POLITICS
04/12/2017 04:46 pm ET Updated Apr 13, 2017

Rural America Friendly To Trump, But Trump's Budget Not So Friendly Back

The administration suggests cutting rural development programs.

WASHINGTON ― Donald Trump won the presidency largely by turning out rural voters whose economic woes had allegedly been forgotten by the Washington establishment.

The federal government runs a plethora of programs designed to ease those economic woes, but Trump wants to cut them. His administration has proposed deep reductions to the U.S. Department of Agriculture and several federal programs that help small businesses in rural areas.

“The higher of a percentage of population in your county that voted for Donald Trump, the more screwed you are by his budget,” said Brian DePew, director of a nonprofit in Lyons, Nebraska, that helps rural entrepreneurs get loans.

One way DePew’s Center for Rural Affairs does this is by serving as an intermediary for state and federal loans that help finance small businesses, like grocery stores, auto dealers and hair salons.

“We have a lot of clients who can’t get traditional credit for one reason or another,” DePew said, adding the problem has been worse since the 2008 financial crisis.

One of those clients is Racheal Chandler, who runs a successful honey business in Anselmo, Nebraska. Chandler’s Sandhill Honey & Bottling Co. has benefited from state and federal financing over the years, most recently with a $50,000 grant from the USDA’s Rural Business-Cooperative Service in October.

“I don’t know if we could have done it” without the assistance, Chandler said.

Trump’s budget proposes a significant decrease for what it calls “duplicative and underperforming programs” run by the Rural Business-Cooperative Service. The RBS, as it is colloquially known, makes grants and loans directly to rural businesses and also to intermediaries, like the Center for Rural Affairs, which helped Chandler’s company with financing and planning in 2010.

The RBS cut represents a tiny part of the spending reductions in Trump’s proposal for the USDA, which would see its overall budget slashed by 21 percent, and a popular rural water infrastructure program totally eliminated. Arguing that such efforts are either wasteful or duplicative, Trump’s broader budget targets a variety of small programs at federal agencies that help small businesses and struggling communities.

A president’s budget generally serves as an ideological statement and an opening bid with Congress, which actually sets spending levels. But after Trump released his budget, his administration followed up with a list of domestic spending cuts it would like to see in upcoming legislation to fund government operations beyond April 28. If lawmakers can’t strike a deal by the end of that day, the federal government will partially shut down.

“Despite decades of funding, RBS programs have failed to move the dial in rural areas,” the Trump administration said in a memo to congressional leaders. The document said the Government Accountability Office has repeatedly pointed to RBS in reports on overlapping priorities among government programs run by separate agencies, such as rural lending programs under the Small Business Administration and the USDA.

Rep. Mike Conaway (R-Texas), chairman of the House Agriculture Committee, said in a statement reacting to Trump’s budget last month that his committee has already worked to reduce spending on programs under the Agriculture Department’s jurisdiction. In 2014, for instance, Congress consolidated two RBS programs into one.

“As we in Congress get ready to write the budget, we will certainly pay close attention to the president’s recommendations, many of which I suspect will be incorporated into the budget,” Conaway said. “But, we will also have ideas on what the budget should look like and our priorities will also be taken into account.”

Tom Vilsack, who was agriculture secretary during the Obama administration, told Politico this week that the people in charge of agriculture policy in the Trump administration “have little to no awareness of what USDA actually does.” Trump picked Vilsack’s replacement last among senior Cabinet officials.

The rural population in the U.S. has been steadily shrinking, though urban and rural economies have many similarities, according to the USDA’s economic research service. Rural economies tend to have more jobs in goods-producing industries like farming and manufacturing, and rural populations tend to be older and poorer than urban ones. 

David Swenson, an economist at Iowa State University, said the biggest U.S. safety net programs, such as food stamps and Social Security, are probably more important to rural areas than the smaller initiatives that specifically target farmers and their neighbors. 

“They’re only playing a small role in the overall well being in the dynamics of rural change,” Swenson said. “It’s never been enough.”

In 2007, Racheal Chandler’s honey-producing company received a state grant to erect a commercial building. In 2010, it won another grant to upgrade honey-extraction equipment. Chandler said she didn’t know how she could’ve obtained the financing without the government’s help.

“The banks don’t really want to own bee equipment around here,” Chandler said.

The second grant required her company to raise matching funds, so Chandler turned to the Center for Rural Affairs for help with the financing and with developing a business plan. The center draws funding from a variety of federal programs, as well as the state of Nebraska and private donations. Last year, the organization said it placed $1.7 million worth of loans with 127 small businesses in Nebraska.

In October, the Rural Business-Cooperative Service awarded Chandler’s company a $50,000 grant to expand the business. Chandler said the company can use the funds to pay workers, and buy honey containers and raw honey from other producers in Nebraska. The purpose of the grant is to expand the number of Nebraska stores that carry the company’s product.

Chandler said she voted for Trump and didn’t have any problems with his spending proposals, which at this point stand only a remote chance of becoming law.

“I guess I feel like he’ll do what he needs to do,” she said.  “I just thought we needed a change, a big change.”

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