McConnell, Paul, Rogers support Obama plan to help southeast Ky.

bestep@herald-leader.comJanuary 9, 2014 

Echoing President Lyndon B. Johnson's call 50 years ago for a bipartisan attack on poverty, President Barack Obama on Thursday sought support from both parties for efforts to boost economic opportunity, announcing an initiative aimed at doing that in southeastern Kentucky and four other places.

Obama identified the first sites chosen for his Promise Zones program, which will give the areas priority in getting federal money for education and other needs.

An area made up of Harlan, Bell, Letcher, Perry, Leslie, Clay, and Knox counties, along with much of Whitley County, was one of two rural zones Obama announced. The Lexington Herald-Leader first reported Obama's plans Wednesday.

Republican U.S. Sens. Mitch McConnell and Rand Paul, as well as U.S. Rep. Harold "Hal" Rogers, whose district includes the eight-county area, attended the announcement in the East Room of the White House.

All have been critical of Obama on a range of issues, including his health-care overhaul.

Obama noted the country has had a "rancorous political year," but said he believes that making sure all Americans have a "fair shot" to succeed should not be a partisan issue.

"This should be a challenge that unites us all," said Obama, specifically acknowledging Paul's attendance. "I don't care if the ideas are Democrats or Republican. I do care that they work."

The president and administration officials said there are too many places where various problems combine to trap people in poverty generation after generation.

"A child's course in life should be determined not by the zip code she's born in, but by the strength of her work ethic and the scope of her dreams," Obama said.

The coal industry has shed 6,000 jobs in Eastern Kentucky since 2011. McConnell, Paul and Rogers have blamed the downturn on the administration's tougher environmental rules — the so-called "war on coal."

Still, McConnell and Rogers issued statements praising the Promise Zone designation. The program shows promise for attracting private-sector jobs, Rogers said.

"I'm glad the Administration has finally awakened to the economic problems that are facing Southern and Eastern Kentucky due to the coal job losses," Rogers said.

McConnell said in a speech that he had supported southeastern Kentucky's application and was pleased it won.

McConnell called the Promise Zone program a step in the right direction, though he reiterated the charge that much of the economic hardship in the area is related to administration policies.

He and Paul are encouraged Obama "is finally focused on a concrete approach to jobs that members of both parties can support — proving that we can accomplish things when we focus on real efforts rather than political show votes designed to fail," McConnell said.

Industry analysts say that while environmental rules have figured into the drop in Eastern Kentucky coal production, factors such as the low price of natural gas, high mining costs in Eastern Kentucky and cheaper coal from other regions have played key roles as well.

The other zones Obama announced Thursday are in Los Angeles, San Antonio, Philadelphia and the Choctaw Nation in Oklahoma.

The administration plans to pick 15 more zones over the next three years.

In the Kentucky zone, some Census tracts in Whitley County were left out because the rural zones had to have a total population of less than 200,000 and meet certain poverty thresholds.

The poverty rate topped 70 percent in some Eastern Kentucky counties when Johnson called for "unconditional war" on poverty.

It is much lower than that throughout the region now, but it stubbornly persists above 30 percent in several counties in the newly designated zone — more than double the national rate.

The designation will mean additional money for programs in the area, but it's not yet clear how much.

There is not a specific new fund set aside for southeastern Kentucky and the other zones Obama announced.

Rather, the areas will get an edge in competing for federal money through existing programs in housing, education, economic development, public safety and other areas.

Many federal grants are awarded on a competitive basis. Southeastern Kentucky will be awarded extra points as a result of being named one of the Promise Zones.

All told, the zones will get bonus points for grants through 25 different programs, Shaun Donovan, federal Housing and Urban Development secretary, told reporters after Obama's announcement.

Federal officials also will be assigned to work more closely with local officials and others in the zones to help them cut through bureaucracy in seeking federal money, and to use the money more effectively.

Part of the theory behind the program is that efforts to reduce poverty or expand opportunity must tackle a range of problems that hold back communities.

In the past, a federal agency might improve housing in a distressed area, but the new units would still be surrounded by struggling schools, Donovan said.

Under the Promise Zone approach, the U.S. Department of Agriculture could, for instance, use its community-development money to build a preschool, crossing the lines between agencies, said Secretary Tom Vilsack.

"It creates a much more collaborative and cooperative approach to poverty, to job creation," Vilsack said.

The program also places an emphasis on getting the private and non-profit sectors involved.

It was a plus in the application for southeastern Kentucky that private money has been pledged for a small-business loan fund, Vilsack said.

Kentucky Highlands Investment Corporation, headquartered in London, put together the Promise Zone application for southeastern Kentucky and will coordinate the program.

Jerry Rickett, president and CEO at Kentucky Highlands, attended Obama's announcement Thursday.

The plan for Kentucky's zone includes regional economic development; a loan fund for small businesses; expanded technical education; college- and career-readiness programs in high schools; training programs focused on specific industries; and leadership and business training for young people.

Research suggests targeted approaches like Promise Zones helps revitalize high-poverty areas, according to the Joint Center for Political and Economic Studies, which has helped the administration explain the Promise Zone program.

Many anti-poverty programs, such as food stamps, focus on individuals, but programs like the Promise Zone initiative address structural problems people in poor communities have trouble overcoming, said Autumn Saxton-Ross, program director for the Health Policy Institute, part of the Joint Center.

The involvement of the private and non-profit sectors also is an important part of the program, she said.

"It's not just everyone on the government dole," said Saxton-Ross.

There is one key piece of the Promise Zone approach that Obama has called for, but Congress has not enacted — tax credits for businesses in the zones that hire people.

The program can do good things without that piece, but won't achieve as much as it could if Congress approves the incentive, federal officials said.

"We believe the tax credits are a critical part of accelerated job creation,' Donovan said.

McConnell and Paul are advocating a different approach — called economic freedom zones — which McConnell said includes reduced taxes and regulation on businesses in high-unemployment areas.

Bill Estep: (606) 678-4655.Twitter: @billestep1

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