The U.S. Department of Agriculture (USDA) runs an array of rural subsidy programs, which are aside from the farm subsidy programs that it also runs. USDA’s rural programs are grouped within three agencies: the Rural Housing Service (RHS), the Rural Utilities Service (RUS), and the Rural Business-Cooperative Service (RBS). The agencies will spend $6.5 billion in 2016.
These subsidies are the focus of a new essay at DownsizingGovernment.org.
The USDA’s rural agencies have tentacles into a wide range of activities, as illustrated by the following projects funded in 2015:
In the U.S. economy, these sorts of projects are usually funded by local governments and the private sector. So why should the USDA spend money on them? The assumption seems to be that the federal government has a magical source of cost-free funds. But all the money for federal aid programs ultimately comes from taxpayers who live in the 50 states. So the USDA’s aid programs are a zero-sum game for the nation as a whole.
Indeed, the programs are worse than zero-sum because taxpayers have to pay for the bureaucratic middlemen who run the programs. The USDA employs about 5,000 people to run its three rural agencies. The costs of wages, benefits, office space, travel, and supplies for these workers totaled $680 million in 2016. Thus about 10 percent of the $6.5 billion cost of USDA’s rural programs gets consumed by the federal bureaucracy.
Even if rural subsidy programs were administered efficiently, they represent an unfair redistribution of wealth. In many ways, rural Americans are better off than urban and suburban Americans. They enjoy cheaper housing, cleaner air, less congestion, and other advantages. So people who live in rural areas should not be a privileged class receiving special subsidies.
Rural subsidies should be ended, and the RHS, RUS, and RBS should be closed down.