The Myth of Rural ‘Subsidies’

I am sure that the stats haven’t changed much….thanks to Daily Yonder for this article


The Washington Post’s Ezra Klein is dead certain Congress subsidizes “rural living.” But per capita federal spending is higher in urban counties than it is in rural ones.

By Bill Bishop

The federal government provides “a raft of subsidies (devoted) to sustaining rural living.”

That’s what Ezra Klein wrote in The Washington Post in a blog post that has caused a minor uproar — especially after Ag Secretary Tom Vilsack blundered into the argument. But is that true?

Klein’s initial point was that cities are unique in the efficient way they create new wealth. He then said that we should capitalize on this unique attribute of urban life, but that we won’t because the structure of the Congress inevitably leads to programs and spending that subsidize rural life.

USDA Secretary Tom Vilsack took Klein’s column as a “slam on rural America.” Vilsack called the Post writer and the two had a remarkably pointless conversation about the cultural values found in rural America. Klein was unimpressed with Vilsack’s argument, as were most others. You can read the exchange here.

Our interest is Klein’s assertion that the federal government lays out some huge “subsidy” for those who live in rural America. Klein just assumes that “Rural living ends up costing a lot more than urban living on a variety of measures” and that this results in disproportionate spending in rural America.

So, is it true that the rural-dominated Congress spends more money on rural residents than on those who live in cities?

No. That’s not what happens at all. In fact, as you can see from the chart above, the total per capita federal spending in rural counties is regularly lower than per capita spending in urban counties.

The USDA’s Economic Research Service keeps track of federal spending in metro and non-metro counties. You can find the data here.

Yes, there are federal crop subsidies and they go largely to rural counties. But federal crop subsidies are a drip in the bucket of federal spending. (Ag subsidies and natural resources spending is one percent of the national per capita spending that can be attributed to a county, four percent in rural counties.) In most program categories, per capita federal spending in rural America is far, far lower than for comparable programs in urban counties.

Klein contends that disproportionate representation in Congress (where each state gets two Senators, regardless of its population) leads to a rural bias in spending. If Klein is right and Congress regularly subsidizes rural areas, then we would expect that bias to show up in spending on community development.

But, again, this isn’t the case at all. Spending on community resources in rural areas (for housing, community assistance, Native American programs, environmental protection, regional development and transportation) is far lower on a per capita basis in rural counties.

Klein says we ought to be subsidizing urban areas because cities are the foundation of economic growth. The figures tell us that this is already happening. There is simply no sign of a federal subsidy for rural life.

(We should also remember that rural development constitutes a decreasing share of non-profit spending, too. You can look all over for a disproportionate rural “subsidy” and not find it.)

The chart below shows the per capita spending on community resources in rural and urban counties. (Again, you can get the data and the definitions here.)




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