 1965 have remained the same, although they have been redefined. 
 
In 1971, under President Nixon, the EDA Extension Act gave additional authority to the EDA through the Publics Works Impact Program (PWIP), with the goal of helping short -erm countercyclical employment. The 1971 amendments also extended eligibility to areas whose median family incomes were 50% of the national average. Revisions to PWEDA in 1972 included extensions, funding and relieving areas from economic disaster in addition to emergency assistance. The Amendments to EDA stressed its need to provide assistance and increased funding to communities experiencing both long- and short-term unemployment. 
 
EDA has evolved from focusing predominantly on rural concerns during the 1960s to both rural and urban problems. Funding for EDA programs has been greatly impacted by the ideological changes of the current political parties in office and their constituents.
 

EDA Legislative History

 

What it Does  

The EDA provides grants to economically distressed communities with the goal of creating new employment as well as maintaining existing jobs, while stimulating industry and commercial growth. Much of EDA assistance is aimed at rural and urban areas of the U.S that are experiencing high unemployment, low-income or other types of severe economic distress. The EDA has 3 key Investment Programs that help both regions and communities: (1) the Public Works program focuses on expanding and upgrading physical infrastructure; (2) the Economic Adjustment program designs and implements strategies to diversify economies, and (3) the Technical Assistance program supports research of leading economic development practices and funds efforts supporting the distribution of information.

The EDA funds investment proposals that support long-term economic development approaches, support innovation and competitiveness, as well as encourages entrepreneurship. The EDA takes into consideration investment proposals that respond to sudden and severe economic dislocation, for example – as a result of a natural disaster.
              
The grant process requires several steps. First, the prospective client meets with a representative from the Regional Office to discuss the client’s eligibility criteria. The client must have a Comprehensive Economic Development Strategy (CEDS), utilizing locally developed priorities. The EDA representative then works with the client through the application process. There is a “pre-application” process where the Regional Office, with a Economic Development Representative (EDR), determines the clients eligibility. If approved by the Economic Development Representative or another EDA Representative, the applicant has 30 days to submit the final application to EDA. Once the final application is submitted it is sent to the Legislative and Intergovernmental Affairs Division. If the grant is approved, the recipient gives the EDA reports on the projects progress, performance and financial status. The EDA is responsible for reporting the projects performance to Congress under the Government Performance and Reporting Act.
 
 
 

Annotated Bibliography of Economic Studies of the Economic Development Administration 1995-2001

 

Where Does the Money Go  

There are numerous corporations which have great interest in the EDA’s programs and policies due to the corporations desire to receive project grants and corporate subsidies, tax breaks or grants, from the EDA. Some main stakeholders are; Worchester Business Development corporation (WBDC), Worchester Polytechnic Institute (which received $2.5 million towards the construction of a parking garage), ACCION Texas Inc. of San Antonio, The Great Northern Town Center of Helena, Montana, Massachusetts Biomedical Institution, KCSource Link of Kansas City, Regional Planning Commission of New Orleans…etc. 
 

A Parking Lot for Worchester

 

Controversies  

Helping the Rich

The EDA was established to improve the lives of lower-income people by creating new jobs and economic opportunity in depressed areas. Today, some have argued that the EDA has moved away from its original goal of focusing on benefiting the poor and moved towards benefiting wealthy corporations at the expense of low-income citizens.

 

Stephen Moore, Director of fiscal policy studies, and Dean Stansel, a fiscal policy analyst at the Cato Institution, refer to the Department of Commerce as the “Nerve center of the Corporate Welfare State.” According to Cato Institutes estimates in 1997, the government spent around $60 billion in tax money, each year, on more than 100 programs carried out by American businesses. Putting an end to these subsidy programs could have saved U.S taxpayers more than $300 billion dollars between the years of 1997 and 2002, as claimed by Moore and Stansel. Essentially, the EDA’s goals can be seen not as one driven to benefit the poor in low-income areas of the U.S but to provide subsidies to large corporations, increasing their profit margin.
 
Other incidents that have proved the EDA has gone astray from its original goal can be seen by tracking where and who their grants have gone. For example, EDA grants have gone to Raleigh-Durham, N.C and Fort Worth, Texas which both are cities that have unemployment rates far below the nation’s average. EDA funds have also been used to invest in projects for influential Congress members. One example occurred in 1995 when EDA gave a $500,000 grant to the National Football League that went towards the building of a practice field for the Carolina Panthers.

Helping the Carolina Panthers

 

Debate  
Suggested Reforms  
Congressional Oversight  
Former Directors  

David A. Sampson

David A. Sampson was the Assistant Secretary of Commerce for Economic Development until July 2005 when he was appointed the Deputy Secretary if the U.S. Commerce Department. Sampson is a graduate of David Lipscomb University and earned his doctorate at Abilene University’s John F Kennedy School of Government in 1999.  

 

 

Comments  
Ken Williams - 6/22/2012 7:04:54 AM              
watch for senator lindsey graham to replace holder if he is properly ousted. they will replace holder with someone just as crooked.

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Table of Contents

Founded: 1965
Annual Budget: $300 million
Employees: 165

Economic Development Administration
Fernandez, John
Assistant Secretary

As Assistant Secretary of Commerce for Economic Development, John Fernandez has led the Department of Commerce’s Economic Development Administration (EDA) since September 14, 2009. The EDA is charged with encouraging private capital investments in economically distressed areas. 

 
A first generation American, Fernandez was born in Canton, Ohio, but grew up in Kokomo, Indiana. His parents emigrated from Spain during World War II, after his grandfather was killed fighting against Franco during the Spanish Civil War. Fernandez’s father worked in the auto industry and his mother was a nurse. Fernandez earned his bachelor’s and master’s degrees from the Indiana University School of Public and Environmental Affairs, and his Juris Doctor from the Indiana University School of Law.
 
After clerking for a state Supreme Court justice, Fernandez entered private practice as a member of Bingham Summers Welsh and Spilman’s litigation practice group.
 
In 1987, he was elected to the Bloomington City Council and served as its president in 1991. He ran for mayor in 1995 and won, leading the city from 1996 to 2003. During this time, Fernandez worked with business and Indiana University leaders to launch the Bloomington Life Sciences Partnership, securing more than $243 million in private investments and creating more than 3,700 jobs. He also developed a downtown revitalization plan that brought in more than $100 million in new investments.
 
Fernandez was the Indiana Democratic Party’s candidate for Secretary of State in 2002, but was defeated in the general election. 
 
He then joined Krieg DeVault, an Indianapolis-based law firm, advising public and private organizations, and worked as senior vice president at Finelight Strategic Marketing Communications, a Bloomington-based advertising agency. In April 2006, he also took over as president of the Heartland Development Group, but then moved on to become senior vice president and partner at First Capital Group, an Indiana-based real estate investment firm, which he joined January 1, 2007.
 
 
Fernandez joined the Obama for Change Indiana leadership team in 2007 and served as a senior advisor and fundraiser. Since 2004, Fernandez has contributed more than $10,000 to the campaigns of Democratic candidates, most notably to Barack Obama ($2,405) Rep. Baron Hill ($2,250) and Sen. Evan Bayh ($1,000).
 
Fernandez is married to Karen Howe Fernandez.
 
John Fernandez Biography (Economic Development Administration) (pdf)
John Fernandez (WhoRunsGov)
 
 
Baruah, Santanu “Sandy”
Previous Administrator
Santanu “Sandy” Baruah earned a Bachelor of Science degree in political science from the University of Oregon and an M.B.A from Willamette University. Baruah then started a career as a business consultant in Portland, Oregon, working for seven years at the consulting firm, Performance Consulting Group. He also worked with U.S Senator Bob Packwood and for President George H.W Bush in the office of the Secretary of Labor and the Secretary of Interior. Baruah was also an Oregon field director for the Bush-Quayle ticket in 1988 and he contributed to the Bush-Cheney campaign in 2004.
 
Baruah served as the Deputy Assistant Secretary for Program Operations and Chief of Staff at the Economic Development Administration (EDA), before being appointed Assistant Secretary of Commerce for Economic Development. He took charge in December 2005. On June 25, 2008, President Bush nominated Baruah to head the Small Business Administration. He served as acting administrator until President Barack Obama took office.
 
 
 
 


 
 
 
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