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The Roanoke Times
Here’s something unexpected: A group of four U.S. senators — two Democrats, two Republicans — have sponsored a study on how to rebuild the economy of Appalachia.
The 34-page report, prepared by a Washington think tank, came out Wednesday. The arrival of this bipartisan document on Appalachia’s economy brings to mind the quote attributed to the 18th century English writer Samuel Johnson, who referred to the phenomenon of a dog walking on its hind legs. The point is not whether it is done well, he said, “but you are surprised to find it done at all.”
In this case, the report is done well, but the most important thing is that Appalachia is getting high-level attention in Washington for perhaps the first time since Lyndon Johnson launched the “war on poverty” in the 1960s.
You can indirectly thank Donald Trump for this report. His election helped call attention to the growing economic and cultural divide between the thriving bi-coastal cities and much of rural America. Shortly after the election, the Bipartisan Policy Center — a non-partisan group founded in 2007 by leaders from both parties — approached Sen. Mark Warner, D-Virginia, about a study on Appalachia. Warner’s interest in rural economies dates back to his time as governor. He still calls the day he announced 400-plus jobs in Russell County as “my best day as governor.”
Trump’s inexplicable decision to propose a budget that eliminates the Appalachian Regional Commission probably heightened the interest of some Republicans who represent the region. In the end, the study wound up with four sponsors — Warner, Democrat Joe Manchin of West Virginia, and Republicans David Perdue of Georgia and Thom Tillis of North Carolina. The study further enlisted various regional leaders to take part — among them Donna Henry, the chancellor of the University of Virginia’s College at Wise; Del. Israel O’Quinn, R-Bristol; and former U.S. Rep. Rick Boucher, D-Abingdon.
The report does not unearth a magic formula for fixing the economy of Appalachia, which has seen coal collapse and other traditional industries decline. That’s likely because there is no single magic formula.
Instead, the report details what are by now familiar problems — a workforce whose skills don’t match the jobs being created, a lack of broadband internet, a rugged terrain that makes transportation difficult, and a lack of investment capital to encourage start-ups. These, by the way, are also all problems identified in the recent report on Southwest Virginia conducted by the GO Virginia economic development council.
What’s noteworthy, though, are some of the solutions that the senators proposed during a panel discussion accompanying the report’s release.
Warner talked about the upcoming debate on tax reform. One of the many issues there is “tax repatriation.” American corporations right now have an estimated $3 trillion in overseas profits stashed in foreign banks because the tax rates there are lower than in the United States. Manchin said the amount might be as high as $4 trillion. In any case, it’s a lot of money and the policy debate in Washington is about lowering the corporate tax rate, at least temporarily, to encourage companies to bring that money home and invest it here.
Technology companies hold a big share of that money. Ten of the biggest — Alphabet, Apple, Amazon, Cisco Systems, Facebook, Intel, Microsoft, Nvidia, Oracle and Qualcomm — together have $600 billion in foreign cash on their balance sheets. CNBC reported recently that negotiations on repatriations are stalled because the tech companies are insisting on a lower tax rate than many in Congress want to set.
Warner proposes an interesting wrinkle: Maybe there ought to be a lower tax rate on repatriated dollars if companies agreed to invest it in economically-distressed regions such as Appalachia? That would have the fascinating effect of creating jobs in rural areas and might help jump-start a technology sector in Appalachia.
Manchin proposed another idea: In exchange for various tax breaks, renewable energy companies should be required to locate at some of those jobs in coal country. The rationale: Renewables are replacing coal, but renewable jobs are spread across the country while coal jobs are — or were — concentrated in just a few places.
“They walked away from us and left us,” Manchin said of those who have pushed renewables. “If you’re going to give people a chance, have a soft landing.” That might seem an attack on renewables, but look more deeply at what he’s saying: Here’s a coal state senator who fully understands where the energy market is headed and is actually advocating tax breaks for renewables — as a way to create an alternative energy industry in his state. That sounds pretty significant.
The beauty of both those proposals is they don’t involve massive amounts of federal spending — or any federal spending, for that matter. Instead, the senators would use the tax code to create incentives in the private sector to invest in Appalachia.
These ideas also seem potentially doable —assuming, of course, Congress can do anything these days. All four senators emphasized that the solutions for Appalachia’s economic problems aren’t partisan ones. “A lot of the issues we have don’t fit neatly on the Democrat-Republican line,” Warner said. Sometimes that’s a problem — issues like that can easily fall through the cracks of a partisan divide. On the other hand, it’s also potentially an opportunity for bipartisan cooperation.
Warner said he could see maybe a dozen different bills coming out of the report — each pretty technical, but each with potential to change the economic trajectory of Appalachia. “Let’s see if we can do it and put some points on the board,” he said.
Yet another beauty of this report: Some of the suggestions don’t require legislation at all, just action by community leaders. The report stressed that not all Appalachian communities are suffering equally “but it has not always been clear why certain communities have succeeded while others have not.”
To address that, one idea is to set up “domestic study abroad” programs that would pair “leaders and students from newly-prospering communities” in Appalachia with those from more distressed communities.
Who wants to lead?
You can find the report at: https://bipartisanpolicy.org/library/the-appalachia-initiative/