Center for Rural Affairs' response to President Bush's Fiscal Year 2006 proposed budget

February 7, 2005

President’s Proposed Budget Cuts at the Heart of Rural America


The Community Development Block Grant (CDBG) program, the Small Business Administration Microloan Program, and other rural development programs are on the chopping block in the budget proposed by President Bush today, raising questions about the future of rural America.

“The President’s budget would doom many rural Americans and many rural communities to permanent status as members of America’s underclass.” according to Jon Bailey, director of the Rural Research and Analysis Program at the Center for Rural Affairs, a non-profit rural advocacy group.

The new ‘Strengthening America’s Communities Initiative’ proposal actually weakens rural communities, says Bailey. "It would kill worthwhile programs and remove a third of the funding they provide for economic and community development.”

Center researchers contend the elimination of the CDBG and other programs will make it more difficult for rural communities to provide the necessary infrastructure needed for their future viability.

"The drastic cuts to programs that encourage the development of small businesses and rural housing will not allow low- and moderate-income rural Americans to become part of President Bush’s ‘Ownership Society, says "Bailey.

The President’s proposed Fiscal Year 2006 federal budget slashes funding for the programs that offer a future to Rural Economic Development.

Cuts Striking Rural America Hardest

A nearly 10% cut is proposed for The Department of Agriculture, and an 11.5% cut is proposed for Department of Housing and Urban Development. The USDA and HUD are two federal agencies with significant programs devoted to rural economic and community development. They are the targets of the largest reductions in discretionary spending.

Abandoning Rural Development

The President’s budget is also the beginning of the abandonment of the federal role in rural development. Cash-strapped local and state governments will have an even more difficult time meeting crucial needs for rural economic and community development. The diminishing of this endangered financial environment does not promote the future of rural places.

The following programs are among those being consolidated into the new “Strengthening America’s Communities Initiative” program in the Department of Commerce:
Rural Business Enterprise Grant Program (RBEG – USDA)
Rural Business Opportunity Grant Program (RBOG – USDA)
Enterprise Zone/Enterprise Community Program (USDA)
Community Development Block Grant Program (CDBG – HUD)
Rural Housing and Economic Development Program (HUD)

Limits on Farm Payment Program

The Center lauded the President’s proposal to tighten payments to mega farms, says Executive Director, Chuck Hassebrook. “The single most effective way to strengthen family farms is to stop subsidizing mega farms to drive smaller farms out of business.”

But the Center is calling on the president to go further. The proposal reduces the payment limit cap for individuals to $250,000 for commodity payments, including all types of marketing loan gains, while removing the three-entity-rule.

"Aggressive payment limitation reform could achieve 3-4 times the savings of the President’s proposal," said Hassebrook, and significantly reduce the need for the damaging cuts in USDA farm and rural programs.

Environmental Programs Ravaged

Bush would take over half the funding from the Conservation Security Program, which rewards environmentally sound farming and ranching and impose a 5% across the board cut in farm program payments, which will hit hard on small- and medium-size farmers.

Where is the Money Going?

The budget proposal lists an increase in discretionary spending of 18 billion dollars. The Defense budget is up 19 billion dollars. The Department of Commerce is being offered a nearly 50% increase in funding. And the legislative branch is to receive a 13.1% increase in its budget.

“The President’s Budget devastates rural communities," said Bailey.


Established in 1973, the Center for Rural Affairs is a private, non-profit organization working to strengthen small businesses, family farms and ranches, and rural communities through action oriented programs addressing social, economic, and environmental issues.