The U.S. Economic Development Administration is celebrating 45 years of public service, with a mission of “leading the federal economic development agenda by promoting competitiveness and preparing American regions for growth and success in the worldwide economy,” according to its Web site.
What it actually does is waste about $300 million per year as a permanent “mini-stimulus” slush fund. Republicans want to crash its 45th birthday bash with budget-cutting axes. Naturally, Democrats want to blow more money on it.
The EDA is a Great Society program that re-distributes taxpayer money to “deserving” (meaning well-connected) business ventures. In an editorial today, National Review points out that “studies by government analysts, including those employed by the EDA itself, suggest that practically every penny of that $300 million is wasted.”
Like most other flabby government appendages, the EDA consumes most of its budget on its own administrative costs. It spends a lot of time hiding its failures behind massaged statistics. It spends the money it has left subsidizing absurdities like “a 100-foot-tall replica of the Great Pyramid at Giza, along with an 800-foot-long model of the Great Wall of China, at a planned roadside attraction in Indiana.”
But remember, if we don’t raise the national debt ceiling right away, the United States will default on its financial obligations, because there’s no way we can stop pouring millions into the EDA Slurpee machine. Instead, Harry Reid and the Democrats are trying to give it another $200 million.
This kind of nonsense is not only wasteful, but destructive. Not only would its $300 million budget create more economic good in the hands of the people who actually earned that money, but its politically allocated subsidies deform every local economy they touch.
For example, there’s nothing inherently wrong with building a 100-foot-tall replica of the Great Pyramid at Giza for a tourist attraction. If a private investor thinks he can sell enough tickets to the attraction to make it worthwhile, more power to him.
When the government subsidizes such an endeavor, it is trying to artificially create a demand for cheesy tourist attractions that doesn’t actually exist. If travelers passing through Indiana were eager to see a miniature Great Pyramid, they would buy enough tickets to make it profitable, and EDA funding would not be necessary. Instead, the EDA forces conditions favorable to the formation of a 100-foot-tall Great Pyramid, along with the attendant concessions and jobs running the tourist attraction.
Since the demand to support these jobs doesn’t really exist, they fade away when the subsidies end, just like all of the jobs “saved or created” by Obama’s stimulus slush fund. Meanwhile, resources that could have found their way into a truly sustainable and profitable endeavor have been plowed into the Little Hoosier Pyramid Project, leaving better opportunities to go stale. Since it’s not a private enterprise subject to market reality, the EDA skips merrily along to the next boondoggle, blowing millions of dollars every year for 45 years, but never going “bankrupt.” The vital skill for securing investment capital degrades into catching the eye of the federal sugar daddy, rather than developing sound business plans to attract willing investment.
That’s why these crony capitalist “stimulus” projects are worse than a waste. Hopefully the Republicans can kill the EDA once and for all. Let’s make Uncle Sam drop a few pounds by cutting out the junk food right away, before we get into the serious liposuction.