What Does the Future Hold for the EDA?

The Economic Development Administration (EDA) is a relatively small agency within the Department of Commerce created in 1965 by the Public Works and Economic Development Act. As the only Federal agency focused exclusively on economic development, EDA plays a critical role in facilitating regional economic development efforts in communities across the country. In addition to investing in workforce development and innovation, the agency has seen a growing role in disaster recovery in the last decade; delivering billions of dollars for economic recovery efforts following natural disasters.

During and coming out of the pandemic, awareness of EDA’s programs and impact grew significantly after Congress appropriated $4.5 billion dollars for the agency through the CARES Act and the American Rescue Plan Act (ARPA) to boost economic recovery. After almost two decades without congressional authorization, EDA was finally reauthorized and given updated authorities late last year in the Thomas R. Carper Water Resources Development Act of 2024 (WRDA).

During the first Trump Administration, plans to shut down the EDA were abandoned, largely due to the agency’s popularity amongst both Democrats and Republicans in Congress. In Trump’s second term, it seems plans to shut down EDA are being revived. Project 2025 describes EDA as “an impediment to coordinated campaigns that advance Administration priorities.” Rather than reshaping or repurposing the agency to better fit the Administration’s plans, P2025 posits that “it would be more efficient to abolish EDA and reallocate its funding to other overlapping federal grant programs.”

Given the President’s recent actions to dismantle the Department of Education, there’s real concern about EDA’s future. But even if the Administration ultimately chooses not to shut down EDA due to legal or political hurdles, the proposed plans to reshape the agency are cause for concern. Project 2025 outlines steps to:

(1) Shift decision-making authority from EDA’s regional offices to the agency’s headquarters to “better align funding with conservative political purposes”;

(2) Use direct hire authorities established during the pandemic to outweigh and ultimately drive out career and regional employees;

(3) Continue to administer disaster funding in accordance with points 1) and 2); an

(4) Restart EDA engagement with Opportunity Zones, which were created by the Tax Cuts and Jobs Act in 2017 to incentivize private investment in low-income communities.

Much of this work is already underway. Not only has EDA funding that was obligated for public works and economic adjustment projects been paused, but the majority of those awards are currently being reviewed and likely to be rescinded due to compliance with EDA’s stated investment priorities under the Biden Administration, including equity and sustainability. Like other Federal agencies, career staff are being forced to exit in droves and those who remain are left in an untenable environment.

Staff in EDA’s regional offices have an understanding of the unique characteristics of the communities in their jurisdiction and working relationships with local stakeholders and Economic Development Districts. They do the heavy lifting to vet and advance the competitive projects that will best serve their communities and local economies. They play a critical role in supporting development on the ground in distressed communities across the country; particularly those that lack the resources and organizational capacity to advance projects without outside assistance.

Consolidation at EDA won’t increase efficiency, it will hobble an agency that’s provided measurable value to the American people, particularly in times of crisis. Stakeholders should engage policymakers to voice support for the EDA and defend its future.