Politics & Government

Trump touts Tim Scott’s anti-poverty plan while communities wait and wonder

President Donald Trump smiles as Sen. Tim Scott, R-S.C., speaks during a bill passage event on the South Lawn of the White House in Washington, Wednesday, Dec. 20, 2017, to acknowledge the final passage of tax overhaul legislation by Congress.
President Donald Trump smiles as Sen. Tim Scott, R-S.C., speaks during a bill passage event on the South Lawn of the White House in Washington, Wednesday, Dec. 20, 2017, to acknowledge the final passage of tax overhaul legislation by Congress. Associated Press

Donald Trump kicked off the past week by unveiling a budget that slashed spending for some of the country’s major anti-poverty programs.

Days later, he hosted a big White House event to promote a program that its sponsor, Sen. Tim Scott, R-S.C., touted as “the most consequential policy that we’ve seen in more than a decade in helping the poor that doesn’t already exist.”

Brett Theodos of the Urban Institute, a Washington-based research group, saw a lot of unknowns.

He said the initiative giving some tax breaks to business that put down roots in impoverished neighborhoods to be called “opportunity zones” would yield “modest” incentives. He thought it could make a real difference in communities where gaps in certain services are most profound.

But Theodos warned that the open-ended nature of the program, and its lack of any requirement for input from community leaders beneath governors, could result in opportunity zones being designated in places where longtime residents could be hurt.

“People could use this program to invest in a building and remove it from the affordable housing stock,” Theodos explained. “There is nothing that can obstruct or prevent that from happening. It actually has the potential to undermine community development objectives.”

Erin Stewart, the Republican mayor of New Britain, Conn., who participated in Trump’s recent White House roundtable on opportunity zones, said she desperately wanted her city to benefit from the new program. She was concerned, however, that without some changes, it would do little to ensure that it reaches poorer cities like hers.

“I certainly think right now I don’t even know if there’s enough detail in (the law) to be able to say what communities it will help and what it wouldn’t,” Stewart said.

Stewart, along with a cast of other mayors, entrepreneurs, business leaders and community bankers, met in the White House’s Roosevelt Room last week to discuss the program. Scott, Trump, his daughter and adviser Ivanka Trump and Treasury Secretary Steve Mnuchin hosted the program.

In a sign of the administration’s interest, Mnuchin is already working to implement the program on an expedited timetable. It became law at the end of last year as part of the tax overhaul legislation.

The program requires the Treasury Department to alert governors that they can apply to have some of the most economically troubled areas of their states qualify as opportunity zones. Once approved by Treasury, the zones can become fertile ground for businesses to set up shop, hire members of the community, generate new income and attract investors. The businesses, in return, would get a delay in having to pay capital gains taxes.

After the zones are designated, Scott said, the federal government should “get out of the way.”

“One of the reasons I wanted the legislation designed the way that I designed it is I felt the private sector does a better job of attracting the capital than does the government,” Scott explained. “I’m a conservative. I want a conservative-centric solution for the issues that face this country living in poverty in our nation as a whole, so I like the approach that I’ve taken.”

All this can help explain why the White House likes the plan so much. It can be branded as a true free-market, limited-government approach to tackling poverty.

As Trump endures criticism for proposing steep cuts for food stamps and low-income housing, and struggles to make inroads with communities of color — who are among some of the poorest Americans — he might anticipate that he can calm critics by aligning himself with the concept of opportunity zones.

He can try to make inroads by aligning himself with Scott, the Senate’s only black Republican and one of the most well-liked members of Congress. Trump can also point to Democrats who support the program, including Sen. Cory Booker of New Jersey.

For Scott, who grew up in poverty in North Charleston and has made anti-poverty initiatives a centerpiece of his legislative portfolio since he arrived in Congress in 2011, securing opportunity zones in the tax bill was a major victory.

He told McClatchy the president first learned about opportunity zones during an Oval Office meeting in September 2017, where Scott was invited to school the president on his tone-deaf rhetoric following the deadly white supremacist rally in Charlottesville, Va.

“I’d like to think one of the measurable impacts of that meeting will be a stirring of the conscience for kids that grew up in the same situation that I grew up in,” Scott said.

A fiscal conservative, Scott is also prepared to defend the program’s price tag. It is estimated to cost roughly $1.5 billion over 10 years, but Scott’s spokeswoman, Michele Exner, said the senator was confident the money would easily recouped through revenue generated by the businesses taking advantage of opportunity zones.

Theodos said how much money is actually recouped, and how fast, would depend on where opportunity zones are created and where investments get made. And that’s still months away from being known, as governors have until March 21 to submit applications.

“This could actually be the nation’s largest economic community development program,” he said. “It’s hard to imagine how it would recoup the costs fully.”

Emma Dumain: 202-383-6126, @Emma_Dumain