[Congressional Record Volume 140, Number 92 (Friday, July 15, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 15, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
 ECONOMIC GROWTH AND STABILIZATION FINANCING DEMONSTRATION ACT OF 1994

                                 ______


                         HON. PAUL E. KANJORSKI

                            of pennsylvania

                    in the house of representatives

                        Thursday, July 14, 1994

  Mr. KANJORSKI. Mr. Speaker, today the ranking Republican member of 
the Economic Growth and Credit Formation Subcommittee, Mr. Ridge, and I 
are jointly introducing the Economic Growth and Stabilization Financing 
Demonstration Act of 1994.
  This bipartisan legislation addresses the single largest shortcoming 
of existing Federal programs to promote economic growth and 
stabilization in economically distressed communities across this 
country. It provides the Secretary of Commerce with the financing tools 
necessary for the success in developing an effective, comprehensive 
strategy to create new jobs in economically troubled regions through 
targeted assistance to help new businesses get started and for existing 
businesses to remain or become competitive in today's global economy.
  Specifically, the legislation authorizes the Secretary of Commerce to 
conduct four demonstration programs for financing assistance for 
economic growth and stabilization in economically distressed 
communities. These demonstration programs would focus on loan 
guarantees, interest rate subsidies, equity financing, and credit 
enhancements to securitize economic development loans for the secondary 
market.
  On Tuesday, Commerce Secretary Ron Brown testified on the 
administration's new Competitive Communities initiative. In his 
testimony he underscored the need for the legislation I am introducing 
today. He said, ``To implement the Competitive Communities Program 
fully, with its emphasis on funding intermediaries to support private 
economic activity, EDA could benefit from additional tools. In 
particular, loan guarantee authority to support high-growth business 
activity would be extremely helpful.''
  Mr. Speaker, Secretary Brown's testimony echoes that provided by 
Assistant Secretary for Economic Development William Ginsberg when he 
testified before the Banking Subcommittee on Economic Growth and Credit 
Formation on June 22. Mr. Ginsberg's testimony unveiled the Competitive 
Communities initiative which was described by Secretary Brown Tuesday.
  At my subcommittee's hearing on June 22, Secretary Ginsberg outlined 
the focus of the administration's new initiative saying, ``At EDA, we 
are redirecting our programs and the tools which we use with the 
objective of ensuring that economically distressed areas and regions of 
the United States benefit from the new Federal commitment to promote 
America's globally competitive, technology-based, export-oriented 
industries.''
  Secretary Ginsberg identified as the two key components of the new 
strategy, `` . . .  financial inducements for the growing globally 
competitive industrial sectors to invest in our distressed communities 
and . . .  institutional linkages between the community leadership and 
the business leadership whose companies can form the economic base of 
the future.''
  Many State and local governments have recognized that infrastructure 
development alone, is simply not sufficient to successfully implement a 
strategy to promote economic development and facilitate the creation of 
new jobs. Frequently, the critical element which determines success or 
failure of economic development efforts is the availability of business 
financing assistance.
  Despite this growing realization, the Federal Government lags behind 
many States in providing this often vital assistance. This seriously 
handicaps the effectiveness of our overall economic development 
efforts. Simply building a new industrial park does not assure that new 
business will locate there and create new jobs. We need to focus our 
efforts on encouraging the development of new businesses and jobs that 
offer real opportunities for advancement in troubled communities.
  When Secretary Ginsberg testified before my subcommittee 3 weeks ago, 
in addition to unveiling the Competitive Communities initiative, he 
also commented on a draft version of the Economic Growth and 
Stabilization Financing Demonstration Act of 1994 which I am 
introducing today.
  He noted that this legislation mirrors the goal of the Clinton 
administration saying, ``The administration has strongly supported 
legislation emanating from this subcommittee . . .  which would provide 
EDA with the authority to guarantee economic development loans.'' He 
also testified that, ``The equity finance program proposed for EDA in 
the draft subcommittee legislation . . .  would also achieve [the 
administration's] objectives,'' and vision for EDA in the future.
  Secretary Ginsberg also noted in his testimony that, ``by leveraging 
private investment . . .  this vehicle ensures a better leverage for 
the Federal dollar . . . and serves as a catalyst to encourage private 
sector investment that will create jobs.''
  Mr. Speaker, while a number of our colleagues helped develop the 
ideas which are reflected in the Economic Growth and Stabilization 
Financing Demonstration Act of 1994, I particularly want to recognize 
the important contributions made by my ranking Republican member, Mr. 
Ridge, as well as by Representatives Klein and Traficant.
  As a new Banking Subcommittee chairman in the 103d Congress, it has 
been a pleasure and privilege to work with my ranking Republican 
member, Tom Ridge, on this and other economic development and job 
creation initiatives. Congressman Ridge has contributed many important 
suggestions to the legislation we have worked on, and has been a true 
partner in the work of the subcommittee.
  Earlier this year, Mr. Klein introduced H.R. 3853 authorizing the 
Federal Government to participate in, or guarantee, loans made by banks 
and other qualified lenders for businesses with potential for expansion 
and growth and for other viable economic development projects. 
Throughout his tenure on the Subcommittee on Economic Growth and Credit 
Formation, Congressman Klein has consistently shown great vision and a 
dedication to create new employment opportunities for all Americans. He 
has demonstrated an enormous capacity for thinking through some of our 
economy's most intractable problems and for proposing new and 
innovative solutions. Clearly, the Economic Growth and Stabilization 
Financing Demonstration Act of 1994 incorporate many of his ideas.
  Last year, Representative Traficant introduced H.R. 2191, introduced 
to authorize the Secretary of Housing and Urban Development to carry 
out a demonstration program to make grants available to community 
development corporations for reducing interest rates on loans for 
economic development activities in five federally designated enterprise 
zones. As I have noted, the Economic Growth and Stabilization Financing 
Demonstration Act of 1994 provides for a demonstration program to 
subsidize the interest rates of loans associated with enhancing 
economic growth and stabilization in economically distressed 
communities. I commend Mr. Traficant for his foresight and leadership 
in this area.
  Finally, Mr. Speaker, I want to note for our colleagues that similar 
loan guarantee and equity financing demonstration provisions were 
adopted, with strong bipartisan support, by the Subcommittee on 
Economic Growth and Credit Formation, and were subsequently, by a 
unanimous bipartisan vote, passed by the full Banking Committee, as 
part of its version of H.R. 2442, which reauthorizes the Economic 
Development Administration.
  Unfortunately, the version of H.R. 2442 which was ultimately brought 
to the House floor only provided for a study of new EDA financing 
tools. With the launching of the administration's new Competitive 
Communities initiative, however, it is critical that we provide the 
Secretary of Commerce with the financing tools that Secretary Brown 
testified Tuesday that he needs to fully implement the new program.
  I urge my colleagues to cosponsor the Economic Growth and 
Stabilization Financing Demonstration Act of 1994. For the benefit of 
our colleagues, I am attaching to this statement a section-by-section 
analysis of this bill. I look forward to timely action on this 
legislation by the Committee on Banking, Finance and Urban Affairs.

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