Policy: Economy

Rand Paul wonders why Obama's economic 'promise zones' don't cover Detroit

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Beltway Confidential,Opinion,Joel Gehrke,Barack Obama,Detroit,Rand Paul,Economy,Detroit Bankruptcy,Poverty,Promise Zones

Sen. Rand Paul, R-Ky., says President Obama's latest anti-poverty plan isn't just a ripoff of his own, it also ignores the single most depressed city in the country: Detroit.

"You would think if any place in the country deserves some special looking or special consideration, it would be Detroit," Paul told the Washington Examiner.

Obama plans to designate parts of San Antonio, Los Angeles, southeastern Kentucky, Philadelphia and the Choctaw Nation of Oklahoma as "Promise Zones," areas that receive tax credits and grants to stimulate economic growth.

"I guess my first response was imitation is the best form of flattery," Paul said. "And since we came out with our freedom zones for Detroit about a month ago, I thought maybe he was imitating our freedom zones a bit. I'm afraid his proposal will probably a little bit tepid for my taste."

For places with an unemployment rate 1.5 times the national average or worse, Paul's proposal would cut personal and income tax rates to five percent, cut the payroll tax to two percent for employers and employees, double the tax deduction for investments made in the first year of a business, and cut capital gains taxes.

"The proposal would leave Detroit with $1.3 billion of money currently paid in taxes. We're not going to take it to Washington, we'll leave it with you. How could anybody be opposed to this?" Paul said Dec. 6 at the Detroit Economic Club. "The problem is we've got about 50 years' evidence that government-directed stimulus, picking the winners and losers, doesn't work."

Paul sees the same problem in the latest "Promise Zones" idea. "I think he's stuck in the 1960s sort of 'war on poverty' thing," he said. "Government chooses the winners and losers." He said that he doesn't support the idea of sending grants to government-approved ideas, while suggesting that Obama's tax credits would be too insignificant to make a significant change.

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