[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                    THE STATE OF ECONOMIC DEVELOPMENT

=======================================================================

                                (110-2)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 23, 2007

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia    JOHN L. MICA, Florida
PETER A. DeFAZIO, Oregon             DON YOUNG, Alaska
JERRY F. COSTELLO, Illinois          THOMAS E. PETRI, Wisconsin
ELEANOR HOLMES NORTON, District of   HOWARD COBLE, North Carolina
Columbia                             JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York             WAYNE T. GILCHREST, Maryland
CORRINE BROWN, Florida               VERNON J. EHLERS, Michigan
BOB FILNER, California               STEVEN C. LaTOURETTE, Ohio
EDDIE BERNICE JOHNSON, Texas         RICHARD H. BAKER, Louisiana
GENE TAYLOR, Mississippi             FRANK A. LoBIONDO, New Jersey
JUANITA MILLENDER-McDONALD,          JERRY MORAN, Kansas
California                           GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California        HENRY E. BROWN, Jr., South 
LEONARD L. BOSWELL, Iowa             Carolina
TIM HOLDEN, Pennsylvania             TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington              TODD RUSSELL PLATTS, Pennsylvania
RICK LARSEN, Washington              SAM GRAVES, Missouri
MICHAEL E. CAPUANO, Massachusetts    BILL SHUSTER, Pennsylvania
JULIA CARSON, Indiana                JOHN BOOZMAN, Arkansas
TIMOTHY H. BISHOP, New York          SHELLEY MOORE CAPITO, West 
MICHAEL H. MICHAUD, Maine            Virginia
BRIAN HIGGINS, New York              JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
JOHN T. SALAZAR, Colorado            CHARLES W. DENT, Pennsylvania
GRACE F. NAPOLITANO, California      TED POE, Texas
DANIEL LIPINSKI, Illinois            DAVID G. REICHERT, Washington
DORIS O. MATSUI, California          CONNIE MACK, Florida
NICK LAMPSON, Texas                  JOHN R. `RANDY' KUHL, Jr., New 
ZACHARY T. SPACE, Ohio               York
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                CHARLES W. BOUSTANY, Jr., 
JASON ALTMIRE, Pennsylvania          Louisiana
TIMOTHY J. WALZ, Minnesota           JEAN SCHMIDT, Ohio
HEATH SHULER, North Carolina         CANDICE S. MILLER, Michigan
MICHAEL A. ACURI, New York           THELMA D. DRAKE, Virginia
HARRY E. MITCHELL, Arizona           MARY FALLIN, Oklahoma
CHRISTOPHER P. CARNEY, Pennsylvania  VERN BUCHANAN, Florida
JOHN J. HALL, New York
STEVE KAGEN, Wisconsin
STEVE COHEN, Tennessee
JERRY McNERNEY, California

                                  (ii)

  
?

 Subcommittee on Economic Development, Public Buildings and Emergency 
                               Management

        ELEANOR HOLMES NORTON, District of Columbia, Chairwoman

MICHAEL H. MICHAUD, Maine            SAM GRAVES, Missouri
JASON ALTMIRE, Pennsylvania          BILL SHUSTER, Pennsylvania
MICHAEL A. ARCURI, New York          SHELLEY MOORE CAPITO, West 
CHRISTOPHER P. CARNEY, Pennsylvania  Virginia
TIMOTHY J. WALZ, Minnesota           CHARLES W. DENT, Pennsylvania
STEVE COHEN, Tennessee               JOHN R. `RANDY' KUHL, Jr., New 
JAMES L. OBERSTAR, Minnesota         York
  (Ex Officio)                       JOHN L. MICA, Florida
                                       (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page
Summary of Subject Matter........................................    vi

                               TESTIMONY

 Glasmeier, Amy, Professor of Geography and Regional Planning and 
  John Whisman Appalachian Scholar, Pennsylvania State University     9
 Pages, Eric, President, Entreworks Consulting...................     9
 Reamer, Andrew, Fellow, Brookings Institute.....................     9

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Altmire, Hon. Jason, of Pennsylvania.............................    36
Arcuri, Hon. Michael A., of New York.............................    37
Walz, Hon. Tim, of Minnesota.....................................    38

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

 Glasmeier, Amy..................................................    39
 Pages, Eric.....................................................   166
 Reamer, Andrew..................................................   176

                       SUBMISSIONS FOR THE RECORD

 Glasmeier, Amy, Professor of Geography and Regional Planning and 
  John Whisman Appalachian Scholar, Pennsylvania State 
  University:

  Additional written statement by Ann Markusen...................    49
  Revised oral statement.........................................    57
  The Distinctive City: Production, Class and Identity, Ann 
    Markusen and Greg Schrock, report, January 2006..............    61
  A Consumption Base Theory of Development: An Application to the 
    Rural Cultural Economy, Ann Markusen, report, October 2006...   119
  Nine Concrete Ways to Curtail the Economic War Among the 
    States, Greg LeRoy, Executive Director, Good Jobs First, 
    paper........................................................   153
 Pages, Eric, President, Entreworks Consulting, responses to 
  questions......................................................   173
 Reamer, Andrew, Fellow, Brookings Institute:

  Responses to questions.........................................   184
  The Consequences of Eliminating Group Quarters Data from the 
    Census Bureau's American Community Survey, Andrew Reamer and 
    Cynthia Taeuber, Metropolitan Policy Program, The Brookings 
    Institute, paper, January 2006...............................   194
  Letter, Hon. Carlos M. Gutierrez, Secretary of Commerce, 
    January 19, 2007.............................................   217
  U.S. Census Bureau FY 2007, Impact of Alternative Proposal for 
    Spending $58.3 million in cuts to Periodic Censuses and 
    Programs, statement..........................................   219
  Letter to Hon. David Obey, a Representative in Congress from 
    Wisconsin, from Melissa Armstrong, Chair, Council for 
    Community and Economic Research, January 16, 2007............   223

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                   THE STATE OF ECONOMIC DEVELOPMENT

                              ----------                              


                       Tuesday, January 23, 2007

                  House of Representatives,
      Subcommittee on Economic Development, Public 
                Buildings and Emergency Management,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:30 a.m., in 
room 2167, Rayburn House Office Building, the Honorable Eleanor 
Holmes Norton [Chairwoman of the subcommittee] presiding.
    Ms. Norton. Good morning, and may I welcome everyone to the 
first meeting of the Economic Development, Public Buildings, 
and Emergency Management Subcommittee.
    This Committee and Subcommittee have always been the most 
bipartisan in the Congress, and I am committed to building on 
this invaluable cornerstone of cooperation and mutual respect. 
Our long history of working together collegially has yielded a 
tradition of consensus on most matters that come before this 
Committee.
    In addition, I would like to thank Chairman Jim Oberstar, 
who is one of the architects of this tradition, for his 
leadership, encyclopedic expertise, and his lifetime commitment 
to transportation and infrastructure issues in the United 
States and, I should say, abroad, because his knowledge is 
worldwide.
    I particularly want to welcome our new colleagues, 
Representatives Jason Altmire of Pennsylvania, Michael Arcuri 
of New York, Christopher Carney of Pennsylvania, Steve Cohen of 
Tennessee, and William Walz of Minnesota, and, of course, our 
new Ranking Member, Mr. Graves of Missouri.
    Have I missed anybody? Representative Michael Michaud of 
Maine, who served on this Committee before.
    This is the first of a series of hearings that will focus 
on the state of economic development in the United States and 
the issues associated with smarter and more efficient economic 
development needed in our Country.
    Today's hearing will focus not only on economic development 
in the United States today, but also on the direction that 
experts believe the United States must go in order to prepare 
for the challenges that the global economy requires if the 
Nation is to continue to thrive.
    Economic development was not a specific mission of the 
Federal Government until Congress passed the Public Works and 
Economic Development Act in 1965 and established the Economic 
Development Administration, or EDA. EDA was created to 
alleviate conditions of substantial and persistent unemployment 
in economically distressed areas and regions. The mission of 
EDA today remains much the same as it was when originally 
founded: ``to enhance communities success in attracting private 
capital investment and lucrative job opportunities.''
    EDA has stated that to fulfill its mission, it must--and 
here I am quoting again--``be guided by the principle that 
distressed communities must be empowered to develop and 
implement their own economic development and revitalization 
strategies.''
    As our hearings have documented, the Act has been 
enormously successful, particularly in using modest Federal 
funds to attract and leverage much in private sector 
investment. Future hearings will also focus on the 
reauthorization of the Economic Development Administration and 
regional economic development issues.
    To put economic development in context, we have to turn the 
page back 50 years, when President Eisenhower initiated the 
Federal Defense Highway System. This highway system not only 
linked our Country together into a coherent and efficient 
transportation hull, but it also boosted commerce and became 
the centerpiece of the world's strongest economy. In addition, 
the legislation was the major economic development tool for 
most local communities.
    Later, with passage of the Public Works and Economic 
Development Act of 1965, the Federal Government specifically 
targeted economic distressed areas where the Federal highway 
system had not had a revitalizing effect.
    The Development Act addressed high unemployment, low 
incomes, under-employment, and out-migration as sign posts. As 
the economy of the United States continues to grow, these 
distressed areas, that often contain significant underused 
human and infrastructure resources, must remain clearly in 
focus in order to sustain their growth.
    The effort to build the Federal highway system is often 
cited as building America. But now, 50 years later, with aging 
and sometimes obsolete infrastructure, we must look to 
rebuilding America or lose 50 years of valuable investment.
    Today we must not only focus on rebuilding America, but 
also investigate how we can take the lessons from successful 
EDA projects and incorporate them into new efforts for 
distressed areas and, for that matter, other parts of the 
Country.
    If building the interstate highway system was a major part 
of building the old economy, how can traditional infrastructure 
that we have supported and must improve work in synergy with 
the new economy to push the envelope of economic development? 
We must take a fresh look at the infrastructure itself, asking, 
for example, how the rapidly developing information highway can 
supplement our current highway system.
    We are fortunate to be able to welcome our distinguished 
panel of experts on economic development that can inform the 
Subcommittee. The witnesses today include Amy Glasmeier of Penn 
State University; Eric Pages, President of EntreWorks, expert 
consultant on economic development as well; and Andrew Reamer, 
Fellow at the Brookings Institute.
    I now am happy to acknowledge the Ranking Member, Sam 
Graves of Missouri, for his opening statement.
    Mr. Graves. Thank you, Chairman Norton.
    Let me begin by congratulating you on your chairmanship to 
this Subcommittee. Obviously, your expertise and your hard work 
are a testament to what you have done. And this is a Committee 
that is obviously very important to the District, and I think 
the people of the District of Columbia are very fortunate to 
have you representing them.
    And thank you Chairman Oberstar. I think you made an 
excellent choice, and I look forward to working with you in the 
future.
    I also want to take this opportunity to thank our Ranking 
Republican, Mr. Mica, for providing me the opportunity to serve 
as Ranking Member. I am honored by the trust that you have 
placed in me, and I intend to work hard to make the most of 
this opportunity. I know you have a number of important issues 
before the Subcommittee, and I look forward to working with you 
and the Chairman on all of them.
    And I want to recognize Bill Shuster, the former chairman 
of the Subcommittee, for the outstanding job that he did as 
chairman. In the wake of Hurricane Katrina, you accomplished 
what a lot of people said you couldn't do: you moved a massive 
FEMA reform bill through a jurisdiction gauntlet that included 
the Commerce Committee and Homeland Security Committee, and you 
had it signed into law during an election year, when almost 
nothing else made it to the President's desk. And I think that 
is a truly impressive accomplishment which our Country is going 
to benefit for decades.
    The members of this Subcommittee have an outstanding record 
of accomplishment. I am pleased to be able to serve as the 
Subcommittee's Ranking Member. I look forward to continuing the 
bipartisan tradition, as Chairman Norton pointed out. In many 
respects, the Subcommittee's bipartisan approach is the key to 
its success. I intend to work with the Chairman on both our 
Republican and Democrat priorities so we can prevail over the 
Senate.
    As the Subcommittee moves forward and sets an agenda for 
the 110th Congress, there are a number of issues I hope we can 
address. On the economic development front, I look forward to 
working with the Chairman to increase the impact of our limited 
economic development dollars.
    While economic globalization and increased international 
trade bring opportunities and lower cost goods to much of the 
Country, they can also bring severe economic dislocation, 
particularly in rural areas and manufacturing regions of our 
Country. I think it is important that our economic investments 
help spur innovation and opportunity in those areas, and not 
just in our large urban centers.
    With respect to public buildings jurisdiction, we need to 
find ways to do more with less. Whether we are authorizing new 
courthouses or modernizing government-owned buildings, the 
available resources are limited and the project lists go on 
forever.
    I also hope our Subcommittee will reassert its jurisdiction 
over the Capitol building and the grounds. The Capitol complex 
has a number of projects underway and in the planning phase 
that I believe our Subcommittee should be reviewing. I believe 
the Capitol Visitor Center, in particular, could benefit from 
our involvement.
    We also must ensure the FEMA reform bill is properly 
implemented. We cannot afford another response like we had 
during Hurricane Katrina. I know in my home State of Missouri 
disasters are serious business. We are a high risk flood State 
and we are home to the largest earthquake ever recorded in the 
lower 48 States. The D.C. area is vulnerable to hurricanes and 
it is also the highest risk terrorist target in the Country. I 
look forward to working with the Department, State and local 
governments, emergency managers and first responders to make 
sure we reform our system and are ready for the next big 
disaster.
    As a general theme, we must exercise sufficient oversight 
to reduce fraud, waste, and abuse in all the programs under our 
jurisdiction. When you consider the building projects and the 
disaster relief programs that we oversee, the opportunity for 
waste is tremendous. We owe it to the American people to get 
the most out of their hard-earned tax dollars.
    Let me also thank our witnesses for being here today and 
for enduring our opening statements. I know I spent most of my 
time discussing our agenda for this Congress, but I want you to 
know that I look forward to your expert testimony and 
recommendations for the Federal Government's economic 
development programs.
    Thank you again, Chairman Norton, and I look forward to the 
opportunity to work with you.
    Ms. Norton. Thank you, Mr. Graves, and I appreciate your 
statement.
    I would like to ask the Chair of the full Committee for his 
remarks, particularly since we are talking about the Economic 
Development Act, which is, of course, his I shouldn't say baby, 
but that is what it was.
    Mr. Oberstar.
    Mr. Oberstar. Thank you, Madam Chair. Congratulations on 
assuming the Chair of the Committee. You have worked hard, you 
have learned the subject matter. You have a deep personal 
interest in all of the issues under the jurisdiction under this 
Subcommittee, and you have proven yourself in the past as the 
Ranking Member and now I am delighted to see you assume the 
leadership role.
    Mr. Graves, congratulations on being designated as the 
Ranking Member. I have observed your participation diligently 
in the work of the full Committee on Transportation and 
Infrastructure. You are always there for the hearings and for 
the markups, and you have applied yourself vigorously.
    And I want to thank former Chairman Shuster for his 
leadership of the Subcommittee. He comes from a long family 
tradition of commitment to the subject matter of our full 
Committee and particularly of this Subcommittee and, again, you 
did a superb job as Chair of this Subcommittee, and none better 
than during the tour of the devastation of Katrina when we had 
the joint committee inquiry into the aftermath of Katrina and 
you toured throughout Baton Rouge, New Orleans, Mississippi, 
and into Alabama. Your expertise and your commitment personally 
to the subject matter at hand will be extremely valuable as we 
go forward, and I appreciate your continuing to participate.
    And to the Ranking Member of the full Committee, Mr. Mica, 
glad to have you participating. I know that you will diligently 
oversee the work of each of the subcommittees and participate 
in their deliberations. We have had discussion about the agenda 
of the full Committee and each of the subcommittees, and Mr. 
Mica and I are on track to achieving a good record for this 
Committee, an outstanding record of bipartisanship and 
participation in all of the works of this Committee.
    Now, this particular subject matter of today, as Chairman 
Norton said, I have a very keen personal interest, and I have a 
reminder at home: a green pen that was used by Lyndon Johnson 
to sign into law the Public Works and Economic Development Act 
of 1965. I was a staff member for my predecessor, chief of 
staff for my predecessor, John Blotnik, at the time that 
legislation was written and participated in all of the 
subcommittee work, full committee, and the House-Senate 
conference in drafting the conference report on the Public Work 
and Economic Development Act. I worked on numerous--and I was 
at the White House for the signing of the bill, and that is why 
I have that one pen.
    And over the years, as time passed and I was elected to 
Congress, in my first opportunity to chair a subcommittee, I 
chose the Public Buildings and Grounds and Economic Development 
Subcommittee, and the ranking member of the subcommittee at the 
time was Bill Klinger of Pennsylvania, who had served as the 
chief counsel for EDA in a previous career.
    But we assumed the leadership of the subcommittee together 
at the time President Reagan proposed to abolish EDA and the 
Appalachian Regional Commission. We decided that we were going 
to prove the case that EDA and ARC together had served the 
Country well, that the investments made were indeed long-term, 
substantive, beneficial to the Country and to the communities, 
and that these two programs were grassroots-up initiatives; 
that the ideas for each project came from the community, not 
from Washington, not handed down to them by the Executive 
Branch or the National Legislative Branch.
    And that indeed is the success and the key and the 
brilliance of EDA and ARC together, that they are community 
generated and have community participation. And that is the key 
to success that we want to continue to nurture, to foster, and 
to support in the reauthorization of EDA and ARC.
    I was very pleased to hear Mr. Graves talk about 
reasserting jurisdiction over the Capitol Building, something 
that was siphoned away from our Committee in 1995, 1996, and 
Ranking Member Mica has a particularly keen interest and has 
spent a great deal of time looking over the shoulders of those 
who have been in charge of the Visitor Center project, which, 
as he will undoubtedly say, has far exceeded original cost 
estimates and could have been done for a good deal less, and 
very likely would have been had we retained our authority. We 
will work to reassert that authority in this Congress.
    I welcome our witnesses and, with Ms. Norton, I welcome the 
new members, those newly elected to this Congress and those new 
to the work of the Subcommittee. And I look forward to a very 
interesting hearing and a very productive year ahead of us.
    Thank you, Madam Chairman.
    Ms. Norton. Thank you, Mr. Chairman. And I am pleased to 
ask the Ranking Member of the full Committee if he would mind 
offering a few remarks at this time.
    Mr. Mica. Well, thank you so much and congratulations to 
you Ms. Norton. I have worked with many members in Congress. I 
can't think of anyone who is more effective and has provided 
better leadership than you. We have worked on a number of 
issues together and she is a tough representative, and look 
forward to working with her in her new capacity, but very 
pleased to have you in this position and look forward to 
working with you.
    I have already complimented the Chair on his ascension, 
after some 32 years, to the Chair of the full Committee and we 
have had a great working relationship and look forward to 
expanding on that as we work together on the six subcommittees 
and the full Committee's efforts. That will be great.
    I thank again Mr. Shuster for his leadership in the past 
and welcome Mr. Graves. He will do an excellent job. I have 
watched his career too, and that is why he was elevated to this 
position. I think it is a very meaningful Subcommittee and the 
topic you launch today with I think is extremely important, 
economic development. Everything else is sort of second nature 
if we can provide good jobs and opportunities to people across 
the land, particularly in areas that need attention and 
combined resources of not only State and local and the private 
sector, but also the Federal Government.
    I have had the opportunity to read some of the testimony 
and I think you brought together some good witnesses, and they 
focus on maximizing local resources in concert with Federal and 
other State and private efforts, and I think that is a very 
good approach. They also talk about better preparing our 
workforces, which is essential in this era.
    I might say that I saw one of the testimonies also talks a 
little bit about export and might note for the record that 19 
of 20 consumers in the future are outside the United States, 
and some of these areas that we are dealing with that need 
economic development assistance are not geared or prepared to 
compete in that international arena. So that is where the 
economic opportunities of consumes in the future lie. We need 
to do a better job in preparing and assisting those locales and 
efforts to compete in the global market.
    So those are a couple of points that I wanted to make.
    Finally, with limited resources--and these are big 
programs. You go through and there are 500 million I think we 
identified, sort of a combined effort in some of these 
programs, probably a little bit more here and there, and it has 
gone up and down, but better leveraging our limited funds I 
think is also a key to success, and I have seen some focus, or 
will be in this hearing, on that.
    I will mention, in conclusion, that--and I did have this in 
advance--I intend to see that we take full jurisdiction as we 
finish the Capitol Visitor Center. The irony of all this is the 
project started in this Committee. The only hearings held on 
the bills--and I offered the two bills; I think you offered one 
at one point--were heard in this Subcommittee. The project got 
launched from this Subcommittee and it will finish with the 
oversight of this Subcommittee, and it will be the finest 
addition in the history of the United States Capitol, if not 
the largest.
    But we will maintain closer supervision of the project and 
I think it will be something that every American can be proud 
of. It is the first addition in the history of the Capitol to 
be built not just for the convenience of the members, but for 
the convenience primarily of the owners, the citizens and 
residents and visitors who come here. So I am pleased to put in 
a word for our stake in that effort.
    I think Ms. Norton knows my interest in the Federal Trade 
Commission building, that we expand the National Gallery of 
Arts and that we create a Federal cultural corridor and 
triangle. We have the responsibility for the larger vision. I 
mean, people can build buildings here and there, but we have to 
determine what this incredible national capital is going to 
look like 10, 20, 30 and generations down the pike, and I think 
that is an important project. I look forward to working with 
you.
    And finally FEMA. We have got an obligation to make certain 
that we avoid some of the problems of the past and make that 
agency that we are so dependent upon--I come from Florida. 
Others from around the Country, the Gulf States, New Orleans, 
or wherever we have been hit by a natural disaster know the 
importance of having a well functioning agency. We have seen 
the need for that and we need to make certain we have it 
together, so to speak, with our FEMA efforts.
    So a full platter, some exciting opportunities for a small 
Subcommittee but a very important, vital subcommittee within 
the Transportation and Infrastructure Committee, and I look 
forward to working with everyone as we move forward. Thank you.
    Ms. Norton. Well, thank you very much, Mr. Mica, for those 
very interesting and helpful remarks. And, if I may, I would 
certainly want to thank you for the assistance that you gave to 
me and the leadership that you took in our effort to open 
Reagan National Charter Service years after all other airports 
were open. Your determination, including going to the hangar at 
Reagan National, helped to make the point to those involved 
that this had to happen, that we couldn't leave a small plane 
or charter service closed down in the Nation's capital. That 
and other projects in which you have worked so cooperatively 
with me, for that I am most grateful.
    Now, Mr. Graves, I don't know if you want to introduce your 
members, but as a point of personal privilege I would like to 
ask my own former chair if he has any opening remarks, because 
it gives me the opportunity to thank him once again, 
personally, for the extraordinary bipartisan spirit in which he 
ran the Subcommittee. He knows that his father was a favorite 
of mine, so he knows I would have reported him if he hadn't 
carried on that tradition. I am very grateful very much for 
your work on the Committee.
    Mr. Shuster. Well, thank you very much. I appreciate that, 
Madam Chairman. And as most members know, when I was chairman, 
I always appreciated limited opening statements and brief 
opening statements, but if the Chair will indulge me, since 
this is the opening hearing on the Committee, I think it is 
appropriate that I say something.
    First, to start off by congratulating the new Chairman of 
the Committee. I believe that we did some good work the last 
two years. We worked well together, I believe, and in a 
bipartisan manner. I think Mr. Graves pointed out that that is 
the key to the success, and I think that Chairman Oberstar 
pointed out the key to success in this Committee, whether it is 
the Subcommittee or the whole Committee, is working together in 
a bipartisan fashion, and hope to continue to do that.
    I congratulate Mr. Graves for his being appointed Ranking 
Member. I know he will bring the energy and thoughtfulness that 
he always brings to the table when he works on anything.
    And, finally, also to thank Mr. Mica for reappointing me to 
this Subcommittee. I think it is fair to say that this is not 
the most sought after Subcommittee on the full Committee, but 
it is one that I asked Mr. Mica I would like to be reappointed 
to because I think there is significant work to be done on this 
Subcommittee and I didn't want to take the last two years of 
knowledge I think that I have gained on this Subcommittee.
    But there are important areas that we need to continue to 
focus on and I think, Madam Chairman, you were so effective in 
making sure we held the Federal Judiciary's feet to the fire, 
and I hope we continue to do that when we are looking at their 
proposals for building new courthouses and, most importantly, 
utilizing those courthouses.
    I had a couple of meetings in the closing days of the last 
Congress with some members of the Federal Judiciary, and they 
assured us they were going to move forward with a study that is 
something that is going to be fair and we can count on to give 
us insight, although I do have to tell you when the Federal 
Judiciary says they take politics out of the Judiciary, well, 
what they did in the final days was to reappoint a new chairman 
of their sort of--I don't know what they call it exactly--their 
buildings and grounds committee, which happens to be the 
Federal judge who lives in my district and is a good friend of 
mine.
    Judge Brook Smith, who serves on the Sixth Circuit in 
Philadelphia is a good friend of mine, very conservative, and 
he has assured me that politics had nothing to do with it, but 
I know he is going to take a tough-minded, fair approach to 
these utilization studies, which I think are so very important 
to us that we are using taxpayer dollars in an appropriate way 
building these courthouses and, again, utilizing them.
    The national brokers contract I think is an important step 
we took two years ago to help improve the GSA's ability to go 
out there and find, in a cost-effective manner, leases for us 
to house different Federal agencies across this Country. And 
then, finally, the important work we are doing here today and 
we are going to be doing on the reauthorization of EDA, the 
Appalachian Regional Commission, and the Delta Regional 
Commission, all extremely important to this Nation and 
extremely important to my district.
    And, finally, I want to welcome Ms. Glasmeier. Is that the 
way you pronounce it, Glasmeier? That is what I thought. We 
welcome you here as a professor at Penn State. I appreciate 
your being here. And also to let you know that my daughter will 
be, next fall, a freshman on the main campus there, so maybe we 
will run into each other as I am up there checking in on her 
from time to time, although she has insisted I give her a two 
hour rule that when I cross the Centre County line, I have to 
announce two hours before I cross it. So welcome here today.
    Thank you all for being here today. And I yield back.
    Ms. Norton. Is there any other member who desires to make a 
statement before we call the witnesses forward?
    [No response.]
    Ms. Norton. I would now like to welcome our witnesses, 
then. The Subcommittee especially appreciates that Professor 
Glasmeier has traveled a good distance to testify this morning.
    I ask unanimous consent that our witnesses' full statements 
be included in the record. Without objection, so ordered.
    Perhaps we should begin the panel with Ms. Glasmeier, 
Professor Glasmeier.

 TESTIMONY OF AMY GLASMEIER, PROFESSOR OF GEOGRAPHY & REGIONAL 
  PLANNING AND JOHN WHISMAN APPALACHIAN SCHOLAR, PENNSYLVANIA 
STATE UNIVERSITY; ERIC PAGES, PRESIDENT, ENTREWORKS CONSULTING; 
           ANDREW REAMER, FELLOW, BROOKINGS INSTITUTE

    Ms. Glasmeier. Thank you very much. I am pleased to be here 
before the Committee.
    I would like to offer the Committee, in its beginning 
deliberations, a copy of an atlas I did a couple years ago on 
poverty in the United States. It is a good geographical 
representation of where the Nation has been over the last 40 
years and it will help you see where we have done a lot of good 
work and also identify places where there is still work to be 
done.
    I might also like to comment that Dr. Markusen's absence 
here is due to a family health problem, but her comments are 
available for your review.
    In addition to being a professor at Penn State, I am also 
the John Whisman Appalachian Scholar and I work with the 
Appalachian Regional Commission. This is the second time I have 
held that post and in that job I am responsible for assisting 
the Commission in thinking through big problems and big future 
issues. So my comments today are largely a reflection of having 
the opportunity to think about what are problems within that 
region, but also the extent to which those kind of problems we 
see nationally.
    And I want to commend the Committee by noting that the two 
pieces of legislation that people have mentioned, the creation 
of EDA and the creation of ARC, has really contributed to the 
well being of America's communities. You can't go through a 
small town in the United States and drive down a main street 
without seeing the benefits of American investment. You can't 
drive by a small airport and not realize that there are Federal 
resources involved. You can't look at a health clinic and not 
recognize that there probably, 30 years ago, was some sort of 
Federal involvement in that. You can't look at a broadband 
system and not wonder whether or not there is some sort of 
Federal support. You can't look at a vocational training 
program and not recognize that somewhere along the line Federal 
policy has been involved in recognizing the value of those 
investments that we make in our communities.
    I work in parts of Appalachia, but I also work in the 
Mississippi Delta and other parts of the Country, and while we 
have made those investments, there are still many communities 
that are, in a sense, waiting for their investments, and so I 
look forward to the Committee's work in the coming years to 
make those needs realized.
    I am going to focus my comments really on points I think 
are critical when you think about the work ahead, and I am 
going to think about them in terms of how to focus attention.
    The first that I recognize, in working with Federal 
agencies, is that economic development has traditionally 
emphasized the creation of jobs through, in large measure, the 
provision of infrastructure. That has had a huge impact and now 
the time has come to think about what we add to that to make 
America a competitive and creative economy in the 21st century. 
The bottom line is we need to integrate what we do. Right now 
we work at different agencies over different programs, and 
there is a great degree of independence and there is a lack of 
integration. It makes it difficult for communities to use 
programs; it also makes it difficult for communities to 
recognize resources.
    We need to focus on strategy. The United States is somewhat 
unique, at least in my experience traveling around the world, 
in that we don't think strategically about economic 
development. We do it more as a process, but we don't really 
think about a strategy. And I can think of countries like Spain 
or Britain or Japan where, at the very highest level of 
government, it is about what is the country we want to be and 
we work back from that perspective. And I think we need to 
think about that as a strategic approach to future economic 
development.
    We need to think about economic development not as a 
county-by-county activity, but as an activity that is done on a 
regional basis. While the ARC or the Mississippi Delta stand as 
examples of regionalism, regionalism is a practice that needs 
to be implemented across the Country, and the reason is because 
economic activity does not stop at the borders of counties. 
Economic problems do not end at the city lines. Economies are 
increasingly regionally developmental, and we can use the 
regional scale as a basis for performance.
    We need to also think about planning. One of the most 
important elements of the Economic Development Administration's 
practice over all these years has been the fact that it has 
instituted in communities the notion to plan, the fact that you 
just don't decide to do something without some idea of what the 
problem is and what the cause and the consequences are. There 
is not enough emphasis in the available funds today for 
planning, and yet communities are facing a whole set of new 
realities that they are very ill prepared to manage. So we need 
to think about how to strengthen the planning function.
    We need to think about cooperation. Cooperation is easy to 
say; it is harder to do. When it is all said and done and 
resources are scarce, communities find themselves in 
competition, and while they may speak as if they are working 
together, often they find themselves very far apart. So we have 
to have programs that really reinforce and facilitate 
cooperation. In some instances, because we don't know how to do 
it very well, we actually may have to mandate it.
    And then, finally, my last comment focuses on opportunity. 
The future of the United States is very much tied to the 
possibility of an energy security potential. Right now, the 
United States' renewable energy industry is not globally 
competitive. Countries from other parts of the world are far 
more well placed to be the global leaders in renewable energy 
technologies. The rate of growth in renewable energy 
industries--solar, wind, biofuels--are 25 percent per year for 
the last five years. So it is a situation in which the 
potential is enormous to generate jobs, to generate new 
technology and capabilities, and to create regional 
integration.
    We need to have leadership to do that. It is one thing to 
say we should have new energy capabilities; it is another to 
actually see it occur in a coordinated and an integrated and a 
regional fashion. So I see that as an opportunity that this 
Committee could take leadership on and to really drive the idea 
of energy security home through the process of economic 
development.
    Ms. Norton. Thank you very much.
    Actually, I will leave it to you as to who is next. Would 
you like to be next Mr. Pages?
    Mr. Pages. Thank you Madam Chair. Chairman Oberstar, 
members of the Subcommittee, I appreciate the opportunity to 
appear before you today.
    My name is Erik Pages. I am President of EntreWorks 
Consulting, which is a private economic development consulting 
firm based in Arlington. I am going to speak to you today based 
on my experience running this firm, where we have had clients 
in 28 States, so we have had the distinct honor and pleasure of 
seeing economic development in the grassroots all across the 
United States. I also have experience serving in the EDA, so I 
have Federal experience working in economic development as 
well.
    I am going to focus my remarks today on how the Federal 
Government can help incentivize economic development in rural 
America, so I am going to exclusively focus on this. This, 
again, will be based on my experience as a private consultant, 
but also I serve as a Senior Fellow at the RUPRI Center for 
Rural Entrepreneurship, so I have some experience from that 
perspective as well.
    As Subcommittee members certainly know, rural America faces 
profound economic development challenges. The last few decades 
have seen an unprecedented flowering of wealth, innovation, and 
entrepreneurship in the American economy. Unfortunately, a lot 
of this wealth and innovation has bypassed rural America. If 
you look at recent research, 10 percent of American counties 
account for three-quarters of the Nation's job growth in the 
last decade, between 1993 and 2003. Eight of those counties are 
located in rural America. So the vast majority of innovation 
and job growth in the American economy is occurring in suburban 
and urban settings. So there is a significant challenge facing 
rural communities.
    What is the solution? Well, the solution, there is no one-
size-fits-all solution for promoting economic development in 
rural America. In fact, it is pretty hard to develop a single 
monolithic definition of a rural community. Jackson Hole, the 
Pine Ridge Indian Reservation, the cornfields of Iowa, the 
Mississippi Delta, all of these kinds of communities are rural, 
yet they have very vastly different situations.
    So each community's solution is going to have to be unique. 
It is going to have to be locally generated, locally designed, 
locally driven. But I have seen it in my practice and I have 
seen throughout my career that economic development investments 
from the Federal Government can help incentivize and promote 
innovation for these small towns and rural communities.
    Now, what can the Federal Government do? What should be the 
appropriate Federal role? Well, again, no economic development 
strategy is going to succeed through Federal investment alone. 
Leadership has to come from the grassroots. Local leaders must 
recognize the need for change, build partnerships to succeed 
with change, and they are going to have to do it themselves. 
They are going to have to be the leaders in terms of 
development and implementation of these programs.
    However, given the financial and the demographic challenges 
facing many rural communities, Federal investments are needed 
to help, and I believe that Congress must assume a more 
prominent leadership role in this effort. The past decade has 
witnessed a serious erosion of the Federal Government's ability 
to support local and innovative economic development 
strategies. We need to reverse these patterns and begin making 
real and sustained investments that help empower local 
communities, and I will leave you with a few recommendations 
that I think the Subcommittee should consider.
    First is the simple one, to continue to support Federal 
investments in economic development. And I know most of the 
members of this Subcommittee support that position. As you 
know, many of the key Federal agencies, such as the EDA, the 
Small Business Administration, have faced serious budget cuts 
in the past decades. At a minimum, the Committee and the 
Subcommittee should support efforts to maintain EDA's budget at 
the current level, $284 million, and perhaps even consider an 
expansion of these programs. Other programs that you might 
consider for expansion would be programs that support stem 
education, science technology, engineering and math, as well as 
some SBA programs such as the small business development 
centers and micro loan programs. And I would be more than happy 
to discuss any of this during the Q&A period.
    Another opportunity to support rural development will occur 
outside of this Subcommittee's jurisdiction when we debate the 
Farm Bill this year. There is certain to be in the Farm Bill 
major discussions of new strategies for empowering or 
innovative approaches to rural development. I would encourage 
all of you to actively become engaged in that debate over this 
year's Farm Bill. It is a tremendous opportunity to energize 
innovative rural economic development strategies.
    The third strategy--and I would follow Ms. Glasmeier on 
this a little bit--is to support regional approaches. And, 
again, this can take multiple forms, such as support for 
regional development authorities such as the ARC, the Delta 
Authority, as well as new proposals such as Congressman 
Michaud's Northeast Regional Commission and other efforts such 
as the Southeast Crescent Authority. Actually, some of the more 
recent programs that the Administration has been involved in 
have done a very good job in terms of energizing regionalism. 
In particular, I would encourage you to take a look at the 
Department of Labor's WIRED program, which has done quite a 
good job of encouraging regional collaboration.
    And then, finally, I would just throw out three other quick 
ideas that are perhaps somewhat counterintuitive in terms of 
supporting rural development strategies. First is to encourage 
and support new immigrants into our economy. We are seeing a 
massive influx of immigration into rural communities, and these 
new immigrants are going to be the entrepreneurs of our future. 
They are going to be the drivers of rural prosperity in the 
future, and we need to support these new Americans as they 
begin to start and grow businesses and create jobs and create 
prosperity.
    I would also second Ms. Glasmeier's comments about 
supporting energy R&D. Investment in alternative energy R&D is 
also an investment in rural development, which is well poised 
to prosper in this emerging cluster.
    And then last, but not least, I would encourage you to 
consider expanding support for new kinds of infrastructure, 
particularly broadband. Broadband is the highway of the future. 
I know it sounds cliche, but it is going to be the driver of 
economic development for rural communities in the future. They 
need to be on par with Metro and suburban areas in terms of 
deploying broadband.
    I will stop and I look forward to your Q&A, and thank you 
for the opportunity to appear before you.
    Ms. Norton. Thank you Mr. Pages.
    Mr. Reamer.
    Mr. Reamer. Good morning Madam Chair, Chairman Oberstar, 
Congressman Graves, Congressman Mica, and distinguished members 
of the Subcommittee. I appreciate your invitation to speak 
today.
    At the Brookings Institution I examine the Federal role in 
promoting regional development and in producing the economic 
data needed by public and private decision makers. I was a 
development consultant for many years and EDA was a frequent 
client.
    For some time, the U.S. economy has been undergoing an 
often exhilarating, often wrenching restructuring process, one 
that has transformed regional economies across the Nation and 
led to major geographic shifts in jobs and income. While some 
places have emerged in better shape than others, none has 
escaped the pain and the uncertainty of this process.
    We are in a world dramatically different than that of 1965, 
when Congress created EDA. Then the Nation appeared to have a 
stable economic structure with well understood roles: Detroit 
for cars, Hartford for insurance, Houston for oil, and so 
forth. Economic development was seen as remedial work for 
places left behind in the post-war boom.
    In 2007's brave new world of opportunity, vulnerability, 
and uncertainty, regional development agencies have created and 
implemented a diverse array of strategies. However, these 
usually have one element in common: seeking to create 
defensible market niches that provide high value-added products 
and services. Defensible niches are ones that cannot be easily 
replicated in other locations. For example, Boston, San 
Francisco, and San Diego have very strong positions in the 
biomedical industry, and Louisville and Memphis have similar 
positions in air freight. Value-added is simply sales minus 
materials. Higher value-added usually means higher wages.
    Creating and sustained high value-added defensible niches 
requires ongoing investment in a wide array of regional assets, 
such as innovative capacity, entrepreneurial base, workforce, 
business networks, physical facilities, infrastructure, and 
venture capital. This is a highly complex process and not 
easily achieved.
    In light of the ongoing economic restructuring in this 
Country, I recommend that the Subcommittee consider 
legislatively broadening EDA's mission from aiding distressed 
regions to facilitating the competitiveness of all regions. In 
a widespread, constant restructuring process, all regions can 
benefit from some form of support. Moreover, the Nation's 
competitiveness is very much a function of the competitiveness 
of its various regions. Thus, Federal regional policy becomes 
an important component of national economic policy.
    EDA was created on the assumption that depressed regions 
lacked the resources to provide the tangible assets--roads, 
industrial parks--necessary to attract industry. In 2007, 
regional competitiveness is less a function of tangible assets 
than of intangible ones, the ability of firms to be innovative 
and intelligent and entrepreneurial and effectively battle in 
an intensely competitive marketplace.
    The new role of regional development organizations is to 
see that firms get access to the softer assets they need to 
develop these qualities and to prosper in the community. To 
carry out this role, development organizations at the regional 
level need access to current accurate information about the 
region's economic performance and structure, the expertise to 
create and implement a realistic regional vision for defensible 
niches and a roadmap for achieving that vision, and knowledge 
in a diverse set of realms such as workforce development, 
technology transfer, physical infrastructure, including, as Mr. 
Pages said, telecommunications, entrepreneurship, and venture 
capital.
    To fulfill the broader mission I laid out earlier, I 
suggest that EDA carry out a series of information-focused 
activities which support development agencies in this role. In 
particular, I suggest that EDA see that Federal statistical 
agencies produce the type of economic statistics that regional 
development organizations need, greatly increase its support 
for economic development research in order to better understand 
the dynamics of regional economies and what it takes to be a 
successful development organization, support electronic peer-
to-peer networks among development practitioners that 
facilitate access to learning and effective practices, and 
utilize State economic development departments as mechanisms 
for providing expertise and support to regional agencies. State 
economic development departments are large enough to have 
economies of scale in delivering services and yet are close 
enough to the ground to be able to provide hands-on assistance 
to regional agencies. Lastly, I would like to see EDA provide a 
series of online references and analytic tools for economic 
development practitioners. EDA began to explore the use of such 
tools but has stopped.
    The cost of these various information tools is remarkably 
modest, a small fraction of EDA's overall costs. Low costs and 
nationwide accessibility mean that the return on the Federal 
investment on information tools would be quite large. A 
reformulated EDA would continue its grant programs for 
distressed regions. The proposed information focused activities 
would be of significant additional help to such regions.
    In its proposed new role, EDA would require a different 
skill set and culture. Staff should have hands-on experience in 
the new wave of economic development. They would need to know 
how to advocate for the development community before other 
Federal agencies.
    As it is difficult to transform the agency as currently 
organized, I suggest the Subcommittee consider chartering EDA 
as a quasi-governmental organization. For similar reasons, many 
States have moved their development department outside of State 
government, and Congress might consider a similar step.
    Thank you for the opportunity to speak, Madam Chair. I look 
forward to any questions you might have.
    Ms. Norton. Well, let me thank all three of today's 
witnesses for very intriguing testimony. Let me begin with a 
couple of questions of my own.
    Forty-five, 50 years ago, in fact, until recent times, I 
think, Ms. Glasmeier, indeed, the statute itself makes the link 
to development and jobs, and, indeed, at that time, in that 
age, if there was a recession, typically the country looked to 
infrastructure, because you always need infrastructure 
improvements, and at the same time jobs, of course, came 
forward. Infrastructure continues to be vital in both aspects. 
But 21st century infrastructure turns out to be as much a new 
technology infrastructure, and one would say, or one could say 
that it might reduce jobs, rather than create them, the way 
there is an automatic link between physical infrastructure and 
jobs. And, indeed, for sure, having a strong back or knowing a 
craft may not be enough to get you a job. More expertise, fewer 
jobs may be the wave of the new technology infrastructure in 
the global economy.
    I wish you would address that possibility as we look to 
late-arriving regions that are competing not in the old 
economy, but in a brand new economy.
    Mr. Pages. Well, Madam Chair, I think my primary comment is 
that I think you have hit the nail on the head in the sense 
that we are still using old metrics in the field of economic 
development. We clearly know that jobs is not the only thing to 
count, yet we still are kind of caught in the old system; we 
still rely on jobs. Clearly, the future of economic future is 
not about job creation, it is about wealth generation, and we 
need to look at new ways that we can measure wealth.
    As I think you sort of noted implicitly in your comments, 
what is more important is a good job that pays well, that 
requires a lot of skills and has a lot of spillover effects 
tied to it is more important than just any job. And it really 
is more important that we think about wealth creation, and the 
way we create wealth is through new businesses, through fast 
growing businesses, and we need to think about new strategies 
that build assets in that kind of way, that focus on creating 
wealth, as opposed to just creating jobs.
    Ms. Norton. Ms. Glasmeier, did you have something you would 
like to say to that?
    Ms. Glasmeier. Yes. I would like to continue Mr. Pages' 
comments and say that we need smart firms. And I would say my 
own research tells me that American firms, in some degrees and 
in many places, are smart. But a lot of them are not smart and 
a lot of them have what I would call lifestyle firms: they work 
in their business to make enough money to have a good life, to 
send their kids to collect. They are not thinking about what 
the internationalization of the economy means unless it knocks 
at the back door of their factory and announces itself as you 
have just lost this account or business is declining.
    In general, I would say American corporations, or firms in 
particular, rather than corporations, because that sounds like 
big organizations, since we are such a large economy, it has 
been easy to think of economic opportunities in the business 
community from the perspective of what goes on in the United 
States, and not as much being concerned about what is taking 
place outside the U.S.
    I would argue that in addition to what we think in terms of 
the need for infrastructure, for the change in the skills of 
workers, that we need to have our businesses be strategic. They 
need to be self-conscious. They need to realize that the world 
out there is no longer something that stops at the border, but 
that is completely pervading our Country. And that calls for a 
series of programs and interventions that we only see in very 
few places and only in experimental forum. So that requires 
taking on a set of educational processes and practices that we 
have only begun to understand. But I see a real issue 
associated with our firms being competitive.
    Ms. Norton. Let me ask one more question before moving to 
Mr. Graves. In this hearing we are stepping back and trying to 
look with fresh eyes at everything. It seems to me that 
includes looking with fresh eyes--and all of you have alluded 
to this in one way or another--the whole notion of regional 
economies in the first place. I was particularly interested 
when Mr. Reamer talked about defensible market initiatives. It 
is hard to think of countries having a niche any longer. We all 
live in regions; we prosper when the region prospers.
    But these regions don't operate within States any longer. 
These regions don't operate within a Nation any longer. These 
regions operate within a world economy. And, thus, it is one 
thing to have developed the old Northeast regions when, in 
essence, one region was competing with another. It is quite 
another to advise an underdeveloped region how it should 
develop in the 21st century.
    I am wondering if there is any defensible market niche, if 
there is any coherent regional notion in the world economy 
today that is not resource-based, for example, based on natural 
resources in a particular economy. You could understand that 
niche could--might, I should say--survive in an international 
economy. Even human capital now crosses all lines.
    So I want us to look at, when we say regional economy with 
underdeveloped regions who depend often on the Federal 
Government for whatever expertise they will get in strategy and 
planning, how the whole notion of region as a basis for Federal 
economic investment can be not only defended, but can be used 
to assure that we are addressing the real needs of those 
regions so that they will survive for some period of time, at 
least the period of time that one might expect given the 
investment.
    Mr. Reamer. Madam Chair, very good points. A defensible 
market niche does not mean that you are assured that you can 
exist, but you have a better chance, once you have leadership, 
of maintaining that. So a place like Silicon Valley cannot be 
easily replicated elsewhere, but it has to stay on its toes 
constantly. There is an incredibly effective regional entity 
called Joint Venture Silicon Valley that has worked for several 
decades bringing together regional leaders to make sure they 
keep their competitive edge, and that group really has been on 
the cutting edge of how a region can work together to maintain 
its competitiveness.
    So several challenges here. One is that regions are not 
political entities; regions are typically made up of a large 
number of political subdivisions. How do you organize 
regionally to make decisions to develop consensus when you have 
four cities, 20 counties, all with political leadership?
    The second point is that, echoing my testimony, I think an 
important element of EDA's role now, as compared to 40 years 
ago, is helping regions build the capacity to create a 
defensible vision and a roadmap, that it is not something that 
is taught in graduate school. There are hundreds and hundreds 
of experiments around the Country about how to do this, and 
part of EDA's role is to keep tabs of what is happening around 
the Country and help regions share information learned from one 
another; collect, codify, make explicit that kind of 
information so that regions in Nebraska and regions in North 
Dakota and regions in Missouri and regions in Pennsylvania have 
the benefit of learning from other regions.
    Ms. Norton. Mr. Pages?
    Mr. Pages. Yes. I would just add that, particularly from 
the rural perspective that I was talking about in my remarks, I 
mean, the reason we talk about regions is they generate scale 
and they generate ambition. Small communities, rural counties 
cannot have all the resources that a business needs in their 
community, there is simply not enough people; it is just a 
numbers game. By broadening yourself out as a region, you can 
get all of the resources in that broader region that a business 
needs to succeed. It also broadens the vision of the businesses 
to think it is not enough for me to go sell, I am a D.C.-based 
business and I do business in Maryland or I do business in 
Virginia; I need to sell globally. And a region broadens the 
perspective there.
    And what I have learned from my experience is that 
communities won't come together, a county and a city or two 
counties won't come together unless they face a tremendous 
crisis or a tremendous opportunity. We don't want them to face 
a tremendous crisis. The role of the Federal Government is to 
generate those kinds of opportunities. You see them through EDA 
grants or I referenced the WIRED project over at the Department 
of Labor. This has forced people to think regionally, to come 
together around an opportunity of a catalyzing Federal 
investment that will force them to do things differently. That 
is what we want EDA to be able to do, to encourage communities 
to do this before a crisis hits.
    Ms. Norton. Yes, Ms. Glasmeier.
    Ms. Glasmeier. You made the point that increasingly it is 
not about competing in the Nation, it is actually competing 
internationally, and yet most economic development ends up 
being one community competing against another community. If 
there was a way in which we could change the manner in which we 
describe what is going on and what the problems are, and allow 
places or help places understand that they are not competing 
against each other, they actually are competing with the 
outside world, then you might be able to foster more 
cooperation and you could allow--and then places could actually 
see what their own individual advantages are.
    Because when you get away from the burden of thinking it is 
your neighbor who is going to steal the factory that is coming 
down the road, to recognizing that factory might not come here 
if your nation is not, overall, competitive, then you can begin 
to see how communities could start imaging that cooperation has 
some value. If we all think we are in it together, as opposed 
to us all individually operating as if we are going to lose 
something, then we might actually be able to plan some sort of 
future. But that has to be reinforced and, in a sense, policed 
within a policy framework because, otherwise, communities are 
simply going to work on the basis of bigger-than-neighbor 
policies.
    Ms. Norton. Thank you very much.
    I will go to Mr. Graves now.
    Mr. Graves. Thank you, Chairman Norton.
    I tend to look at things a little bit simple. In fact, Ms. 
Glasmeier, you pointed out some very basic problems with 
looking at this regional concept. I come from a little tiny 
town in Northwest Missouri--I still live there--population 
2,000. I will kind of lay this out for you. We have Omaha, 
Nebraska that is 75, 80 miles to our north; we have St. Joe, 
Missouri that is 70 miles to my south; and we have the Town of 
Merryville, which is about 40 miles to our east. Merryville has 
a population of about 10,000.
    I look at regions as a few counties. But you can't get 
those folks to talk to each other. If the Town of Merryville 
has got a hot tip on a company or the Town of St. Joe has a hot 
tip on a company, they are not talking to the little towns out 
there about how they are going to be able to add to this 
process. They are not talking.
    And my question to you is so how do we get them to change 
this paradigm--because they are not going to--they aren't 
competing against each other? The reality is they are competing 
against each other. The smaller communities, they can't afford 
consultants, they can't--for heaven's sake, a lot of them don't 
even know how to fill out some of the paperwork, they don't 
have somebody with the experience to fill out the paperwork to 
apply for some of these wonderful opportunities or proposals or 
projects or programs that are out there that the States and 
Federal Government have to offer.
    But we can't even get a town, some towns to talk to the 
outlying county, you know, outside their city limits, let alone 
go across county lines. And being where I am, seven miles from 
the Iowa border, you know, that is just like a wall that is 
thrown up between the two States, and then you have States 
competing against each other too.
    So I would be very interested in knowing how we break 
through that realistically, not theoretically but realistically 
break through that, and even what sector can we look at. Do you 
have a specific sector, you know, that might work or something? 
I would be very interested because I just don't see that 
paradigm change. All of you, I would appreciate your comments.
    Mr. Reamer. EDA has a program of economic development 
districts, and I am not fully familiar with it, but I think EDA 
strongly encourages, particularly in rural areas, that counties 
join together and form a district in order to be eligible to 
receive EDA funds. That is certainly one mechanism for bringing 
together counties in rural areas to talk to each other and plan 
collectively.
    Mr. Pages. I would just add, Mr. Graves, I mean, this is 
the classic dilemma we face in economic development every day 
out in the field, and, you know, I like to step back a little 
bit and think about, you know, we often talk about the three-
legged stool of economic development: you can take business 
from elsewhere, you can keep the business as you have, or you 
can grow businesses. You are largely talking about business 
recruitment and business attraction, which has been the 
paradigm for economic development for the past several decades. 
To me, that is a zero sum game, and it is going to be very 
difficult to get two States to agree to cooperate on that 
issue, or two counties or two cities.
    So I say let's not even fight that fight. Let's focus on 
homegrown economic development strategies that try to increase 
startups, that try to increase fast-growing businesses that are 
based on the assets in the community. So, again, it comes back 
to this issue of the distinctive niche. What is the distinctive 
niche in your community? What are the businesses that the 
current residents of that community can develop?
    If you sort of take it away from the zero sum game to a 
game like that, where it is really about each community 
strengthening itself, again, I am not going to sugar coat this, 
people don't just have this ``aha'' moment when you make this 
pitch, it is still challenging. But it is much simpler to bring 
people together around business retention or around a business 
growth strategy as opposed to around a business recruitment 
strategy. And so that would be at least one strategy I would 
suggest to create these kinds of regional alliances.
    Ms. Glasmeier. One of the reasons that it is easy to do 
this competition is because data is configured in a way that we 
can draw boundaries, and so counties have their own boundary 
and data come in that package, and you have two of them and 
they don't have to share and they don't have to look at one 
another because they have their own packets of data. We have 
the ability to look below the county level, and what we find 
when we look below the county level is that most places are 
these little spots of development.
    If we were to ask places to begin to look beyond the county 
boundary and to say draw us a landscape of economic opportunity 
that takes into account your neighbors and create small 
incentives for local areas to learn how to do this--because it 
is not something that they know how to do naturally, but the 
information is out there; they have the extension offices that 
are there to help them figure out that type of view--then you 
may actually have places that are bigger actually looking at 
these smaller places and saying, well, gee, you know, you are 
not actually competing directly with me and you might actually 
have people who work in my area, so that they start to realize 
that they are all in this little net together.
    The second issue is just to make incentive programs. For 
example, in the case of renewables, the Appalachian Regional 
Commission just put together a blueprint on energy. We realize 
that there is not enough money to do much of anything in a 
packaged way, for the Commission to come out and say here is a 
lot of money to go after this. So what they are thinking, 
instead, is how can they start conversations that are within 
geographic areas that make sense for the types of renewables 
that can be done and what are the institutional actors in these 
places that actually could profitably work together.
    So you are talking about providing resources for 
conversations that lead people to say, gee, we are next to one 
another, it makes sense to work together on this, and it 
doesn't set up a competitive situation because the problem 
can't be solved on a point basis; it can't be one community 
that gets everything, it just won't work that way.
    Mr. Graves. Thanks, Madam Chairman.
    Ms. Norton. Thank you very much Mr. Graves.
    I want to go to Mr. Michaud, but I do want to say, because 
I think Mr. Graves asked the question that small communities 
across the Country are all asking, I just want to suggest an 
analogy based on synergy from, yes, a big city, but the synergy 
analogy, I think, works.
    The District attracts tourists because the great monuments 
are here, and it has produced a tourist economy here. Well, 
Virginia understood that not all of the tourists wanted to stay 
in the expensive hotels in the District of Columbia, so if you 
go to Virginia or Maryland, you can get yourself a cheaper 
hotel. Half the people who come here, of the 20 million people, 
are school children. That means that Virginia and the District 
and Maryland work together on tourism. Even though it is the 
basis for our economy, they get enough spillover or synergy so 
that we are all in it together, as it were.
    Mr. Michaud?
    Mr. Michaud. Thank you very much, Madam Chair. Before I 
begin, I want to congratulate you for becoming Chair of this 
Subcommittee and want to thank you for your work over the past 
Congresses dealing with economic development. I really enjoyed 
working with you and, at the time, Chairman Shuster.
    I want to congratulate Mr. Graves and look forward to 
working with him in the upcoming Congress.
    Just a couple of quick questions.
    Mr. Pages, I read your opening statements and your 
answering of questions. I agree with your assessment on things 
that are going on. One of your comments you made, that there is 
no cookie cutter type of approach when you look at regional 
economic development commissions. I agree with that 
wholeheartedly, being involved in the Northeast Regional 
Commission.
    My question to Mr. Reamer and Ms. Glasmeier is do you agree 
with that approach as well, that each region is different and 
there should be a different regional approach as we look at the 
different regions around the Country?
    Mr. Reamer. Absolutely. I once wrote an article called 
``Custom Fit, Not Cookie Cutter.'' The strategy for each region 
comes out of its own intrinsic set of assets. And back to the 
point about defensible market niches, that comes out of the 
particular unique set of assets in that region.
    Actually, one of the dangers in economic development is 
around what I call magical thinking. You might remember 10 
years ago every region in the Country wanted to be the next 
Silicon Valley, so regions were trying to become something that 
they could not be. And part of EDA's role, I think, is to help 
regions be realistic and develop their own strategies that fit 
their particular and unique circumstances, and an important 
part of that is actually the Federal statistical system that 
Ms. Glasmeier just alluded to, that we need data, regions need 
data to understand what their distinct assets are, and a key 
role of the Federal Government is providing those data; 
otherwise, regions are flying blind and they are susceptible to 
magical thinking.
    Ms. Glasmeier. I spent a sabbatical last year up in New 
Hampshire and I wandered around in your region, so I have some 
sense of what some of the challenges are. And I also am from 
sort of the north central part of Pennsylvania in which we had 
an industrial economy and it is pretty much gone now. And I 
think we need to distinguish between places which are 
development-ready and places that have yet to be developed, 
because those are two different types of circumstances, and, 
yes, they need individually tailored programs, but they also 
have some common problems.
    So for example, in the southern tier of New York and the 
northern region of Pennsylvania, we have a former industrial 
economy with a declining infrastructure, a workforce that has 
been made moribund, and we are actually attracting immigrants 
who have lower levels of education than the base population. 
These are people that went away and are coming back, and there 
is really nothing for them to do.
    That is quite different from what you find in Central 
Appalachia, where basically that is a part of the Country whose 
economy has been inactive for a very long period of time. So we 
have to deal with those base conditions and, in a sense, make 
sure that places are development-ready, that there are certain 
minimum requirements. I mean, the old mill regions have an 
infrastructure which is corroding over time.
    If the investments aren't made just to stay where they are, 
it is going to be hard to put together a regional strategy. So 
we have to look at places and realize that there are different 
economic histories that lead them to the place where they are 
at, and having an individual approach is correct, but there has 
to be minimum standards; otherwise, you are not going to be 
able to develop off of that.
    Mr. Michaud. My second question is, coming from the State 
of Maine, clearly, it is very rural, and at times you have 
economic developers in conflict with environmentalists. What 
role do you think resource conservation should play in economic 
development, particularly in rural States?
    Mr. Pages. I think that for many rural communities the 
future is in resource conservation, particularly in communities 
that have scenic amenities or have some proximity to a Metro 
area. I mean, the trends in economic development, the exciting 
things that are happening in rural communities are really 
around those kinds of issues, around tourism, agrotourism, 
sustainable fuels, retiree attraction--which is really sort of 
a tourism kind of strategy as well, all tied to the scenic 
beauty and the amenities in rural communities; and you have to 
say you want to build off an asset.
    Well, for many communities in Maine--and I know Maine very 
well, sir--it is one of the most beautiful places in the 
Country. That is the asset for many Maine communities, is that 
it is so lovely up there. And to protect that asset is going to 
be the driver of economic growth for many communities in Maine 
and elsewhere across rural America.
    Ms. Glasmeier. One of the challenges that rural places like 
the northern part of Maine face is the lack of 
telecommunications access. If you want to have a vibrant 
economy in a rural place which is sparsely settled, there needs 
to be some connectivity. And we can see, in work that we have 
been doing in Pennsylvania, that you can have tourist highways, 
but if the broadband interconnect isn't there, then the ability 
for people to really be a successful tourist is diminished. So 
one of the challenges to take advantage of natural assets is 
going to be infrastructure of the future, which is still 
nascent money of these locations.
    Mr. Reamer. I want to reiterate a point I made earlier. I 
think because rural areas around the Country are struggling 
with this issue, how to do this, that EDA has a role in 
collecting the experiences from around the Country and finding 
a way to share them so people are not having to reinvent the 
wheel in Maine when someone has a similar experience in Oregon.
    Ms. Norton. Mr. Walz?
    Mr. Walz. Well, thank you, Madam Chair, and thank you to 
all of you for taking the time to come to us today and share 
your insights on this critical issue.
    I come from Southern Minnesota. I am truly at the heart of 
the biofuels. I have been driving a van for many years that is 
fueled by 85 percent corn; and the cornfield is right there, 
the farmer-owned co-op 100 percent is right next door to it, 
and the station owned by the co-op is right there, you can see 
it all within a mile radius. We have come a long way in that 
and I agree with Mr. Pages on this, there has been some great 
entrepreneurship in doing this.
    The efficiency of the biofuels, that industry knows that it 
is not the savior when it comes to energy, but they do know 
that they started the conversation and moved us forward. They 
also know that, compared to the rest of the world, as Ms. 
Glasmeier noted, we are in our infancy on that, and I think one 
of the reasons is this idea of the regionalism. And I must 
confess I also am a geographer and trained in that, so I talk 
regionalism a lot. But I think Mr. Pages made a good point.
    My question to you is, on this, I believe that we are doing 
those things as entrepreneurship. I do believe we are creating 
the new base of jobs. I have seen this absolutely save small 
communities out there in what they are doing. My question to 
you is we have some of these great regional authorities to help 
with this because the infrastructure is a huge issue, from 
broadband to rail to roads, and we see the ARC--and, granted, 
grossly underfunded and Delta and things like that--but the 
Northern Great Plains Regional Authority, we hear all this 
great talk about how we are going to become the Midwest is 
going to be the new Mideast when it comes to production of 
energy, but the last Congress made it easy for me to remember 
how much the commitment is to that: zero dollars for that 
regional authority.
    And my question to you is is that regional authority, in 
your opinions--and I have listened to you here--can that help 
us now that we have built that groundwork infrastructure on 
entrepreneurship, we have started to get the investment and 
people are ready, but they are being hampered by the very 
things you said, the border with Iowa and those type of things.
    So I am not sure who I am addressing this to. I guess I am 
just asking you. I think we are on the verge of something 
incredible in an economy, and it feels like we are hampered by 
this.
    Thank you.
    Ms. Glasmeier. Thank you. I guess what I would say is I 
think that there are some lessons that can be learned from the 
other regional commissions. At the same time, I don't want to 
make it seem like they are the answer to everything, because I 
think that we do have these really large challenges. If the 
national economy isn't growing vibrantly, then that is a 
problem. If businesses are not generating jobs that are skill 
matched with what the citizenry is capable of doing, then that 
is a problem.
    But recognizing that those are real sort of structural 
constraints, I would say that we have to think in terms of 
development-ready. To what extent are these places that we 
might describe as regions actually development-ready? One of 
the things that is a part of the legacy of the Appalachian 
Regional Commission was taking a region that was truly not 
developmentally ready to a point where now you can actually 
initiate economic development and it actually works.
    I think the Midwest is challenged by different sets of 
issues than what we see at the ARC. At the same time I think 
issues such as population-out migration and essentially 
infrastructure that is not being reinvested in will act as a 
continuous challenge in attempting to make that a region as a 
whole. But how do you keep people in the region and how do you 
formulate new entrepreneurial activities seem to me to be, you 
know, underlying what that regional enterprise could be a part 
of.
    Ms. Norton. Mr. Cohen.
    Mr. Cohen. Thank you Madam Chairman.
    I guess to ask the group, or whomever wants to offer help, 
how do you define economically distressed community in terms of 
getting economic development agency grants?
    Mr. Reamer. If you hang on a second, I think I have the 
legislation here. It is in the legislation. There is a series 
of criteria. I think you have to have a per capita income less 
than 80 percent of the national average and an unemployment 
rate above a certain amount. You have to have any one of three 
criteria.
    Mr. Cohen. And how is that measured, is it by the city or 
could it be--for instance, you studied Memphis, as I see in 
your remarks. Memphis has a lot of economically distressed 
areas. It may not meet that definition, but there are parts of 
the city that do, and there are parts of every inner city that 
does. Do those inner cities that have that need, do they 
qualify or are they disadvantaged because of the suburbs that 
raise their overall economic level?
    Mr. Reamer. Actually, my guess is that it is the political 
subdivision, but I am not certain.
    Mr. Cohen. Madam Chair, if that is accurate, is there a way 
that we can look at the definition? Because I think the great--
I represent an inner city, as the Chair does, and there is no 
place in America--I know the rural areas need help, but there 
is no place that needs more help than inner city America, and 
it has been neglected for 150 years and gone through a lot of 
Jim Crow, really, to get to this point. They have been 
neglected.
    And Katrina exposed it, but it has always been there. And I 
think probably in 1965, when this program was started, Lyndon 
Johnson understood the need for it, but it has kind of been 
neglected. And I would think that we need to find a definition 
of economic distress that incorporated inner cities, even if 
they have got burbs around them that are burgeoning, that the 
inner city that needs that help is available for that grant 
program.
    Mr. Reamer. Congressman Cohen, I actually found the 
legislation and it says a small area that meets one or more of 
the criteria of poverty or high unemployment and lies within a 
larger community in less economic distress shall be eligible 
without regard to political or other subdivisions.
    Mr. Cohen. So that would include the inner city.
    Mr. Reamer. Yes.
    Mr. Cohen. And I have noticed, Madam Chairman--I appreciate 
your understanding and expressing about the global economy and 
not being regional, but as Mr. Reamer probably understands from 
his study, Memphis is the center of the Country, and if we 
concentrate everything there, it will concentrically go out and 
help all.
    [Laughter.]
    Ms. Norton. I understand perfectly.
    [Laughter.]
    Ms. Norton. Mr. Shuster.
    Mr. Shuster. Thank you, Madam Chairman.
    My question, following up with what Mr. Graves was talking 
about--and he is absolutely right, it is very, very difficult 
to get counties--I am in a very rural area, as I believe Dr. 
Glasmeier knows, south of State College--it is very difficult 
to get them to communicate, although they have started to 
communicate. And I wonder if you had come up with any ideas on 
how do you--especially in rural areas, or in rural areas, 
because I think it is a lot easier in urban areas to find that 
center of gravity, but in rural areas do you have any ideas on 
how do you put together regions or how do we go about saying if 
we are going to change, reauthorize EDA to encourage people to 
operate regionally, do you look at the resources, whether it is 
people, whether it is income levels, their tax base? I think 
you can find centers of gravity.
    In my district, Altoona is the center of gravity. Over the 
mountain is Johnstown. Well, quite frankly, they both believe 
they are centers of gravity and they are never going to--well, 
I shouldn't say never, but they are rarely going to be able to 
cooperate. So do you have ideas on different measurements or 
different ways we can put into law that you need to come up 
with this is the criteria for regional cooperation?
    Mr. Pages. I guess I am not sure this is something that you 
would legislation, but from my experience in practice is that 
you have a different region around different centers of 
gravity. Every community will have a different region around 
tourism than it will around business, than it will around 
commuting patterns, and my only criterion in terms of Federal 
investment would be to require that these are regional 
approaches and then let the locals define the region. In some 
ways, you know, people will often ask how do you define a 
region.
    I say what do the businesses think is a region? Or to give 
you an example from Pennsylvania, Central Pennsylvania, a lot 
of people say what is the Central Pennsylvania region? It is 
the Channel 8 viewing area, which you may know from Harrisburg. 
People say that is the region. So it is often unique things 
like that.
    And I guess my experience is when you have squabbling 
counties or squabbling cities, squabbling political 
jurisdictions, is to start with the easy stuff, and the easy 
stuff is tourism or the easy stuff is youth engagement or, you 
know, try to slow the brain drain, strategies like that that 
are kind of, you know, less threatening to, you know, you are 
going to take the manufacturing plant that is going to move to 
my community.
    And, really, it is just baby steps, you know, build 
regional perspective around safer issues and then move to more 
difficult issues. It is really almost like a marriage or dating 
between the communities as you bring them together, and you 
need to start with things that are going to be less threatening 
to the sort of the economic centers of the communities. Again, 
I mean, that is more impressionistic than ways you might 
legislate, but that at least is one perspective.
    Mr. Shuster. I appreciate that, and I would like to hear 
from the other two, but just to point out to you that the 
Channel 8 viewing area is the other Central Pennsylvania. I am 
in the Western Central Pennsylvania.
    Anybody else care to------
    Ms. Glasmeier. I would say that that economic development 
districts are a place to look to because that is an already 
identifiable unit and people do cooperate in that context. It 
is also the case that today we are in better position to use 
data spatially, to actually see what regions look like. So what 
Mr. Pages described in terms of tourism, you look at what the 
tourism economy looks like and you can look at it 
statistically. Now, we can't do it like surgery, but we can do 
it on a basis to give people some sense of it is not always 
beggar thy neighbor. Maybe it is, you know, we are not in 
competition, maybe if we cooperate. So it is by using 
information so people and places can see that they can work 
together, that is going to encourage them to work together. And 
you already have units of planning that have that mind-set 
anyway; to try to reinforce them and provide them with 
incentives to work with communities to cooperate.
    Mr. Reamer. Three quick points. One is that money is an 
incentive, so if money is available only through organizing a 
development district, then that provides people with an 
incentive to cooperate.
    Secondly, just for your information, the Bureau of Economic 
Analysis takes the entire Country, rural-urban, and divides it 
into regions. So you can look in Pennsylvania and see what that 
Federal agency thinks are regions and use that as an organizing 
tool.
    Third point is I left each of you a packet of some examples 
of Federal statistical tools, one of which is a very innovative 
tool the Census Bureau has called On The Map, and you will see 
for your district, Congressman Shuster, you can map where 
people live in relationship to where they work. And as Dr. 
Glasmeier says, by giving people in a region a picture to show 
how they are interrelated, that in fact people live in one 
place but may work in another place, that that gives people a 
larger sense of who "us" is, broader than perhaps a more narrow 
definition.
    Mr. Shuster. And a final question to Dr. Glasmeier. How 
would you grade Penn State's economic development efforts? I 
have talked to other members of the Pennsylvania delegation, 
and one in particular was talking about some of these 
universities--Georgia Tech I think was pointed out to me--and I 
don't know this for a fact, but that Georgia Tech has just been 
a great boon for its region. A hundred miles around where 
Georgia Tech is--I don't even actually know where Georgia Tech 
is located except in the State of Georgia--but they have done a 
great deal of technology transfer and caused some great things 
to happen.
    How would you grade Penn State's efforts in technology 
transfer and what they have done to Central Pennsylvania? 
Because, as you well know, you go from Centre County down to 
Philipsburg or you go down to some of the other towns and it is 
Appalachia again; they are depressed areas that are within 30 
minutes or less of what should be a hub of economic radiation.
    Ms. Glasmeier. Georgia Tech is a really good example of an 
institution that new 50 years ago that it was important that 
science and technology knowledge generated in an institution 
was distributed around the State. So Georgia really is quite 
unusual, and it is actually the Georgia Tech Economic Institute 
that has these operations outside of the metropolitan area of 
Atlanta, and what they provide is sector-specific knowledge and 
expertise.
    At Penn State we don't have something that is organized 
around a sectoral approach. What we do have, which is true for 
every State in the Country, is you have a land grant 
institution like Penn State and you have your extension-related 
educators, and they are very well versed in economic 
development practice and knowledge of their communities, and 
they work in individual communities and you call them up, you 
got a problem--we just lost a plant, we need somebody to come 
here and do an economic impact study--and usually there is 
somebody on staff that can do that. That is certainly true at 
Penn State as well.
    Mr. Shuster. So the grade you would give Penn State?
    Mr. Pages. You have got to give them an A.
    Ms. Glasmeier. No, I can't give them an A. I would give 
them------
    Mr. Reamer. Isn't it pass-fail?
    Ms. Glasmeier. Pardon?
    Mr. Reamer. Is it pass-fail?
    Ms. Glasmeier. Is it pass-fail? Right. That seems like the 
easy way out. I would give us a B.
    Mr. Shuster. OK. All right, fair enough.
    Ms. Glasmeier. And I am a hard grader.
    Mr. Shuster. OK. Well, I am probably a tougher grader than 
you are, so I won't tell you what my grade is. It is not a B, 
but it is certainly not an F or a D. But I would encourage Penn 
State to work with communities. As you well know, Blair County, 
which is to the south of Centre County, where I live, Mifflin 
County, all surrounding Penn State, and I have said Penn State 
certainly has the intellectual capital, but they just don't 
have the workforce, and that is where those counties around 
have great workforces that we need to be tapping into and 
working with them.
    So I appreciate it. I look forward to maybe getting 
together with you, as I said, after this meeting sometime and 
talk about your ideas and what we can do to encourage that.
    Thank you again, all of you, for being here.
    Ms. Glasmeier. I was just going to make one comment, which 
is I am working with the local development districts of the 
ARC, and we are putting together a program that would be used 
to try to convert firms from current practice to the capacity 
to work in the renewable industry, and that is obviously a 
regional approach that goes across the State, and it is working 
quite well.
    Mr. Shuster. Energy is what you are talking about, 
renewable?
    Ms. Glasmeier. It is energy, but it is the idea, it is the 
LDDs that are working together.
    Mr. Shuster. OK. Thank you very much.
    Thank you.
    Mr. Reamer. Mr. Shuster, can I also make a comment about 
technology transfer?
    Mr. Shuster. As long as the Chairman says it is OK.
    Ms. Norton. By all means. By all means.
    Mr. Reamer. Thank you. I did a study for EDA on the role of 
technology transfer and economic development, and I found that 
the rate of innovation, the rate of technology transfer 
increased dramatically the larger the city. Georgia Tech is in 
Atlanta, so places like Atlanta, places like Chicago, places 
like New York have much higher rates of tech transfer and 
patent formation and product development than do more rural 
areas. And there has been a lot of hope given to universities 
that are not in major cities, like Penn State, that they could 
produce the technology that would encourage firms to locate 
there. It is much more difficult outside of large Metro areas 
to do that.
    Mr. Shuster. Thank you.
    Ms. Norton. Thank you. I must say, Mr. Shuster, I think a 
message before the end of the day will get back to Penn State.
    Mr. Shuster. I hope.
    Ms. Norton. The chairman is going to come back. He hasn't 
had a round of questions. Let me ask a few while we are waiting 
for him.
    I am intrigued, Mr. Pages, by your testimony that says that 
71 percent of rural counties actually gained population during 
the 1990's. And I think it makes you wonder even yet again 
about what definitions we are using. Does that increase in 
population correlate with improved economic development, or are 
we really talking about ``rural counties'' in the traditional 
sense of the word?
    Mr. Pages. A very good question Madam Chair. What is 
driving that statistics of the increase in migration to rural 
counties are really several things. One is--I mentioned briefly 
in the testimony--new immigration, particularly in the 
Southeast and in the Midwest. You are seeing lots of immigrants 
moving to rural communities. You are also seeing some level of 
retiree migration, people moving to second homes or moving out 
of the big city to a more pastoral lifestyle is driving some of 
that.
    I would say generally what you are seeing, though, is that 
the rural communities that are showing this in migration are 
becoming less and less rural. I mean, these tend to be counties 
that are located closer to Metro areas, so I don't know------
    Ms. Norton. But you say 71 percent.
    Mr. Pages. Right.
    Ms. Norton. That sounds like most of them.
    Mr. Pages. Well, you would get the communities in the outer 
ring of the suburbs here in Washington, D.C., many of them 
would be classified as rural and would show that increase.
    But I think generally it is a very positive sign. At a 
minimum it is a reversal of a trend that has been going on for 
several decades, so I think if you are looking for good news 
about rural America, that is one very prominent piece.
    Ms. Norton. Mr. Chairman?
    Mr. Oberstar. Thank you Madam Chair.
    I appreciate the testimony of the witnesses, including that 
of Ann Markusen, which will be submitted and included in the 
record, and I hope her husband is doing well; he had a serious 
fall. Ann I have known for years and she is one of our premier 
thinkers on the subject of regional economic development and 
industrial economics.
    You discussed, each of you, the upgrading of technology and 
the application of technology to economic development. In the 
SAFETEA transportation bill that we passed in the 109th 
Congress there was a provision allowing States, State DOTs to 
use the median right-of-way for fiber optic cable to serve 
underserved principally rural areas. That was our intent. It 
was my idea of making the median the REA of the Internet.
    I don't know of any States that have yet moved to use that 
authority, although it is certainly out there and Massachusetts 
has expressed interest in doing so. I have talked with folks in 
Minnesota and I have spoken about this at various conferences, 
but it is something that you should look at as a means of 
stimulating the capacity of rural areas to compete in today's 
economy, commuting by Internet.
    I listened with great interest to Mr. Graves' example of 
his hometown. I think many others of us on the full Committee 
and Subcommittee have that same experience, a small community 
with large population centers in reasonable distance but far 
away, and then what constitutes regional development. We have 
several regional commissions in addition to the Appalachian 
Regional Commission, and my experience with regional economic 
development commissions was largely in Northern Minnesota, 
Northern Wisconsin, and Northern Michigan with the Upper Great 
Lakes Regional Commission.
    What I found as staff director for my predecessor working 
on the specifics of projects, communities applying, was how do 
you create and define a project of regional significance, one 
that is really and truly going to benefit all three States. And 
I think Mr. Pages is expressing the same thing. When you hear 
something regional, is it all going to be swallowed up by one 
big community? You know, the largest population center in my 
district is Duluth, it is 85,000 people. The Superior 
metropolitan area is 135,000, 140,000 people. But how do you 
identify a multi-State regional project?
    Ms. Glasmeier. I can think of one that comes up in the area 
of providing world health care and links broadband. Right now, 
individual hospitals may or may not have advanced broadband 
applications, and there are two factors that seem to limit the 
real high utilization. One is the age of the doctor, the extent 
to which the doctor population is over the age of 50 and not 
used to using computers.
    I don't think you can do anything about that, but what you 
can do is you can link hospitals into a telecommunications-base 
network that allows them to share knowledge both in terms of 
the kinds of problems that they have, but also the access that 
doctors have to specialties that are beyond the local region. 
And that is not inconsequential when it comes to providing 
sophisticated medical knowledge that would otherwise require 
the person who happens to be in Duluth to travel to Minneapolis 
or maybe even to travel to Wisconsin or to some part of 
Michigan to get some care.
    So there are ways in which certain kinds of existing 
functions can be coordinated in a manner. Then there is no sort 
of hub, it is a distributed system in which everybody has a 
potential to benefit.
    Mr. Oberstar. Well, that is a very good example, and I can 
take it a little further. In, if you can imagine, Minnesota and 
the point that Minnesota goes out to Lake Superior and Duluth 
is sort of right there, and about 50 miles south is Moose Lake 
and about 150 miles southwest is Crosby on the other iron ore 
mining country, the Cayuna Range. A surgical practice at Crosby 
perfected amongst their practice the art of laparoscopy, the 
science of laparoscopy, microscopic surgical intervention. It 
is the least invasive and intrusive of surgeries.
    So then they got about a piece of a satellite and they 
created another clinic at Moose Lake, 135 miles away, and they 
trained a doctor there in laparoscopy and installed a 
laparoscopy surgical suite at Moose Lake. So every day this 
surgeon performs laparoscopy with the team in Crosby through 
the satellite doing rounds and overseeing surgical work.
    In addition, by the way, this team at Crosby established a 
similar laparoscopy practice in Haiti, and daily they work with 
a surgeon in the central highlands of Haiti and support a 
surgeon there who does laparoscopy.
    That is regional. It is not multi-State. In this case it is 
international.
    I would like you to think further about how we can help 
these newly created regional commissions craft a policy that 
will direct their funds to truly regional projects.
    Ms. Glasmeier, in your remarks about renewable energy, we 
have great potential in this Subcommittee and its jurisdiction 
over Federal civilian office space, nearly 900 million of 
Federal civilian office space to equip Federal buildings with 
solar power. In fact, our Subcommittee is going to consider and 
then report a bill for floor action to equip the Department of 
Energy building, which was constructed with a south-facing 
wall, blank, no windows, to accommodate solar facilities--in 
this case I think, most likely, photovoltaics, and produce 
enough energy to run the building. We ought to turn the lights 
on at the Department of Energy with solar power and make it an 
example for the rest of the Country.
    In fact, in this very Subcommittee, in 1977 a hearing was 
held on the use of photovoltaics in Federal office buildings to 
create, jump-start, if you will, stimulate a national 
photovoltaic industry and reduce the cost of electricity 
produced by photovoltaics from $1.75 a kilowatt hour in 1977 
over a five year period reducing it down to 7 or 8 cents 
kilowatt hour, which was the industry standard.
    Well, I introduced legislation, got it enacted; Senator 
Humphrey did in the Senate. Together we got this bill passed. 
It was funded during the last days of the Carter administration 
and then defunded by the incoming Reagan administration, and 
nothing has happened since then. It is time to reactivate.
    Where is solar power so important? In rural areas. The U.S. 
Forest Service has weather reporting stations in remote areas 
that are operated by photovoltaics. The National Park Service 
does the same. NOAA operates weather buoys using photovoltaics 
that transmit. Our entire space program runs on photovoltaics, 
and on those long distance travels up to Pluto they use nuclear 
power. We can do that here.
    And in rural areas it would be extremely important to 
develop these types of renewable energy initiatives. There is a 
very successful project on a dairy farm in the central part of 
my district, Hubb & Shield Farm, where all of the manure is 
moved by the minute into a digester where methane is produced; 
and the methane is drawn off, the digester scrubbed, run 
through a generator, produces electrical power from manure-
generated methane that runs the entire Hubb & Shield Farm and 
has produced a million kilowatts into the rural electric grid. 
He has got 200 head of dairy cows. He figures that each dairy 
cow is worth a barrel of oil, because that is the equivalent of 
the electricity produced on that farm by each cow in the course 
of a year.
    The same can be done with hog operations. I know Mr. Graves 
actively operates his farm and I know he can readily understand 
what we are talking about here.
    I would like to get your thoughts about the role of the 
economic development representative, the EDR of the EDA 
structure. Have you given thought to the role of the EDR, the 
local grassroots-up implementation of EDA's programs?
    And the background for this is that there is a 
restructuring underway within EDA that will remove the economic 
development representative from communities within the region 
and centralize the function into the regional office seat, 
Chicago or other similar regional offices, and operate the 
service of the EDR out of that central location. I would like 
to have your thoughts about that.
    Mr. Pages. Mr. Chairman, I had the pleasure of working at 
EDA during the early 1990's, when we had a more extensive EDR 
operation in place and, really, the EDRs were kind of the 
public face of the agency, and if you really wanted to know 
kind of what was happening at the grassroots, you would talk to 
the EDR. And when people thought of EDA, they said, oh yeah, 
Joe the EDR or Mary the EDR, and they really were our public 
face. And I think both the EDRs and the regional offices are 
critical, because EDA is different from other Federal agencies; 
it responds to the grassroots rather than says here is the 
solution and we will give you a grant. It says come up with 
some ideas, some innovative ideas, and we will do what we can 
to support you.
    So you need those people that are out there in the field 
who understand what is happening------
    Mr. Oberstar. And if I may interrupt you, the EDR is also 
the filter to tell folks, look, you have got a germ of an idea 
here, but it isn't packaged right, it isn't going to fit, it 
isn't going to work, some other place has tried it, it hasn't 
worked. He is the filter, or she, the filter to weed out that 
project.
    Mr. Pages. And I would agree with you 100 percent. In fact, 
you know, for many of these communities who have maybe one FTE 
or two people in total working in economic development as 
professionals, to spend a lot of time on grant applications 
that they are not going to be able to win is, you know, very 
inefficient use of their time. They have got very limited time 
and resources. So that screening mechanism is very important. 
For some communities it is better to get a quick no than to 
spend a lot of time doing an application. We don't count how 
much time, cost and resources go into these RFPs and into the 
grant applications. It is quite significant, and if we can help 
communities on that front, that is also an important 
contribution.
    Mr. Reamer. I would agree with that. I think the EDR 
structure has been--my experience has been it has been very 
helpful to have these people on the ground facilitating the 
process.
    In the information-oriented approach that I am suggesting 
EDA add to its current functions, I think EDRs would be 
important as well as a source of expertise to help local 
development agencies understand how to do their jobs better and 
as a way of collecting intelligence at a local level and 
bringing it back to EDA. I mean, this army of 50 people around 
the Country is a great resource for EDA to learn about what is 
going on on the ground, and it would be the starting point of a 
mechanism, as I was saying earlier, to share information across 
the Country about what works, what doesn't work, and EDRs I 
think are a terrific resource in that kind of effort.
    Mr. Oberstar. I like your reference to the Army, except 
that the Army has been reduced to a platoon with the reduction 
in the number of EDRs, and about to be reduced further.
    Mr. Pages. I would just make one other final suggestion, if 
you would indulge me, Mr. Chairman, on the EDRs.
    Mr. Oberstar. Sure.
    Mr. Pages. One thing the Subcommittee might want to 
consider is to cross-train the EDRs in to the offerings and the 
programs of other agencies, rather than just have them focus on 
EDA. You often see this with State regional reps for State 
economic development departments. Basically market all of the 
State programs, as opposed to just one program in the 
Department of Commerce or the Department of Economic 
Development.
    Mr. Oberstar. I agree with you, and I think they should be, 
and in Minnesota our now retired EDR worked very closely with 
the State rural development agency of USDA and coordinated 
efforts to bring to bear the resources of both agencies on the 
needs of small towns.
    There are many other questions I would like to pursue but, 
Madam Chair, I think there are some things I might submit for 
the record. I will yield back my time at this point.
    Ms. Norton. Well, if anyone deserves to ask questions, it 
is the man who started it all, and we appreciate that effort 
and the depth of your questions.
    I just have a couple of questions that I would like to ask. 
One has to do with testimony we have received ever since I have 
been on this Committee, really impressive testimony that I 
cannot recall receiving in any other committee or subcommittee 
about very impressive results from leveraging private resources 
and, indeed, very impressive history of measurable outputs from 
the Federal investment.
    We are in a period of, we call it here, pay-go. All of you, 
in one form or another, spoke about the underfunding of EDA. We 
are not going to see a big infusion of funds. I would like 
anything you could tell me about how we might better leverage 
small amounts of Federal funds to encourage the kind of 
proportionately greater private investment that is virtually 
the hallmark of this bill, and may be its only real future.
    Mr. Reamer. In my testimony, I alluded to the power of 
information-based tools. I mean, the Government has several 
tools at its disposal to promote social change. One is money 
tools: grants, tax credits. Another is information. Money, by 
definition, is expensive; and information is relatively cheap. 
So, Madam Chair, in terms of levering private investment, 
private investors need data on markets to know where to make 
decisions, where to make investments, and the Federal 
statistical system is the primary source of data for 
governments and for businesses to make those investments; where 
to put a store, where to put a highway, where to build a 
school.
    So I think in terms of bang for the buck in economic 
development, that a robust statistical system that really costs 
pennies per taxpayer has enormous, enormous payoff, that 
businesses and planning agencies, regional development agencies 
need those population statistics, need those statistics on jobs 
and income, need those statistics on the workforce to know 
where to make those decisions. And I very much encourage this 
Committee to be a strong advocate for a robust Federal 
statistical system because, again, for $25 million you could do 
a few things to expand the data resources available to regional 
developers and the businesses in their areas with remarkable 
payoff.
    Ms. Norton. Mr. Reamer, they look fairly broadly now. They 
look at educational-base, they look at cheap labor costs. They 
stop there and then they go on. Now, if there is some value 
added beyond that, I think you are right, the Federal 
Government is going to have to virtually teach business how to 
find it, because they obviously look in the same way abroad and 
are not on their own going to invest much more deeply in the 
data, and it is very important for us to know ways in which 
Federal data--if you have anything more to add to the record on 
that, what kinds of Federal data might encourage the private 
sector to go beyond where they look now.
    Mr. Reamer. I would be happy to do that.
    Ms. Norton. Ms. Glasmeier?
    Ms. Glasmeier. I would just like to reinforce what Mr. 
Reamer said and use two examples. The first is in the case of 
broadband. Right now, broadband information is held on a 
proprietary basis by the providers. If you are interested in 
economic development and you want to know whether there is 
broadband capability, and you are looking at a rural State or a 
rural region within a State, you have to go to somebody within 
the public sector to get that information, and the question is 
do they have that information, and most of the time they don't 
have it; they don't know where the last mile is. So to the 
extent that there can be encouragement that that information be 
made available so that business enterprises could actually make 
good decisions, that is important.
    The second issue or second example is in the case of 
renewables. Right now, States have widely different policies 
about the prospects for renewable energy. If you are a company 
from Spain and you want to make an investment in the United 
States because we are a really big market and we are completely 
underdeveloped, how do you go about doing that? How do you find 
the information that you need about what the State regulatory 
framework is, what is the local labor force capabilities, what 
are the other due diligence requirements of operating in an 
individual State? That information is not coordinated, you have 
to dig it out with a bulldozer. It is very inefficient.
    So what does that mean for a foreign investor? Quite 
frankly, there are many other places around the world that they 
could go and sell their business as well. So if we don't make 
investments in information tools so somebody that lives in 
Spain who wants to make an investment here can do it in the 
comfort of their home, then those opportunities will simply go 
someplace else like Singapore, where they already have that 
information.
    So it is not about should we, it is that we have to. And if 
we are willing to ignore the fact that the rest of the world is 
moving ahead of us, then that is our own cost. But we have to 
realize we are not playing on the field with all the tools that 
we need.
    Mr. Pages. If I could just add. I would agree with Mr. 
Reamer generally that the smartest investment for leveraging 
would be to invest in statistical and information resources. 
But I also recognize that you face a difficult budget 
environment in terms of supporting our, or at least my, 
proposals to increase funding for some of these programs. I 
realize that is often easier said than done.
    But one other resource that the Subcommittee might want to 
look at is that there have been significant Federal investments 
already in revolving loan funds. EDA does that, the Department 
of Agriculture does that. And many of these revolving loan 
funds are underutilized at this point in time, and there might 
be ways to encourage improved marketing or, you know, new ways 
to get that funding out. These are previous Federal investments 
that are sitting there unused, and we ought to find ways to be 
able to tap that resource.
    Ms. Norton. Here in the Congress I found a piece of land 
five minutes from the Capitol. It made a slum out of the whole 
neighborhood; owned by the Federal Government. I put in a bill 
for a public-private partnership. It is now being developed by 
the private sector. You couldn't do that before because it was 
Federal land. The local community--there was a question from 
our colleague from Memphis about inner cities. It happens to be 
a poor local community down there. The investment from the 
private sector is renewing the entire section. The Federal 
Government hasn't put a dime in that. The land was there. It 
took a piece of legislation. And I am very interested in seeing 
how that might apply in other parts of the Country.
    As I close this hearing, I don't want to leave the 
impression that the Transportation and Infrastructure Committee 
believes that traditional infrastructure is no longer important 
for developing rural and, for that matter, other areas. I want 
to stress that particularly in the Midwest and in the 
Northeast, where many of our underdeveloped areas are located, 
there is a hugely aging infrastructure precisely because these 
were the first parts of our Country to develop. We are about to 
lose billions of dollars in investment because we are letting 
it go to seed, if you will forgive me. We are letting it rust 
out of existence, so that we will have to begin all over again. 
And with what investment? With what funds?
    I am very interested, for example, in tying infrastructure 
funds, or at least in doing some kind of experiment in tying 
infrastructure funds with upkeep of the infrastructure. There 
isn't a lot of incentive for cities, for example, to build a 
road. What is it, 80 percent Federal? Should be, certainly 
should be.
    But what is the incentive? Unless the Federal Government 
encourages the reinvestment in the very substantial investment 
it has made in the first place. The infrastructure needs of 
these underdeveloped areas often remain underdeveloped, and in 
the Committee Subcommittees over and over again we hear about 
the development of water and wastewater infrastructure, which 
is not only aging, but some believe even dangerously aging. So 
we face the rebuilding America notion that I mentioned in my 
opening testimony, as much as I am interested in the vision of 
the future and the 21st economy in which we clearly already 
live.
    I want to particularly thank each of you for your own 
testimony and your willingness to come today, prepare 
testimony, make us think more clearly about our own mission. 
What we have heard has been extremely helpful. I invite you to 
continue to submit, as you have heard our questions, ideas to 
us as you face the difficult task of trying to carry EDA into 
yet another context, far more challenging.
    It is very much more difficult to be in an underdeveloped 
area in 2007, to virtually be starting from scratch than it was 
for your great-grandfather, who may have lived in 
Massachusetts, who could have done so with and did do so with 
his own labor and with an expanding economy that was a perfect 
match for the labor that was provided. And now we are saying, 
oh, you are late in coming and, by the way, the economy that 
might have done it has passed you by, so hop on this world, see 
if you can continue to function. We have got to think that way.
    And, frankly, what comes in on us--and you heard some of it 
from my colleagues on both sides--people want to talk about 
their problem. That is what their constituents sent them here 
for. So we would never get a look at what is really, really 
driving the problems of the members were it not for testimony 
such as yours.
    I ask unanimous consent that the record of today's hearing 
remain open until such time as our witnesses have provided 
answers to any questions that may be submitted to them and 
unanimous consent that during such time the record remains 
open, additional comments offered by the witnesses or groups 
may be included in the record of today's hearing. Without 
objection, so ordered.
    Thank you all again.
    [Whereupon, at 12:33 p.m., the subcommittee was adjourned.]

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