USDA Local Subsidies

PrintPrint

On May 27th the USDA awarded $168 million in stimulus money to 145 local infrastructure projects across the country. A third of the money is going to the Mohegan Indian tribe in Connecticut for a new community center. The $54 million loan has attracted national scrutiny because the tribe operates one of the biggest casinos in the country, which grossed $1.3 billion in 2009.

A lot of the focus has been on the role of the Connecticut congressional delegation, which petitioned the USDA to award the tribe the money. In particular, a former aide to Sen. Chris Dodd (D-CT) is now the tribe’s chief of staff for external and governmental affairs. 
 
But is the taxpayer gift to the wealthy Indian tribe any more egregious than the billions of dollars of other subsidies handed out by the USDA? Certainly not.
 
Members of Congress pressure the USDA and other federal agencies to fund their pet projects all the time. Former congressional staffers lobbying for special interest handouts is common. It’s certainly repulsive from the taxpayer standpoint, but it’s to be expected when the federal government is allowed to spend money on local interests.
 
The following are some of the other local projects recently awarded to local communities by the USDA:
 
  • $150,000 for Monterey County, CA to buy a bookmobile and four computers.
  • $75,000 for Ashburn, GA to purchase a new backhoe.
  • $150,000 to the Harford County Board of Education in Maryland to purchase and install new refrigeration and freezing units.
  • $19,600 to Handi-Shop, Inc. in Missouri to replace a cardboard baler.
  • $107,000 to the Village of Brocton, NY to purchase a new ambulance. 
These projects may or may not be worthy. But the only way to find out is to allow the people who will benefit to decide if they’re willing to pay for the projects.
 
It’s important to remember that when it comes to state and local subsidies, the use of the funds is much less important than the existence of the funds. The federal government’s spending appetite is unlikely to be brought under control until the responsibility for local interests is returned to local governments. The USDA subsidy to the Mohegan tribe is certainly egregious, but the outrage should be directed at the whole range of federal programs that fund such things.
 
See this essay for more on the need to reinstitute fiscal federalism. See this essay for more on the problems with the USDA’s rural subsidies.