tv QA David Wessel Only the Rich Can Play CSPAN October 17, 2021 10:59pm-12:00am EDT
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accessories. there's something for every c-span fan and every purchase help support our nonprofit operations. shop now or anytime at c-spanshop.org. >> mr. president, during one of those conversations, we talked about ways to improve distressed communities throughout the country. 52 million americans living in distressed communities and we talked about legislation that can move those communities forward.
you can guess. part of this tax reform package, the investing and opportunity act, has been included, which will bring trillions of dollars into poor communities because of your willingness to listen. >> that is senator tim scott of south carolina. december 2017, the tax legislation, talking about a legislative proposal he was a sponsor for. he predicted it would bring trillions of dollars into underserved, economically depressed communities. how did it turn out? >> i don't think he would make that remark now. that is a press conference hyperbole. opportunity zones created 8764 tax payments across the country. they gave wealthy people an incentive to put their money in
pork communities in exchange for capital gains cap -- tax rates. we don't know how much money has gone into them as a result of the arcane sent a known as reconciliation, which is a household word. the provisions that required reporting with script out -- stripped out. we are talking about tens of billions of dollars going into opportunity zones. unfortunately, i think the bulk of the money has gone into zones that did not need the money. they were already improving. a bunch of projects that would have been built otherwise. opportunity zones have been used for good and i have examples in the book but i do not think because there is no requirement that the use for good, they benefit the residents of a community. i think most somebody went to other projects. >> they are subject of your book, "only the rich can play. " it is a 500 page tax bill.
you write this occupied five of the pages in that piece of adulation. >> i had a colleague at brookings, a public finance economist who worked in the obama treasury and he called my attention to this and i rolled my eyes. another complicated tax provision. when you think about storytelling, taxes do not usually coincide with the word storytelling and then he mentioned sean parker of napster and facebook was behind it. suddenly my ears perked up and so i thought -- i was looking for a project. i have been at brookings for seven years and used to be a reporter for the wall street journal and i missed having a project of my own. i thought a tax bill that has a little provision, it is supposed to help communities with
interesting social policy, sean parker involved, there has to be a story. i heard there was an opportunity zone echoing in los angeles at the mandalay bay and resort and i thought i am not sure i will do a book on this but if i do, i will always regret it if i'm not at the expo. in the spring 2019, i went to the mandalay bay and went to this opportunity zone expert -- expo, one of dozens of conferences as peoples figured out the tax bill and it was a modern day gold rush. it was teeming with people, tax lawyers and accountants trying to get business, rich people trying to find ways to reduce taxes, developers looking for money, and it is such an interesting collection of people and fortunately for reporter, all of them were extroverts and happy to talk to me. they wrote things down in my notebook. i thought there was a story
here. i did not know that would be the most fun of all of recording because part of my game was this would be a good excuse to travel the country. i got to portland, oregon. the pandemic hit. host: does the title refer to the people who can take up the tax code provisions or the legislative process? david: it is probably both. the way this provision works is only people who have a capital gain, a profit on some asset they brought -- stock, property , art -- can put money into an opportunity fund so most americans cannot play in this game. rich people are the people with the money so it is not clear to me they had a broader set of people who could participate that would've gotten more money
but it would've seemed more fair and democratic. i think sean parker was well-intentioned like a lot of people in silicon valley. he thinks he has a better way to do everything. a better way to do the internet, a better way to do anti-poverty, those people have self-confidence. because he was shrewd and rich, he could find his own think tank that skillfully lobbied this into law. he recruited tim scott as a south carolina republican and cory booker from new jersey. the way they did it and tim scott got it into the tax cuts and jobs act, there were never hearings. it had a lot of sponsors but it was because it sounded benign. who could be against rich people putting money into poor neighborhoods? they didn't design a program, in
my view, that was likely to maximize what they said was their intention. all of those people i met at the opportunity zone expo are skilled at finding ways to squeeze and stretch the tax code so in the end, i am afraid it did more to save money for rich people and their taxes than to help poor people. host: you said there was not really good reporting on this, not manned by the legislation, but is it possible, how much money would have gone to the u.s. treasury through required capital gains tax that have been diverted to the opportunity zones? david: opportunity zone program was very carefully designed -- eig hired a technician from capitol hill and it requires people who are participating pay some money in 2026.
that is significant because as you know, in washington, everything is measured in 10 year increments. because of this revenue in 2026, most of the losses occur outside the 10 year window, the estimate is law in the single-digit billions of dollars. i do not have a way of knowing how much it will cost us in the long run because that depends on how many people participate and how much money they make on their investments. we do not really know but i do know that we are talking billions of dollars and although that seems a small sum in washington, somehow you cannot get attention on less you are talking to the --you can imagine it could help these communities rather than try and funnel it through the tax code. host: let's go back to sean parker, talking about opportunity zones in an interview. i'd like to learn more about him. >> this was a philanthropic
mission and when i set up my foundation, i spent time thinking about how to help communities that do not have access to the advantages i have. when you go to silicon valley away, you find a ton of investors, more than there are great companies to invest in. this is a problem that is pretty unique to silicon valley. this all began from a desire to do --try to spread that capital access more evenly in places that did not enjoy. they did not benefit from the technology boom or the economic recovery. host: for people that do not know him, who is he and how did he make his money? david: sean parker grew up around here in washington. he was a young hacker. he got busted when he was a teenager for hacking into some government system. he did not go to college. he ended up in silicon valley.
he was the founder of something called napster which the younger viewers may not know was a music sharing site that was put out of business because they were stealing peoples music and people were trading music when i was younger. he befriended mark zuckerberg and the very early days of facebook. he made his initial money by being the first president of facebook. he did not last long there but when you get in at the ground floor in silicon valley, after you leave the company, you can ride the escalator up and that is how he made his money and he is made shrewd investments. one thing that is interesting about that click to capture something about sean parker's intention, you could see he was talking about investing money in businesses. that was his vision and he told me that. there is some money going into operating businesses. there was a little brewery not far from here in d.c. with
opportunity zone money but he did not appreciate most of this money is going to real estate. that was not his plan and that is what happens when you have a good idea and you are so convinced that you know how it will work and disregard the advice of experts. host: how did we feel about this today? david: he feels good about them. he thinks that it is like software. we have version 1.0 and should do 2.0 and 3.0. we have learned the business of tweaking legislation has become impossible. once it passes, no one touches it. he and his allies preferred to look at the good stories, the places it is being used as intended, and they think the bad stories are just bad examples, and they think it is early days, and i think lots of money will float to poor communities so they want us to reserve
judgment. after trump lost, some of the people at his think tank began to say maybe the trump treasury did not put regulations and that would've helped. they did not say that publicly when trump was president. i think he is still pretty proud of it but i do not think that he has spent a lot of time on the ground looking at how it is going. he launched his baby and found out he is into fighting cancer. host: you talked to him. did you share your book with them? david: i did not share the book with him. i shared with his publicist to make sure i got it right. it was interesting. his people complained i dwell too much on his party days as a young man and they are trying to style him as a serious
philanthropist. i'm not convinced but they give me evidence he threw a ridiculous party years ago. he bought a mansion in california at q hefner's playboy mansion. -- hugh hefner's playboy mansion. i haven't heard from him. i don't expect to. i heard from some of the people at the economic innovation group who i let read the manuscript. they are angry because they think that i misled them. i never expressed an opinion about opportunity zones when doing interviews. i did what any good journalist dies and asked a lot of questions and probably appear to sympathetic so they expected a more positive review of opportunity zones. host: the book is a detailed study of how washington works and how they navigated the system so i want to dig into it.
what did sean parker -- when did sean parker have the idea? david: 2013. host: when did it move into working on this? david: for a period of the next couple of years, he had a sidekick named michael who has had brief notoriety because he is dating lady gaga, which we know from her instagram, not my investigative reporting. he hired these two washington insiders, a veteran of the obama white house and one who had worked for a trade association for the foreign units --u.s. units of foreign multinationals, a republican. both had worked in the senate and he hired them and they pretty much went into stealth mode for a couple of years and he organized a think tank and then they built a strong case that we have a problem with economic inequality in the u.s.
a lot of people talk about income inequality, the gap between rich and poor, and they focused on the gap between communities doing well and communities doing poorly. that laid -- they did not talk about opportunity zones. even though sean parker and michael polansky formed this think tank to get opportunity zones into law, they cleverly built the case by saying there is a problem and then they dissented with a solution. because they are wise to washington ways, they got to economists, a republican who was chair of donald trump's council of economic advisers after that, and jared bernstein who had worked for biden as vice president and is on biden's council now, to do a white paper. the white paper says we have a problem with geographic inequality and previous tax
provisions have not worked as well as we like. they did not lay out a roadmap for opportunity zones. they kind of said we need to think about doing something like this. dig holds them up as the poster boys for a bipartisan thing. over time, they build a coalition in congress impressively of important people in congress, the majority people in the ways and means committee, democrat and republican, and sean parker meets with these people individually and one thing that makes him different than a lot of other business people i have met is that he is charming and engaging. john the terry told me unlike the ceos he worked with and his previous job who knew they had to talk to members of congress and hated every minute, sean parker enjoyed it. they built this coalition, this formidable, bipartisan coalition to push the bill, announced in 2016, but i think the people who
signed on did not look at the details or think through how it might work in practice. like a lot of bills introduced in washington, it went nowhere. having tim scott on their side proved to be really smart. the eig --i think the leaders of eig, like many in washington, assumed hillary clinton would win the 2016 election but they had the perfect person find a portfolio, cory booker, a democrat, and tim scott if there was a republican. what they could not have known but left out was tim scott was on the finance committee and the then chairman, orrin hatch, asked for senators to lead the tax reform legislation to make it -- shaping it. tim scott was one of them. when you are in the inner circle, you can get something done. he had an assist from donald
trump at a key moment. host: one person that is in the early stage of the story is someone who wrote --. who is he? david: ro khanna is a congressman from silicon valley who was popular with silicon valley liberals because he was socially liberal but economically appreciated economic growth. sean parker talked to him and tried to hire him to become the head of eig but ro khanna said i'm going to run for congress. he runs for congress and sean parker contributes to his campaign. he loses. he winds years later and is now a democratic congressman from silicon valley. an unusual guy because he is a big silicon valley economic growth and on the other hand, he was one of the leaders of the bernie sanders presidential campaign and i talked to him and
he blames the treasury for the way this was implemented. he does not take blame for the fact that the law allowed it to be implemented this way or did not require treasury to do things like oversee where the money went. he has dropped out of the opportunity zone picture. host: was he in congress when it passed? david: yes. host: he voted against it. david: because all the democrats did good cory booker, for this thing, voted against the act. that is one of the things i think hurt opportunity zones. yet jihad built a bipartisan coalition as i said good you got cory booker and tim scott, two prominent african-american senators, both in local government, saying this was a good thing. it becomes part of the tax cuts and jobs act and is branded the trump tax cut and trump embraces it. this was somewhat cynically trump answered to anytime anybody asked him what he has
done for african-americans. he appointed african-americans to run those offices in the white house. he hired an nfl player turned motivational speaker like stock -- scott turner who spoke about opportunity zones. he said this is not a program. this is a mission. ben carson, the hud secretary, became a proponent and jerome smith, who worked in the white house who had worked for tim scott, he also was it. trump did two things. he embraced this thing and made a lot of people against it because it was a trump thing. secondly, rather cynically, he made it seem this is my answer to anybody asks if i've done anything for the black community. host: we have a quote from cory booker talking about opportunity zones. sen. booker: i worked with republicans and democrats to write and pass a law that is bringing billions ofa lot bring.
there are so many places like that across america. it is not just cities like this one. communities and towns like us in newark have been given upon and talked down to, counted out, and, underestimated. susan: early on, their interest on both sides of the aisle was really essential moving forward. talk about these two freshman senators and why this concept really appealed to them? david: that's a good question. cory booker is right that he am tim scott do this together. it was a bipartisan effort. but, it was not put into law with anything that looks like
our partisanship. -- bipartisanship. i think what happened is tim scott is a really interesting guy. as a black man running from south carolina, he has been very outspoken on matters of race. but a very conservative. -- he is economically very conservative. he was always interested in using the tax code to put -- push his objectives. cory booker, as mayor of newark, spent a lot of money getting -- energy getting new jersey to put tax incentives in place to get businesses to invest in newark.
most of the land in newark they were selling to investors was owned by the city. there is no requirement in the opportunity though law that you hire anybody in the community. you don't even have to pretend you are doing anything for the community. there are self storage facilities with no employees being built with opportunities own money. the two of them originally joined together on an apprenticeship bill. i think they were both very aware that we in the press could not possibly overlook two black senators, one republican, and one democrats, who had joined. when they did a bill introduction, the washington post wrote a couple of words on it. other senators would introduce a bill. even the c-span audience would never hear about it.
i think that cory booker still believes in the concept. he has not criticized it. he probably will be instrumental if congress ever revises this thing to make it better. but, tim's -- tim scott's office did all the nuts and bolts. susan: that clip was from 2019, two years after and he was still talking positively. david: he is not negative. if i believe that 85% of the money went for the intended purpose and 15% went to projects like when -- the one i write about in the book, the ritz-carlton complex in downtown portland, i don't think i would have much complaint. on the other hand, if 85% of the money goes to the ritz-carlton or projects in brooklyn or austin and only 15% goes to a neighborhood in baltimore, that's a different story.
i would be the first to admit we do not know. my reporting suggests that more of the money went to desirable projects in the best communities. those are incentives for real estate investors. 84% of the zones got no money whatsoever. half of the money went to the best 1% of zones. the average income of people who participated was over $1 million per year. susan: is there a consensus among economists about the efficacy of targeted tax breaks? david: that is a good question. if you had asked me that question five or six years ago i would have said that most economists, softhearted, maybe hardheaded, would say, don't invest in places, invest in people. they would say trying to save
flint michigan or some shrinking town in the middle of kansas will not work. and, you are much better off investing in people, giving them training of education. if they do not have opportunities where they live, encourage them to move to someplace. that has changed in recent years for three reason. one reason is we have learned that a lot of people will not move, even if they live in a dying community. because, they have social networks, family, may be spouse has a job. so, people are more stuck then economists realize. secondly, americans are moving less than they used to. fewer people move from one county to another that was true 20 years ago. third, frankly, i think a lot of economists were shocked to discover that ronald -- the donald trump one. when they ask themselves, why?
they saw a lot of people left behind and angry. they realize that in those communities where, shockingly low percentages is -- percentages of adults have jobs and we have the opioid crisis and stuff like that, just thing these people should move would not work. i think economists are more open to place-based policy, but, very skeptical that they work unless they are very carefully regulated. making sure the incentives benefit the people who live there and not some research -- rich person that invest in a condo complex. susan: two house members that for the bipartisan cosponsors of this, who are they and why did they sign on? david: patch to barry was a senior republican from ohio. sean parker came in to talk to him. he was like captivated.
his district had mentioned. he had a rural poor districts. he was interested in getting this into legislation because he thought it had potential. he was very frustrated that the house version of the jobs act did not include this provision. he was trying to clean up the tax code. pat t barry wanted to be how -- chair of the house ways and means committee but he did not get it. he left congress and now runs an ohio business roundtable. ron kind is from wisconsin. he was kind of part of the new democratic crowd, people who were trying to figure out how to put the money into poor neighborhoods or capital starved neighborhoods in wisconsin.
he was not very involved in the legislation. he did not like the decisions the then governor scott walker made. he did not think his district got their fair share. so he has become somewhat critical but i think he still likes the idea. the governor could choose 25% of districts to be designated and opportunities own. some chose wisely. some were probably corrupt. some chose foolishly. austin is one of the fastest-growing metro areas in the country. andrew cuomo, his office designated opportunity zones in brooklyn, which is doing pretty well.
some of the governors made foolish choices. the money has flowed to those choices because any reasonable real estate investor looking for a tax break on a high return, low risk investment will take a better off place. >> that the process. your book spend a lot of time on that. it is a view of how washington works. they fact that they set up the think tank and spent a lot of time laying the work for the base case, you work for i think tank. what is the difference between brookings, where you work, and their eid? >> the brookings institution is 100 years old. it is like a little university without students. it has dozens of experts on a variety of fields. with a few exceptions, it has never succeeded in getting its idea passed into law. once or twice. i think there is some apocryphal
story about how the workings institution designed the marshall plan. there are elements of what workings institute scholars have done that show up in things like the child tax credit. ei was founded by one rich guy, as was brookings 100 years ago. he had a very clear agenda. to get this provision into law. i think it has matured since then. they have done other interesting things. occupational licensing tends to make it hard for people to bring into provisions. they have done stuff on immigration. they have been very active in lobbying for small businesses to get a better share of covid money. it has grown into a broader think tank. its origins were really one rich guy with a really determined agenda who managed to hire really smart people who navigated washington with extraordinary skill.
so, someone i know said that it is a contrast. people like mark zuckerberg try to couple of times to do legislation. he tried to save the newark public schools, largely seen as a failure. he had a big immigration reform thing called fwd u.s.. they launched it too soon and got tons of grief. so, i think what sean parker did cleverly is hired a couple of guys who knew what they were doing and let them run the thing and do a very low profile and build it one step at a time and then succeed. i think they would probably prefer it was not branded as a sean parker thing. sean parker carries his own gauge. a justin timberlake and the social network. yet an incredibly ostentatious wedding where everybody was dressed in costumes made from the token novels. -- talking -- j.r.r. tolkien
novels. susan: talk about the gates family who more or less bypassed washington and used their money to go directly to projects and communities. why did sean parker believe washington was a solution if it was not for the tax haven portion of this? david: i think he was trying to leverage rich people to put their money into these poor communities. he saw the tax code as an impediment to that. he would argue that investments in these communities, if they are well chosen, are risky. and the only way rich people will do it if that is if the government pitches in and gives them a little incentive. he has done the other kind of philanthropy. he has given money to cancer research. he is into immunology of cancer. in that sense, some of his
philanthropy is like bill gates and melinda gates. the thing that is so remarkable about how washington works is he did not actually spend that much money on this. it is less than $50 million. he spent tens of thousands of dollars in campaign contributions. -- it is less than $15 million. once he did this he went from contributing to just democrats to contributing to both. it was really clever. somebody said eid people were angry at me because they do not like the tone of the book. they are crazy. they look like geniuses. in polarized washington, they got something into law. it is like a case study of how washington works. what troubles me is i have no objection to people like sean parker having ideas for how to make america better. there are a lot of smart people
in silicon valley. i just do not think we should let them and the people they hire write the law because we get what i fear we have gotten now. susan: back to the playbook. i made a list of various chapters about how they went about this process. they hired a bipartisan consultant and lobbyist spreading money around washington. why is that important? david: they are door openers. they have an -- a bipartisan group of economists. they brought an advisory group that did not have much to do with it but gave them a good sheen. ken roebuck, matt slaughter. they went to a few meetings. you would think these guys were the brain trust. susan: campaign contributions. david: right. sean parker was a big contributor to democrats. when the think outgoing he switched ed increased to -- he switched and went both to
democrats and republicans. he flirted with republicans in the 2016 campaign until donald trump got nominated at which point he sided with the hillary clinton camp. i don't think these campaign contributions by votes in this case, but i think they are a combination of getting you into see someone who is a big, rich contributor. they are a banknote with a big check attached. susan: two inside baseball stories "sneak peek for members of congress and also a launch event david: in a sense in silicon valley you get a couple of big named investors to back your company. then other people say, if those guys are in it i want to be in it too. his strategy was to give sneak peeks to key members of congress like pat barry and ron kind and tim scott and cory booker and
get them to sign onto it knowing that once they were on it they would get a lot of followers. he tells me that the most powerful and charismatic members of congress get an early look at these things because they are more valuable. susan: why is a launch event that few people go to important? david: the launch event was kind of strange. they had republican and democrat giving into republican -- intellectual bipartisanship. then they had scott and booker talking. when you watch the video, it is not clear that they were very focused on opportunities own. -- opportunity zones. it gave it this perfect intellectual legitimacy amid economics reporters. if kevin hassan and jared bernstein think it is a good idea, we must to do it. even though the -- the event was
only briefly about opportunity zones on the eig website there is this picture of cory booker and tim scott. bipartisan, bipartisan, bipartisan. susan: this is a really interesting strategy. the distressed communities index. this is something of interest both to legislators and also the media. local, local, local. why is that important? david: because, they had worked in the senate, they understood that members of congress are hungry for information they can use about their communities. how do they link what they do to what is going on in the community? so, this distressed communities index allowed them to go to any member of congress and say, look, this is what is going on in your district compared to other districts around the country. these are the poor zip codes. they made it very accessible to the press. there were stories about
nebraska, this town in nebraska is 20th on the distressed communities index. it was a way to capture this concern about economic inequality in an easy to understand way. usa today friendly. you can rank the communities. newspapers went for it. the ap helped distributed. you can make beautiful graphics. it is all accurate. they are not distorting the truth. they are just highlighting this economic inequality without ever mentioning the words opportunity zones until later. >> the distressed communities, is that the 8764? david: no, the distressed communities is just an index they made. susan: so what is the 8764? david: the 8760 four census tract. they are designated by governors to be opportunity zones.
>> so that is how many opportunity zones or possibly work? david: there are. these are designated opportunity zones. everybody who follows the rules can invest money in one of these things. if the project proves profitable they can hold it for 10 years and don't have to pay any capital gains tax. what we don't know is most of those places did not get any money. so, it is true that these zones are, on average, than the typical census tract. -- poorer than the typical census tract. but there are lots of places that were already drawing loss of investment. that is why downtown portland oregon is an opportunity zone. susan: after the election when the trump administration came in, you write that their focus was tax reform but not this kind of tax reform. but, momentum was aided by two
things. one, the republican failure to repeal the affordable care act and secondly, charlottesville. why? ava: -- david: i remember thinking at the time, tax reform takes a long time and i don't believe they have done enough work to get a tax bill through congress in 2017. i was wrong. there was a lot more work behind the scenes i had realized. secondly, when they failed in the senate to repeal the affordable care act, the republicans were realizing, man, we had something to show for our time controlling congress just as the democrats do today. that provided momentum for the jobs act that hitched a ride on that thing. charlottesville is a fascinating story. charlottesville, of course, there were these stations over a statue of robert e. lee that turned violent and protesters died. it was a confrontation between
white supremacists and protesters who wanted to set you down. president trump famously said there were good people on both sides. this was too much for tim scott. he went on a couple of interviews in which he basically said, we need more on leadership from the white house. this is not moral leadership. this is wrong. there are not good people on both sides. it was a very strong statement, especially from a republican senator. he gets a call from the white house a couple weeks later to talk to the president. scott said, i thought maybe i should go, maybe i should not go. he went. he was braced for a real confrontation with trump. instead, he found, as other people have reported that in these settings trump does not want confrontation. it was an amicable conversation.
tim scott talked about being black in south carolina and why what trump said was hurtful. trump said to him, according to tim scott, what can i do to make it up for the people i have hurt here? well, tim scott was ready. he says, mr. president, you can support my opportunity zone legislation. until that point, the white house had no patience for this. they were trying to cut corporate taxes. they were not interested in this. there were a few people in the white house who were become -- you were but the white house itself was not in that changed instantly. jerome smith, who was a proponent of opportunity zones working for the master policy council got a call from a guy who was the person at the time who said, that opportunities own thing, you need to tell me about it because the president is for it. the next day on air force one president trump is asked by reporters about the meeting with
tim scott. it was close to the press. everybody think that might have been dramatic. trump said, we had a great conversation, by the way, that sing he is talking about to put money in poor communities, i am all for it. at that point, the trump white house got behind it. there have been stories about how ivanka trump and jerry to trump in their real estate interest -- jared trump in their real estate interest took advantage of this. there are some stories this was nefarious by them to align their own pockets. -- to line their own pockets. i don't think that's true. i think a tax break past that was favorable to real estate and people around a donald trump that were real estate investors, including jared kushner, took advantage of it. susan: we have president trump talking about it in his february 2020 state of the union. >> opportunity zones are helping americans like an army veteran from cincinnati, ohio.
after struggling with drug addiction tony lost his job, house, and family. then, tony found a construction company that invests in opportunity zones. he is now a top tradesmen, drug-free, reunited with his family. he is here tonight. tony, keep up the great work, tony. [applause] david: it is a great story, but it's not true. tony rankin did get hired by a construction company. but it was not connected to opportunity zones. although that company has done really good work and gotten involved in opportunity zones. he more than blurred the lines a little bit. the most heartwarming part of the end of that story is that, as you could see, when he smiles, his teeth need some fixing. because he was on national tv, a number of dentists offered to
fix his teeth for free. it is a nice story but exaggerates the rolled -- the role opportunity zones played in his recovery in the way donald trump tended to do. susan: i did the last portion of your book you went first to portland then via internet to cumin entities -- two communities that received opportunities own money. david: i went to baltimore too. what i found is that from what i can tell, anecdotally, but that is what reporting is when you don't have hard numbers, most of the money went to places that did not really need it. the state of oregon designated some really economically bad to rural communities and some of downtown portland as opportunity zones. downtown qualifies because not very many people live there but the people who do live there are in housing that has been preserved as affordable housing so it shows up as poor.
what i found is in a place like oregon as much as i could tell, much of the money went to places like downtown portland, office buildings, condo complexes, and, very little to the immigrant community of rockwood outside. baltimore is a fascinating place. it was exactly what opportunity zones were meant for. i mean, it is a struggling town. it was the six largest city in america in 1950. now they are down to 600,000 people and have a terrible crime problem. its reputation was probably ruined by the wire. when you walk or drive around baltimore, it looks like the wire. they got a little opportunities own money. i was there yesterday. there is a really interesting project. a guy is building -- taking some rowhouses and renovating them. his name is brendan. he is going to put this is on
the first floor and apartments for the business owners upstairs. like you live above the store. his whole project is $5 million. whereas, the condo complex, the ritz-carlton condo, boxes one condo of many. what i fear is that because there was nothing to force people to put money into places like this thing on north avenue in baltimore, most of the money went to things in austin or brooklyn or downtown portland that did not actually need it. then, there are some bad provisions in the law. i mentioned earlier, self storage facilities, which are nice, but don't create any jobs. the most outrageous one is a number of communities qualified as low income because they were college towns. the governors, for some reason, designated those as opportunity zones. so, in louisville, kentucky and are about a champagne, --
urbana-champaign, illinois, which are college towns, they are building luxury housing for people who can afford to have their kids live in a nice apartment with opportunities own money and i don't think that's what it was intended for. susan: so if the concept was generally seen as good, was a problem with the way the law was crafted or the way it was implemented? david: both. first of all, there is an interesting issue about whether the concept is right. there is a choice. rich people have a lot of money. we would like to encourage them to put that in poor neighborhoods. can we write a provision of the tax code that makes that happen? or, should we just ask them and then lets his government put the money in. there is an ideological choice there. i think this law was poorly drafted and poorly conceived. because, they had decided that previous tax breaks like this had too much red tape and too
much bureaucracy. they went too far in the other direction. there is nothing to require an investor to even assert this project is helping the community. there is nothing that talks about employment. the old enterprise zones that jet cap proposed in the 80's had -- jack camp proposed in the 80's had incentives to hire. i think it was poorly drafted and reflect accommodation of naivete about how much tax lawyers will exploit some thing and faith in the market that led money flow and it will go to places that need it. i don't think the trump treasury did the lawn he favors, though. they come at every opportunity -- the law any favors, though. they made it easier for investors. so, there probably were things that a different treasury would
have done to steer this in the right direction. now, we have an interesting, see what happens, joe biden campaign on reforming opportunity zones. there is nothing i have seen in any of these bills that would touch opportunity zones. the biden treasury has done nothing significant on regulation. i think they look at it as, congress created this mess, let them fix it and it has kind of gotten lost. but you know how washington works. i would not be the least surprise that one day we work up and there is some provision added in a reconciliation till and suddenly there is a change, maybe, to narrow opportunity zones, maybe, to make them more generous in their proposals. susan: what are the lessons of the opportunities own legislation that applied to the big bills pending in washington now? -- that apply to the big bills pending in washington now? david: when bills are so big,
little provisions that if they stood on their own would get a lot of scrutiny get tucked in and nobody can pay attention. they get overwhelmed. there is a real need for reporters and congressional staff and advocacy groups and think tanks to scrutinize these bills and see what those little things are. because, little things can turn into big things. definitely, reconciliation is a frustrating process. this program would have benefited from better reporting and better data. the third thing is that you should never let -- you should never outsource the writing of legislation. of course, there were people in a congress involved but, most of the work was done by a think tank funded by one, perhaps it heal a it, billionaire. -- perhaps idealistic, billionaire. susan: if people read your book
and say this does not work for the country and people, what can i, as an individual citizen, do about it? david: well, everybody should vote. that's the first thing. i have found a number of communities where people organized and the economic develop networks were strong in order to encourage opportunities own investment. so, i do not know how many of us can do this. but, like the example of a small time in indiana where one rich family sold a business and is using the money to renovate a hotel in the downtown to make it into senior housing. one thing is that if there are rich people in a community who are publicly minded, there are a bunch in erie, pennsylvania as well, a big insurance company. opportunity zones can be used for good. you just have to work really hard to make sure they are being
done. i also think that in many communities, d.c. is one of them, the state and local government have put some added incentives in two opportunity zones. in order to take advantage of those incentives, you need to walk through some hopes -- hoops to show this is good for the community. too many of us look at develop it in our communities as someone else's business and the only people who show up at a zoning board are people who live next door. i think that things like this, this is a tool that can be used for good, but, requires a lot of energy and people in a community to make sure it is used for good and not just a tax break to build a hotel. susan: you have been reporting for the wall street journal force 30 years -- for 30 years. did you learn anything new about washington in this project?
david: i think i had never actually seen a tax provision that was born outside of washington come to life like this. big corporations are always lobbying to get this provision of the tax bill so plants that get pharmaceuticals can make a tax break and i was familiar with that. i did not realize how, in a way, it was easy what they did. when you look at it after the fact. but, just how clever you can be to get something into law without getting a lot of attention, without spending a lot of money, without -- just, a remarkable case study of what wealth can buy you and what i worry about is that there are other tax provisions that rich people will push that will