[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
THE STATE OF ECONOMIC DEVELOPMENT
=======================================================================
(110-2)
HEARING
BEFORE THE
SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS AND EMERGENCY MANAGEMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JANUARY 23, 2007
__________
Printed for the use of the
Committee on Transportation and Infrastructure
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
JAMES L. OBERSTAR, Minnesota, Chairman
NICK J. RAHALL, II, West Virginia JOHN L. MICA, Florida
PETER A. DeFAZIO, Oregon DON YOUNG, Alaska
JERRY F. COSTELLO, Illinois THOMAS E. PETRI, Wisconsin
ELEANOR HOLMES NORTON, District of HOWARD COBLE, North Carolina
Columbia JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York WAYNE T. GILCHREST, Maryland
CORRINE BROWN, Florida VERNON J. EHLERS, Michigan
BOB FILNER, California STEVEN C. LaTOURETTE, Ohio
EDDIE BERNICE JOHNSON, Texas RICHARD H. BAKER, Louisiana
GENE TAYLOR, Mississippi FRANK A. LoBIONDO, New Jersey
JUANITA MILLENDER-McDONALD, JERRY MORAN, Kansas
California GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California HENRY E. BROWN, Jr., South
LEONARD L. BOSWELL, Iowa Carolina
TIM HOLDEN, Pennsylvania TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington TODD RUSSELL PLATTS, Pennsylvania
RICK LARSEN, Washington SAM GRAVES, Missouri
MICHAEL E. CAPUANO, Massachusetts BILL SHUSTER, Pennsylvania
JULIA CARSON, Indiana JOHN BOOZMAN, Arkansas
TIMOTHY H. BISHOP, New York SHELLEY MOORE CAPITO, West
MICHAEL H. MICHAUD, Maine Virginia
BRIAN HIGGINS, New York JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri MARIO DIAZ-BALART, Florida
JOHN T. SALAZAR, Colorado CHARLES W. DENT, Pennsylvania
GRACE F. NAPOLITANO, California TED POE, Texas
DANIEL LIPINSKI, Illinois DAVID G. REICHERT, Washington
DORIS O. MATSUI, California CONNIE MACK, Florida
NICK LAMPSON, Texas JOHN R. `RANDY' KUHL, Jr., New
ZACHARY T. SPACE, Ohio York
MAZIE K. HIRONO, Hawaii LYNN A WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa CHARLES W. BOUSTANY, Jr.,
JASON ALTMIRE, Pennsylvania Louisiana
TIMOTHY J. WALZ, Minnesota JEAN SCHMIDT, Ohio
HEATH SHULER, North Carolina CANDICE S. MILLER, Michigan
MICHAEL A. ACURI, New York THELMA D. DRAKE, Virginia
HARRY E. MITCHELL, Arizona MARY FALLIN, Oklahoma
CHRISTOPHER P. CARNEY, Pennsylvania VERN BUCHANAN, Florida
JOHN J. HALL, New York
STEVE KAGEN, Wisconsin
STEVE COHEN, Tennessee
JERRY McNERNEY, California
(ii)
?
Subcommittee on Economic Development, Public Buildings and Emergency
Management
ELEANOR HOLMES NORTON, District of Columbia, Chairwoman
MICHAEL H. MICHAUD, Maine SAM GRAVES, Missouri
JASON ALTMIRE, Pennsylvania BILL SHUSTER, Pennsylvania
MICHAEL A. ARCURI, New York SHELLEY MOORE CAPITO, West
CHRISTOPHER P. CARNEY, Pennsylvania Virginia
TIMOTHY J. WALZ, Minnesota CHARLES W. DENT, Pennsylvania
STEVE COHEN, Tennessee JOHN R. `RANDY' KUHL, Jr., New
JAMES L. OBERSTAR, Minnesota York
(Ex Officio) JOHN L. MICA, Florida
(Ex Officio)
(iii)
CONTENTS
Page
Summary of Subject Matter........................................ vi
TESTIMONY
Glasmeier, Amy, Professor of Geography and Regional Planning and
John Whisman Appalachian Scholar, Pennsylvania State University 9
Pages, Eric, President, Entreworks Consulting................... 9
Reamer, Andrew, Fellow, Brookings Institute..................... 9
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Altmire, Hon. Jason, of Pennsylvania............................. 36
Arcuri, Hon. Michael A., of New York............................. 37
Walz, Hon. Tim, of Minnesota..................................... 38
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Glasmeier, Amy.................................................. 39
Pages, Eric..................................................... 166
Reamer, Andrew.................................................. 176
SUBMISSIONS FOR THE RECORD
Glasmeier, Amy, Professor of Geography and Regional Planning and
John Whisman Appalachian Scholar, Pennsylvania State
University:
Additional written statement by Ann Markusen................... 49
Revised oral statement......................................... 57
The Distinctive City: Production, Class and Identity, Ann
Markusen and Greg Schrock, report, January 2006.............. 61
A Consumption Base Theory of Development: An Application to the
Rural Cultural Economy, Ann Markusen, report, October 2006... 119
Nine Concrete Ways to Curtail the Economic War Among the
States, Greg LeRoy, Executive Director, Good Jobs First,
paper........................................................ 153
Pages, Eric, President, Entreworks Consulting, responses to
questions...................................................... 173
Reamer, Andrew, Fellow, Brookings Institute:
Responses to questions......................................... 184
The Consequences of Eliminating Group Quarters Data from the
Census Bureau's American Community Survey, Andrew Reamer and
Cynthia Taeuber, Metropolitan Policy Program, The Brookings
Institute, paper, January 2006............................... 194
Letter, Hon. Carlos M. Gutierrez, Secretary of Commerce,
January 19, 2007............................................. 217
U.S. Census Bureau FY 2007, Impact of Alternative Proposal for
Spending $58.3 million in cuts to Periodic Censuses and
Programs, statement.......................................... 219
Letter to Hon. David Obey, a Representative in Congress from
Wisconsin, from Melissa Armstrong, Chair, Council for
Community and Economic Research, January 16, 2007............ 223
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THE STATE OF ECONOMIC DEVELOPMENT
----------
Tuesday, January 23, 2007
House of Representatives,
Subcommittee on Economic Development, Public
Buildings and Emergency Management,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 10:30 a.m., in
room 2167, Rayburn House Office Building, the Honorable Eleanor
Holmes Norton [Chairwoman of the subcommittee] presiding.
Ms. Norton. Good morning, and may I welcome everyone to the
first meeting of the Economic Development, Public Buildings,
and Emergency Management Subcommittee.
This Committee and Subcommittee have always been the most
bipartisan in the Congress, and I am committed to building on
this invaluable cornerstone of cooperation and mutual respect.
Our long history of working together collegially has yielded a
tradition of consensus on most matters that come before this
Committee.
In addition, I would like to thank Chairman Jim Oberstar,
who is one of the architects of this tradition, for his
leadership, encyclopedic expertise, and his lifetime commitment
to transportation and infrastructure issues in the United
States and, I should say, abroad, because his knowledge is
worldwide.
I particularly want to welcome our new colleagues,
Representatives Jason Altmire of Pennsylvania, Michael Arcuri
of New York, Christopher Carney of Pennsylvania, Steve Cohen of
Tennessee, and William Walz of Minnesota, and, of course, our
new Ranking Member, Mr. Graves of Missouri.
Have I missed anybody? Representative Michael Michaud of
Maine, who served on this Committee before.
This is the first of a series of hearings that will focus
on the state of economic development in the United States and
the issues associated with smarter and more efficient economic
development needed in our Country.
Today's hearing will focus not only on economic development
in the United States today, but also on the direction that
experts believe the United States must go in order to prepare
for the challenges that the global economy requires if the
Nation is to continue to thrive.
Economic development was not a specific mission of the
Federal Government until Congress passed the Public Works and
Economic Development Act in 1965 and established the Economic
Development Administration, or EDA. EDA was created to
alleviate conditions of substantial and persistent unemployment
in economically distressed areas and regions. The mission of
EDA today remains much the same as it was when originally
founded: ``to enhance communities success in attracting private
capital investment and lucrative job opportunities.''
EDA has stated that to fulfill its mission, it must--and
here I am quoting again--``be guided by the principle that
distressed communities must be empowered to develop and
implement their own economic development and revitalization
strategies.''
As our hearings have documented, the Act has been
enormously successful, particularly in using modest Federal
funds to attract and leverage much in private sector
investment. Future hearings will also focus on the
reauthorization of the Economic Development Administration and
regional economic development issues.
To put economic development in context, we have to turn the
page back 50 years, when President Eisenhower initiated the
Federal Defense Highway System. This highway system not only
linked our Country together into a coherent and efficient
transportation hull, but it also boosted commerce and became
the centerpiece of the world's strongest economy. In addition,
the legislation was the major economic development tool for
most local communities.
Later, with passage of the Public Works and Economic
Development Act of 1965, the Federal Government specifically
targeted economic distressed areas where the Federal highway
system had not had a revitalizing effect.
The Development Act addressed high unemployment, low
incomes, under-employment, and out-migration as sign posts. As
the economy of the United States continues to grow, these
distressed areas, that often contain significant underused
human and infrastructure resources, must remain clearly in
focus in order to sustain their growth.
The effort to build the Federal highway system is often
cited as building America. But now, 50 years later, with aging
and sometimes obsolete infrastructure, we must look to
rebuilding America or lose 50 years of valuable investment.
Today we must not only focus on rebuilding America, but
also investigate how we can take the lessons from successful
EDA projects and incorporate them into new efforts for
distressed areas and, for that matter, other parts of the
Country.
If building the interstate highway system was a major part
of building the old economy, how can traditional infrastructure
that we have supported and must improve work in synergy with
the new economy to push the envelope of economic development?
We must take a fresh look at the infrastructure itself, asking,
for example, how the rapidly developing information highway can
supplement our current highway system.
We are fortunate to be able to welcome our distinguished
panel of experts on economic development that can inform the
Subcommittee. The witnesses today include Amy Glasmeier of Penn
State University; Eric Pages, President of EntreWorks, expert
consultant on economic development as well; and Andrew Reamer,
Fellow at the Brookings Institute.
I now am happy to acknowledge the Ranking Member, Sam
Graves of Missouri, for his opening statement.
Mr. Graves. Thank you, Chairman Norton.
Let me begin by congratulating you on your chairmanship to
this Subcommittee. Obviously, your expertise and your hard work
are a testament to what you have done. And this is a Committee
that is obviously very important to the District, and I think
the people of the District of Columbia are very fortunate to
have you representing them.
And thank you Chairman Oberstar. I think you made an
excellent choice, and I look forward to working with you in the
future.
I also want to take this opportunity to thank our Ranking
Republican, Mr. Mica, for providing me the opportunity to serve
as Ranking Member. I am honored by the trust that you have
placed in me, and I intend to work hard to make the most of
this opportunity. I know you have a number of important issues
before the Subcommittee, and I look forward to working with you
and the Chairman on all of them.
And I want to recognize Bill Shuster, the former chairman
of the Subcommittee, for the outstanding job that he did as
chairman. In the wake of Hurricane Katrina, you accomplished
what a lot of people said you couldn't do: you moved a massive
FEMA reform bill through a jurisdiction gauntlet that included
the Commerce Committee and Homeland Security Committee, and you
had it signed into law during an election year, when almost
nothing else made it to the President's desk. And I think that
is a truly impressive accomplishment which our Country is going
to benefit for decades.
The members of this Subcommittee have an outstanding record
of accomplishment. I am pleased to be able to serve as the
Subcommittee's Ranking Member. I look forward to continuing the
bipartisan tradition, as Chairman Norton pointed out. In many
respects, the Subcommittee's bipartisan approach is the key to
its success. I intend to work with the Chairman on both our
Republican and Democrat priorities so we can prevail over the
Senate.
As the Subcommittee moves forward and sets an agenda for
the 110th Congress, there are a number of issues I hope we can
address. On the economic development front, I look forward to
working with the Chairman to increase the impact of our limited
economic development dollars.
While economic globalization and increased international
trade bring opportunities and lower cost goods to much of the
Country, they can also bring severe economic dislocation,
particularly in rural areas and manufacturing regions of our
Country. I think it is important that our economic investments
help spur innovation and opportunity in those areas, and not
just in our large urban centers.
With respect to public buildings jurisdiction, we need to
find ways to do more with less. Whether we are authorizing new
courthouses or modernizing government-owned buildings, the
available resources are limited and the project lists go on
forever.
I also hope our Subcommittee will reassert its jurisdiction
over the Capitol building and the grounds. The Capitol complex
has a number of projects underway and in the planning phase
that I believe our Subcommittee should be reviewing. I believe
the Capitol Visitor Center, in particular, could benefit from
our involvement.
We also must ensure the FEMA reform bill is properly
implemented. We cannot afford another response like we had
during Hurricane Katrina. I know in my home State of Missouri
disasters are serious business. We are a high risk flood State
and we are home to the largest earthquake ever recorded in the
lower 48 States. The D.C. area is vulnerable to hurricanes and
it is also the highest risk terrorist target in the Country. I
look forward to working with the Department, State and local
governments, emergency managers and first responders to make
sure we reform our system and are ready for the next big
disaster.
As a general theme, we must exercise sufficient oversight
to reduce fraud, waste, and abuse in all the programs under our
jurisdiction. When you consider the building projects and the
disaster relief programs that we oversee, the opportunity for
waste is tremendous. We owe it to the American people to get
the most out of their hard-earned tax dollars.
Let me also thank our witnesses for being here today and
for enduring our opening statements. I know I spent most of my
time discussing our agenda for this Congress, but I want you to
know that I look forward to your expert testimony and
recommendations for the Federal Government's economic
development programs.
Thank you again, Chairman Norton, and I look forward to the
opportunity to work with you.
Ms. Norton. Thank you, Mr. Graves, and I appreciate your
statement.
I would like to ask the Chair of the full Committee for his
remarks, particularly since we are talking about the Economic
Development Act, which is, of course, his I shouldn't say baby,
but that is what it was.
Mr. Oberstar.
Mr. Oberstar. Thank you, Madam Chair. Congratulations on
assuming the Chair of the Committee. You have worked hard, you
have learned the subject matter. You have a deep personal
interest in all of the issues under the jurisdiction under this
Subcommittee, and you have proven yourself in the past as the
Ranking Member and now I am delighted to see you assume the
leadership role.
Mr. Graves, congratulations on being designated as the
Ranking Member. I have observed your participation diligently
in the work of the full Committee on Transportation and
Infrastructure. You are always there for the hearings and for
the markups, and you have applied yourself vigorously.
And I want to thank former Chairman Shuster for his
leadership of the Subcommittee. He comes from a long family
tradition of commitment to the subject matter of our full
Committee and particularly of this Subcommittee and, again, you
did a superb job as Chair of this Subcommittee, and none better
than during the tour of the devastation of Katrina when we had
the joint committee inquiry into the aftermath of Katrina and
you toured throughout Baton Rouge, New Orleans, Mississippi,
and into Alabama. Your expertise and your commitment personally
to the subject matter at hand will be extremely valuable as we
go forward, and I appreciate your continuing to participate.
And to the Ranking Member of the full Committee, Mr. Mica,
glad to have you participating. I know that you will diligently
oversee the work of each of the subcommittees and participate
in their deliberations. We have had discussion about the agenda
of the full Committee and each of the subcommittees, and Mr.
Mica and I are on track to achieving a good record for this
Committee, an outstanding record of bipartisanship and
participation in all of the works of this Committee.
Now, this particular subject matter of today, as Chairman
Norton said, I have a very keen personal interest, and I have a
reminder at home: a green pen that was used by Lyndon Johnson
to sign into law the Public Works and Economic Development Act
of 1965. I was a staff member for my predecessor, chief of
staff for my predecessor, John Blotnik, at the time that
legislation was written and participated in all of the
subcommittee work, full committee, and the House-Senate
conference in drafting the conference report on the Public Work
and Economic Development Act. I worked on numerous--and I was
at the White House for the signing of the bill, and that is why
I have that one pen.
And over the years, as time passed and I was elected to
Congress, in my first opportunity to chair a subcommittee, I
chose the Public Buildings and Grounds and Economic Development
Subcommittee, and the ranking member of the subcommittee at the
time was Bill Klinger of Pennsylvania, who had served as the
chief counsel for EDA in a previous career.
But we assumed the leadership of the subcommittee together
at the time President Reagan proposed to abolish EDA and the
Appalachian Regional Commission. We decided that we were going
to prove the case that EDA and ARC together had served the
Country well, that the investments made were indeed long-term,
substantive, beneficial to the Country and to the communities,
and that these two programs were grassroots-up initiatives;
that the ideas for each project came from the community, not
from Washington, not handed down to them by the Executive
Branch or the National Legislative Branch.
And that indeed is the success and the key and the
brilliance of EDA and ARC together, that they are community
generated and have community participation. And that is the key
to success that we want to continue to nurture, to foster, and
to support in the reauthorization of EDA and ARC.
I was very pleased to hear Mr. Graves talk about
reasserting jurisdiction over the Capitol Building, something
that was siphoned away from our Committee in 1995, 1996, and
Ranking Member Mica has a particularly keen interest and has
spent a great deal of time looking over the shoulders of those
who have been in charge of the Visitor Center project, which,
as he will undoubtedly say, has far exceeded original cost
estimates and could have been done for a good deal less, and
very likely would have been had we retained our authority. We
will work to reassert that authority in this Congress.
I welcome our witnesses and, with Ms. Norton, I welcome the
new members, those newly elected to this Congress and those new
to the work of the Subcommittee. And I look forward to a very
interesting hearing and a very productive year ahead of us.
Thank you, Madam Chairman.
Ms. Norton. Thank you, Mr. Chairman. And I am pleased to
ask the Ranking Member of the full Committee if he would mind
offering a few remarks at this time.
Mr. Mica. Well, thank you so much and congratulations to
you Ms. Norton. I have worked with many members in Congress. I
can't think of anyone who is more effective and has provided
better leadership than you. We have worked on a number of
issues together and she is a tough representative, and look
forward to working with her in her new capacity, but very
pleased to have you in this position and look forward to
working with you.
I have already complimented the Chair on his ascension,
after some 32 years, to the Chair of the full Committee and we
have had a great working relationship and look forward to
expanding on that as we work together on the six subcommittees
and the full Committee's efforts. That will be great.
I thank again Mr. Shuster for his leadership in the past
and welcome Mr. Graves. He will do an excellent job. I have
watched his career too, and that is why he was elevated to this
position. I think it is a very meaningful Subcommittee and the
topic you launch today with I think is extremely important,
economic development. Everything else is sort of second nature
if we can provide good jobs and opportunities to people across
the land, particularly in areas that need attention and
combined resources of not only State and local and the private
sector, but also the Federal Government.
I have had the opportunity to read some of the testimony
and I think you brought together some good witnesses, and they
focus on maximizing local resources in concert with Federal and
other State and private efforts, and I think that is a very
good approach. They also talk about better preparing our
workforces, which is essential in this era.
I might say that I saw one of the testimonies also talks a
little bit about export and might note for the record that 19
of 20 consumers in the future are outside the United States,
and some of these areas that we are dealing with that need
economic development assistance are not geared or prepared to
compete in that international arena. So that is where the
economic opportunities of consumes in the future lie. We need
to do a better job in preparing and assisting those locales and
efforts to compete in the global market.
So those are a couple of points that I wanted to make.
Finally, with limited resources--and these are big
programs. You go through and there are 500 million I think we
identified, sort of a combined effort in some of these
programs, probably a little bit more here and there, and it has
gone up and down, but better leveraging our limited funds I
think is also a key to success, and I have seen some focus, or
will be in this hearing, on that.
I will mention, in conclusion, that--and I did have this in
advance--I intend to see that we take full jurisdiction as we
finish the Capitol Visitor Center. The irony of all this is the
project started in this Committee. The only hearings held on
the bills--and I offered the two bills; I think you offered one
at one point--were heard in this Subcommittee. The project got
launched from this Subcommittee and it will finish with the
oversight of this Subcommittee, and it will be the finest
addition in the history of the United States Capitol, if not
the largest.
But we will maintain closer supervision of the project and
I think it will be something that every American can be proud
of. It is the first addition in the history of the Capitol to
be built not just for the convenience of the members, but for
the convenience primarily of the owners, the citizens and
residents and visitors who come here. So I am pleased to put in
a word for our stake in that effort.
I think Ms. Norton knows my interest in the Federal Trade
Commission building, that we expand the National Gallery of
Arts and that we create a Federal cultural corridor and
triangle. We have the responsibility for the larger vision. I
mean, people can build buildings here and there, but we have to
determine what this incredible national capital is going to
look like 10, 20, 30 and generations down the pike, and I think
that is an important project. I look forward to working with
you.
And finally FEMA. We have got an obligation to make certain
that we avoid some of the problems of the past and make that
agency that we are so dependent upon--I come from Florida.
Others from around the Country, the Gulf States, New Orleans,
or wherever we have been hit by a natural disaster know the
importance of having a well functioning agency. We have seen
the need for that and we need to make certain we have it
together, so to speak, with our FEMA efforts.
So a full platter, some exciting opportunities for a small
Subcommittee but a very important, vital subcommittee within
the Transportation and Infrastructure Committee, and I look
forward to working with everyone as we move forward. Thank you.
Ms. Norton. Well, thank you very much, Mr. Mica, for those
very interesting and helpful remarks. And, if I may, I would
certainly want to thank you for the assistance that you gave to
me and the leadership that you took in our effort to open
Reagan National Charter Service years after all other airports
were open. Your determination, including going to the hangar at
Reagan National, helped to make the point to those involved
that this had to happen, that we couldn't leave a small plane
or charter service closed down in the Nation's capital. That
and other projects in which you have worked so cooperatively
with me, for that I am most grateful.
Now, Mr. Graves, I don't know if you want to introduce your
members, but as a point of personal privilege I would like to
ask my own former chair if he has any opening remarks, because
it gives me the opportunity to thank him once again,
personally, for the extraordinary bipartisan spirit in which he
ran the Subcommittee. He knows that his father was a favorite
of mine, so he knows I would have reported him if he hadn't
carried on that tradition. I am very grateful very much for
your work on the Committee.
Mr. Shuster. Well, thank you very much. I appreciate that,
Madam Chairman. And as most members know, when I was chairman,
I always appreciated limited opening statements and brief
opening statements, but if the Chair will indulge me, since
this is the opening hearing on the Committee, I think it is
appropriate that I say something.
First, to start off by congratulating the new Chairman of
the Committee. I believe that we did some good work the last
two years. We worked well together, I believe, and in a
bipartisan manner. I think Mr. Graves pointed out that that is
the key to the success, and I think that Chairman Oberstar
pointed out the key to success in this Committee, whether it is
the Subcommittee or the whole Committee, is working together in
a bipartisan fashion, and hope to continue to do that.
I congratulate Mr. Graves for his being appointed Ranking
Member. I know he will bring the energy and thoughtfulness that
he always brings to the table when he works on anything.
And, finally, also to thank Mr. Mica for reappointing me to
this Subcommittee. I think it is fair to say that this is not
the most sought after Subcommittee on the full Committee, but
it is one that I asked Mr. Mica I would like to be reappointed
to because I think there is significant work to be done on this
Subcommittee and I didn't want to take the last two years of
knowledge I think that I have gained on this Subcommittee.
But there are important areas that we need to continue to
focus on and I think, Madam Chairman, you were so effective in
making sure we held the Federal Judiciary's feet to the fire,
and I hope we continue to do that when we are looking at their
proposals for building new courthouses and, most importantly,
utilizing those courthouses.
I had a couple of meetings in the closing days of the last
Congress with some members of the Federal Judiciary, and they
assured us they were going to move forward with a study that is
something that is going to be fair and we can count on to give
us insight, although I do have to tell you when the Federal
Judiciary says they take politics out of the Judiciary, well,
what they did in the final days was to reappoint a new chairman
of their sort of--I don't know what they call it exactly--their
buildings and grounds committee, which happens to be the
Federal judge who lives in my district and is a good friend of
mine.
Judge Brook Smith, who serves on the Sixth Circuit in
Philadelphia is a good friend of mine, very conservative, and
he has assured me that politics had nothing to do with it, but
I know he is going to take a tough-minded, fair approach to
these utilization studies, which I think are so very important
to us that we are using taxpayer dollars in an appropriate way
building these courthouses and, again, utilizing them.
The national brokers contract I think is an important step
we took two years ago to help improve the GSA's ability to go
out there and find, in a cost-effective manner, leases for us
to house different Federal agencies across this Country. And
then, finally, the important work we are doing here today and
we are going to be doing on the reauthorization of EDA, the
Appalachian Regional Commission, and the Delta Regional
Commission, all extremely important to this Nation and
extremely important to my district.
And, finally, I want to welcome Ms. Glasmeier. Is that the
way you pronounce it, Glasmeier? That is what I thought. We
welcome you here as a professor at Penn State. I appreciate
your being here. And also to let you know that my daughter will
be, next fall, a freshman on the main campus there, so maybe we
will run into each other as I am up there checking in on her
from time to time, although she has insisted I give her a two
hour rule that when I cross the Centre County line, I have to
announce two hours before I cross it. So welcome here today.
Thank you all for being here today. And I yield back.
Ms. Norton. Is there any other member who desires to make a
statement before we call the witnesses forward?
[No response.]
Ms. Norton. I would now like to welcome our witnesses,
then. The Subcommittee especially appreciates that Professor
Glasmeier has traveled a good distance to testify this morning.
I ask unanimous consent that our witnesses' full statements
be included in the record. Without objection, so ordered.
Perhaps we should begin the panel with Ms. Glasmeier,
Professor Glasmeier.
TESTIMONY OF AMY GLASMEIER, PROFESSOR OF GEOGRAPHY & REGIONAL
PLANNING AND JOHN WHISMAN APPALACHIAN SCHOLAR, PENNSYLVANIA
STATE UNIVERSITY; ERIC PAGES, PRESIDENT, ENTREWORKS CONSULTING;
ANDREW REAMER, FELLOW, BROOKINGS INSTITUTE
Ms. Glasmeier. Thank you very much. I am pleased to be here
before the Committee.
I would like to offer the Committee, in its beginning
deliberations, a copy of an atlas I did a couple years ago on
poverty in the United States. It is a good geographical
representation of where the Nation has been over the last 40
years and it will help you see where we have done a lot of good
work and also identify places where there is still work to be
done.
I might also like to comment that Dr. Markusen's absence
here is due to a family health problem, but her comments are
available for your review.
In addition to being a professor at Penn State, I am also
the John Whisman Appalachian Scholar and I work with the
Appalachian Regional Commission. This is the second time I have
held that post and in that job I am responsible for assisting
the Commission in thinking through big problems and big future
issues. So my comments today are largely a reflection of having
the opportunity to think about what are problems within that
region, but also the extent to which those kind of problems we
see nationally.
And I want to commend the Committee by noting that the two
pieces of legislation that people have mentioned, the creation
of EDA and the creation of ARC, has really contributed to the
well being of America's communities. You can't go through a
small town in the United States and drive down a main street
without seeing the benefits of American investment. You can't
drive by a small airport and not realize that there are Federal
resources involved. You can't look at a health clinic and not
recognize that there probably, 30 years ago, was some sort of
Federal involvement in that. You can't look at a broadband
system and not wonder whether or not there is some sort of
Federal support. You can't look at a vocational training
program and not recognize that somewhere along the line Federal
policy has been involved in recognizing the value of those
investments that we make in our communities.
I work in parts of Appalachia, but I also work in the
Mississippi Delta and other parts of the Country, and while we
have made those investments, there are still many communities
that are, in a sense, waiting for their investments, and so I
look forward to the Committee's work in the coming years to
make those needs realized.
I am going to focus my comments really on points I think
are critical when you think about the work ahead, and I am
going to think about them in terms of how to focus attention.
The first that I recognize, in working with Federal
agencies, is that economic development has traditionally
emphasized the creation of jobs through, in large measure, the
provision of infrastructure. That has had a huge impact and now
the time has come to think about what we add to that to make
America a competitive and creative economy in the 21st century.
The bottom line is we need to integrate what we do. Right now
we work at different agencies over different programs, and
there is a great degree of independence and there is a lack of
integration. It makes it difficult for communities to use
programs; it also makes it difficult for communities to
recognize resources.
We need to focus on strategy. The United States is somewhat
unique, at least in my experience traveling around the world,
in that we don't think strategically about economic
development. We do it more as a process, but we don't really
think about a strategy. And I can think of countries like Spain
or Britain or Japan where, at the very highest level of
government, it is about what is the country we want to be and
we work back from that perspective. And I think we need to
think about that as a strategic approach to future economic
development.
We need to think about economic development not as a
county-by-county activity, but as an activity that is done on a
regional basis. While the ARC or the Mississippi Delta stand as
examples of regionalism, regionalism is a practice that needs
to be implemented across the Country, and the reason is because
economic activity does not stop at the borders of counties.
Economic problems do not end at the city lines. Economies are
increasingly regionally developmental, and we can use the
regional scale as a basis for performance.
We need to also think about planning. One of the most
important elements of the Economic Development Administration's
practice over all these years has been the fact that it has
instituted in communities the notion to plan, the fact that you
just don't decide to do something without some idea of what the
problem is and what the cause and the consequences are. There
is not enough emphasis in the available funds today for
planning, and yet communities are facing a whole set of new
realities that they are very ill prepared to manage. So we need
to think about how to strengthen the planning function.
We need to think about cooperation. Cooperation is easy to
say; it is harder to do. When it is all said and done and
resources are scarce, communities find themselves in
competition, and while they may speak as if they are working
together, often they find themselves very far apart. So we have
to have programs that really reinforce and facilitate
cooperation. In some instances, because we don't know how to do
it very well, we actually may have to mandate it.
And then, finally, my last comment focuses on opportunity.
The future of the United States is very much tied to the
possibility of an energy security potential. Right now, the
United States' renewable energy industry is not globally
competitive. Countries from other parts of the world are far
more well placed to be the global leaders in renewable energy
technologies. The rate of growth in renewable energy
industries--solar, wind, biofuels--are 25 percent per year for
the last five years. So it is a situation in which the
potential is enormous to generate jobs, to generate new
technology and capabilities, and to create regional
integration.
We need to have leadership to do that. It is one thing to
say we should have new energy capabilities; it is another to
actually see it occur in a coordinated and an integrated and a
regional fashion. So I see that as an opportunity that this
Committee could take leadership on and to really drive the idea
of energy security home through the process of economic
development.
Ms. Norton. Thank you very much.
Actually, I will leave it to you as to who is next. Would
you like to be next Mr. Pages?
Mr. Pages. Thank you Madam Chair. Chairman Oberstar,
members of the Subcommittee, I appreciate the opportunity to
appear before you today.
My name is Erik Pages. I am President of EntreWorks
Consulting, which is a private economic development consulting
firm based in Arlington. I am going to speak to you today based
on my experience running this firm, where we have had clients
in 28 States, so we have had the distinct honor and pleasure of
seeing economic development in the grassroots all across the
United States. I also have experience serving in the EDA, so I
have Federal experience working in economic development as
well.
I am going to focus my remarks today on how the Federal
Government can help incentivize economic development in rural
America, so I am going to exclusively focus on this. This,
again, will be based on my experience as a private consultant,
but also I serve as a Senior Fellow at the RUPRI Center for
Rural Entrepreneurship, so I have some experience from that
perspective as well.
As Subcommittee members certainly know, rural America faces
profound economic development challenges. The last few decades
have seen an unprecedented flowering of wealth, innovation, and
entrepreneurship in the American economy. Unfortunately, a lot
of this wealth and innovation has bypassed rural America. If
you look at recent research, 10 percent of American counties
account for three-quarters of the Nation's job growth in the
last decade, between 1993 and 2003. Eight of those counties are
located in rural America. So the vast majority of innovation
and job growth in the American economy is occurring in suburban
and urban settings. So there is a significant challenge facing
rural communities.
What is the solution? Well, the solution, there is no one-
size-fits-all solution for promoting economic development in
rural America. In fact, it is pretty hard to develop a single
monolithic definition of a rural community. Jackson Hole, the
Pine Ridge Indian Reservation, the cornfields of Iowa, the
Mississippi Delta, all of these kinds of communities are rural,
yet they have very vastly different situations.
So each community's solution is going to have to be unique.
It is going to have to be locally generated, locally designed,
locally driven. But I have seen it in my practice and I have
seen throughout my career that economic development investments
from the Federal Government can help incentivize and promote
innovation for these small towns and rural communities.
Now, what can the Federal Government do? What should be the
appropriate Federal role? Well, again, no economic development
strategy is going to succeed through Federal investment alone.
Leadership has to come from the grassroots. Local leaders must
recognize the need for change, build partnerships to succeed
with change, and they are going to have to do it themselves.
They are going to have to be the leaders in terms of
development and implementation of these programs.
However, given the financial and the demographic challenges
facing many rural communities, Federal investments are needed
to help, and I believe that Congress must assume a more
prominent leadership role in this effort. The past decade has
witnessed a serious erosion of the Federal Government's ability
to support local and innovative economic development
strategies. We need to reverse these patterns and begin making
real and sustained investments that help empower local
communities, and I will leave you with a few recommendations
that I think the Subcommittee should consider.
First is the simple one, to continue to support Federal
investments in economic development. And I know most of the
members of this Subcommittee support that position. As you
know, many of the key Federal agencies, such as the EDA, the
Small Business Administration, have faced serious budget cuts
in the past decades. At a minimum, the Committee and the
Subcommittee should support efforts to maintain EDA's budget at
the current level, $284 million, and perhaps even consider an
expansion of these programs. Other programs that you might
consider for expansion would be programs that support stem
education, science technology, engineering and math, as well as
some SBA programs such as the small business development
centers and micro loan programs. And I would be more than happy
to discuss any of this during the Q&A period.
Another opportunity to support rural development will occur
outside of this Subcommittee's jurisdiction when we debate the
Farm Bill this year. There is certain to be in the Farm Bill
major discussions of new strategies for empowering or
innovative approaches to rural development. I would encourage
all of you to actively become engaged in that debate over this
year's Farm Bill. It is a tremendous opportunity to energize
innovative rural economic development strategies.
The third strategy--and I would follow Ms. Glasmeier on
this a little bit--is to support regional approaches. And,
again, this can take multiple forms, such as support for
regional development authorities such as the ARC, the Delta
Authority, as well as new proposals such as Congressman
Michaud's Northeast Regional Commission and other efforts such
as the Southeast Crescent Authority. Actually, some of the more
recent programs that the Administration has been involved in
have done a very good job in terms of energizing regionalism.
In particular, I would encourage you to take a look at the
Department of Labor's WIRED program, which has done quite a
good job of encouraging regional collaboration.
And then, finally, I would just throw out three other quick
ideas that are perhaps somewhat counterintuitive in terms of
supporting rural development strategies. First is to encourage
and support new immigrants into our economy. We are seeing a
massive influx of immigration into rural communities, and these
new immigrants are going to be the entrepreneurs of our future.
They are going to be the drivers of rural prosperity in the
future, and we need to support these new Americans as they
begin to start and grow businesses and create jobs and create
prosperity.
I would also second Ms. Glasmeier's comments about
supporting energy R&D. Investment in alternative energy R&D is
also an investment in rural development, which is well poised
to prosper in this emerging cluster.
And then last, but not least, I would encourage you to
consider expanding support for new kinds of infrastructure,
particularly broadband. Broadband is the highway of the future.
I know it sounds cliche, but it is going to be the driver of
economic development for rural communities in the future. They
need to be on par with Metro and suburban areas in terms of
deploying broadband.
I will stop and I look forward to your Q&A, and thank you
for the opportunity to appear before you.
Ms. Norton. Thank you Mr. Pages.
Mr. Reamer.
Mr. Reamer. Good morning Madam Chair, Chairman Oberstar,
Congressman Graves, Congressman Mica, and distinguished members
of the Subcommittee. I appreciate your invitation to speak
today.
At the Brookings Institution I examine the Federal role in
promoting regional development and in producing the economic
data needed by public and private decision makers. I was a
development consultant for many years and EDA was a frequent
client.
For some time, the U.S. economy has been undergoing an
often exhilarating, often wrenching restructuring process, one
that has transformed regional economies across the Nation and
led to major geographic shifts in jobs and income. While some
places have emerged in better shape than others, none has
escaped the pain and the uncertainty of this process.
We are in a world dramatically different than that of 1965,
when Congress created EDA. Then the Nation appeared to have a
stable economic structure with well understood roles: Detroit
for cars, Hartford for insurance, Houston for oil, and so
forth. Economic development was seen as remedial work for
places left behind in the post-war boom.
In 2007's brave new world of opportunity, vulnerability,
and uncertainty, regional development agencies have created and
implemented a diverse array of strategies. However, these
usually have one element in common: seeking to create
defensible market niches that provide high value-added products
and services. Defensible niches are ones that cannot be easily
replicated in other locations. For example, Boston, San
Francisco, and San Diego have very strong positions in the
biomedical industry, and Louisville and Memphis have similar
positions in air freight. Value-added is simply sales minus
materials. Higher value-added usually means higher wages.
Creating and sustained high value-added defensible niches
requires ongoing investment in a wide array of regional assets,
such as innovative capacity, entrepreneurial base, workforce,
business networks, physical facilities, infrastructure, and
venture capital. This is a highly complex process and not
easily achieved.
In light of the ongoing economic restructuring in this
Country, I recommend that the Subcommittee consider
legislatively broadening EDA's mission from aiding distressed
regions to facilitating the competitiveness of all regions. In
a widespread, constant restructuring process, all regions can
benefit from some form of support. Moreover, the Nation's
competitiveness is very much a function of the competitiveness
of its various regions. Thus, Federal regional policy becomes
an important component of national economic policy.
EDA was created on the assumption that depressed regions
lacked the resources to provide the tangible assets--roads,
industrial parks--necessary to attract industry. In 2007,
regional competitiveness is less a function of tangible assets
than of intangible ones, the ability of firms to be innovative
and intelligent and entrepreneurial and effectively battle in
an intensely competitive marketplace.
The new role of regional development organizations is to
see that firms get access to the softer assets they need to
develop these qualities and to prosper in the community. To
carry out this role, development organizations at the regional
level need access to current accurate information about the
region's economic performance and structure, the expertise to
create and implement a realistic regional vision for defensible
niches and a roadmap for achieving that vision, and knowledge
in a diverse set of realms such as workforce development,
technology transfer, physical infrastructure, including, as Mr.
Pages said, telecommunications, entrepreneurship, and venture
capital.
To fulfill the broader mission I laid out earlier, I
suggest that EDA carry out a series of information-focused
activities which support development agencies in this role. In
particular, I suggest that EDA see that Federal statistical
agencies produce the type of economic statistics that regional
development organizations need, greatly increase its support
for economic development research in order to better understand
the dynamics of regional economies and what it takes to be a
successful development organization, support electronic peer-
to-peer networks among development practitioners that
facilitate access to learning and effective practices, and
utilize State economic development departments as mechanisms
for providing expertise and support to regional agencies. State
economic development departments are large enough to have
economies of scale in delivering services and yet are close
enough to the ground to be able to provide hands-on assistance
to regional agencies. Lastly, I would like to see EDA provide a
series of online references and analytic tools for economic
development practitioners. EDA began to explore the use of such
tools but has stopped.
The cost of these various information tools is remarkably
modest, a small fraction of EDA's overall costs. Low costs and
nationwide accessibility mean that the return on the Federal
investment on information tools would be quite large. A
reformulated EDA would continue its grant programs for
distressed regions. The proposed information focused activities
would be of significant additional help to such regions.
In its proposed new role, EDA would require a different
skill set and culture. Staff should have hands-on experience in
the new wave of economic development. They would need to know
how to advocate for the development community before other
Federal agencies.
As it is difficult to transform the agency as currently
organized, I suggest the Subcommittee consider chartering EDA
as a quasi-governmental organization. For similar reasons, many
States have moved their development department outside of State
government, and Congress might consider a similar step.
Thank you for the opportunity to speak, Madam Chair. I look
forward to any questions you might have.
Ms. Norton. Well, let me thank all three of today's
witnesses for very intriguing testimony. Let me begin with a
couple of questions of my own.
Forty-five, 50 years ago, in fact, until recent times, I
think, Ms. Glasmeier, indeed, the statute itself makes the link
to development and jobs, and, indeed, at that time, in that
age, if there was a recession, typically the country looked to
infrastructure, because you always need infrastructure
improvements, and at the same time jobs, of course, came
forward. Infrastructure continues to be vital in both aspects.
But 21st century infrastructure turns out to be as much a new
technology infrastructure, and one would say, or one could say
that it might reduce jobs, rather than create them, the way
there is an automatic link between physical infrastructure and
jobs. And, indeed, for sure, having a strong back or knowing a
craft may not be enough to get you a job. More expertise, fewer
jobs may be the wave of the new technology infrastructure in
the global economy.
I wish you would address that possibility as we look to
late-arriving regions that are competing not in the old
economy, but in a brand new economy.
Mr. Pages. Well, Madam Chair, I think my primary comment is
that I think you have hit the nail on the head in the sense
that we are still using old metrics in the field of economic
development. We clearly know that jobs is not the only thing to
count, yet we still are kind of caught in the old system; we
still rely on jobs. Clearly, the future of economic future is
not about job creation, it is about wealth generation, and we
need to look at new ways that we can measure wealth.
As I think you sort of noted implicitly in your comments,
what is more important is a good job that pays well, that
requires a lot of skills and has a lot of spillover effects
tied to it is more important than just any job. And it really
is more important that we think about wealth creation, and the
way we create wealth is through new businesses, through fast
growing businesses, and we need to think about new strategies
that build assets in that kind of way, that focus on creating
wealth, as opposed to just creating jobs.
Ms. Norton. Ms. Glasmeier, did you have something you would
like to say to that?
Ms. Glasmeier. Yes. I would like to continue Mr. Pages'
comments and say that we need smart firms. And I would say my
own research tells me that American firms, in some degrees and
in many places, are smart. But a lot of them are not smart and
a lot of them have what I would call lifestyle firms: they work
in their business to make enough money to have a good life, to
send their kids to collect. They are not thinking about what
the internationalization of the economy means unless it knocks
at the back door of their factory and announces itself as you
have just lost this account or business is declining.
In general, I would say American corporations, or firms in
particular, rather than corporations, because that sounds like
big organizations, since we are such a large economy, it has
been easy to think of economic opportunities in the business
community from the perspective of what goes on in the United
States, and not as much being concerned about what is taking
place outside the U.S.
I would argue that in addition to what we think in terms of
the need for infrastructure, for the change in the skills of
workers, that we need to have our businesses be strategic. They
need to be self-conscious. They need to realize that the world
out there is no longer something that stops at the border, but
that is completely pervading our Country. And that calls for a
series of programs and interventions that we only see in very
few places and only in experimental forum. So that requires
taking on a set of educational processes and practices that we
have only begun to understand. But I see a real issue
associated with our firms being competitive.
Ms. Norton. Let me ask one more question before moving to
Mr. Graves. In this hearing we are stepping back and trying to
look with fresh eyes at everything. It seems to me that
includes looking with fresh eyes--and all of you have alluded
to this in one way or another--the whole notion of regional
economies in the first place. I was particularly interested
when Mr. Reamer talked about defensible market initiatives. It
is hard to think of countries having a niche any longer. We all
live in regions; we prosper when the region prospers.
But these regions don't operate within States any longer.
These regions don't operate within a Nation any longer. These
regions operate within a world economy. And, thus, it is one
thing to have developed the old Northeast regions when, in
essence, one region was competing with another. It is quite
another to advise an underdeveloped region how it should
develop in the 21st century.
I am wondering if there is any defensible market niche, if
there is any coherent regional notion in the world economy
today that is not resource-based, for example, based on natural
resources in a particular economy. You could understand that
niche could--might, I should say--survive in an international
economy. Even human capital now crosses all lines.
So I want us to look at, when we say regional economy with
underdeveloped regions who depend often on the Federal
Government for whatever expertise they will get in strategy and
planning, how the whole notion of region as a basis for Federal
economic investment can be not only defended, but can be used
to assure that we are addressing the real needs of those
regions so that they will survive for some period of time, at
least the period of time that one might expect given the
investment.
Mr. Reamer. Madam Chair, very good points. A defensible
market niche does not mean that you are assured that you can
exist, but you have a better chance, once you have leadership,
of maintaining that. So a place like Silicon Valley cannot be
easily replicated elsewhere, but it has to stay on its toes
constantly. There is an incredibly effective regional entity
called Joint Venture Silicon Valley that has worked for several
decades bringing together regional leaders to make sure they
keep their competitive edge, and that group really has been on
the cutting edge of how a region can work together to maintain
its competitiveness.
So several challenges here. One is that regions are not
political entities; regions are typically made up of a large
number of political subdivisions. How do you organize
regionally to make decisions to develop consensus when you have
four cities, 20 counties, all with political leadership?
The second point is that, echoing my testimony, I think an
important element of EDA's role now, as compared to 40 years
ago, is helping regions build the capacity to create a
defensible vision and a roadmap, that it is not something that
is taught in graduate school. There are hundreds and hundreds
of experiments around the Country about how to do this, and
part of EDA's role is to keep tabs of what is happening around
the Country and help regions share information learned from one
another; collect, codify, make explicit that kind of
information so that regions in Nebraska and regions in North
Dakota and regions in Missouri and regions in Pennsylvania have
the benefit of learning from other regions.
Ms. Norton. Mr. Pages?
Mr. Pages. Yes. I would just add that, particularly from
the rural perspective that I was talking about in my remarks, I
mean, the reason we talk about regions is they generate scale
and they generate ambition. Small communities, rural counties
cannot have all the resources that a business needs in their
community, there is simply not enough people; it is just a
numbers game. By broadening yourself out as a region, you can
get all of the resources in that broader region that a business
needs to succeed. It also broadens the vision of the businesses
to think it is not enough for me to go sell, I am a D.C.-based
business and I do business in Maryland or I do business in
Virginia; I need to sell globally. And a region broadens the
perspective there.
And what I have learned from my experience is that
communities won't come together, a county and a city or two
counties won't come together unless they face a tremendous
crisis or a tremendous opportunity. We don't want them to face
a tremendous crisis. The role of the Federal Government is to
generate those kinds of opportunities. You see them through EDA
grants or I referenced the WIRED project over at the Department
of Labor. This has forced people to think regionally, to come
together around an opportunity of a catalyzing Federal
investment that will force them to do things differently. That
is what we want EDA to be able to do, to encourage communities
to do this before a crisis hits.
Ms. Norton. Yes, Ms. Glasmeier.
Ms. Glasmeier. You made the point that increasingly it is
not about competing in the Nation, it is actually competing
internationally, and yet most economic development ends up
being one community competing against another community. If
there was a way in which we could change the manner in which we
describe what is going on and what the problems are, and allow
places or help places understand that they are not competing
against each other, they actually are competing with the
outside world, then you might be able to foster more
cooperation and you could allow--and then places could actually
see what their own individual advantages are.
Because when you get away from the burden of thinking it is
your neighbor who is going to steal the factory that is coming
down the road, to recognizing that factory might not come here
if your nation is not, overall, competitive, then you can begin
to see how communities could start imaging that cooperation has
some value. If we all think we are in it together, as opposed
to us all individually operating as if we are going to lose
something, then we might actually be able to plan some sort of
future. But that has to be reinforced and, in a sense, policed
within a policy framework because, otherwise, communities are
simply going to work on the basis of bigger-than-neighbor
policies.
Ms. Norton. Thank you very much.
I will go to Mr. Graves now.
Mr. Graves. Thank you, Chairman Norton.
I tend to look at things a little bit simple. In fact, Ms.
Glasmeier, you pointed out some very basic problems with
looking at this regional concept. I come from a little tiny
town in Northwest Missouri--I still live there--population
2,000. I will kind of lay this out for you. We have Omaha,
Nebraska that is 75, 80 miles to our north; we have St. Joe,
Missouri that is 70 miles to my south; and we have the Town of
Merryville, which is about 40 miles to our east. Merryville has
a population of about 10,000.
I look at regions as a few counties. But you can't get
those folks to talk to each other. If the Town of Merryville
has got a hot tip on a company or the Town of St. Joe has a hot
tip on a company, they are not talking to the little towns out
there about how they are going to be able to add to this
process. They are not talking.
And my question to you is so how do we get them to change
this paradigm--because they are not going to--they aren't
competing against each other? The reality is they are competing
against each other. The smaller communities, they can't afford
consultants, they can't--for heaven's sake, a lot of them don't
even know how to fill out some of the paperwork, they don't
have somebody with the experience to fill out the paperwork to
apply for some of these wonderful opportunities or proposals or
projects or programs that are out there that the States and
Federal Government have to offer.
But we can't even get a town, some towns to talk to the
outlying county, you know, outside their city limits, let alone
go across county lines. And being where I am, seven miles from
the Iowa border, you know, that is just like a wall that is
thrown up between the two States, and then you have States
competing against each other too.
So I would be very interested in knowing how we break
through that realistically, not theoretically but realistically
break through that, and even what sector can we look at. Do you
have a specific sector, you know, that might work or something?
I would be very interested because I just don't see that
paradigm change. All of you, I would appreciate your comments.
Mr. Reamer. EDA has a program of economic development
districts, and I am not fully familiar with it, but I think EDA
strongly encourages, particularly in rural areas, that counties
join together and form a district in order to be eligible to
receive EDA funds. That is certainly one mechanism for bringing
together counties in rural areas to talk to each other and plan
collectively.
Mr. Pages. I would just add, Mr. Graves, I mean, this is
the classic dilemma we face in economic development every day
out in the field, and, you know, I like to step back a little
bit and think about, you know, we often talk about the three-
legged stool of economic development: you can take business
from elsewhere, you can keep the business as you have, or you
can grow businesses. You are largely talking about business
recruitment and business attraction, which has been the
paradigm for economic development for the past several decades.
To me, that is a zero sum game, and it is going to be very
difficult to get two States to agree to cooperate on that
issue, or two counties or two cities.
So I say let's not even fight that fight. Let's focus on
homegrown economic development strategies that try to increase
startups, that try to increase fast-growing businesses that are
based on the assets in the community. So, again, it comes back
to this issue of the distinctive niche. What is the distinctive
niche in your community? What are the businesses that the
current residents of that community can develop?
If you sort of take it away from the zero sum game to a
game like that, where it is really about each community
strengthening itself, again, I am not going to sugar coat this,
people don't just have this ``aha'' moment when you make this
pitch, it is still challenging. But it is much simpler to bring
people together around business retention or around a business
growth strategy as opposed to around a business recruitment
strategy. And so that would be at least one strategy I would
suggest to create these kinds of regional alliances.
Ms. Glasmeier. One of the reasons that it is easy to do
this competition is because data is configured in a way that we
can draw boundaries, and so counties have their own boundary
and data come in that package, and you have two of them and
they don't have to share and they don't have to look at one
another because they have their own packets of data. We have
the ability to look below the county level, and what we find
when we look below the county level is that most places are
these little spots of development.
If we were to ask places to begin to look beyond the county
boundary and to say draw us a landscape of economic opportunity
that takes into account your neighbors and create small
incentives for local areas to learn how to do this--because it
is not something that they know how to do naturally, but the
information is out there; they have the extension offices that
are there to help them figure out that type of view--then you
may actually have places that are bigger actually looking at
these smaller places and saying, well, gee, you know, you are
not actually competing directly with me and you might actually
have people who work in my area, so that they start to realize
that they are all in this little net together.
The second issue is just to make incentive programs. For
example, in the case of renewables, the Appalachian Regional
Commission just put together a blueprint on energy. We realize
that there is not enough money to do much of anything in a
packaged way, for the Commission to come out and say here is a
lot of money to go after this. So what they are thinking,
instead, is how can they start conversations that are within
geographic areas that make sense for the types of renewables
that can be done and what are the institutional actors in these
places that actually could profitably work together.
So you are talking about providing resources for
conversations that lead people to say, gee, we are next to one
another, it makes sense to work together on this, and it
doesn't set up a competitive situation because the problem
can't be solved on a point basis; it can't be one community
that gets everything, it just won't work that way.
Mr. Graves. Thanks, Madam Chairman.
Ms. Norton. Thank you very much Mr. Graves.
I want to go to Mr. Michaud, but I do want to say, because
I think Mr. Graves asked the question that small communities
across the Country are all asking, I just want to suggest an
analogy based on synergy from, yes, a big city, but the synergy
analogy, I think, works.
The District attracts tourists because the great monuments
are here, and it has produced a tourist economy here. Well,
Virginia understood that not all of the tourists wanted to stay
in the expensive hotels in the District of Columbia, so if you
go to Virginia or Maryland, you can get yourself a cheaper
hotel. Half the people who come here, of the 20 million people,
are school children. That means that Virginia and the District
and Maryland work together on tourism. Even though it is the
basis for our economy, they get enough spillover or synergy so
that we are all in it together, as it were.
Mr. Michaud?
Mr. Michaud. Thank you very much, Madam Chair. Before I
begin, I want to congratulate you for becoming Chair of this
Subcommittee and want to thank you for your work over the past
Congresses dealing with economic development. I really enjoyed
working with you and, at the time, Chairman Shuster.
I want to congratulate Mr. Graves and look forward to
working with him in the upcoming Congress.
Just a couple of quick questions.
Mr. Pages, I read your opening statements and your
answering of questions. I agree with your assessment on things
that are going on. One of your comments you made, that there is
no cookie cutter type of approach when you look at regional
economic development commissions. I agree with that
wholeheartedly, being involved in the Northeast Regional
Commission.
My question to Mr. Reamer and Ms. Glasmeier is do you agree
with that approach as well, that each region is different and
there should be a different regional approach as we look at the
different regions around the Country?
Mr. Reamer. Absolutely. I once wrote an article called
``Custom Fit, Not Cookie Cutter.'' The strategy for each region
comes out of its own intrinsic set of assets. And back to the
point about defensible market niches, that comes out of the
particular unique set of assets in that region.
Actually, one of the dangers in economic development is
around what I call magical thinking. You might remember 10
years ago every region in the Country wanted to be the next
Silicon Valley, so regions were trying to become something that
they could not be. And part of EDA's role, I think, is to help
regions be realistic and develop their own strategies that fit
their particular and unique circumstances, and an important
part of that is actually the Federal statistical system that
Ms. Glasmeier just alluded to, that we need data, regions need
data to understand what their distinct assets are, and a key
role of the Federal Government is providing those data;
otherwise, regions are flying blind and they are susceptible to
magical thinking.
Ms. Glasmeier. I spent a sabbatical last year up in New
Hampshire and I wandered around in your region, so I have some
sense of what some of the challenges are. And I also am from
sort of the north central part of Pennsylvania in which we had
an industrial economy and it is pretty much gone now. And I
think we need to distinguish between places which are
development-ready and places that have yet to be developed,
because those are two different types of circumstances, and,
yes, they need individually tailored programs, but they also
have some common problems.
So for example, in the southern tier of New York and the
northern region of Pennsylvania, we have a former industrial
economy with a declining infrastructure, a workforce that has
been made moribund, and we are actually attracting immigrants
who have lower levels of education than the base population.
These are people that went away and are coming back, and there
is really nothing for them to do.
That is quite different from what you find in Central
Appalachia, where basically that is a part of the Country whose
economy has been inactive for a very long period of time. So we
have to deal with those base conditions and, in a sense, make
sure that places are development-ready, that there are certain
minimum requirements. I mean, the old mill regions have an
infrastructure which is corroding over time.
If the investments aren't made just to stay where they are,
it is going to be hard to put together a regional strategy. So
we have to look at places and realize that there are different
economic histories that lead them to the place where they are
at, and having an individual approach is correct, but there has
to be minimum standards; otherwise, you are not going to be
able to develop off of that.
Mr. Michaud. My second question is, coming from the State
of Maine, clearly, it is very rural, and at times you have
economic developers in conflict with environmentalists. What
role do you think resource conservation should play in economic
development, particularly in rural States?
Mr. Pages. I think that for many rural communities the
future is in resource conservation, particularly in communities
that have scenic amenities or have some proximity to a Metro
area. I mean, the trends in economic development, the exciting
things that are happening in rural communities are really
around those kinds of issues, around tourism, agrotourism,
sustainable fuels, retiree attraction--which is really sort of
a tourism kind of strategy as well, all tied to the scenic
beauty and the amenities in rural communities; and you have to
say you want to build off an asset.
Well, for many communities in Maine--and I know Maine very
well, sir--it is one of the most beautiful places in the
Country. That is the asset for many Maine communities, is that
it is so lovely up there. And to protect that asset is going to
be the driver of economic growth for many communities in Maine
and elsewhere across rural America.
Ms. Glasmeier. One of the challenges that rural places like
the northern part of Maine face is the lack of
telecommunications access. If you want to have a vibrant
economy in a rural place which is sparsely settled, there needs
to be some connectivity. And we can see, in work that we have
been doing in Pennsylvania, that you can have tourist highways,
but if the broadband interconnect isn't there, then the ability
for people to really be a successful tourist is diminished. So
one of the challenges to take advantage of natural assets is
going to be infrastructure of the future, which is still
nascent money of these locations.
Mr. Reamer. I want to reiterate a point I made earlier. I
think because rural areas around the Country are struggling
with this issue, how to do this, that EDA has a role in
collecting the experiences from around the Country and finding
a way to share them so people are not having to reinvent the
wheel in Maine when someone has a similar experience in Oregon.
Ms. Norton. Mr. Walz?
Mr. Walz. Well, thank you, Madam Chair, and thank you to
all of you for taking the time to come to us today and share
your insights on this critical issue.
I come from Southern Minnesota. I am truly at the heart of
the biofuels. I have been driving a van for many years that is
fueled by 85 percent corn; and the cornfield is right there,
the farmer-owned co-op 100 percent is right next door to it,
and the station owned by the co-op is right there, you can see
it all within a mile radius. We have come a long way in that
and I agree with Mr. Pages on this, there has been some great
entrepreneurship in doing this.
The efficiency of the biofuels, that industry knows that it
is not the savior when it comes to energy, but they do know
that they started the conversation and moved us forward. They
also know that, compared to the rest of the world, as Ms.
Glasmeier noted, we are in our infancy on that, and I think one
of the reasons is this idea of the regionalism. And I must
confess I also am a geographer and trained in that, so I talk
regionalism a lot. But I think Mr. Pages made a good point.
My question to you is, on this, I believe that we are doing
those things as entrepreneurship. I do believe we are creating
the new base of jobs. I have seen this absolutely save small
communities out there in what they are doing. My question to
you is we have some of these great regional authorities to help
with this because the infrastructure is a huge issue, from
broadband to rail to roads, and we see the ARC--and, granted,
grossly underfunded and Delta and things like that--but the
Northern Great Plains Regional Authority, we hear all this
great talk about how we are going to become the Midwest is
going to be the new Mideast when it comes to production of
energy, but the last Congress made it easy for me to remember
how much the commitment is to that: zero dollars for that
regional authority.
And my question to you is is that regional authority, in
your opinions--and I have listened to you here--can that help
us now that we have built that groundwork infrastructure on
entrepreneurship, we have started to get the investment and
people are ready, but they are being hampered by the very
things you said, the border with Iowa and those type of things.
So I am not sure who I am addressing this to. I guess I am
just asking you. I think we are on the verge of something
incredible in an economy, and it feels like we are hampered by
this.
Thank you.
Ms. Glasmeier. Thank you. I guess what I would say is I
think that there are some lessons that can be learned from the
other regional commissions. At the same time, I don't want to
make it seem like they are the answer to everything, because I
think that we do have these really large challenges. If the
national economy isn't growing vibrantly, then that is a
problem. If businesses are not generating jobs that are skill
matched with what the citizenry is capable of doing, then that
is a problem.
But recognizing that those are real sort of structural
constraints, I would say that we have to think in terms of
development-ready. To what extent are these places that we
might describe as regions actually development-ready? One of
the things that is a part of the legacy of the Appalachian
Regional Commission was taking a region that was truly not
developmentally ready to a point where now you can actually
initiate economic development and it actually works.
I think the Midwest is challenged by different sets of
issues than what we see at the ARC. At the same time I think
issues such as population-out migration and essentially
infrastructure that is not being reinvested in will act as a
continuous challenge in attempting to make that a region as a
whole. But how do you keep people in the region and how do you
formulate new entrepreneurial activities seem to me to be, you
know, underlying what that regional enterprise could be a part
of.
Ms. Norton. Mr. Cohen.
Mr. Cohen. Thank you Madam Chairman.
I guess to ask the group, or whomever wants to offer help,
how do you define economically distressed community in terms of
getting economic development agency grants?
Mr. Reamer. If you hang on a second, I think I have the
legislation here. It is in the legislation. There is a series
of criteria. I think you have to have a per capita income less
than 80 percent of the national average and an unemployment
rate above a certain amount. You have to have any one of three
criteria.
Mr. Cohen. And how is that measured, is it by the city or
could it be--for instance, you studied Memphis, as I see in
your remarks. Memphis has a lot of economically distressed
areas. It may not meet that definition, but there are parts of
the city that do, and there are parts of every inner city that
does. Do those inner cities that have that need, do they
qualify or are they disadvantaged because of the suburbs that
raise their overall economic level?
Mr. Reamer. Actually, my guess is that it is the political
subdivision, but I am not certain.
Mr. Cohen. Madam Chair, if that is accurate, is there a way
that we can look at the definition? Because I think the great--
I represent an inner city, as the Chair does, and there is no
place in America--I know the rural areas need help, but there
is no place that needs more help than inner city America, and
it has been neglected for 150 years and gone through a lot of
Jim Crow, really, to get to this point. They have been
neglected.
And Katrina exposed it, but it has always been there. And I
think probably in 1965, when this program was started, Lyndon
Johnson understood the need for it, but it has kind of been
neglected. And I would think that we need to find a definition
of economic distress that incorporated inner cities, even if
they have got burbs around them that are burgeoning, that the
inner city that needs that help is available for that grant
program.
Mr. Reamer. Congressman Cohen, I actually found the
legislation and it says a small area that meets one or more of
the criteria of poverty or high unemployment and lies within a
larger community in less economic distress shall be eligible
without regard to political or other subdivisions.
Mr. Cohen. So that would include the inner city.
Mr. Reamer. Yes.
Mr. Cohen. And I have noticed, Madam Chairman--I appreciate
your understanding and expressing about the global economy and
not being regional, but as Mr. Reamer probably understands from
his study, Memphis is the center of the Country, and if we
concentrate everything there, it will concentrically go out and
help all.
[Laughter.]
Ms. Norton. I understand perfectly.
[Laughter.]
Ms. Norton. Mr. Shuster.
Mr. Shuster. Thank you, Madam Chairman.
My question, following up with what Mr. Graves was talking
about--and he is absolutely right, it is very, very difficult
to get counties--I am in a very rural area, as I believe Dr.
Glasmeier knows, south of State College--it is very difficult
to get them to communicate, although they have started to
communicate. And I wonder if you had come up with any ideas on
how do you--especially in rural areas, or in rural areas,
because I think it is a lot easier in urban areas to find that
center of gravity, but in rural areas do you have any ideas on
how do you put together regions or how do we go about saying if
we are going to change, reauthorize EDA to encourage people to
operate regionally, do you look at the resources, whether it is
people, whether it is income levels, their tax base? I think
you can find centers of gravity.
In my district, Altoona is the center of gravity. Over the
mountain is Johnstown. Well, quite frankly, they both believe
they are centers of gravity and they are never going to--well,
I shouldn't say never, but they are rarely going to be able to
cooperate. So do you have ideas on different measurements or
different ways we can put into law that you need to come up
with this is the criteria for regional cooperation?
Mr. Pages. I guess I am not sure this is something that you
would legislation, but from my experience in practice is that
you have a different region around different centers of
gravity. Every community will have a different region around
tourism than it will around business, than it will around
commuting patterns, and my only criterion in terms of Federal
investment would be to require that these are regional
approaches and then let the locals define the region. In some
ways, you know, people will often ask how do you define a
region.
I say what do the businesses think is a region? Or to give
you an example from Pennsylvania, Central Pennsylvania, a lot
of people say what is the Central Pennsylvania region? It is
the Channel 8 viewing area, which you may know from Harrisburg.
People say that is the region. So it is often unique things
like that.
And I guess my experience is when you have squabbling
counties or squabbling cities, squabbling political
jurisdictions, is to start with the easy stuff, and the easy
stuff is tourism or the easy stuff is youth engagement or, you
know, try to slow the brain drain, strategies like that that
are kind of, you know, less threatening to, you know, you are
going to take the manufacturing plant that is going to move to
my community.
And, really, it is just baby steps, you know, build
regional perspective around safer issues and then move to more
difficult issues. It is really almost like a marriage or dating
between the communities as you bring them together, and you
need to start with things that are going to be less threatening
to the sort of the economic centers of the communities. Again,
I mean, that is more impressionistic than ways you might
legislate, but that at least is one perspective.
Mr. Shuster. I appreciate that, and I would like to hear
from the other two, but just to point out to you that the
Channel 8 viewing area is the other Central Pennsylvania. I am
in the Western Central Pennsylvania.
Anybody else care to------
Ms. Glasmeier. I would say that that economic development
districts are a place to look to because that is an already
identifiable unit and people do cooperate in that context. It
is also the case that today we are in better position to use
data spatially, to actually see what regions look like. So what
Mr. Pages described in terms of tourism, you look at what the
tourism economy looks like and you can look at it
statistically. Now, we can't do it like surgery, but we can do
it on a basis to give people some sense of it is not always
beggar thy neighbor. Maybe it is, you know, we are not in
competition, maybe if we cooperate. So it is by using
information so people and places can see that they can work
together, that is going to encourage them to work together. And
you already have units of planning that have that mind-set
anyway; to try to reinforce them and provide them with
incentives to work with communities to cooperate.
Mr. Reamer. Three quick points. One is that money is an
incentive, so if money is available only through organizing a
development district, then that provides people with an
incentive to cooperate.
Secondly, just for your information, the Bureau of Economic
Analysis takes the entire Country, rural-urban, and divides it
into regions. So you can look in Pennsylvania and see what that
Federal agency thinks are regions and use that as an organizing
tool.
Third point is I left each of you a packet of some examples
of Federal statistical tools, one of which is a very innovative
tool the Census Bureau has called On The Map, and you will see
for your district, Congressman Shuster, you can map where
people live in relationship to where they work. And as Dr.
Glasmeier says, by giving people in a region a picture to show
how they are interrelated, that in fact people live in one
place but may work in another place, that that gives people a
larger sense of who "us" is, broader than perhaps a more narrow
definition.
Mr. Shuster. And a final question to Dr. Glasmeier. How
would you grade Penn State's economic development efforts? I
have talked to other members of the Pennsylvania delegation,
and one in particular was talking about some of these
universities--Georgia Tech I think was pointed out to me--and I
don't know this for a fact, but that Georgia Tech has just been
a great boon for its region. A hundred miles around where
Georgia Tech is--I don't even actually know where Georgia Tech
is located except in the State of Georgia--but they have done a
great deal of technology transfer and caused some great things
to happen.
How would you grade Penn State's efforts in technology
transfer and what they have done to Central Pennsylvania?
Because, as you well know, you go from Centre County down to
Philipsburg or you go down to some of the other towns and it is
Appalachia again; they are depressed areas that are within 30
minutes or less of what should be a hub of economic radiation.
Ms. Glasmeier. Georgia Tech is a really good example of an
institution that new 50 years ago that it was important that
science and technology knowledge generated in an institution
was distributed around the State. So Georgia really is quite
unusual, and it is actually the Georgia Tech Economic Institute
that has these operations outside of the metropolitan area of
Atlanta, and what they provide is sector-specific knowledge and
expertise.
At Penn State we don't have something that is organized
around a sectoral approach. What we do have, which is true for
every State in the Country, is you have a land grant
institution like Penn State and you have your extension-related
educators, and they are very well versed in economic
development practice and knowledge of their communities, and
they work in individual communities and you call them up, you
got a problem--we just lost a plant, we need somebody to come
here and do an economic impact study--and usually there is
somebody on staff that can do that. That is certainly true at
Penn State as well.
Mr. Shuster. So the grade you would give Penn State?
Mr. Pages. You have got to give them an A.
Ms. Glasmeier. No, I can't give them an A. I would give
them------
Mr. Reamer. Isn't it pass-fail?
Ms. Glasmeier. Pardon?
Mr. Reamer. Is it pass-fail?
Ms. Glasmeier. Is it pass-fail? Right. That seems like the
easy way out. I would give us a B.
Mr. Shuster. OK. All right, fair enough.
Ms. Glasmeier. And I am a hard grader.
Mr. Shuster. OK. Well, I am probably a tougher grader than
you are, so I won't tell you what my grade is. It is not a B,
but it is certainly not an F or a D. But I would encourage Penn
State to work with communities. As you well know, Blair County,
which is to the south of Centre County, where I live, Mifflin
County, all surrounding Penn State, and I have said Penn State
certainly has the intellectual capital, but they just don't
have the workforce, and that is where those counties around
have great workforces that we need to be tapping into and
working with them.
So I appreciate it. I look forward to maybe getting
together with you, as I said, after this meeting sometime and
talk about your ideas and what we can do to encourage that.
Thank you again, all of you, for being here.
Ms. Glasmeier. I was just going to make one comment, which
is I am working with the local development districts of the
ARC, and we are putting together a program that would be used
to try to convert firms from current practice to the capacity
to work in the renewable industry, and that is obviously a
regional approach that goes across the State, and it is working
quite well.
Mr. Shuster. Energy is what you are talking about,
renewable?
Ms. Glasmeier. It is energy, but it is the idea, it is the
LDDs that are working together.
Mr. Shuster. OK. Thank you very much.
Thank you.
Mr. Reamer. Mr. Shuster, can I also make a comment about
technology transfer?
Mr. Shuster. As long as the Chairman says it is OK.
Ms. Norton. By all means. By all means.
Mr. Reamer. Thank you. I did a study for EDA on the role of
technology transfer and economic development, and I found that
the rate of innovation, the rate of technology transfer
increased dramatically the larger the city. Georgia Tech is in
Atlanta, so places like Atlanta, places like Chicago, places
like New York have much higher rates of tech transfer and
patent formation and product development than do more rural
areas. And there has been a lot of hope given to universities
that are not in major cities, like Penn State, that they could
produce the technology that would encourage firms to locate
there. It is much more difficult outside of large Metro areas
to do that.
Mr. Shuster. Thank you.
Ms. Norton. Thank you. I must say, Mr. Shuster, I think a
message before the end of the day will get back to Penn State.
Mr. Shuster. I hope.
Ms. Norton. The chairman is going to come back. He hasn't
had a round of questions. Let me ask a few while we are waiting
for him.
I am intrigued, Mr. Pages, by your testimony that says that
71 percent of rural counties actually gained population during
the 1990's. And I think it makes you wonder even yet again
about what definitions we are using. Does that increase in
population correlate with improved economic development, or are
we really talking about ``rural counties'' in the traditional
sense of the word?
Mr. Pages. A very good question Madam Chair. What is
driving that statistics of the increase in migration to rural
counties are really several things. One is--I mentioned briefly
in the testimony--new immigration, particularly in the
Southeast and in the Midwest. You are seeing lots of immigrants
moving to rural communities. You are also seeing some level of
retiree migration, people moving to second homes or moving out
of the big city to a more pastoral lifestyle is driving some of
that.
I would say generally what you are seeing, though, is that
the rural communities that are showing this in migration are
becoming less and less rural. I mean, these tend to be counties
that are located closer to Metro areas, so I don't know------
Ms. Norton. But you say 71 percent.
Mr. Pages. Right.
Ms. Norton. That sounds like most of them.
Mr. Pages. Well, you would get the communities in the outer
ring of the suburbs here in Washington, D.C., many of them
would be classified as rural and would show that increase.
But I think generally it is a very positive sign. At a
minimum it is a reversal of a trend that has been going on for
several decades, so I think if you are looking for good news
about rural America, that is one very prominent piece.
Ms. Norton. Mr. Chairman?
Mr. Oberstar. Thank you Madam Chair.
I appreciate the testimony of the witnesses, including that
of Ann Markusen, which will be submitted and included in the
record, and I hope her husband is doing well; he had a serious
fall. Ann I have known for years and she is one of our premier
thinkers on the subject of regional economic development and
industrial economics.
You discussed, each of you, the upgrading of technology and
the application of technology to economic development. In the
SAFETEA transportation bill that we passed in the 109th
Congress there was a provision allowing States, State DOTs to
use the median right-of-way for fiber optic cable to serve
underserved principally rural areas. That was our intent. It
was my idea of making the median the REA of the Internet.
I don't know of any States that have yet moved to use that
authority, although it is certainly out there and Massachusetts
has expressed interest in doing so. I have talked with folks in
Minnesota and I have spoken about this at various conferences,
but it is something that you should look at as a means of
stimulating the capacity of rural areas to compete in today's
economy, commuting by Internet.
I listened with great interest to Mr. Graves' example of
his hometown. I think many others of us on the full Committee
and Subcommittee have that same experience, a small community
with large population centers in reasonable distance but far
away, and then what constitutes regional development. We have
several regional commissions in addition to the Appalachian
Regional Commission, and my experience with regional economic
development commissions was largely in Northern Minnesota,
Northern Wisconsin, and Northern Michigan with the Upper Great
Lakes Regional Commission.
What I found as staff director for my predecessor working
on the specifics of projects, communities applying, was how do
you create and define a project of regional significance, one
that is really and truly going to benefit all three States. And
I think Mr. Pages is expressing the same thing. When you hear
something regional, is it all going to be swallowed up by one
big community? You know, the largest population center in my
district is Duluth, it is 85,000 people. The Superior
metropolitan area is 135,000, 140,000 people. But how do you
identify a multi-State regional project?
Ms. Glasmeier. I can think of one that comes up in the area
of providing world health care and links broadband. Right now,
individual hospitals may or may not have advanced broadband
applications, and there are two factors that seem to limit the
real high utilization. One is the age of the doctor, the extent
to which the doctor population is over the age of 50 and not
used to using computers.
I don't think you can do anything about that, but what you
can do is you can link hospitals into a telecommunications-base
network that allows them to share knowledge both in terms of
the kinds of problems that they have, but also the access that
doctors have to specialties that are beyond the local region.
And that is not inconsequential when it comes to providing
sophisticated medical knowledge that would otherwise require
the person who happens to be in Duluth to travel to Minneapolis
or maybe even to travel to Wisconsin or to some part of
Michigan to get some care.
So there are ways in which certain kinds of existing
functions can be coordinated in a manner. Then there is no sort
of hub, it is a distributed system in which everybody has a
potential to benefit.
Mr. Oberstar. Well, that is a very good example, and I can
take it a little further. In, if you can imagine, Minnesota and
the point that Minnesota goes out to Lake Superior and Duluth
is sort of right there, and about 50 miles south is Moose Lake
and about 150 miles southwest is Crosby on the other iron ore
mining country, the Cayuna Range. A surgical practice at Crosby
perfected amongst their practice the art of laparoscopy, the
science of laparoscopy, microscopic surgical intervention. It
is the least invasive and intrusive of surgeries.
So then they got about a piece of a satellite and they
created another clinic at Moose Lake, 135 miles away, and they
trained a doctor there in laparoscopy and installed a
laparoscopy surgical suite at Moose Lake. So every day this
surgeon performs laparoscopy with the team in Crosby through
the satellite doing rounds and overseeing surgical work.
In addition, by the way, this team at Crosby established a
similar laparoscopy practice in Haiti, and daily they work with
a surgeon in the central highlands of Haiti and support a
surgeon there who does laparoscopy.
That is regional. It is not multi-State. In this case it is
international.
I would like you to think further about how we can help
these newly created regional commissions craft a policy that
will direct their funds to truly regional projects.
Ms. Glasmeier, in your remarks about renewable energy, we
have great potential in this Subcommittee and its jurisdiction
over Federal civilian office space, nearly 900 million of
Federal civilian office space to equip Federal buildings with
solar power. In fact, our Subcommittee is going to consider and
then report a bill for floor action to equip the Department of
Energy building, which was constructed with a south-facing
wall, blank, no windows, to accommodate solar facilities--in
this case I think, most likely, photovoltaics, and produce
enough energy to run the building. We ought to turn the lights
on at the Department of Energy with solar power and make it an
example for the rest of the Country.
In fact, in this very Subcommittee, in 1977 a hearing was
held on the use of photovoltaics in Federal office buildings to
create, jump-start, if you will, stimulate a national
photovoltaic industry and reduce the cost of electricity
produced by photovoltaics from $1.75 a kilowatt hour in 1977
over a five year period reducing it down to 7 or 8 cents
kilowatt hour, which was the industry standard.
Well, I introduced legislation, got it enacted; Senator
Humphrey did in the Senate. Together we got this bill passed.
It was funded during the last days of the Carter administration
and then defunded by the incoming Reagan administration, and
nothing has happened since then. It is time to reactivate.
Where is solar power so important? In rural areas. The U.S.
Forest Service has weather reporting stations in remote areas
that are operated by photovoltaics. The National Park Service
does the same. NOAA operates weather buoys using photovoltaics
that transmit. Our entire space program runs on photovoltaics,
and on those long distance travels up to Pluto they use nuclear
power. We can do that here.
And in rural areas it would be extremely important to
develop these types of renewable energy initiatives. There is a
very successful project on a dairy farm in the central part of
my district, Hubb & Shield Farm, where all of the manure is
moved by the minute into a digester where methane is produced;
and the methane is drawn off, the digester scrubbed, run
through a generator, produces electrical power from manure-
generated methane that runs the entire Hubb & Shield Farm and
has produced a million kilowatts into the rural electric grid.
He has got 200 head of dairy cows. He figures that each dairy
cow is worth a barrel of oil, because that is the equivalent of
the electricity produced on that farm by each cow in the course
of a year.
The same can be done with hog operations. I know Mr. Graves
actively operates his farm and I know he can readily understand
what we are talking about here.
I would like to get your thoughts about the role of the
economic development representative, the EDR of the EDA
structure. Have you given thought to the role of the EDR, the
local grassroots-up implementation of EDA's programs?
And the background for this is that there is a
restructuring underway within EDA that will remove the economic
development representative from communities within the region
and centralize the function into the regional office seat,
Chicago or other similar regional offices, and operate the
service of the EDR out of that central location. I would like
to have your thoughts about that.
Mr. Pages. Mr. Chairman, I had the pleasure of working at
EDA during the early 1990's, when we had a more extensive EDR
operation in place and, really, the EDRs were kind of the
public face of the agency, and if you really wanted to know
kind of what was happening at the grassroots, you would talk to
the EDR. And when people thought of EDA, they said, oh yeah,
Joe the EDR or Mary the EDR, and they really were our public
face. And I think both the EDRs and the regional offices are
critical, because EDA is different from other Federal agencies;
it responds to the grassroots rather than says here is the
solution and we will give you a grant. It says come up with
some ideas, some innovative ideas, and we will do what we can
to support you.
So you need those people that are out there in the field
who understand what is happening------
Mr. Oberstar. And if I may interrupt you, the EDR is also
the filter to tell folks, look, you have got a germ of an idea
here, but it isn't packaged right, it isn't going to fit, it
isn't going to work, some other place has tried it, it hasn't
worked. He is the filter, or she, the filter to weed out that
project.
Mr. Pages. And I would agree with you 100 percent. In fact,
you know, for many of these communities who have maybe one FTE
or two people in total working in economic development as
professionals, to spend a lot of time on grant applications
that they are not going to be able to win is, you know, very
inefficient use of their time. They have got very limited time
and resources. So that screening mechanism is very important.
For some communities it is better to get a quick no than to
spend a lot of time doing an application. We don't count how
much time, cost and resources go into these RFPs and into the
grant applications. It is quite significant, and if we can help
communities on that front, that is also an important
contribution.
Mr. Reamer. I would agree with that. I think the EDR
structure has been--my experience has been it has been very
helpful to have these people on the ground facilitating the
process.
In the information-oriented approach that I am suggesting
EDA add to its current functions, I think EDRs would be
important as well as a source of expertise to help local
development agencies understand how to do their jobs better and
as a way of collecting intelligence at a local level and
bringing it back to EDA. I mean, this army of 50 people around
the Country is a great resource for EDA to learn about what is
going on on the ground, and it would be the starting point of a
mechanism, as I was saying earlier, to share information across
the Country about what works, what doesn't work, and EDRs I
think are a terrific resource in that kind of effort.
Mr. Oberstar. I like your reference to the Army, except
that the Army has been reduced to a platoon with the reduction
in the number of EDRs, and about to be reduced further.
Mr. Pages. I would just make one other final suggestion, if
you would indulge me, Mr. Chairman, on the EDRs.
Mr. Oberstar. Sure.
Mr. Pages. One thing the Subcommittee might want to
consider is to cross-train the EDRs in to the offerings and the
programs of other agencies, rather than just have them focus on
EDA. You often see this with State regional reps for State
economic development departments. Basically market all of the
State programs, as opposed to just one program in the
Department of Commerce or the Department of Economic
Development.
Mr. Oberstar. I agree with you, and I think they should be,
and in Minnesota our now retired EDR worked very closely with
the State rural development agency of USDA and coordinated
efforts to bring to bear the resources of both agencies on the
needs of small towns.
There are many other questions I would like to pursue but,
Madam Chair, I think there are some things I might submit for
the record. I will yield back my time at this point.
Ms. Norton. Well, if anyone deserves to ask questions, it
is the man who started it all, and we appreciate that effort
and the depth of your questions.
I just have a couple of questions that I would like to ask.
One has to do with testimony we have received ever since I have
been on this Committee, really impressive testimony that I
cannot recall receiving in any other committee or subcommittee
about very impressive results from leveraging private resources
and, indeed, very impressive history of measurable outputs from
the Federal investment.
We are in a period of, we call it here, pay-go. All of you,
in one form or another, spoke about the underfunding of EDA. We
are not going to see a big infusion of funds. I would like
anything you could tell me about how we might better leverage
small amounts of Federal funds to encourage the kind of
proportionately greater private investment that is virtually
the hallmark of this bill, and may be its only real future.
Mr. Reamer. In my testimony, I alluded to the power of
information-based tools. I mean, the Government has several
tools at its disposal to promote social change. One is money
tools: grants, tax credits. Another is information. Money, by
definition, is expensive; and information is relatively cheap.
So, Madam Chair, in terms of levering private investment,
private investors need data on markets to know where to make
decisions, where to make investments, and the Federal
statistical system is the primary source of data for
governments and for businesses to make those investments; where
to put a store, where to put a highway, where to build a
school.
So I think in terms of bang for the buck in economic
development, that a robust statistical system that really costs
pennies per taxpayer has enormous, enormous payoff, that
businesses and planning agencies, regional development agencies
need those population statistics, need those statistics on jobs
and income, need those statistics on the workforce to know
where to make those decisions. And I very much encourage this
Committee to be a strong advocate for a robust Federal
statistical system because, again, for $25 million you could do
a few things to expand the data resources available to regional
developers and the businesses in their areas with remarkable
payoff.
Ms. Norton. Mr. Reamer, they look fairly broadly now. They
look at educational-base, they look at cheap labor costs. They
stop there and then they go on. Now, if there is some value
added beyond that, I think you are right, the Federal
Government is going to have to virtually teach business how to
find it, because they obviously look in the same way abroad and
are not on their own going to invest much more deeply in the
data, and it is very important for us to know ways in which
Federal data--if you have anything more to add to the record on
that, what kinds of Federal data might encourage the private
sector to go beyond where they look now.
Mr. Reamer. I would be happy to do that.
Ms. Norton. Ms. Glasmeier?
Ms. Glasmeier. I would just like to reinforce what Mr.
Reamer said and use two examples. The first is in the case of
broadband. Right now, broadband information is held on a
proprietary basis by the providers. If you are interested in
economic development and you want to know whether there is
broadband capability, and you are looking at a rural State or a
rural region within a State, you have to go to somebody within
the public sector to get that information, and the question is
do they have that information, and most of the time they don't
have it; they don't know where the last mile is. So to the
extent that there can be encouragement that that information be
made available so that business enterprises could actually make
good decisions, that is important.
The second issue or second example is in the case of
renewables. Right now, States have widely different policies
about the prospects for renewable energy. If you are a company
from Spain and you want to make an investment in the United
States because we are a really big market and we are completely
underdeveloped, how do you go about doing that? How do you find
the information that you need about what the State regulatory
framework is, what is the local labor force capabilities, what
are the other due diligence requirements of operating in an
individual State? That information is not coordinated, you have
to dig it out with a bulldozer. It is very inefficient.
So what does that mean for a foreign investor? Quite
frankly, there are many other places around the world that they
could go and sell their business as well. So if we don't make
investments in information tools so somebody that lives in
Spain who wants to make an investment here can do it in the
comfort of their home, then those opportunities will simply go
someplace else like Singapore, where they already have that
information.
So it is not about should we, it is that we have to. And if
we are willing to ignore the fact that the rest of the world is
moving ahead of us, then that is our own cost. But we have to
realize we are not playing on the field with all the tools that
we need.
Mr. Pages. If I could just add. I would agree with Mr.
Reamer generally that the smartest investment for leveraging
would be to invest in statistical and information resources.
But I also recognize that you face a difficult budget
environment in terms of supporting our, or at least my,
proposals to increase funding for some of these programs. I
realize that is often easier said than done.
But one other resource that the Subcommittee might want to
look at is that there have been significant Federal investments
already in revolving loan funds. EDA does that, the Department
of Agriculture does that. And many of these revolving loan
funds are underutilized at this point in time, and there might
be ways to encourage improved marketing or, you know, new ways
to get that funding out. These are previous Federal investments
that are sitting there unused, and we ought to find ways to be
able to tap that resource.
Ms. Norton. Here in the Congress I found a piece of land
five minutes from the Capitol. It made a slum out of the whole
neighborhood; owned by the Federal Government. I put in a bill
for a public-private partnership. It is now being developed by
the private sector. You couldn't do that before because it was
Federal land. The local community--there was a question from
our colleague from Memphis about inner cities. It happens to be
a poor local community down there. The investment from the
private sector is renewing the entire section. The Federal
Government hasn't put a dime in that. The land was there. It
took a piece of legislation. And I am very interested in seeing
how that might apply in other parts of the Country.
As I close this hearing, I don't want to leave the
impression that the Transportation and Infrastructure Committee
believes that traditional infrastructure is no longer important
for developing rural and, for that matter, other areas. I want
to stress that particularly in the Midwest and in the
Northeast, where many of our underdeveloped areas are located,
there is a hugely aging infrastructure precisely because these
were the first parts of our Country to develop. We are about to
lose billions of dollars in investment because we are letting
it go to seed, if you will forgive me. We are letting it rust
out of existence, so that we will have to begin all over again.
And with what investment? With what funds?
I am very interested, for example, in tying infrastructure
funds, or at least in doing some kind of experiment in tying
infrastructure funds with upkeep of the infrastructure. There
isn't a lot of incentive for cities, for example, to build a
road. What is it, 80 percent Federal? Should be, certainly
should be.
But what is the incentive? Unless the Federal Government
encourages the reinvestment in the very substantial investment
it has made in the first place. The infrastructure needs of
these underdeveloped areas often remain underdeveloped, and in
the Committee Subcommittees over and over again we hear about
the development of water and wastewater infrastructure, which
is not only aging, but some believe even dangerously aging. So
we face the rebuilding America notion that I mentioned in my
opening testimony, as much as I am interested in the vision of
the future and the 21st economy in which we clearly already
live.
I want to particularly thank each of you for your own
testimony and your willingness to come today, prepare
testimony, make us think more clearly about our own mission.
What we have heard has been extremely helpful. I invite you to
continue to submit, as you have heard our questions, ideas to
us as you face the difficult task of trying to carry EDA into
yet another context, far more challenging.
It is very much more difficult to be in an underdeveloped
area in 2007, to virtually be starting from scratch than it was
for your great-grandfather, who may have lived in
Massachusetts, who could have done so with and did do so with
his own labor and with an expanding economy that was a perfect
match for the labor that was provided. And now we are saying,
oh, you are late in coming and, by the way, the economy that
might have done it has passed you by, so hop on this world, see
if you can continue to function. We have got to think that way.
And, frankly, what comes in on us--and you heard some of it
from my colleagues on both sides--people want to talk about
their problem. That is what their constituents sent them here
for. So we would never get a look at what is really, really
driving the problems of the members were it not for testimony
such as yours.
I ask unanimous consent that the record of today's hearing
remain open until such time as our witnesses have provided
answers to any questions that may be submitted to them and
unanimous consent that during such time the record remains
open, additional comments offered by the witnesses or groups
may be included in the record of today's hearing. Without
objection, so ordered.
Thank you all again.
[Whereupon, at 12:33 p.m., the subcommittee was adjourned.]
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