Department of Agriculture efforts intended to create jobs in rural areas, including the Rural Business and Industry Guaranteed Loan Program, haven’t quite worked as planned:
Funds have gone to firms that have hired foreign workers instead of Americans. Millions more have gone to failing and bankrupt businesses. Most of the jobs are not new. Many are low-tech and low-wage.
In addition to the loan program, the USDA has handed out almost half a billion dollars in rural development grants to businesses and nonprofits since 2001.
Loan guarantees or grants have gone to a car wash in Milford, Del.; a country club in Great Falls, Mont.; a movie theater in Smithfield, N.C.; a water park in Myrtle Beach, S.C.; an alligator hunter in Dade City, Fla.; snowmobile clubs in Maine; and dozens of gas stations and convenience stores in Maryland, Ohio, Pennsylvania and Arkansas.
The article, written by Gilbert M. Gaul in today’s Washington Post, provides the kind of in depth examination of government spending that should be routine but sadly, rarely happens. Perhaps his most disturbing finding about the Rural Business and Industry Guaranteed Loan Program is this: “More than three decades after the loan program was created, USDA officials still don’t know whether it works.” Office of Management and Budget assessed the program in 2003, at which time USDA disclosed that, “No independent performance evaluations have been conducted to assess the program’s impact on improving economic opportunities in rural communities.” And, Gaul reports, members of Congress have other interests: making sure the money spigot stays open.
Congressional committees charged with overseeing USDA business programs rarely question the agency’s claims or probe deeply into the programs. Instead, some lawmakers have aggressively lobbied the USDA to approve costly projects in their districts.
In 1999, members of Washington state’s congressional delegation urged the USDA to guarantee a $20 million loan to a troubled sugar beet refinery near Moses Lake. The agency agreed, even though the borrower was already in default on existing loans. Within months the plant failed and defaulted on its newest loan, sticking taxpayers with a $12.1 million loss.
The article is part of the excellent Harvesting Cash series that’s dissecting Department of Agriculture programs. I wish the Post, or other papers, would take the same care to examine Commerce, HUD, Labor and HHS programs as well. And for those interested, beneficiaries of the Rural Business and Industry Guaranteed Loan Program from 2000 to 2006 can be found on FedSpending.org, here.