The Washington Post has an in-depth piece today about a boondoggle of a USDA program to create jobs in rural America. Read the whole thing; here are some North Carolina highlights:
More than three decades after the loan program was created, USDA officials still don’t know whether it works. Funds have gone to firms that have hired foreign workers instead of Americans. Millions more have gone to failing and bankrupt businesses. Most of the jobs are not new. Many are low-tech and low-wage.
In addition to the loan program, the USDA has handed out almost half a billion dollars in rural development grants to businesses and nonprofits since 2001.
Loan guarantees or grants have gone to a car wash in Milford, Del.; a country club in Great Falls, Mont.; a movie theater in Smithfield, N.C.; a water park in Myrtle Beach, S.C.; an alligator hunter in Dade City, Fla.; snowmobile clubs in Maine; and dozens of gas stations and convenience stores in Maryland, Ohio, Pennsylvania and Arkansas.
“You know, some people could argue a job at minimum wage is better than no job at all,” said William Hagy, the USDA’s deputy administrator for business programs. “In a lot of rural areas, that’s all there are.”
More about the Smithfield movie theater to follow:
In 2004, Mickey Buffaloe discovered that the USDA had guaranteed a $4.2 million loan to a developer to build a 10-screen multiplex theater just a mile and a half from his older theater in Smithfield, N.C. The retired firefighter had purchased the Howell Theater, built in 1935, several years earlier with a private bank loan.
After the new theater opened, Buffaloe said that his income dropped by more than half and that he had trouble getting first-run movies. He was forced to convert to a discount theater offering second-run shows.
Buffaloe, 51, complained to USDA officials that the federal government was helping to put him out of business. But he didn’t get very far. “They basically handed me a package to fill out and said they would see about doing a loan with me,” he said. “The way I figure, if my business goes under, I lose, and my tax dollars are going to help my competitor.”
Buffaloe attempted to get the developer’s application under the Freedom of Information Act but was told it would cost him $843, money he didn’t have. The multiplex’s owner projected that it would create 45 jobs, but as of this summer, it was averaging about 25, according to the USDA.
Let’s see: $4.2 million for 25 movie-theater jobs … that put the American taxpayers on the hook for $168,000 per popcorn greaser and soda slinger. Not to mention that Buffaloe is right; the federal government was taxing him to help fund his competitor. Could a multiscreen movie theater get started on its own in Smithfield? Perhaps, but a private lender didn’t make the decision to invest (and risk the consequences should the investment fail). Instead, it was funded by the federal government, which has no such risk and is accountable to no investors in particular since it essentially holds a gun to all taxpayers’ heads.
The article mentioned another NC project:
Often the loans create or save few jobs for the money. The Savannah Inn of Carolina Beach, N.C., estimated that it would save five jobs with its $1.3 million guaranteed loan — $260,000 per job. The loan was to help the beachfront motel to stay open year-round. The owners declined to comment.
