Editor's Note: Is Government Participation in the Economy Here to Stay?
Geraldine Gambale, Editor, Area Development Magazine (Feb/Mar 10)
An annual report released by the White House in mid-February indicated that the federal government's $787 billion Stimulus Plan saved or created two million jobs and is on track to create an additional 1.5 million jobs this year.
Needless to say, Democrats have praised the Stimulus Plan's job-creation efforts and results, while Republicans say it hasn't done enough. Now, Democrats in the Senate have pushed through another $15 billion Jobs Bill, which was before the House as we went to press on this issue.
Conservatives in both Houses are once again worried that increasing the national debt is not a solution to the nation's unemployment woes. Nonetheless, business leaders would agree that investment in creating jobs to improve the nation's transportation and communications infrastructure is a good idea. These improvements will not only generate jobs in the short term but also have long-lasting benefits for the economy. Business leaders would also agree that investment in cleaner energy technologies and sources is a good idea as well.
These measures seem to indicate that government participation in the economy is on the rise. Further, according to Tom Stringer, director of the Business Advisory Practice at Duff & Phelps, government participation is an accepted part of the new business equation. In his article this month, "Business Incentives in 2010: Alive and Well," Stringer says that state and local governments "have taken their cue from Washington" and are handing out "targeted investment-oriented incentives for strategic projects" - despite the fact that these governments face budget deficits.
The "incentives as investment" strategy is helping to sustain projects that are creating jobs and revenues. And it's not only new jobs - in several states it is also the case for retained jobs. In our cover story this month - "Luring Companies to Stay Put" - CBRE's Jonathan Sangster provides details on programs targeted specifically to business retention in five states.
Sangster also asks the question, "Is the decision to relocate an operation from a community realistic - or just an attempt to receive benefits or incentives to remain?" Communities and companies need to avoid playing this dangerous game. Instead, they must work collaboratively for a mutually beneficial solution. In that way, communities will win or retain jobs and needed tax revenues, while companies get the financial and other support they need.