Skip to main content

tv   QA David Wessel Only the Rich Can Play  CSPAN  October 18, 2021 6:02am-7:01am EDT

6:02 am
and homeland security secretary alejandra mayorkas will appear before the senate judiciary committee. watch this week on the c-span network, or you can watch for coverage on our new video app. also, head on over to for scheduling information or to stream video live or on-demand anytime. a new mobile video app from c-span. c-span now. download today. ♪
6:03 am
>> mr. president, during one of those conversations that we had, we talked about ways to improve distressed communities throughout this country. 62 million americans living in distressed communities and we talked about legislation that can move this communities forward. and you said yes. as part of this tax reform package, the investing and opportunity act has an inclusion 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 with the big tax legislation of the trump administration talking about a proposal he was a chief sponsor for called opportunity zones. he predicted trillions of dollars into underserved or
6:04 am
economically have been depressed communities. how did this turn out? >> i don't think even senator scott would make that trillions remark now. opportunity zones created 8764 tax havens across the country and they gave wealthy people an incentive to put their money in those poor communities in exchange for capital gains tax breaks. unfortunately, we don't really know how much money has gone into them. as a result of that arcane scented process known as reconciliation, which is now a household word, provision that required reporting was stripped out. but i would say based on the stuff, 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 didn't really need the money they were already improving. or it went to projects that probably would have been built
6:05 am
otherwise. opportunity zones have been used for good, but because there is no requirement that they be used for good, i think most of the money went to other projects. host: opportunity zones are the subject of your book "only the rich can play." i'm wondering if that 500 plus page tax bill that you write in the book that occupied at five pages in that the peach legislation, how did you get interested in this one aspect? >> i have a colleague who is a public finance economist and worked in the obama treasury. he called by attention to this and i kind of rolled my eyes. another complicated tax provision. i know they are important, but when you think about storytelling, taxes don't usually coincide with the word storytelling. and then he mentioned that sean parker of napster and facebook
6:06 am
fame was behind it, and suddenly my ears perked up. i was looking for a project. i have been in the brookings institution for more than seven years. i used to be a reporter for the wall street journal. so i thought a tax bill that has this little provision that is supposed to help left behind communities, injuring social policy. sean parker is involved in it, there has got to be a story here. then i heard that there was an opportunity zone expo in las vegas at the mandalay bay and resort and i thought, i'm not sure i'm going to do a book on this, if i do a book and i don't go to this expo in las vegas, i will always regret it. so i went to the mandalay bay and went to this opportunity zone expo, one of dozens of these conferences as these people were beginning to figure out this provisional tax bill.
6:07 am
and it was a modern day gold rush. some of them were rich people trying to find ways to reduce their taxes, some of them were developers looking for money, and adjust was such an interesting collection of people , all of whom were extroverts and all of whom were just happy to talk to me about things in my notebook. so i thought there is definitely a story here. i didn't know that that would be the most fun of the whole reporting thing because part of my game was that this would be a good excuse to travel the country. host: the title for your book, does it refer to the people who can partake of the provision where the legislative process? guest: i think it's probably both. the way this provision works is only people who have a capital
6:08 am
gain of profit on some asset that they bought. stocks, property, art, whatever. only people who have a capital gain can cut -- put money into an opportunity fund, so most americans can't play. of course, rich people are the people with the money. it is not clear to me if they had had a broader set of people they would've got more money, but it certainly would've seemed more fair and, craddick. also, i conclude that sean parker was well-intentioned, like a lot of people in silicon valley. he thinks that he has a better way to do everything. a better way to do the internet, a better way to anti-poverty. those people have a great deal of self-confidence, you might say. he could fill this think tank with cory booker, the democratic
6:09 am
senator from new jersey, appointed in this thing. the way they did it and the way the tim scott got it in, there were never any hearings. it had a lot of sponsors, but it was mostly because the ideas sounded benign. who could be against rich people putting money into poor neighborhoods? they didn't design a program, in my view, that is likely to maximize what they said were their intentions. instead, all those people i met at the opportunity zone expo in las vegas are very skilled at finding ways to squeeze and stretch the tax code so that in the end, i'm afraid they want to save money for rich people on their taxes. host: you said that there was nonrelated reporting on this not mandated by the legislation. how much money would likely have gone to the u.s. treasury
6:10 am
through required capital gains taxes that have been diverted and to the opportunity zones? guest: the opportunity zone program is very carefully designed. the think tank hired a technician that would work on capitol hill, and requires that people who participate pay some money in 2026. and that is really significant because in washington, everything is measured in 10 year increments. because there is this revenue in 2020 six and most of the losses occur outside the tenure window, the official estimate is relatively small, in the single-digit billions of dollars. i don't really have any 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 don't really know. but i do know that we are talking billions of dollars.
6:11 am
although it seems like a small song in washington these days were somehow you can't get attention unless you are talking trading, you can imagine billions of dollars could have been used directly help these communities rather than try to follow it through the tax code. host: go back to sean parker. i would like to learn more about that. >> from my perspective, this was a purely philanthropic mission. i spent a lot of time thinking how can i help communities that don't have access to some of the advantages that i have? in silicon valley, you find there are a ton of investors, more investors than companies to invest in. this is the problem that it turns out is pretty unique to silicon valley. this all began from a desire to try to spread that access to capital more evenly across the country in places that didn't benefit from the technology boom
6:12 am
or the economic recovery. host: so, for people who don't know him, who is he, and how did he make his money? guest: sean parker was a young hacker. he actually got busted when he was a teenager for hacking into some government systems. he didn't go to college. he ended up in silicon valley. he was the founder of something called napster, which the younger viewers may not know, but was a music sharing site that was put out of business because they were stealing music and people were trading music when i was younger. and then he befriended mark zuckerberg at the very, very early days of facebook. and he made his initial money by being the first president of facebook. he didn't last very long there, but when you get in on the ground floor of silicon valley, even after you leave the day, you can rise up. one thing that is interesting
6:13 am
about that let, and it really captures something about his intentions, you can see that he was talking about investing money in businesses. that was kind of like his vision. he told me that. there is some money going into operating businesses. this actually a of brewery not far from here that has got some opportunity zone money. but he didn't appreciate that most of his money was going to real estate. that wasn't his plan. and that is what happens when you have a good idea and you're so convinced that you know how it is going to work that you disregard the advice of experts. host: would that clip was 2019. >> he feels good about them. it is like software. you have version 1.0 and there are some problems with it,.
6:14 am
he and his allies prefer to look at the good story for places where it is used as they intended. they think the bad stories are just bad examples. after trump lost, some of the people in the think tank began to think that maybe the trump treasury didn't put regulations and that would have helped this thing. they didn't say that probably would trump was president. i think he is still pretty proud of it, but his life he launched his baby and he is really fighting cancer and stuff. host: did you share your book with him? guest: i did not share the book within.
6:15 am
i shared with his publicist the biographical information i have in the book about sean parker to make sure i got it right. it's interesting. sean parker's people complained that i loved too much on his party days as a young man, and they are now trying to style him as a serious philanthropist. i'm not completely convinced, but they did give me some evidence. he threw a ridiculous party a few years ago. he bought a mansion in california that has -- is next to hugh hafner's playboy mansion. i think he lives well. their reaction to the book, i haven't heard from him, i don't expect to. i did hear from some of the people at the economic group. and they are angry because they think that i misled them.
6:16 am
i never really express an opinion about opportunity zones in my interview. i did what any good journalist does, i asked a lot of questions and i probably appear to attic. so they expected a much more positive review of opportunity zones then i gave in the book. host: this book is a real detailed study of how washington works and how they navigated the system. when did sean parker first had the idea? host: around 2013. host: and when did it move into "i'm going to work on this"? guest: he and his sidekick, a guy named michael polansky hired these two washington insiders, a veteran of the obama white house
6:17 am
and a trade association for the four units of the u.s. multinational republican, both of whom had worked in the senate. and he hired them and they pretty much went into stealth mode for a couple of years. they organized a little think tank and then they built a very strong case that we have a problem with economic inequality in the u.s. they focus on the gap between communities that are doing well and immunity that are doing poorly. then they defended with a solution. because they are wise to washington ways, they had two
6:18 am
economists, a republican who was after that chair of donald trump's council of economic advisors and sharon bernstein, who had worked for biden as vice president and is now on biden's council of economic advisors to do a white paper. and the white paper says we have a problem with geographic inequality and previous provisions haven't worked as well as we'd like. they didn't really lay out a roadmap for opportunity zones. they kind of said, we need to think about doing something like this. but they are held up for the poster boys at this bipartisan and. over time, they build a coalition in congress sean parker goes around and meet with these people individually. one thing that makes sean parker different than a lot of business people i've met is that he is
6:19 am
charming and he is engaging. and so john told me that unlike the ceos he has worked with in his previous jobs who knew they had to go talk to members of congress and basically hated every minute of it, sean parker really enjoyed it. so they built this coalition, this formidable bipartisan coalition forces ill which was announced in 2016. but i think that a lot of the people who signed on didn't really look at the details and they didn't through how it might work in practice. like a lot of bills introduced in washington, it went nowhere. but having tim scott on their side proved to be really smart. i think the leaders of eig, like many people in washington, assumed that hillary clinton would win the 2016 election, but they had the perfect diversified portfolio. they had a democrat in the white house, and tim scott if there was a republican, but they could
6:20 am
not have known that tim scott was on the finance committee and chairman orrin hatch asked four senators to lead the tax reform legislation and in shaping it, tim scott was one of them. when you are in that inner circle, you can get something done, and tim scott got it in with a really interesting assist from donald trump. host: before we get to that, one person in the early stage of the story is someone named ro khanna. who is he? guest: he is a congressman from silicon valley. he was very popular with silicon valley liberals because he was sort of socially liberal and economically appreciated economic growth. sean parker talked to him and tried to hire him to become the head of vig, but ro khanna said i'm actually going to run for congress, so you should talk to this guy. ro khanna runs for congress,
6:21 am
sean parker contributes to the campaign. he loses. two years later, he wins. he is now a democratic congressman from silicon valley. a rather unusual guy. he was one of the leaders of the bernie sanders presidential campaign theory i talked to him. he blames the treasury the way this was implemented. he doesn't take any blame for the fact that the law allowed it to be implemented this way or didn't require treasury to do things like oversee where the money went. he kind of dropped out of the opportunities on picture. host: was ro khanna in congress when it passed? guest: yes. all the democrats voted against the tax cuts and jobs act. so cory booker voted against the act. that is one of the things that i think her opportunity zones. vig had built a bipartisan coalition.
6:22 am
if you got cory booker a tim scott, two prominent african-american satirist, both the food have been in local government saying this is a good thing. becomes part of the tax cuts and jobs act and is immediately branded a trump tax cut and front embraces it. this was, i think, somewhat cynically, trump's answer to anytime anyone asked him what he done for african-americans? he pointed african-americans to run the office in the white house. they hired an nfl player turned motivational speaker named scott turner who went around the country speaking about opportunity zones. this is not a program, this is a mission. ben carson, the african-american hud secretary became an active proponent. a guy named jerome smith who work in the white house who have worked for tim scott, he also was in. so trump didn't two things. he embraced the thing a man a
6:23 am
lot of people be against it because it was a trump thing. secondly, rather cynically, he made it seem like this is my answer to anybody who asks if i have done anything for the black community. host: we have a clip of cory booker talking about opportunity zones. let's look at that. >> republicans and democrats to write and then passed a law that is bringing billions of dollars of investment to low income urban and rural communities that have for too long been left out and left behind. there are so many places like that across america. not just cities like this one. farm communities and factory towns that like us here in new york, have been given up on eight talked down to. counted out and underestimated. host: early on, the interest on
6:24 am
both sides of that was really essential to moving onward. talk about these two freshman senators and why this concept really yield to them. guest: good question. cory booker is right, that he and tim scott did this together, bipartisan effort with bipartisan monitors, but it was not put into law and anything that looked like bipartisanship that wasn't a single democrat who voted for the tax cuts and jobs act. what happened here, so, tim scott is a really interesting guy. as a black man running from south carolina, he has been very outspoken of matters -- on matters of race. but he knows he needs white votes, so the actually was cochair of strom thurmond last senate campaign. but he is economically very conservative. he voted to repeal the affordable care act. he voted for tax cuts. and he has this thing he calls the opportunity for some time.
6:25 am
he was always interested in using the tax codes to push his objectives. cory booker, as mayor of newark, had spent a lot of energy getting the state of new jersey to put some tax incentives in place to get his nurses to invest in new art. but the difference between that is most of the landed work that they were selling to these investors was owned by the city, so the city could put a lot of conditions on them including conditions about climate. there is no requirement in the opportunities on law that you hire anybody in the community. you don't even have to pretend you are doing anything for the community. there are some facilities which have no employees, they are being built with opportunities of money. but i think the two of them originally joined together on an apprenticeship bill, and i think they were both very aware that we in the press could possibly
6:26 am
overlook two black senators, one republican, one democrat who would join hands for anything so when they did a deal introduction set -- bill introduction, even the c-span audience would never hear about it. i think that cory booker, he still believes in the concept, not criticized. he probably will be instrumental if congress ever revises the thing to make it better, but tim scott's office is the one that really did all the nuts and bolts of work because democrats were excluded from the tax codes. host: backflip was from 2019, 2 years after it passed and he was still talking about. guest: if i believe that 85% of the money that is, and 15% of it
6:27 am
went for the complex in downtown portland, i don't think i would have much complaint. however if 85% of it goes to the ritz-carlton and only 50% goes to the neighborhood in baltimore, that's a different story. -- 15%. i will be met, we don't know. my reporting suggests that money -- more of the money went to the desirable projects because those are the incentives for real estate investors. most of the tax returns from 2019 are opportunities own funds, and they found that 84% of the zones got no money whatsoever. at the money went to the best off 1%, and the average income of people who participate was over $1 million per year.
6:28 am
host: is there a consensus among economists about the efficacy of targeted tax breaks? guest: if you had asked to be that question and met five or six years ago, i would have that most economists, softhearted, maybe hardheaded would say don't invest in places, invest in people. trying to save flint michigan or some shrinking town in the middle of kansas is just not going to work. were much better off investing in people, giving them training education. if they don't have opportunities where they live, encourage them to move to someplace where they can have more productive lives that has changed in recent years, i think for three reasons. one reason is that we have learned that a lot of people will not move even if you have any dying community because they have social networks, family, maybe their status as a job.
6:29 am
people are a lot more stock than economists realized. secondly, americans are moving left the used to. fewer people move from one county to another than 20 years ago. third, frankly, i think a lot of economists were in shock because that donald trump won. when they ask themselves why, they saw a lot of people who were really left behind and angry in the realized that in those communities where shockingly low percentages of adult actually have jobs and we have the whole opioid crisis and stuff like that, just saying these people should move wasn't going to work. i think economy -- economists are more open to place-based policies, but they are very skeptical that they work unless the entity our right to make sure that the incentives benefit the people who live there, not just somebody invests in the condo complex.
6:30 am
host: talking about a legislative complex, two house members that were bipartisan cosponsors, why did they sign on? guest: pat -- was a senior republican from ohio. sean parker talked to him and he was just captivated. he had some rural districts, so he was really interested in getting this into legislation because he thought it had potential. and he was very frustrated that the house version of the tax cuts and jobs act did not include this provision. although this is kind of a paul ryan ring, former speaker, he was trying to clean up the tax code. he didn't want to put more bells and whistles in. he barely wanted to be chair of the house ways and means committee, but he didn't want to. he left congress.
6:31 am
he now runs an ohio business roundtable. ron kind is from wisconsin, and he this kind of part of the new democrat crowd, the people who were trying to figure out how did you let sean parker put money into poor neighborhoods in wisconsin? he wasn't very involved in the legislation. he didn't like the decisions that the that-governor scott walker made an designating opportunity zones. he didn't think the district got their fair share. so he has become somewhat critical of them, but i think he still like the idea. under the law, the treasury put out a list of communities that were eligible. 56% were eligible. and the governor pictures of the 25% of those to be designated as an opportunity zone. some chose wisely, some chose
6:32 am
foolishly. austin is one of the fastest growing areas in the country. andrew cuomo, his office designated opportunity zones in brooklyn, which is doing pretty well. 25 percent of all the opportunity zones in the state of new york are in brooklyn. some of the governors made foolish choices, and 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 is going to pick the better place. host: your book spends a lot of time on it, and the fact that they set up this think tank, you said that a lot of time laying the groundwork you work for a think tank. what is the difference between
6:33 am
where you work and yet ig? guest: the brookings institution is 100 years old. it is like a little university without students. we've got experts on a variety of fields and with a few exceptions, have never succeeded in getting it idea past its falls. once or twice, i think there is some story about how the brookings institution designed the marshall plan. and there are elements of what the scholars have done that would show up in things like the child tax credit. eig was founded by one rich guy who had a very clear agenda. to get this provision into law. i think it has matured since then. they have done a lot of other interesting things, they fit involved in issues about occupational license which tends to make it hard for people to break into provisions. they've done stuff on
6:34 am
immigration. they've been very active in lobbying for small businesses getting a better share of some of the covid money. its origins were one rich guy with a really determined agenda who managed to hire really smart people who navigated washington with extraordinary skill. someone i know said that it is a contrast to people like mark zuckerberg who has tried a couple of times to do legislation. he tried to save the new our public schools, i think that is largely seen as a failure. he had this big immigration reform thing called fwd u.s. they launched it too soon, and they got lots of grief. i think what sean parker did cleverly is hired a bunch of guys who knew what they were doing, let them run the thing, do it very low profile, build it one step at a time, and then
6:35 am
succeed. i think they would probably prefer it wasn't branded as a sean parker thing. sean parker carries his own baggage, justin timberlake in the social network. he had an incredibly ostentatious wedding where everybody was dressed in costumes made from the tolkien novels and stuff. host:'s think about the gates family, for example, who more or less bypassed washington and used their money to go direct to projects and communities. why did sean parsons believe the washington was the solution if it were not for the tax haven solution of this? guest: i think he was trying to leverage rich people to put their money into these poor communities, and he saw the tax code as an impediment to that. he would argue that investment in these communities are risky it the only way rich people will
6:36 am
do it is if the government gives them a little bit of an incentive to do it. i think that would be the concept. he has done the other kind of philanthropy. he has given money to set up this cancer research. he is into the hole immunology of cancer. in that sense, some of the philanthropy is similar to bill gates. that thing that felt remarkable about how washington works is that he didn't actually spend that much looking at the public disclosures, it is less than $50 million. once he started doing this, he went from contributing only the democrats to contributing to both. this is a relatively low-budget operation. i was telling somebody i know that eig people were angry at me
6:37 am
because they don't like the tone of the book. they said they are crazy, they look like jesus. in polarized washington, they got something into law. it is like a case study on how washington works. i have no objection to people like sean parker having ideas how to make america better we both know there a lot of smart people in silicon valley. i just don't think we should let them and the people they hire right along -- the law -- write the law. host: the hired bipartisan consultants and lobbyists spreading money around washington. why is that important? guest: they didn't really have much to do with it, but it gave them a good sheen. the dean of the business school
6:38 am
at dartmouth. when i talked to them, they went to a few meetings, but these guys where the brain trust. host: campaign contributions. guest: sean parker was a big contributor to democrats. he swished and increases campaign contributions and went both the democrats and republicans. he flirted with republicans during the 2016 presidential campaign until dolled from got nominated at which point he sat down with the hillary clinton canned. i don't think these campaign contributions are both in this case, but they are a combination of getting into seats in one and they are a big thank you note with a check attached host: sneak peek for members of congress and also a large event. guest: what john explained to me
6:39 am
with that in a sense, in silicon valley, you get a couple of big-name investors to back your company. and that other people say those guys are in it, i want to be it. his strategy was to give sneak peeks to key members of congress and get them to sign onto it knowing that once they were on it, they would get a lot of followers. the most powerful and charismatic members of congress did an early look at these things because they are much more valuable host: why is that a large event that very few people go to? guest: it was kind of strange. they had a republican and democrat giving this intellectual bipartisanship and then they've got stott and booker talking.
6:40 am
it's not clear that they really were very focused on opportunity zones. but it gave it is perfect intellectual legitimacy among economics reporters. and bipartisanship. even though that event was only briefly in the opportunity zones, there is a picture of cory booker and tim scott, bipartisan, bipartisan, bipartisan. host: and this is really interesting also on one of the strategies. something of interest both to legislators and also the media. local, local, local. why is that important? guest: because he had worked in the senate, he understood that members of congress are hungry for information that they can use about their communities.
6:41 am
how they link what they do to what is going on in their communities. the community index allowed them to go to any member of congress and say this is what is going on in your district compared to other districts around the country. these are the poor zip codes. and they made it very acceptable to the press. all sorts of stories about nebraska, 28 on the distressed communities index. it was a way to capture this concern about economic any fully in a very easy to understand way, usa today-friendly. newspapers went for it. they are not distorting the truth, they are just highlighting the economic
6:42 am
inequality without ever mentioning the word opportunity zones. host: distressed communities, is that the 8764? guest: distressed communities is just an index they made looking at a lot of things. the census tracts are census tracts designated by governors to be opportunity zones. host: so that is how many there possibly work. guest: there are. anybody who follows the rules can invest money in one of these things and if the project proves profitable, they don't anticipate any capital gains taxes on it. but what we don't know except for this study mentioned from the joint tax committee, most of those places didn't get any money. it is true that these clones are, on average, poor, typical track, but there are a lot of places on there because of the way they were using data that
6:43 am
were already drawing lots of investments. that's why downtown portland oregon. post: after the election, you write about how 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. secondly, charlottesville. why? guest: the first one, i remember thinking at the time, tax reform takes a long time. at least, i don't believe they done enough work to get a tax bill congress in 2017. and i was just wrong. there was a lot more work behind the scenes than i have realized, and they failed in the senate to repeal the affordable care act, republicans were realizing we have got to have something to
6:44 am
show for our time controlling congress. that has provided the movement of the tax cuts and jobs act and this hitch a ride on that thing. charlottesville is a fascinating story. charlottesville, there were these demonstrations over a statute of robert e. lee, it turned violent. it was a confrontation between white supremacist, white nationals and protesters who wanted the statute taken down. and president trump famously said that they were good people on both sides and this was too much for tim scott and he went on a did a couple of interviews in which he basically said we need moral leadership from the white house and this is not moral leadership, this is just wrong. there are not good people on both sides. it was a very strong stance effectively for a republican senator. his office gets a call from the white house a couple weeks later and said would you like to come down to talk to the president about this?
6:45 am
scott says i thought maybe i should go, maybe i shouldn't go. like most people, if the president calls, you go. he went, and he was brace for a real confrontation with from what instead he found as other people have reported, that in these settings, trump doesn't want confrontation. it was an amicable conversation and tim scott talked about being black in south carolina and why what front had said was so hurtful and then trump says to him according to tim scott what can i do to make it out to the people who i have her here? well, tim scott was ready for this. mr. president, you could support my opportunities on legislation. until that point, the white house had no patience for this. there were a few people in the white house who were. the white house itself was not. that changed instantly. jerome smith gets a call from a
6:46 am
guy who was the lead has legislator at the time and said that opportunities him they, the president is for it. the next day on air force one, trump is asked by reporters about his meeting with scott. trump said we had a great conversation. by the way, that thing he is talking about, i am all for it. at that point, the trump white house got behind it. there have been a lot of stories about how he ivanka trump and jerry trump took advantage of this. some suggested this was a nefarious scheme by them to line their own pockets. i actually don't think that is true. i think a tax break past that was very favorable to real estate and not surprisingly,
6:47 am
people around donald trump who are real estate investors took advantage of. host: we have president trump talking about it is february 1 2020 speech. listen. >> opportunity thousands are helping americans like army veteran tony rankin's from cincinnati, ohio. after struggling with drug addiction, tony lost his job, his house and his family. he was homeless. but then, tony found a construction company that invested an opportunity zones. he is now a top tradesman, drug-free, reunited with his family, and he is here tonight. tony, keep up the great work. guest: it is a great story, but it is not true. rankin did get hired by a
6:48 am
construction company, but it was not connected to opportunity zones. that company has later gotten involved in opportunity zones. he more than blurred the line. the most heartwarming part of the end of that story is that, as you can see when he smiles, his teeth need some fixing. because he was on national tv, a dentist offered to fix his teeth for free. it is a nice story, but it exaggerates the role that opportunity zones laid in his recovery in the way the donald trump tended to do. host: the last portion of your book, you went by internet communities that were designated for these opportunities on money. what did you find out on the ground? guest: i did go to baltimore, because you do that without getting on a plane. what i found is that, from what i can tell, anecdotally, but that is what reporting is, most of the money went to places that
6:49 am
didn't really need it. the state of oregon designated some really bad, economically bad rural communities and some of downtown portland as opportunity zones. not many people lived there, but the people who do are in housing that has been preserved. in a place like oregon, as much as i can tell, most of the money went to places like downtown portland. baltimore is just a fascinating place. it was exactly what opportunity zones were meant for. i mean, is a struggling town, the sixth largest city in america.
6:50 am
they got a little opportunity zone money. i was just there yesterday, a guy is taking some rowhouses and renovating them. he is going to put businesses on the first floor. his whole project is $5 million. the condo complex, what i fear is that because there was nothing to force people to put money into places like this in on north avenue in baltimore, most of the money went the things in austin or brooklyn or downtown portland that didn't needed. then there is some bad provisions in the law. self storage facilities are
6:51 am
nice, but they don't create new jobs. the most outrageous one is that a number of communities qualified as low income because they were college towns, and governors for some reason designate those as opportunity zones. louisville, kentucky and urbana-champaign, illinois, people are building luxury student housing. the kind for people who could afford to have their kids live in a nice apartment. host: so if the concept was generally seen as a good one except the problem with the way the law was crafted, or the way it was implemented? guest: well, both. an interesting issue about the concept, here is the choice. rich people have a lot of money. we would like to encourage them to put it into poor
6:52 am
neighborhoods. can we write a provision of the tax code that really make that happen? or should we just attacked them and let the government put the money in? there is an ideological choice. i think this law was poorly drafted and poorly conceived, because they had decided that previous tax break 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 that this project is helping the community. the old enterprise zones that the former republican congressman and hud secretary proposed the 80's, i think it was poorly drafted. i think it reflects a combination of naivety about how much tax lawyers will exploit something and the market that lets let a lot of money flow and some of it will go to places that don't need it, but most of
6:53 am
it will and we can be happy without a lot of bureaucrats. i don't think the trump treasury did the law any favors. every opportunity when you read about what voters are saying, they say the regulations are very taxpayer-friendly, which means they made it easier for investors. probably things that a different treasury would have done to steer this in the right direction. now, we will see what happens. joe biden campaigned on reforming opportunity zones. there's nothing that i've seen any of the bills that he has sent out in congress that would touch opportunity zones and the biden treasury has done nothing significant on regulations. i think they look at it as this is such a mess, congress created this mass, let them fix it. let you know how washington works, i wouldn't be the least bit surprised if one day we wake up with some provision added and a reconciliation bill and suddenly there is a change.
6:54 am
maybe to make them more generous. host: so what are the lessons of the opportunities on legislation that applied to the big bills that are pending in washington like now. guest: when bills are so big, little provisions that if they stood on their own would get a lot of scrutiny just get tucked in. they get overwhelmed. there is a real need for reporters and congressional staff and advocacy groups to scrutinize. secondly, reconciliation is a frustrating process. this program would have benefited from better reporting and better data if not for
6:55 am
reconciliation. you should never outsource the writing of legislation. most of the work was done by a think tank funded by one billionaire and that is not a good idea. host: people read your book and say this process doesn't work the country, for the people that it intended to. what can i, as an individual citizen, to about it? guest: everybody should vote, that is the first thing. i think i found a number of communities where people organized and economic develop and efforts were strong in order to encourage opportunity zone investment. i don't know how many of us can do this, but like this example in a small town in indiana, one bridge family sold a business
6:56 am
and is using the money to renovate a hotel downtown to make it into senior housing. one thing is that if there are rich people in a community who are publicly-minded, is a bunch of pennsylvania as well, a big insurance family on a big insurance company, opportunity zones can be used for good. you've just got to work really hard to be sure they are being done. in many communities, d.c. is one of them, the state and local government have an incentive into opportunity zones. in order to take those incentives, you need to walk through some hoops to show is good for the community. too many about look at development in our communities as, that is somebody else's business. the only people who show up at a zoning board are the people who live next door, who don't want the building or do want the building or whatever. this is a tool that can be used
6:57 am
for good, but requires a lot of energy to make sure it is used for good and not just as a tax break to build a hotel. host: you reported on wall street journal for seven years. did you learn anything new about washington in this project? >> i think i had never actually seen the tax provision that was born outside of washington come to life like this. obviously big corporations are always lobbying to get this provision of the tax bill so that plans that make pharmaceutical can get a tax break. anyway, it was easy what they
6:58 am
did. but just how clever you can be to get something into law without getting a lot of attention, without spending a lot of money. it is a remarkable case study of what wealth can buy you. there are other tax provisions that put people will close that will be full of things in opportunity zones, but will really end up making the rich richer. host: the book is called "only the rich can play." nice to have you in person in the studios. guest: nice to be here, thank you. >> all q&a programs are available on our website, or as a podcast on our new c-span now
6:59 am
>> c-span is your unfiltered view of government. we are funded by these television companies and more, including comcast. >> you think this is just a community center? it is may more than that. >> comcast is partnering with thousands of unity centers so that students from low income families can get the tools they need to be ready for anything. comcast support c-span as a public service along with these other television providers, giving you a front row seat democracy. >> coming up this morning on "washington journal," we preview the week ahead on capitol hill and congressional negotiations on president biden's build back better agenda with axios congressional reporter alayna treene. plus a discussion on covid-19 debts in rural areas.
7:00 am
our guests are keith mueller and fred ulrich. in syracuse university's patrick penfield talks about delays in the u.s. supply chain and the impact on the economy. washington journal is next. host: this is the washington journal for october 18. a new poll asks people about the role of government. most respondents told the polling companies they think many things could be done by individuals or businesses. there is more to the poll on people's opinions of government power. we will ask you to tell us what you think about the role of government, whether you would prefer a reduced government role, maybe you think government needs to do more. (202) 748-8001


info Stream Only

Uploaded by TV Archive on