If shops soon sprout out of the distressed landscape that was the Robert Taylor Homes, or the longtime unemployed find new jobs and hope, or big businesses start lending a hand to small firms, reserve some credit for House Speaker Dennis Hastert (R-Ill.)
Hastert led a bipartisan effort to approve tax breaks for investments in the nation’s economically depressed areas. Pork-barrel politics nearly killed that deal, but his persistence saved it.
Last spring, Hastert and President Clinton announced an agreement to expand federal anti-poverty efforts, mainly through capital-gains tax breaks, to make blighted urban and rural areas into new markets for investors. It was a merger of Democratic and Republican proposals and was crafted the way such programs should be: Private business takes the lead, with a boost from government through favorable tax and regulatory policy.
Prospects for the package looked dismal by the fall, however, when the Senate larded up its version of the bill with dozens of tax breaks. One actually involved chicken manure, and others might well have been put in that category. By October, the Senate had given up on moving its version.
Hastert rescued the measure. Once the presidential election was finally settled, a leaner, cleaner bill got congressional passage and Clinton’s approval. The new law will bring up to $25 billion over the next 10 years for efforts to revive crumbling areas. Funds may go to rural Mississippi or East St. Louis–or the Englewood neighborhood in Chicago, where Hastert and Clinton first revealed they would cooperate on an urban bill. Forty “renewal communities” will be chosen to receive aid through a federal application process.
Business owners can reduce their capital gains taxes by reinvesting profits in such zones, and continued reinvestment can cut such taxes to zero. Venture capital funds will be established. Incentives, including tax credits, of up to $35,000 can be awarded for equipment purchases and up to $10,000 for hiring long-term unemployed workers from the zones. Other credits will encourage financial institutions to make loans and investments, and help forge links between large and small businesses.
When he was sworn in Wednesday for a second term as speaker, Hastert made the customary call for bipartisanship on Capitol Hill. Through his cooperation with a Democratic White House and doggedness in passing this legislation, Hastert showed there is substance behind the rhetoric.
