Copyright 2004 Plain Dealer Publishing Co.

Plain Dealer (Cleveland)

September 14, 2004 Tuesday

FINAL Edition; ALL Editions

SECTION: NATIONAL; Pg. A4

LENGTH: 865 words

HEADLINE: Bush 'opportunity zones' resemble Clinton program;

Details not in yet about promised job-loss response

BYLINE: ELIZABETH AUSTER, PLAIN DEALER REPORTER

BODY:

Washington - During a recent visit to Broadview Heights, President Bush talked proudly about a plan he unveiled at the Republican convention to offer special help to communities suffering from large job losses.

Bush said his proposal to create "opportunity zones" would be tailor-made for places like Greater Cleveland. A White House news release on the plan even singles out Cuyahoga and two other counties nationwide as examples of areas that might qualify for such zones.

Opportunity zones would get priority when applying for federal grants for job training, community development, reading and other programs. Small businesses in the zones would see lower income tax rates as well as tax breaks for investment and hiring.

But experts on both sides of the aisle caution that residents of Northeast Ohio shouldn't get too excited yet about the plan. With few details available from the Bush campaign on how the zones would be selected and how much help they would get, experts say they have yet to see evidence the zones - if approved by Congress - would have much impact.

At this point, they say, the idea sounds mostly like a modest variation on the "empowerment zones" set up in Cleveland and other poor areas during the Clinton administration. And even supporters of empowerment zones - areas with high poverty that are chosen to get various forms of help - say there is little definitive research on their effectiveness.

Ronald Utt, a senior research fellow at the conservative Heritage Foundation, said Bush's proposal strikes him as an election-year attempt to offer an urban policy that wouldn't be controversial because it expands on an existing program. He noted that Bush is calling for only 28 urban zones and 12 rural ones.

"That's not even one per state," he said. "Would it be likely that Ohio would get more than its fair share? I don't think so. But the real question, I think, is not how much you get but whether these things do any good. And I don't think there's much of a successful track record for these kinds of concepts."

Bush offers a more upbeat view of the plan. Unlike conventional empowerment zones, he said in Broadview Heights, opportunity zones would be targeted at communities undergoing an economic transition rather than focusing primarily on combating poverty.

"An opportunity zone says that if you've lost manufacturing jobs, if you've lost plants, if you've lost retail sales, you qualify," Bush said. "It will be an intensive, holistic effort to address the fact that the economy is changing."

John Bailey, a deputy policy director for the Bush campaign, said the White House has yet to decide on key aspects of the plan, including the size of the cut in tax rates on the income of small businesses in the zones as well as the criteria for drawing the zones. He said the zones would be smaller than entire counties, but officials have yet to decide how to draw them in a way that avoids giving incentives for shifting jobs from very troubled areas to less troubled areas.

"A lot of this is still a work in progress," he said.

A cut in income tax rates on small businesses in opportunity zones could be significant, but only if the cut is sizable, said Michael Barr, an assistant professor of law at the University of Michigan who helped design tax incentives for distressed communities as a Treasury official in the Clinton administration.

Beyond that, he said, he worries that Bush's plan is mostly "shuffling around things that already exist," meaning that communities could go through a difficult application process only to see little payoff.

Unlike Clinton's empowerment zones, Bush is not proposing direct grants of money to opportunity zones. Instead, Bush is aiming to provide tax breaks worth about $10 billion over the next 10 years, Bailey said.

Bruce Katz, former chief of staff at the Department of Housing and Urban Development in the Clinton administration, said he finds it hard to imagine that Bush would commit much money to opportunity zones because the president has proposed cutting various programs aimed at helping distressed communities.

Katz said he questions the value of creating such zones even though he worked on empowerment zones at HUD. "I'm not really sure they work," he said.

Jason Furman, economic policy director for the Kerry campaign, is less skeptical about the concept of such zones. Kerry's main complaint with Bush's plan, Furman said, is that it's too little, too late to address manufacturing job losses. Furman also said Bush has previously proposed cutting grants to empowerment zones.

"We've waited three and a half years while we've lost 2.7 million manufacturing jobs to come up with what can best be described as renaming programs that George Bush himself wanted to cut," he said. "This is a cynical attempt to make it look like they have a policy . . . when in reality it would do virtually nothing."

At the Bush campaign, Bailey said Bush's idea is part of a broader set of economic proposals including tax relief, legal reform and regulatory reform.

"This is in addition to the rest of the president's job creation plans," he said. "This is trying to target those areas that have been most hard-hit."

To reach this Plain Dealer reporter:

eauster@plaind.com, 216-999-4212