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President’s Rural Development Budget ‘Races to the Bottom’

Last week, NRHC published a press release, criticizing the White House and the U.S. Department of Agriculture (USDA) for leading a “race to the bottom” by proposing significant funding cuts to Rural Development programs, including those that help low-income rural families access affordable housing and grants that help small rural communities provide potable water and waste disposal systems to residents.

“The President’s budget demonstrates just how little this Administration and USDA support Rural Development,” says Bob Rapoza, executive secretary of the National Rural Housing Coalition. “Over the past few years, this Administration has led a ‘race to the bottom,’ by using one excuse after another to cut funding for these critical programs. It is appalling.”

Between 2010 and 2014, the President requested over $1 billion in cuts to USDA’s loans and grants for business development, water and waste disposal, and rural housing. As a result, these programs have been reduced by 35 percent since 2010. If enacted by Congress, the President’s budget would amount to a 57 percent reduction in funding since 2010.

Programs like Section 502 Direct Homeownership Loans, the single most cost-effective federal housing program, have been particularly hard hit. Each direct loan costs the government about $3,000 over the entire lifetime of the loan, far less than the annual cost of many similar federal housing programs. Since inception, the program has helped more than 2.1 million low-income rural families become homeowners.

Above all, Section 502 Direct Loans are an important source of jobs in rural America. According to USDA estimates, the program created 94,000 jobs and generated $4.7 billion in wages over the past 5 years.

Rapoza argues that if the President’s 2015 budget is enacted, 4,600 fewer rural families will be able to access affordable mortgages, creating 8,100 fewer jobs and generating $407 million less in local wages.

Likewise, the President’s budget dramatically cuts grants to small rural communities without adequate water or waste disposal facilities. The President’s budget proposes a one-year reduction of nearly $160 million or 34 percent.

“The numbers speak for themselves. This Administration shows very little interest in meeting the development needs of rural America,” said Rapoza.