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Clinton Tour Seeks to Tap 'New Markets'

Economy: Four-day trip begins in Kentucky, ends in Watts. President's plan offers businesses loan guarantees and tax credits for investing in poor areas.

July 05, 1999|EDWIN CHEN | TIMES STAFF WRITER

WASHINGTON — Buoyed by a booming economy, President Clinton today embarks on a four-day mission to promote economic development in some of America's most impoverished areas, from Appalachia to Watts.

Accompanied by a delegation of lawmakers and business leaders, the president hopes to help those left behind by an expanding economy that few could have predicted 6 1/2 years ago when he took office.

"I'm going places not just to remind America of the plight of the Americans who live there but to highlight their enormous economic potential and the visionary businesses who are helping to develop it," Clinton said recently as he described the trip. "Our greatest untapped markets are not overseas; they are right here at home."

The president will be touting his "new markets" initiative, which would offer businesses an array of tax credits and loan guarantees for investing in economically distressed areas, including East St. Louis, Ill.; the Pine Ridge Indian Reservation in South Dakota; and the Mississippi Delta--all places Clinton will visit before his last stop in Watts, to be followed by a conference with business leaders in Anaheim.

"There are real opportunities to make money in these markets," said Jesse L. White Jr., federal co-chairman of the Appalachian Regional Commission.

The "new markets" approach, White said, is an effort to "move communities to a more home-grown base, rather than relying on the old model of recruiting branch plants."

Presidents and others long have tried to help the nation's impoverished areas but with mixed results, as Clinton's trip will point out.

Since its creation in 1965, for instance, the Appalachian Regional Commission has spent $7.4 billion in more than 400 counties across 13 states, much of it building roads.

By 1990, the region's poverty rate of one person in three living below the poverty line was cut in half. Yet in eastern Kentucky, Clinton's first stop, per capita income today remains well below the national average.

For his part, the president contrasted his strategy to that of the War on Poverty launched by President Lyndon B. Johnson in the 1960s and the free enterprise approach adopted by Presidents Reagan and Bush in the 1980s.

"In the 1980s, we found out for sure that free enterprise alone would not develop these areas into the 1990s," Clinton said in an interview with USA Today.

On the other hand, the War on Poverty provided "no internal structural change that would allow a lot of these places to become more self-sufficient on a long-term basis," he added.

The White House said Clinton's initiatives, if approved by Congress, could generate as much as $15 billion in new investments in needy regions.

The tax code has long been Republicans' preferred vehicle for economic development policy. House Speaker J. Dennis Hastert (R-Ill.) said Sunday in a letter to colleagues that the tax cut bill being prepared by House Republicans would include tax breaks for businesses and families that move into any of 100 distressed communities identified by the bill.

Skeptics, however, said that Washington and the private sector can do only so much, arguing that communities must help themselves--by, for example, cutting crime and improving schools--if they are to thrive.

"People in Washington make a mistake when they go to these areas and say we're going to solve your problems for you," said Stephen Moore, director of fiscal policy studies at the libertarian-minded Cato Institute here.

"For the last 30 years, Washington programs to help inner cities have been mostly counterproductive," he declared. "No matter how much cajoling Clinton does, people are not going to invest in those areas unless the underlying problems go away."

In Watts, activists agreed. "It's going to take the community and the city to make a difference once he leaves," said Linda Broadus Miles, executive director of the Al Wooten Jr. Heritage Center.

Other critics found Clinton's efforts wanting for other reasons.

"Figuring out how to get venture capital to small businesses in low-income communities is really important. But that's only one small piece," said Sen. Paul Wellstone (D-Minn.), a liberal who conducted his own poverty tour two years ago.

"This is not a bold agenda," especially amid the nation's prosperity, he said, arguing that the president's budget has not provided sufficient funds to expand access to child care, health insurance and Head Start.

"I'm glad he's going to be out there. But where's the commitment?" Wellstone asked.

He also expressed the hope that Clinton's trip will not raise false expectations. "What you have to be careful of is symbolic politics. These trips can have an 'Alice in Wonderland' quality."

But a senior White House aide said skeptics need not worry.

"We're not going to places for a photo op," the aide said. "There has to be something real when we leave that can cause improvement."

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