Getting Rid of Antiquated Federal Programs

All things must end; however, federal agencies always seem to find new ways to justify continuing obsolete programs, such as the U.S. Department of Agriculture’s (USDA) Rural Utility Service (RUS). 

The RUS grew out of the remnants of USDA’s Rural Electrification Administration (REA) of the 1930s.  The primary goal of the REA was to promote rural electrification to farmers and residents in out-of-the-way communities where the cost of providing electricity in such locations was considered to be too expensive for local utilities. 

By 1981, 98.7 percent electrification and 95 percent telephone service coverage was achieved.  Rather than declaring victory and shutting down the REA, the agency was transformed into the RUS, and then expanded to provide loans and grants for other utilities including telephone service to underserved areas of the country.  Eventually, that mission was further expanded in 2002 to include providing broadband services to rural areas of the country unserved or underserved by existing service providers.

A September 2005 USDA Inspector General (IG) report noted that “RUS has not maintained its focus on rural communities without preexisting service.  Although the language of the law specifies that these Federal loans and grants are for rural communities, RUS has codified and implemented a definition that cannot reliably distinguish between rural and suburban areas… Furthermore, we question whether the Government should be providing loans to competing rural providers when many small communities might be hard pressed to support even a single company.  In these circumstances, RUS may be setting its own loans up to fail by encouraging competitive service; it may also be creating an uneven playing field for preexisting providers operating without Government assistance.”

In 2009, the USDA IG reported that RUS had not fully implemented corrective action in response to eight of the 14 recommendations from the 2005 report, and continued to make loans to providers in areas with preexisting service, sometimes in close proximity to large urban areas.  In March 2013, the IG reported on the RUS’ Broadband Initiatives Program (BIP) under the American Recovery and Reinvestment Act of 2009 or stimulus bill, and again found that “RUS funded BIP projects that sometimes overlapped preexisting RUS-subsidized providers and approved 10 projects, totaling over $91 million, even though the proposed projects would not be completed within the 3-year timeframe RUS established and published.’  The OIG “also found that the agency could have implemented the program so that it would have focused more exclusively on rural residents who do not already have access to broadband.”

The stimulus added $2.5 billion to the existing $413 million appropriated for the RUS’ ongoing broadband loan and grant programs in 2009.  Unfortunately, data tracking of BIP project deployment has been less than successful.  On September 14, 2012, the Government Accountability Office (GAO) issued a report which reviewed the data provided by RUS and the National Telecommunications and Information Agency (NTIA) on broadband spending under the stimulus.  The GAO found that while NTIA collected data on its broadband projects and was able to project a 76 percent completion rate, RUS was not so diligent.  The RUS’ failure to collect data in a timely manner led to its inability to provide a reliable measure for deployment of fiber miles and wireless access points. 

In April 2012, the Federal Communications Commission published its Eighth Annual Broadband Progress report, which showed that the nation has made significant progress in expanding broadband capabilities across the country, with 95 percent of Americans now having access to high-speed Internet access.  Despite this significant progress in broadband deployment, the federal government continues to fund the RUS broadband loan program, even though the RUS has long outlived its original purpose and now spends lavishly on broadband expansion projects that compete with private sector providers.

In its 2013 Prime Cuts report, Citizens Against Government Waste highlighted wasteful spending at RUS, and called for its elimination, which would save $9.6 billion in one year and $48.1 billion over five years.  While RUS provides funding for more than just broadband deployment, those projects are appallingly wasteful.  In 2009, Buford Communications of LaGrange, Arkansas (population 122) received $667,120 to build a hybrid fiber coax network and a new community center.  This equates to $5,468 per resident of LaGrange. 

The ongoing debate on the 2013 Farm Bill is an opportunity to eliminate this outdated, wasteful agency, and at the very least oppose any efforts to further expand RUS’ mission or funding mechanisms.  Taxpayers are already paying for grants through the Universal Service Fund to provide discounted services to rural hospitals, schools and libraries and high-cost regions of the country, as well as supporting the Lifeline program, which provides discounted phone service (including wireless) to families qualifying for the school lunch program.  Failure to eliminate the antiquated RUS or prevent further expansion of the program would result in taxpayers being stuck with unnecessary and excessively expensive burdens into the foreseeable future.

The RUS program picks winners and losers in already competitive marketplaces at the taxpayers’ expense.  When government competes with the private sector, the taxpayers lose.  It is time to unplug the RUS.