The White House wants to abolish it as a classic example of wasteful spending, a key Senate committee is against it, and the assistant secretary who runs it says the Economic Development Administration has been a disgrace.
But the agency, under constant attack for the last 18 months, may yet survive through some political maneuvering on Capitol Hill.
What began in 1965 as an effort to help rural America has mushroomed into an all-purpose aid program for which many more communities of the country, including some prosperous areas, are now eligible. Through a mixture of grants, loans and loan guarantees, the Commerce Department agency has financed thousands of projects ranging from industrial parks to cemeteries.
Many thought the agency itself was headed for the graveyard until last month, when Rep. James L. Oberstar (D-Minn.) convinced the House to perform radical surgery in order to save the agency. The House agreed to focus its benefits on more highly distressed communities, and in the process authorized $200 million for the next fiscal year, about the same as this year's budget.
Republicans on the Senate Environment and Public Works Committee quickly said they would refuse to sit down to a conference with the House on the issue. "We will be obdurate and obstinate in sticking to this position," Chairman Robert T. Stafford (R-Vt.) said. "The EDA is an agency that has outlived its usefulness in this time of austerity budgets."
But House Democrats combined the agency measure with a bill to continue funding for the Appalachian Regional Commission, which also once ranked high on the Reagan administration's hit list.
Stafford responded that he just might kill the Appalachian panel as well, but it is extremely popular with senators from the 13 eastern states that receive the aid, including several members of Stafford's committee.
"The Senate has spoken, but so has the House," Oberstar said. "One body cannot dictate to the other how it should conduct its business."
The senators still may refuse to go to conference before Congress adjourns. In that case the Appropriations committees probably would keep both agencies alive through a stopgap funding measure. And that, in turn, would put an end to Oberstar's changes and leave the Economic Development Administration in the same shape that has attracted so much criticism.
"Trying to clean up EDA is like trying to unscramble an egg," said Assistant Secretary of Commerce Carlos J. Campbell, who oversees the agency. He dismissed Oberstar's efforts to reshape the administration, saying that legislators were voting for it out of "political expediency, it's an election year and it makes them look good back home."
At the heart of this political infighting are some basic philosophical differences about the role government should play in economic growth.
Oberstar said the program is needed in depressed areas such as his district in Duluth, where unemployment among mine workers has pushed the jobless rate to 19.1 percent, second highest in the country. "You won't hit a long ball and get 1,000 jobs with one EDA project, but it will help areas like ours to diversify," said Oberstar, who chairs the House economic development subcommittee.
On the other hand, Campbell says cutting the budget is far more important. "The only way we can create jobs is through overall economic expansion," he said. "We certainly are not going to create jobs through government spending."
Campbell and other critics point out that 40 percent of all borrowers have defaulted on their Economic Development Administration-backed loans, leaving the government with a debt of $1.2 billion. Campbell says that many of these were pork-barrel projects arranged for Democratic legislators, including 13 cemeteries funded in 1977, most of them in Puerto Rico.
Over the years, federal auditors have not been much kinder. Two years ago, the General Accounting Office surveyed more than 100 industrial parks the agency participated in and found that 10 percent were vacant. In one case, the agency committed $538,000 to an industrial park in rural Michigan, then spent $267,000 on another industrial park three miles away, leaving both half full.
Oberstar agrees the program has a mixed track record, but he says his bill would limit Economic Development Administration funding to communities with unemployment at least 1 percent above the national average or per capita income less than 80 percent of the average. Applicants also would have to raise half the needed funding from other sources and detail their overall development strategy in 20 pages or less.
"We've streamlined the whole process," Oberstar said. "Governors and mayors have become professionals in the field of economic development. We're turning the program back to them and letting them run it."