Republicans losing key Democratic defenders of bipartisan ‘opportunity zones’
Bipartisan support for “opportunity zones” is starting to fracture amid reports that the program is being abused.
Congressional Republicans and the White House have lost the unequivocal support of Sen. Cory Booker of New Jersey, who was perhaps until this point the most unapologetic Democratic defender of the besieged program the GOP wants to promote ahead of the 2020 elections.
A presidential candidate and the lead Democratic sponsor of the original opportunity zones legislation in Congress, Booker signed onto a letter released Monday calling for reforms to the program, which provides tax incentives to anyone making a long-term investment in certain, economically ravaged areas.
Some of the reforms the lawmakers recommend in their letter, obtained first by McClatchy, are the ones the program’s champion, Republican Sen. Tim Scott of South Carolina, said last week would “destroy” the initiative.
“We write to urge the swift enactment of legislative measures to enable the Opportunity Zone (OZ) tax incentives ... to more successfully achieve their purpose,” Booker and other Democrats wrote to the chairmen and ranking members of the tax-writing committees of the House and Senate.
“If a policy is intended to benefit low-income Americans by incenting development in economically disadvantaged communities, then such a policy must prevent manipulation of investments to benefit only investors or high-income prospective residents to the exclusion of low-income current residents,” the members continued.
This ideological splintering surrounding opportunity zones could ultimately threaten the GOP’s ability to continue to claim this program the one bipartisan result of the controversial tax overhaul bill Republicans passed and signed into law in late 2017.
It also could complicate President Donald Trump’s ability to tout the initiative in an election year as proof he’s pursued policies supported by both parties that directly benefit the poor.
A White House spokesman defended the program Monday, telling McClatchy that final rules for implementation were still being finalized by the Treasury Department and until then “it’s premature to make drastic changes to legislation [where] we are see[ing] amazing results.”
Opportunity zones are selected by governors from a list of eligible areas in their states determined by census data. Some eligible opportunity zones, however, happen to fall in areas where struggling communities are laid out alongside rapidly-gentrifying neighborhoods that are far from struggling.
There is a growing number of news reports that wealthy developers — including Jared Kushner, the president’s senior adviser and son-in-law — are aggressively pursuing business opportunities in areas that don’t truly need investments.
And because arcane parliamentary rules prevented enforcement mechanisms from being placed in the 2017 tax bill alongside the provision creating opportunity zones, there are currently no reporting requirements in statute to weed out bad actors.
Earlier this month, a spate of bad press about abuses among investors using the program to win tax breaks in more affluent areas prompted Democratic Rep. Ron Kind of Wisconsin to introduce legislation mandating reporting requirements. Kind was a sponsor of opportunity zones legislation prior to the larger, GOP tax bill’s enactment.
Then, last week, House Majority Whip Jim Clyburn introduced a separate bill that would, among other things, “terminate zones that are not low-income or impoverished.”
The letter Booker signed endorses Kind’s effort as well as Clyburn’s. Clyburn’s office organized the letter, collecting signatures from members of the Congressional Black Caucus, including U.S. Sen. Kamala Harris of California, another 2020 presidential contender.
Scott blasted Clyburn’s bill as one that would “needlessly punish low-income communities who are hoping to use Opportunity Zones to transform areas left behind.”
Noting that he and Booker were already pursuing legislation to institute reporting requirements, Scott also accused Clyburn and other Democrats of “trying to take down Opportunity Zones because of their distaste for President Trump.”
Clyburn has been a critic of opportunity zones for years, but the confrontation between the two S.C. lawmakers took their conflict to a new, deeply personal level.
Asked last week whether he was concerned about helping stoke tensions inside the state’s congressional delegation, Clyburn quipped, “I’ll let you know if I fail to sleep tonight.”
These tensions could only grow — between Scott and Clyburn but also between Republicans and Democrats more broadly — if Democrats who control the House choose to pursue legislation to make changes to the opportunity zones program.
Erin Hatch, a spokeswoman for House Ways and Means Chairman Richard Neal, D-Mass., told McClatchy on Monday that “the issue is a priority for the Chairman, and a hearing could very well be in the future.”
Republicans would see these efforts as an attack on an initiative they have embraced and tried hard to make a part of their political brand.
“Instead of playing politics with a vital new reform incentive, Congress should work with the White House and these local communities to design local revitalization strategies that create social impact,” the White House spokesman told McClatchy.
Last December, Trump launched the “Opportunity and Revitalization Council” to direct federal resources to bolster the program.
And Ivanka Trump — the president’s daughter, Kushner’s wife and another White House senior adviser — has touted opportunity zones as among the initiatives she pitches around the country as examples of the administration’s kinder, gentler side.
Meanwhile, Booker’s new criticism of the program could complicate one of his own talking points on the campaign trail.
Booker’s spokesman, Ryan Johnson, said in a statement to McClatchy that the senator’s views on opportunity zones “haven’t changed. He’s been consistent in his calls to Treasury and the White House for stronger reporting requirements and transparency measures that were stripped from his original legislation, and this letter is part of that ongoing effort.”
Still, he told McClatchy last December — prior to declaring his presidential candidacy — that despite wanting reporting requirements, he had no other problems with the program’s administration and defended it as reports of abuse were first coming to the surface.
“I’m the only senator that lives in a low income area,” said Booker, the former mayor of Newark, N.J., at the time. “We can talk about whatever purity level that you want. I want to get low income folks jobs and opportunities. Period. And if people want to be upset about investors or whatever, come to my community and tell me you want to stop legislation that is going to make a difference for low income folks in America.”
This story has been updated to include comment from a White House spokesperson and new statement from Cory Booker.
Michael Wilner contributed to this report.
This story was originally published November 18, 2019 at 12:18 PM.
