CAGW Issues Weekly Spending Cut Alert: Rural Utilities Service | Citizens Against Government Waste

CAGW Issues Weekly Spending Cut Alert: Rural Utilities Service

Press Release

For Immediate Release
June 10, 2011


Contact:  Leslie K. Paige 202-467-5334 Luke Gelber 202-467-5318

CAGW Issues Weekly Spending Cut Alert: Rural Utilities Service

(Washington, D.C.) –Today, Citizens Against Government Waste (CAGW) issued its weekly spending cut alert aimed at the Department of Agriculture’s (USDA) Rural Utilities Service (RUS), a Depression-era program that has long outlived its original purpose, and now spends lavishly on broadband expansion projects that compete with private sector providers and often take years to complete. RUS garnered 62 percent of the vote in this week’s poll of CAGW’s Facebook friends, beating out three other candidates.

The RUS is the legacy of the Rural Electrification Administration (REA), which was created to bring electricity and telephone service to rural areas across the country. That mission was accomplished many years ago; rather than permanently unplugging the REA, Congress created the RUS. The agency’s most wasteful endeavor is the Broadband Access Program, which was established by Congress as part of the 2002 Farm Bill. Even though a February 12, 2009, Washington Post article reported that $1.8 billion in loans had been approved from 2002 through 2008, and only 21 of 68 “are nearly complete and about half have not begun,” the 2009 stimulus bill provided $2.5 billion for the program, an increase of 700 percent. The Post noted that “An Agriculture spokesman could not confirm whether the rural utilities service program has completed any projects.” The projects that RUS does finish are often 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.

A March 2009 USDA inspector general report found that instead of helping unserved rural areas, the RUS had funded broadband service in 148 towns within 30 miles of cities with 200,000 inhabitants, including communities near large urban areas such as Chicago and Las Vegas.

“Support for programs like the RUS comes from the mistaken belief that private utilities cannot or will not deliver their products to certain areas,” said CAGW President Tom Schatz. “Like most allegations of market failure, the government’s solution is a thinly-veiled excuse for unnecessary spending that harms private entrepreneurs and supports political allies while wasting taxpayer money. Congress never shut down the REA; it is time to pull the plug on the RUS.”

Eliminating the RUS, which is among the spending cuts advocated by CAGW in its Prime Cuts database, would save taxpayers $8.8 billion in one year and $44 billion over five years. Prime Cuts is a compendium of 691 recommendations that would save taxpayers $391.9 billion in the first year and $1.8 trillion over five years.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government. The Spending Cut of the Week calls attention to a federal program that is wasteful or duplicative.