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Obama to Unveil “Promise Zone” Economic Initiative

CBSNews -- President Obama on Thursday will unveil another facet of his plan to combat income inequality, this time focusing on a theme embraced by Democrats and Republicans alike: economic mobility.

President Obama on Thursday will unveil another facet of his plan to combat income inequality, this time focusing on a theme embraced by Democrats and Republicans alike: economic mobility.

Joined by local leaders at the White House, Mr. Obama will officially announce the administration’s first five “promise zones” -- pockets of the country that will receive comprehensive federal assistance after being especially hard-hit by the recession. The five zones will be located in San Antonio, Philadelphia, Los Angeles, Southeastern Kentucky and the Choctaw Nation of Oklahoma. The administration aims to ultimately assist 20 such regions.

Mr. Obama first put forward the idea of “promise zones” nearly a year ago, in his 2013 State of the Union address.

“There are communities in this country where no matter how hard you work, it is virtually impossible to get ahead,” Mr. Obama said in that speech. “Factory towns decimated from years of plants packing up. Inescapable pockets of poverty, urban and rural, where young adults are still fighting for their first job. America is not a place where the chance of birth or circumstance should decide our destiny. And that’s why we need to build new ladders of opportunity into the middle class for all who are willing to climb them.”

The president’s “promise zone” plan is being put into action 50 years after President Lyndon Johnson first declared a "War on Poverty” and around six years after the start of the recession. It also comes as Democrats and Republicans compete to convince voters they have the right formula for helping still-struggling lower- and middle-income Americans. Democrats so far have largely focused on income inequality, calling for a higher minimum wage, closing tax loopholes that benefit the wealthy, and extending emergency long-term unemployment benefits. Yet by framing his “promise zone” initiative as a matter of improving mobility, Mr. Obama could blunt the GOP’s argument that the Democrats’ economic philosophy leaves out a significant part of the equation.

In a speech at the Capitol Wednesday, Sen.  Marco Rubio, R-Fla., said that income inequality is indeed a problem that deserves attention. It does not, however, “give us a complete view of the problem before us,” he said. Rubio’s pitch for a conservative approach to economic growth echoed the argument Mr. Obama made a year ago for the “promise zones.”

“Yes, the cashier at a fast food chain makes significantly less than the company’s CEO,” Rubio said. “The problem we face is not simply the gap in pay between them, but rather that too many of those cashiers are stuck in the same job for years on end, unable to find one that pays better. And it is this lack of mobility, not just income inequality, that we should be focused on.”

Rubio proposed streamlining federal antipoverty programs into a “Flex Fund” that would be distributed to the states to spend how they see fit.

The “promise zone” plan, meanwhile, aims to cut red tape and streamline federal funding from multiple government agencies to these specific zones. The Department of Education, the Department of Housing and Urban Development, the Commerce Department, the Health and Human Services Department, the Justice Department, and the Department for Agriculture will all participate.

The administration is designating “promise zones” by looking for areas where local officials can make strategic, targeted investments. For instance, a “promise zone” may be interested in reducing violent crime with increased Justice Department funding for local law enforcement. Alternatively, a region may want to leverage Housing and Urban Development grants to attract private real estate investors to high-poverty neighborhoods. The president’s plan also includes tax credits for hiring workers and tax write-offs for capital investments within the “promise zones.”

Los Angeles Mayor Eric Garcetti told the Los Angeles Times that the comprehensive approach to improving a region of his city should be effective. 

"For decades, we've put programs in silos, which might move the dial a little bit here on education, a little bit here on health, but never all together, and I think this is our best shot,” he said.

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