A new approach to fighting poverty


Rand Paul - U.S. Senator



Yesterday I introduced the largest, most sweeping anti-poverty legislation since Lyndon B. Johnson’s War on Poverty began. This legislation will provide over $100 billion to communities devastated by chronic poverty.

Communities like eastern Kentucky that have been devastated by the president’s War on Coal will be rescued. Communities like Ferguson, the southside of Chicago and the west end of Louisville will be given a chance to find the American dream.

My legislation is not a gift or a grant. My legislation allows over $100 billion dollars to remain in the hands of those who earned it. My legislation will provide the incentive for businesses and capital to return to areas overwhelmed by chronic poverty and unemployment.

We are just past the 50-year mark of the War on Poverty. Sadly, 50 years later we are still fighting that war, and every one of our states has areas of high poverty, high unemployment, and shaky finances.

I think it is time we try a different approach. An approach that harnesses the ingenuity and hard work of individuals, families, and businesses in our most afflicted communities. An approach that invites new investment to those communities. An approach that is free from government bailouts and bureaucrats picking winners and losers. An approach of opportunity.

Economic Freedom Zones would the largest anti-poverty program since the War on Poverty.

Economic Freedom Zones are areas of reduced taxes and regulations, and increased incentives for businesses. They are much more than a government stimulus or handout. They empower communities by leveraging the human capital, natural resources, and business investment opportunities that already exist. Reducing the taxes in economically depressed areas is a stimulus that will work because the money is returned to businesses and individuals who have already proven they can succeed.

Cities and counties will be designated as Economic Freedom Zones if local unemployment is 50 percent above the national average, or if 30 percent of the population is below the poverty line. Localities that are bankrupt or are in danger of bankruptcy are eligible too, in order to attract new investment and economic activity that will help shore up the local finances without the need for a bailout.

By slashing the federal tax rate to 5 percent for a 10-year period, we can finally incentivize more businesses to locate in our struggling communities and provide more jobs and opportunities. And my plan leaves the hard earned dollars of those in a community right there in the community. It doesn’t go to Washington, where politicians pick winners and losers, it stays with the community, where the consumers decide who succeeds.

Economic Freedom Zones will work where Big Government has failed because the money will remain in the hands of people that local consumers have voted most able to run a business. Whereas Big Government programs often send money to people unable to run a profitable business, Economic Freedom Zones return the money to businesses and individuals that have already proven they can run a successful business.

The president’s big government stimulus funded by debt didn’t work because government always fails to identify profitable uses for capital whereas returning capital to those who originally earned it will provide a stimulus exponentially greater.

In the eastern part of Kentucky, this legislation would provide over half a billion dollars each year in much needed capital. In West Louisville, this legislation would provide more than a two hundred million dollar infusion each year. More importantly this legislation will provide hope and opportunity where today little optimism exists.

Those economic effects will be real and will be felt immediately. But Economic Freedom Zones will provide other reforms that set the stage for medium and long-term growth as well.

Economic Freedom Zones will lift some of the most anti-growth regulatory burden, without jeopardizing the health and safety of the public or the environment. Federal permitting requirements for construction projects will be streamlined. Regulations that artificially drive up labor costs will also be suspended. And foreign investment that brings jobs to the community will be encouraged.

The War on Poverty has been going on for over fifty years and often it seems like poverty is winning. They say the definition of insanity is trying the same thing over and over again and expecting a different outcome. Big government programs haven’t cured poverty. In fact, some argue, they’ve just made the problem worse. Isn’t it time we tried something different?

Yesterday, the Senate had a chance to try something different. The Senate had an opportunity to begin the rebuilding of America.

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Rand Paul

U.S. Senator

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