Monday, September 1, 2014

Federal Spending in Rural Lags Cities

03/08/2012

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The gap between federal spending in rural counties and in metro counties grew from 2009 to 2010, according to figures released by the federal Economic Research Service.

Per capita federal spending in metro counties has been higher than spending in rural counties for five out of the last seven years, according to the ERS, a division of the U.S. Department of Agriculture.

In 2009, federal spending in rural counties was $285 less per person than in metro counties. In 2010, that gap more than doubled, to $683 per person.

In 2010, the federal government spent $10,976 per person in metro (or urban) counties and $10,293 per person in nonmetro (or rural) counties.

The ERS counts all federal spending that can be tracked to a particular county — from defense spending to the National Archives to Social Security payments. Then the ERS divides that amount by the number of people living in each county.

(You can find all the data here. There is a full explanation here.)  

There is a continuing belief that the federal government spends more to maintain a resident in rural America than a person who lives in a metro county. 

Last year, the Washington Post's Ezra Klein wrote that the federal government provides "a raft of subsidies (devoted) to sustaining rural living."  The New York Times economics columnist (now Washington editor) David Leonhardt wrote that "suburbs and rural areas receive vastly more per-person federal largess than cities." 

As you can see from the chart above, federal spending isn't "vastly" higher in rural counties than in urban ones. It isn't higher at all. Federal spending per person in rural areas is, in fact, lower than it is in the cities.

The breakdown in federal spending, rural and urban, varies by the kind of spending measured, of course. Agriculture and natural resources spending is much higher in rural places — $331 per person in rural counties compared to $43 in urban counties. Defense spending is much higher in metro counties.

Klein's and Leonhardt's argument is that it costs more for the federal government to maintain a person in rural America than in the cities, that urban residents pay a subsidy for all the extra costs incurred by people living in small towns where the cost of everything is higher.

You can see in the chart below that this is not true. 

If it did cost more to maintain a rural population, you'd expect to see that in spending on community resources — transportation, Native American assistance, environmental protection, development, business assistance and community facilities. But, spending on community resources is far lower in rural areas than in metro counties.

And that gap between rural and urban spending on community resources has increased every year since 2007.

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Spending is higher in rural counties when it comes to income security payments. The largest of these programs is Social Security, a payment based on age not geographic location. This spending also includes disability, public assistance and hospital and medical benefits.

The rural differential in income security payments shrank from 2009 to 2010, from $1,639 per person to $1,340 per person.

You might want to bookmark this page, because sometime in the next year you will hear or read the argument that American taxpayers are "subsidizing" rural communities — that cities are being starved for funds while rural areas are, as Leonhard wrote, slurping up the "federal largess." The Brookings Institution says this constantly. The New York Times makes this point every so often.

The numbers compiled by ERS tell a very different story.

Comments

Boy, that's a big data sheet

I'm sure I've seen a version of the CFFR that distills spending into a handful of major categories, which might allow exploring the "why" just a bit more.  At the link, though, it's a comprehensive list of seemingly every federal spending program.

 

Have you seen that simplified list? And any idea where it might be found?

Indeed.....

Good point, Bruce.

Here is a smaller sheet with the functions consolidated. The comparison is metro (urban) and nonmetro (rural).