The New York Times - by Ron Nixon
The Obama administration is investing billions of dollars to promote economic development in rural areas by bringing broadband service and small-business financing to regions with chronic poverty and high unemployment.
But critics say the administration has little to show for its efforts, which highlight the difficulties of creating jobs in remote areas. They say the money has gone to areas where it is not needed, to promote broadband where it already exists and for industrial parks designed to attract business and jobs that may never materialize.
The Agriculture Department said it had provided more than $6.2 billion to help nearly 10,000 small and emerging rural businesses expand, creating or saving more than 250,000 jobs since 2009.
“Rural areas are important to our economic future,” said Agriculture Secretary Tom Vilsack, who heads the White House Rural Council, established in June to aid job creation by increasing the flow of capital to rural areas. “It is important that people understand that a large portion of America gets its water, food, fuel from these areas.”
The government’s figures for job creation or preservation are difficult to verify. Still, economists like Lionel Beaulieu, the director of the Southern Rural Development Center at Mississippi State University, said financing for rural programs might have prevented even deeper levels of poverty and unemployment.
“The truth is,” Mr. Beaulieu said, “we don’t know how much worse it would have been if not for this funding.”
Either way, the government program underscores the slow, expensive work of job creation at a time when the administration is trying to make rural development a part of its economic recovery policy. While the nation suffers from high unemployment and a weak economy, rural areas have been especially hit hard. The latest Census Bureau figures show that 16.6 percent of rural Americans are living in poverty, compared with the national average of 13.9 percent.
Last month, President Obama took a three-state rural bus tour where he held town-hall-style meetings and spoke with local leaders. Also last month, the White House released a report, “Jobs and Economic Security for Rural America,” which promotes jobs creation efforts in rural areas and highlights spending on roads and bridges, broadband and small-business loans.
One project, in rural Mississippi, is a proposed industrial park for aerospace companies. The project has been highlighted by the administration because it focuses on regional development, rather than singling out a county or town.
With more than $30 million in federal grants and loans over the past two years, Lowndes County, Miss., has bought land and built roads and water and sewer lines to lure some of the largest companies in the world to the Global Industrial Aerospace Park in eastern Mississippi. Local officials say they hope the project, when completed, will employ up to 2,100 people and spread benefits into neighboring Alabama.
“Our goal is to bring in the kinds of high-paying jobs that you normally don’t see in rural areas,” said Joe Max Higgins Jr., an economic development official in Columbus, Miss.
The county wants to expand an existing park that houses several industries, including three aerospace companies.
“The Global Industrial Aerospace Park will be appealing to the many companies, both domestic and foreign, that work in this industry,” Trina George, state director of the Agriculture Department Rural Development office in Jackson, Miss., said when the loan was announced in June. “This will be a growing and important source of jobs.”
But critics like Tad DeHaven, a budget analyst with the Cato Institute, a conservative research organization in Washington, say industrial parks rarely fulfill their promise.
Mr. DeHaven said that as a budget official in Indiana he saw similar efforts to build industrial parks or to get businesses to expand and add jobs with government loans.
“And a lot of the time you ended up with empty fields and buildings and the jobs never materialized,” he said. “It’s vote buying pure and simply.”
The president “is in trouble with a bad economy and wants to look like he’s doing something,” Mr. DeHaven said.
He said that even if rural areas managed to get companies to relocate, they were not creating jobs, simply moving them from one area to another with the help of federal taxpayers.
Another highly promoted Obama administration project — to bring broadband to rural areas — has also drawn criticism. In its report, the rural council said it had expanded broadband service to more than seven million rural Americans, including three million rural households and more than 350,000 rural businesses.
Under the stimulus act, $7.2 billion was allocated for expanding broadband to unserved and underserved areas, most rural. A 2009 Agriculture Department inspector general report found that the agency had made loans to provide broadband in 148 communities “within 30 miles of cities,” including Chicago and Las Vegas, and that 77 percent of all loans had gone to areas that already had broadband access available through private companies.
A report the same year by Northwestern University found that expanding broadband service to rural areas often did not offer the economic benefits promised or contribute to increased salaries or the tax base or create jobs.
“That’s not to say there is no benefit; there is some modest growth” said Shane Greenstein, a co-author of the report and a professor at the Kellogg School of Management at Northwestern. “But when you look at the data, it shows that the net benefit economically of bringing broadband to rural areas is small and arguably negative. Rural communities have a lot of issues, and broadband alone is not going to solve them.”
One of the biggest criticisms of rural development is that money may be going to areas that do not need it. Last year, rural development financing came under fire after the Indian tribe that runs the prosperous Mohegan Sun casino in Connecticut, which had more than $1.3 billion in gross revenues in 2009, got a $54 million loan from the Agriculture Department to build a community center and tribal government office building. The Agriculture Department defended the loan, saying it would create jobs.
Mr. Vilsack said the administration wanted to ensure that rural communities could create jobs, attract businesses and provide necessary services to their residents.
He added that critics might have some valid points, particularly around the issue of bringing broadband to some rural areas where it would be too expensive. But in those areas, Mr. Vilsack said, the government has opted to finance cheaper means of Internet access like wireless or satellites.
“Still, broadband is essential to rural areas just as rural electrification was in the 1930s,” he said.
Mr. Higgins, the economic official in Mississippi, said he was glad that the administration was putting the spotlight on rural economic development. He said he dismissed critics who say that government is wasting money by investing in Lowndes County’s effort to attract aerospace companies.
“Companies that come in want to have land, water, sewer, everything ready to develop,” Mr. Higgins said. “It helps us move to the front of the line of places competing against us for the same companies.”
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