Rep. Pat Tiberi outlines rare bi-partisan effort to fight poverty


The decision, for Rep. Pat Tiberi (R – OH), was clear and simple: either he got bipartisan support for his bill or his bill would be pointless.

That’s what makes Tiberi, and all lawmakers involved in the creation of the Investing in Opportunity Act, so unique. Their insistence upon consensus in an age of polarization almost sounds old-fashioned, considering our modern climate. Indeed, coming from a Republican Congressman tucked cozily in a Republican-controlled House, the notion that bi-partisan support is vital may sound a little strange – crazy, even.

But this bill has a very big goal – revitalizing the pockets of America that have seen little to no economic resurgence since the Great Recession – and to accomplish that goal, Tiberi said he and his colleagues needed all the consensus they could get.

That’s why liberal Sen. Cory Booker (D-NJ) and Rep. Ron Kind (D-WI) hopped onboard with the effort: because even though incentivizing private enterprises to boost economic investment in economically-distressed communities doesn’t totally jive with the Democratic Party’s penchant for government intervention, it is nevertheless an idea worth trying.

And when most of the loudest voices on the Left are screaming for total gridlock in Washington, such efforts are laudable.

“One of the things I historically knew, but certainly learned from my time in watching the Democrats in how they passed the Affordable Care Act, is that if you don’t historically have bipartisan buy-in, it’s much more difficult to sustain and have longterm support for a program,” Tiberi said in this week’s episode of OppCast.

To use a sports analogy, the bill in question would level the playing field for investment opportunities. For instance, let’s say there is a match-up between the New England Patriots, this year’s Super Bowl Champs, and the Jacksonville Jaguars, this year’s… well, let’s just say their record was not great this year. Given that the Patriots will surely trounce the Jaguars, anyone betting on the lesser team would expect a greater payout, right?

But in the world of investing, there is no such arrangement, no re-set corresponding reward for risk when choosing which communities to invest in, and so investors are dissuaded from putting their money in risky areas – like these economically-distressed pockets all across the country. With no incentive to invest in these areas, the communities continue on a downward trend, and the wealth gap yawns ever wider.

That’s where the Investing in Opportunity Act comes into play. The bill, as outlined a recent Forbes piece, would function in three key aspects:

-Establish “Opportunity Zones” in each state in which investors would be incentivized to deploy capital in new and small businesses

-Make it easier for investors to roll existing capital into “Opportunity Funds” that could be invested in early-stage businesses

-And encourage long-term investor commitments by eliminating capital gains for certain types of investments.

With so much money not being invested, so many opportunities not being leaped upon, it becomes clear why this bill, unlike so many others, has support across both sides of the aisle: it makes logical sense.

Still, with an increasing number of extreme voices in both parties appealing to our nation’s baser concerns, such an even-keeled bill may not survive the tumult.

“But we have to try,” Tiberi said, “and we’ll keep on trying no matter what.”

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There are 7 comments.

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  1. captainpower Inactive
    captainpower
    @captainpower

    Hmm, intentional distortion of the free market to achieve goals of fairness via “incentivizing private enterprises to boost economic investment in economically-distressed communities.”

    Not too sure I like the sound of that.

    Q) Is this really within the scope of governmental authority at the federal level?

    From the forbes article: “It […] will get more money to entrepreneurs in places that need it.”

    Q) Do we really trust the government to decide where scarce resources are best allocated BETTER than the free market?

    • #1
  2. Mike H Coolidge
    Mike H
    @MikeH

    If it works, wouldn’t the end effect be to boost economic growth in that area, which would cause gentrification, and move the economically disadvantaged into another area which would then collapse?

    If you really wanted to help them it’d probably be best to relax zoning laws allowing low income housing to be build in already economically advantaged areas. But no one wants to end up living by those icky disadvantaged people!

    • #2
  3. captainpower Inactive
    captainpower
    @captainpower

    From the podcast at minute:second mark 19:36 – 21:16…

    Question)

    What are the challenges and what do you foresee being the key areas of focus when you are trying to push this through?
    Answer)
    So, as you’ve said and you said it right, in Washington D.C. nothing’s easy. You fight the status quo.

    On the left you have people who don’t like this because they’d rather see government focus on finding solutions for poor communities and don’t like fact that people in the private sector would for-profit use the tax code to potentially make money.
    So you have that on the left.

    And on the libertarian/kind-of-right/far-right side you also have folks who say “why should we use the tax code to do anything, let alone to do this? why are we using the tax code?”
    But we are using the tax code in a way that if we don’t do this I can guarantee you the drumbeat is going to continue to try to get more money into these local communities. And we’ve done that. We’ve done that since FDR was President long before you and I were born. And it hasn’t worked.
    And so the beauty about this is that it’s local decision makers. It’s governors, it’s local county commissioners, it’s non-profits, it’s the private sector, it’s private investors, it’s private capital, to try to use the ability of the tax code to defer capital gain just to try to get that [unintelligible] investment in there to just to try to get somebody to have some success in a community that otherwise wouldn’t have it that sees abject poverty, both again in rural and urban.

    It looks Mr. Tiberi’s casting of likely objections from right is accurate:

         1) “why should we use the tax code to do anything, let alone to do this?

         2) why are we using the tax code?”

    However, his answer only addresses one of the two questions he poses.

    1) “why should we use the tax code to do anything?” goes unanswered, while 2) “why are we using the tax code” is answered with (my paraphrase): because what we have been doing isn’t working so we need to try something different.

    The answer to the first question informs the answer to the second question.

    If it’s fine to use the tax code as an instrument of policy, then 2) isn’t really an objection. e.g. It’s fine so we are doing it.

    If it’s NOT fine to us the tax code as an instrument of policy, then 2) isn’t an answer. e.g. It’s not fine but we are doing it anyway.

    After showing us he understands the likely objections from the right, his response surprisingly failed to address those same objections.

    • #3
  4. Matt Y. Inactive
    Matt Y.
    @MattY

    I think there are four types of GOP congressmen. (1) Rhetoric-driven, who might propose some things that they know have no chance of passing, (like perhaps proposing a flat tax, or eliminating the Department of Education, or a simple Obamacare repeal with no replacement, with no interest in putting their heads down to figure out some reform that could actually pass both houses of Congress) just so they can say they proposed something and posture against everyone else; (2) Solutions-driven, who are either policy wonks or friendly to policy wonks and know how to craft legislation that will actually pass (which could include bipartisan legislation like this, or sweeping tax or health care reform that can serve as a basis for debate, re-working, and eventual passage); (3) Bring-home-the-bacon-and-keep-my-head-down guys, who cast mostly the “right” votes, but never make a name for themselves outside their own districts, aren’t eager to bring up sweeping reforms because the lobbyists don’t like the reforms or because it might upset voters; and (4) actual moderates. Tiberi seems like a (2) guy, the right kind.

    He is also supposed to “quarterback” the replacement for Obamacare.

    He is reportedly thinking about running for Senate in 2018. Josh Mandel is already running, and would probably be a fine Senator, but if Tiberi can pass an Obamacare reform/replacement/repeal and a couple other useful things like this, I just might support him.

    • #4
  5. Matt Y. Inactive
    Matt Y.
    @MattY

    captainpower (View Comment):
    1) “why should we use the tax code to do anything, let alone to do this?

    2) why are we using the tax code?”

    However, his answer only addresses one of the two questions he poses.

    1) “why should we use the tax code to do anything?” goes unanswered, while 2) “why are we using the tax code” is answered with (my paraphrase): because what we have been doing isn’t working so we need to try something different.

     

    After showing us he understands the likely objections from the right, his response surprisingly failed to address those same objections.

    Possibly he simply doesn’t buy into a fully libertarian or classical liberal policy. And possibly the preferred libertarian answer is a political non-starter and doesn’t get much transaction or consideration, so it gets short shrift in interviews like this. (To give it a fair chance to work, would it require a bunch of policy changes in other areas across the board – in other words, go fully libertarian everywhere?) In practice, the actual alternative to reformicon policies (which is what this seems to be) has been NOT to refrain from using the tax code at all, but to either have “crony capitalism” that hands out favors to business, with no thought to help the poor, or to dump money into the local communities via big government spending (the welfare statist/progressive approach).

     

    • #5
  6. Matt Y. Inactive
    Matt Y.
    @MattY

    Matt Y. (View Comment):

    captainpower (View Comment):
    1) “why should we use the tax code to do anything, let alone to do this?

    2) why are we using the tax code?”

    However, his answer only addresses one of the two questions he poses.

    1) “why should we use the tax code to do anything?” goes unanswered, while 2) “why are we using the tax code” is answered with (my paraphrase): because what we have been doing isn’t working so we need to try something different.

    After showing us he understands the likely objections from the right, his response surprisingly failed to address those same objections.

    Possibly he simply doesn’t buy into a fully libertarian or classical liberal policy. And possibly the preferred libertarian answer is a political non-starter and doesn’t get much transaction or consideration, so it gets short shrift in interviews like this. (To give it a fair chance to work, would it require a bunch of policy changes in other areas across the board – in other words, go fully libertarian everywhere?) In practice, the actual alternative to reformicon policies (which is what this seems to be) has been NOT to refrain from using the tax code or any form of government intervention or spending at all, but to either have “crony capitalism” that hands out favors to business, with no thought to help the poor, or to dump money into the local communities via big government spending (the welfare statist/progressive approach).

     

    • #6
  7. Matt Y. Inactive
    Matt Y.
    @MattY

    Why did it create a second comment when I edited?

    …perhaps because someone had already “liked” the first comment before I edited it?

    • #7
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