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Reimagining Rural Policy: Organizing Federal Assistance to Maximize Rural Prosperity

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Reimagining Rural Policy: Organizing Federal Assistance to Maximize Rural Prosperity November 2020 Reimagining rural policy: Organizing federal assistance to maximize rural prosperity Tony Pipa and Natalie Geismar Tony Pipa is a Senior Fellow in the Center for Sustainable Development at the Global Economy and Development Program at Brookings Natalie Geismar is a Project Coordinator & Research Assistant in the Center for Sustainable Development at Global Economy and Development program at Brookings Acknowledgements The authors are indebted to Landon Webber for exceptional research assistance and to many colleagues who strengthened this brief through their careful review and feedback, including Katharine Ferguson, Kenan Fikri, Mark Haggerty, George Ingram, Homi Kharas, David Lipsetz, Randy Lyons, and Eric Postel. We also thank Katrina Badger, Andrew Dumont, Lisa Mensah, Doug O’Brien, Nathan Ohle, and Corianne Scally for ongoing guidance and expertise throughout the research process. We are grateful for feedback provided by participants during several consultations and roundta- bles that explored the connections between international and domestic development approaches and allowed us to refine the visualizations and policy recommendations included in this brief. Many thanks to Matt Dunne and the Center on Rural Innovation team for sharing their insight and providing the maps of rural America featured in this publication. We owe a great debt of intellectual inspiration to Lael Brainard and James Pickett, whose analysis of U.S. foreign assistance in Security by Other Means, published by the Brookings Institution in 2007, provided the idea for our own visualization and analysis of federal assistance for U.S. rural development programs. We extend our sincere appreciation to Brahima Coulibaly for his ongoing leadership and to David Batcheck, Jeannine Ajello, and Shawn Dhar for their communications and outreach support. Many thanks to Frederik Hviid for his assistance with design and layout. The Brookings Institution is a nonprofit organization devoted to independent research and policy solutions. Its mission is to conduct high-quality, independent research and, based on that research, to provide innovative, practical recommendations for policymakers and the public. The conclusions and recommendations of any Brookings publication are solely those of its author(s), and do not reflect the views of the Institution, its management, or its other scholars. Support for this research was provided by the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation. Brookings is committed to quality, independence, and impact in all of its work. Activities sup- ported by its donors reflect this commitment and the analysis and recommendations are solely determined by the scholar. Cover photos credit: Shutterstock 2 | Reimagining Rural Contents 4 Executive summary 6 Introduction: The case for federal leadership in rural development 8 The rural development landscape: Present-day 19 Modernizing U.S. rural policy: An urgent imperative 27 Appendix A 28 Appendix B 30 Appendix C 35 References Executive summary A recovery from COVID-19 that strengthens America’s economic resilience and prosperity, reduces its social vulnerabilities, and address- es longstanding racial and social inequities will require policies that enable more diverse places—as well as people—to thrive. This must include rural areas. Rural America boasts a rich diversity of identity, employment, culture, and experiences. People of color comprise 21 percent of the rural popu- lation; rural areas have higher self-employment rates than urban counterparts; and rural assets will be central to modernization and transition underway in several of the nation’s key industries. Yet rural people and places also face unique vulnerabilities: Their recovery from the 2008 recession was incomplete before COVID-19 hit, and they lag other areas on indicators of poverty, health, and education. Many distressed rural communities are those where racial inequities dominate. Federal assistance for rural As rural communities adapt to 21st-century shifts in the national and global economy, development is outdated, demographics, and climate, the fallout from fragmented, and confusing COVID-19 and the attention to racial injustice The federal programs and tools available today adds new urgency to their situation. In a to help generate social and economic develop- nation where long-term poverty and economic ment in rural communities serve as a reminder distress concentrate disproportionately among of active and broad federal involvement in the people of color in rural areas, it is impossible 20th century, and the possibilities for federal to disentangle rural development from efforts leadership to help rural communities meet to promote economic and racial justice. It is the current moment. Yet they are outdated, time to consider geographic equity as a key fragmented, and incoherent. element of a long-term equity agenda. We identified over 400 programs open to rural communities for economic and community development, spanning 13 departments, 10 independent agencies, and over 50 offices and sub-agencies. A total of 14 legislative committees have jurisdiction over the autho- rizing legislation for rural-eligible development programs. While the U.S. Department of Agriculture (USDA) is charged with directing and coordinating federal rural policy, these 4 | Reimagining Rural programs go far beyond its authority—and 2. Create a national rural strategy given today’s diversity of rural communities, and undertake associated reforms rural policy must go far beyond agricultural policy. For programs open to many different to improve coherence, regional sized communities, rural communities must integration, and transparency often deal with spending formulas or eligibility A national rural strategy will strengthen requirements that are particularly disadvanta- coordination by providing clear policy direction geous to them. to the agencies and stakeholders involved in rural development. To be successful, it must We also tracked FY2019 funding flows for 93 embrace diverse rural perspectives while of these programs which exclusively target breaking down urban-rural divides to facilitate rural communities. They administered $2.58 regional integration. billion in grants (just 0.2 percent of federal discretionary spending) versus $38 billion in Coherent strategy requires a rigorous focus on loan authority. transparency and results. To increase transpar- ency, we recommend an easy-to-use web tool The urgency of challenges facing rural com- that tracks federal funding flows to rural people munities makes a strong case for ambitious and places. We also recommend a congres- federal leadership to support economic and sional commitment to mandate and provide 5 community development in the rural U.S. To percent of program funding for evaluation. maximize the return on federal investment, our recommendations include: To ensure that strategy implementation responds to rural realities, we recommend elevating White House leadership by (1) estab- 1. Launch a domestic development lishing high-ranking positions responsible for corporation, modernizing technical rural and tribal development and (2) creating capabilities and financing tools an office to facilitate interagency coordination and provide consistency and convening power A new corporation would competitively award across presidential administrations. large, flexible block grants that invest in local vision, accompanied by cutting edge technical assistance, rigorous analysis and measurement 3. Appoint a bipartisan of results, and support to strengthen local leadership and civic capacity. It would integrate congressional Commission to and expand the breadth of domestic devel- undertake a top-to-bottom review opment financing tools, bringing strategy and and build bipartisan momentum improved impact to the set of narrowly defined for improving the effectiveness of and siloed tools that currently exist. The U.S. government has done this successfully for federal rural policy its international development investments by We recommend a bipartisan, congressionally creating the Millennium Challenge Corporation appointed commission undertake a top-to- and the International Development Finance bottom review of the effectiveness of federal Corporation; it should apply this experience assistance for rural community and economic to the development challenges facing rural development. The Office of Management and communities in the U.S. Budget is also well-positioned to analyze the extent to which existing policies and regula- tions disadvantage rural communities. BROOKINGS | 5 self-employment rates than urban counterparts Introduction: and are comparable in both revenue and profits, despite imbalances in accessing capital The case for federal from large banks, finding workers, and securing high-speed connectivity.6 Their high concentra- leadership in rural tion in manufacturing sectors also makes them well-positioned to help diversify and improve development the resilience of global supply chains that have been disrupted due to COVID-19.7,8 Yet rural communities are also uniquely vul- The COVID-19 pandemic and the tragic police nerable. They took longer to recover from the killing of George Floyd have brought height- 2008 recession: Employment and prime-age ened attention to the stark inequalities that labor force participation still had not reached presently define the U.S. One dimension of this pre-recession levels in 2019 before
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