Power Failure
Bennet, James
Power Failure Rural electric and telephone programs show that good government programs never die—they just get more expensive by James Bennet The outlook has only gotten rosier for Alltel,...
...Each of the co-ops, which are liberally scattered through congressional districts across the country, has a board composed of some of the most prominent citizens in the community...
...And with a Moody's bond rating of "A" ("many favorable investment attributes"), Alltel's not likely to have trouble finding lenders to back its future growth...
...This year, each house passed a version of a "rural development" act...
...The mystery, of course, is why so many urban congressmen played along...
...For some reason, kindly old Uncle Sam, too strapped to boost funding for VISTA volunteers or school lunch programs, dug deep into his pockets over time and came up with $304 million in loans below market rates to make sure that Alltel could continue to scrape by—as it did last year, when it pulled in over a billion dollars...
...So where most of us see a thriving suburban bedroom community in Manassas, Virginia, the REA still sees horny-handed farmers trying to coax their exhausted wives to pedal just a little faster so they can get the sheep sheared on time...
...So it's nine to one...
...They were first jury-rigged under Roosevelt as "temporary emergency measures...
...That figure surged to more than $7 billion in 1980 before tapering off to an average of about $1.5 billion for the last three years...
...Title VII basically shoots down, one by one, several efforts by the administration and the REA to restrict lending...
...Fiber optic nerve When you examine the REA's lending programs in theory, they seem merely dumb...
...The problem, of course, is that the program hurts all of us...
...You can write that you got this lobbyist's butt off the dime," said Sheila Macdonald of the NTU when I asked her about the legislation...
...By 1952, almost 9 in 10 farmers had electric power...
...If the government is really concerned about people being able to afford electricity and telephone service—and it should be—why doesn't it just give the benefits directly to the needy users (through, say, a tax credit), instead of handing them to big cooperatives and corporations who smear them across the countryside...
...Even the National Taxpayers' Union (NTU), which has fought the REA lending programs for years, didn't notice...
...only 35 percent of farmers had phones...
...It was never a major emphasis on our side to reform that program, because there was never much prospect of Congress going along," says Davis...
...The result is that 10 years of administration efforts to cut or scale back the REA have gone nowhere...
...Hawkins lost...
...Common sense would suggest that it is, since, all other things being equal, a company out in the sticks will have many fewer subscribers per mile to defray the high costs of putting up poles and stringing wires...
...It passed the House by something like 417 to 3. So that was the framework in which we were operating...
...Khedouri described trying in the early eighties to write regulations that would prevent electric companies from borrowing directly from the Federal Financing Bank...
...Look at how Cheney's efforts to give up a handful of procurement programs last year, like the F-14 fighter, were stymied by representatives trying to preserve any federal spending on their turf...
...By 1953, 90.8 percent of farms had electricity...
...It's pretty tough to break even when you borrow at 10 percent (or, during the late seventies, as high as 12.4 percent) and lend at 5. So each year, Congress pumps more money into the fund—over $1.2 billion worth...
...Money for nothing The REA's lending practices have been revamped several times...
...In Washington, the electric co-ops are represented by the National Rural Electric Cooperative Association (the NRECA...
...For the past few years, OMB has refused to let them lend above the minimum...
...Where we really drew the line, though, was on losing ground...
...And they didn't default, since the electricity proved to be affordable after all...
...According to House and Senate staff members and lobbyists, it's too early to predict what the Rural Development Act will look like when it emerges from conference...
...The loans were heavily "subsidized," in that they were available at rates far below what the cooperatives could hope to get from private sources, but they were still above the rates that the government itself had to pay to borrow from the public by issuing Treasury bonds (the government's "cost of money...
...The REA's work "was done a long, long, long time ago," says Harold Hunter, the agency's administrator from 1981 to 1988, today a farmer near Enid, Oklahoma...
...They were quite successful," Davis says of the electric and telephone lobbies, "in beating my head in whenever they got the chance...
...Does that sound like common sense to you...
...the regulations governing the programs have become arcane and complex, mastered only by their staunchest congressional defenders...
...It was so fucking complex that no one could figure it out...
...I'm going to get hopping on it...
...All the demons that have pushed the budget so far out of balance can be seen at work propping up the REA: The borrowers, though few in number, are widely dispersed over many congressional districts...
...The REA just wasn't pricey enough to be considered a priority...
...That rule exists in no other federal lending program...
...One effect of this provision would be to allow more companies to qualify as hardship cases, eligible for loans at 2 percent— less than a quarter of what the government pays to borrow...
...They see it as a way to keep the REA going...
...So why are they doing it...
...Water had to be hauled into the house by hand...
...The problem isn't just that everyone can agree only that somebody else's benefits should be cut, it's that they don't particularly care who that somebody else is...
...No one seems to have noticed that the bill the House passed this spring would make some radical changes in the loan program...
...At OMB, says Randy Davis, "One time we figured out that [the NRECA's] congressional staff was larger than my OMB staff—let alone the people I had working on the REA...
...A Democratic congressman from Oklahoma named Glenn English, one of the greatest friends of REA borrowers in the House and then chairman of a government operations subcommittee with oversight of REA, held a series of hearings investigating the "illegal profits" that the RTB was making...
...First, according to the Congressional Budget Office and the FCC, there's no proof that it's more expensive to provide electricity or telephones to rural areas...
...You bang your head against the wall and you finally realize you're not going to get anywhere...
...if only they weren't so predictable...
...Those factors included such exotic considerations as whether or not the company was efficient and had good management...
...Since the RTB was set up in 1971, the federal government has funded it with more than half a billion dollars, which, supposedly, the borrowers will eventually pay back in order to privatize the bank...
...When Frederick Khedouri, another former associate director of OMB, talks about going up against the lending programs' backers, it sounds like he's describing a mugging: "There were so many...
...This is why the history of the REA also sheds some light on how the American government functions at its worst—on how we ran up a $160 billion deficit in the first place, and on why Congress and the White House, trying to address it today, will do anything they can (monkey with the numbers, raise hidden taxes, maybe open a lemonade stand) to avoid cutting programs...
...The REA is now trying to negotiate some $6 billion worth of bad loans...
...For example: >Congress always sets a minimum and maximum amount that the RTB can loan out in a given year...
...In other words, it subsidizes their electric bills with some $150 million worth of below-market loans...
...Between 1980 and 1988, the REA telephone borrowers' net operating profit margins doubled...
...Gradually, the cost to the government crept up, until by 1952 it had climbed above 2 percent forever—and the REA was guaranteed to start losing money on its loans...
...Second, now that universal service is pretty much a fact, the urban/rural split is an outdated way to approach assisting telephone and electricity users who can't afford their bills...
...They started spending in earnest after rural electrification was a fact...
...In building an electricity and communications infrastructure through rural America, the REA also created a powerful grassroots political structure that has gotten richer and smarter as the borrowers have grown...
...But in 1935, barely 1 in 10 American farmers had electricity...
...The REA announced about a year ago that the revolving fund and the RTB would make loans to finance only the improvement, construction, or acquisition of telephone lines or facilities...
...That's tough...
...Consider the rural/urban split again...
...Through the trees, another, identical mansion looms in the background...
...A couple of decades back, the Rural Electrification Administration—the source of Alltel's loans James Bennet is an editor of The Washington Monthly...
...And—who knows?—maybe they will actually wake up to the fact that, even though the REA isn't a big ticket item, if you cut a hundred million here and a hundred million there, pretty soon you're talking about real leadership...
...The result was what one former REA official refers to as the "greed and access provisions" of the Omnibus Budget Reconciliation Act of 1987—a bill the president literally couldn't afford to veto...
...It turns out that rural companies save money where urban ones can't: They tend to have lower labor costs and to require less investment in central plant equipment, for example...
...As a result of all this, who was willing to bear the administration's standard on the Hill for REA cutbacks...
...to make up the difference, it has had to borrow from the Treasury—at government rates, which are higher...
...So the federal government stepped in...
...Many of the top staff in the lobbies are former REA or congressional officials (Bob Bergland, the executive vice president and general manager of the NRECA, is a former congressman and secretary of agriculture...
...Obviously, they did her some damage," her campaign manager told The Wall Street Journal...
...were probably as far apart as they have ever been...
...That's no reason to preserve a bad program, however...
...The fundamental reason that the REA's lending programs should be drastically scaled back is that most of the borrowers simply don't need them...
...This is the free market reflected in a fun house mirror...
...That meant no refrigeration...
...It's when you look at them in practice that they become offensive...
...And their existence is based on the continuation of these federal programs...
...But not only did it keep lending to electric cooperatives, beginning in 1949, Congress charged it with lending to telephone companies, too...
...The farmer is less sensitive to (in fact, is probably oblivious to) the $5 he sacrifices each year to support the Small Business Administration than he is to the benefit he is accustomed to getting from the Rural Electrification Administration—mostly because his electricity and telephone companies constantly remind him of it...
...The House already tried once to make the revolving fund permanent by forgiving the $7.9 billion debt to the REA, but the Senate killed the legislation...
...Get it...
...They're just so pow"That's one of the reasons I left OMB," says a former official...
...Research assistance by Mary Clayton Coleman and Afshin Molari...
...Title VII puts the borrowers in charge of deciding how long they want to take to pay back each loan...
...Maybe they will realize that it doesn't make much sense for the government to pay for the privilege of lending money to millionaires...
...It's hard to tell from this picture that the residents of posh Piper Glen are on the dole...
...As a result, no one really challenged it...
...Also in 1973, the REA got the authority to fully guarantee loans made to electric and telephone borrowers by the Federal Financing Bank (which lends money at a rate barely above cost) and by private sources...
...Maybe the conferees will catch on to that fact...
...And the lobbies can reach all beneficiaries of the REA by dropping inserts in with their bills each month...
...Despite the constant pleas of farmers, utilities wouldn't supply power to the farms because, they claimed, it would be too expensive to string wires through such thinly populated areas...
...The co-op was founded in 1953...
...The Congress immediately legislated it right out of existence...
...In other words, if Donald Trump were an REA borrower, he'd be able to get financing for a fourth moneylosing casino in Atlantic City...
...Sure, the Silver Star telephone company of Freedom, Wyoming may need its $2.1 million in REA loans to keep up service to its 1,324 subscribers...
...Putting the government—the "lender of last resort"—in the rural telephone business made sense...
...Not only does the government pay part of the bills of rural users regardless of their income, while offering the urban poor no such breaks...
...This reasonable proposal was too much for the lobbies—and evidently for Congress, too...
...But don't hold your breath...
...During her 1986 campaign, the NRECA gave $10,000 to her opponent—more than it gave to any other congressional candidate that year...
...It's a classic case of how a program gets started and everyone agrees with the intention—and to this day I think it was a good program—but once the benefits start to flow and the beneficiaries get used to them, it's virtually impossible to terminate," says Randy Davis, who was an associate director of the Office of Management and Budget under Reagan...
...Each time a piece of legislation affecting the REA comes up, the NRECA brings literally thousands of co-op directors to town and sics them on their congressmen...
...At one point, a buy-back seemed possible...
...It's a duplication of things that are already being done by the Department of Agriculture," says Harold Hunter, who resisted this expansion of the REA's role while he was head of the agency...
...The Rural Telephone Bank...
...From the beginning, the funding for REA loans was appropriated each year as part of the federal budget...
...If enacted, Title VII would not only make that move illegal, it would force the RTB to lend out, at 5 percent, the difference between the minimum and the maximum ever since OMB started using the trick...
...The big companies "wouldn't come out to serve our area because the population just wasn't big enough," says Phil Johnson, assistant general manager of the Grand River Telephone Cooperative, which serves 18,000 residents of northern Missouri and southern Iowa...
...The budget is stuffed with REAs and—despite OMB's "focus on the higher-priced items"—with larger wasteful programs that are pinned in place by the same sort of interlocking interests...
...I really can't think of anyone who's delved into it," says an aide to a congressman known for his antipathy to subsidies...
...Jesse Helms was willing to support us," another Reagan administration official says, "but he's sort of the kiss of death...
...Shortly after the REA began putting up capital for telephone companies, its lending habit started becoming expensive...
...That division has gotten a little fuzzy since the cities began to sprawl...
...So the administration essentially accepted the program's survival as inevitable...
...in 1974, after the RTB, the revolving fund, and the guarantees were all in place, it approved almost $2 billion worth, most of it from the Federal Financing Bank...
...Entitlement VII The theme of the House bill is "flexibility...
...It might actually remind people of how much good an efficient government can do...
...Naturally, defending this explosion in lending after the agency had accomplished its goals required some changes in rationale...
...Now, that $7.9 billion is supposed to be returned—without interest—to the Treasury beginning in 1993...
...was perhaps the clearest example of what government at its best can do...
...It was hopeless...
...From my standpoint," he continues, "that was a mistake, because I think these are some of the most abusive programs in the United States government...
...That meant that as long as the borrowers didn't default, the taxpayers would make a small profit on the loans...
...In fact, these days it's giving 25 percent of its telephone loans to five enormous holding companies like Alltel and losing money in the bargain...
...Title VII," says Tom Walker of the National Telephone Cooperative Association, "is a set of concepts and ideas and whatever that we helped get together and passed on to the appropriate people in the House...
...Think you might want to invest in this sure thing...
...And, equally important, small change can add up...
...But if the RTB were privatized, its lending rates would have to increase, since the federal government would no longer be backing it up—not an attractive proposition to the telephone borrowers...
...Americans may want to see the budget cut, but it's hard to translate that political will into surgical reductions...
...Obfuscation...
...Congressmen respond to the latter, which means the executive branch—which has its own pet programs it wants to save—can't get a whole lot of mileage out of the former...
...You look at the limited resources you have to do your political negotiations on the Hill, and you have to focus on the higher-priced items," says a Reagan administration official...
...Getting it into the Rural Development Act would simply save Whitten from having to go through that annual ritual...
...At the same time, the lending rate was raised to 5 percent— closer to the government cost—with some 2percent loans still offered to "hardship cases...
...The loan programs are extremely complicated, and few congressmen other than the ones who are out to preserve them are willing to invest the time to figure them out...
...Now that a higher proportion of farmers have telephones than do Chicagoans, supporters of the REA no longer talk too much about stringing communications and energy lifelines into the heartland...
...Those "appropriate people," he says, were English and E. Thomas Coleman, a Republican from Missouri and the ranking minority member of the subcommittee on rural development that English chairs...
...In fact, according to the FCC, telephone rates in rural areas tend to be lower than those in the cities...
...The REA can't deny a cut-rate loan to a borrower, no matter how much money the borrower has...
...In the mid-eighties (when the bank was originally supposed to go private), the RTB was making loans at just above the cost of money to the government, so it was running a surplus, building up enough cash to pay off Uncle Sam...
...You bang your head against the wall and finally realize you're not going to get anywhere...
...Well, as a taxpayer, you already have...
...Now can you see where this $160 billion deficit came from...
...And consider the array of perverse regulations, subsidies, and price supports by which Americans pay their farmers not to cultivate their land and their dairy farmers to kill their cows in order to drive up everyone's food bills...
...The NRECA spent almost $450,000 on candidates in 1988 and $270,000 so far in 1990...
...Title VII would force the REA to finance all such investments...
...They're local people— they're good guys...
...Here's a layman's guide to the three principal types of loans the REA makes today and to some of the shenanigans that made them possible: >The Rural Electrification and Telephone Revolving Fund...
...Except in hardship cases, it wouldn't back buying vehicles, furniture, office equipment, and office buildings...
...Originally, the REA loans didn't cost the taxpayers anything...
...Each "reform" made the rules more byzantine, but none changed—in fact, most exacerbated— the basic fact that the REA was losing money...
...In 1989, its stock split 3-for-2 for the second year in a row...
...by 1975, 90 percent of them had telephones...
...The catch is that you're guaranteed to lose money...
...But in 1973, supposedly in an effort to wean the borrowers off federal support, Congress ordered that all outstanding loans—$7.9 billion worth—be paid back, not to the Treasury, but into a "revolving fund," from which the money would be loaned out again to other electric and telephone borrowers...
...It's certainly true that the REA by itself isn't a budget buster: Even if Congress killed all the lending programs, it would save only about $5 billion over the next five years, which is small change inside the Beltway...
...But the two bills don't conflict, so the conferees may just decide to please everyone and stick the two together...
...But last year, Contel, a company that owns subsidiaries across the country, launched its third satellite off the space shuttle Discovery and racked up revenues of $3.1 billion...
...Once you're in, you're in," explains a congressional analyst...
...Once a borrower," summarizes a former REA official, "always a borrower...
...four different lobbies fight for the cooperative, investorowned, and private companies that can get telephone loans...
...It means that once a program is authorized, it's almost impossible to eliminate...
...Delegations are dispatched to the offices of city congressmen to plead their case...
...a 1989 Kidder Peabody analysis showed that the average telephone borrower could easily attract lenders on the private market...
...Similarly, a CBO analysis of electric companies, in the words of a government analyst who tracks the REA, "didn't find any correlation between how rural they are and how high their rates are...
...Congress ordered the RTB to lend out the surplus it had built up (that's the access), and English worked a complex rate-setting formula into the legislation that has held the lending rate to 5 percent ever since (the greed...
...It's not as if OMB fought this good y fight to the death, however...
...Frustration over the REA "is probably one of the things that led to my divorce...
...In rural communities where private lenders and utilities had seen only the great risks and turned away, the federal government saw the urgent needs and invented a way to meet them...
...Yet it has continued now for so many years—like so many federal agencies do...
...Once again, existing companies refused to run lines to outlying areas...
...But the Alltel subsidiary that provides service to this area qualified for $54 million in cut-rate loans and managed to get the REA to fully guarantee $22.7 million more at Treasury rates...
...Fifteen years later, the REA's mission was expanded to include giving a boost to the tiny co-ops and independent companies that would offer telephone service to these isolated homes for the first time...
...It's sort of a gimmick to make it look like the co-ops are paying their own way, but of course they're not," says a congressional analyst...
...As a further dividend from this investment of political courage, maybe Americans would move beyond adoring Democrats only as their pork-producing congressmen and start trusting them as national leaders again...
...Even more than in the city, where there's always a neighbor right next door, a telephone can be a lifesaver on a farm...
...In other words, taxpayers didn't have to spend a dime to electrify rural America...
...Franklin Roosevelt created the REA at the height of the Great Depression, when the vast majority of American farmers didn't have electricity...
...It seems astonishing that in floor debate on the bill this year, not a single representative objected to this or any of the other provisions listed above...
...After all, as Tom Walker, the lobbyist for the NTCA, says of the Senate legislation, "As long as it doesn't hurt the program, it's OK...
...dividends to stockholders jumped 10 percent—the 29th consecutive annual increase...
...The caption reads: "In the Piper Glen development near Charlotte, N.C.—one of the many growing suburban markets Alltel serves—the Company is testing the use of fiber optics to provide enhanced communications services...
...Ironing required heating up a six-pound chunk of iron on a smoky wood stove...
...All of that money is suddenly available," says an administration official —$544 million worth...
...These agriculture programs are basically the REA writ large: revered for their early work, consecrated by time, protected by fierce interest groups, and almost impossible to understand...
...The REA, however, has resolutely ignored any changes in demographics: It will lend to any coop or company serving an area that has ever been designated as "rural"—originally defined as a town with under 1,500 inhabitants...
...Instead, they talk about "protecting universal service" while improving it— essentially, making sure that rates stay affordable for rural users...
...As far as I'm concerned," Johnson says, "everything we have today is because of the REA...
...If you believe the RTB will actually go private by the new target date, 1995, I've got a great 5-percent lending opportunity for you...
...But what about the city representatives...
...They are standing on a broad lawn strewn with autumn leaves, before a colonial mansion, two pumpkins perched on the porch...
...As chair of the Senate subcommittee with oversight of rural electrification, she held hearings into REA lending practices...
...Alltel's 1989 annual report features a glossy photo of two telephone company workers examining some wires...
...Here's the catch: The borrowers' lobbies managed to get several technical amendments attached to the original law that essentially forced the REA to lend out more money than it got back each year in repayments...
...So as part of last year's new regulations, the REA announced that from now on, it would peg the amortization period of its loans to the expected useful life of the equipment the loan would buy...
...This is partly a function of the three previous forces...
...Recall the congressional gridlock over cutting even a few superfluous military bases...
...They had support everywhere...
...The REA can't deny a cut-rate loan to a borrower, no matter how much money the borrower has...
...So the national call to cut programs is general and vague, but the district-by-district call to preserve them is itemized and intense...
...Frustration over the REA, he says, "is probably one of the things that led to my divorce...
...Once rural, always rural," says a Reagan administration official...
...From a high of $5.6 billion under Carter, they blossomed under Reagan to a record in 1986 of $26 billion...
...From making extremely risky loans above government cost to embryonic borrowers with nowhere else to turn, the federal government started making extremely safe loans at below government cost to longstanding institutions that could easily raise money elsewhere...
...Title VII forbids the REA to demand that borrowers raise their rates or otherwise improve their ratio of cash flow to debt in order to qualify for a loan...
...the programs once served a noble purpose, so attacking them today is considered heretical...
...This spring, the House passed a bill that would sweeten the deal for the telephone borrowers with some new rules that would seem outrageous...
...That's one of the reasons I left OMB," says another former official...
...But everything else isn't equal...
...They've got one of those 'Adopt-an-UrbanCongressman' programs," says an administration official...
...So guess what happened...
...The REA offered advice and loans, at about the same rate of interest the government had to pay, to cooperatives that would electrify farms still relying on kerosene for light, wood for heat, and elbow grease for all their other energy needs...
...instead, they would have to take their federal guarantee and apply it to a private loan...
...As the 1993 deadline approaches, watch for a renewed effort...
...Haywires Up until 1971, when the Rural Telephone Bank was created, the REA had never loaned out more than $500 million in a given year...
...and they are small enough ("concentrated benefits and diffuse costs," as one analyst puts it) that few congressmen are willing to take the political heat involved in trying to fight them...
...It also broadens the REA's mission, but it calls for no new appropriations for the new programs...
...Well, here's the kicker: That same rule, attached annually to appropriations bills by Jamie Whitten, the Mississippi Democrat who chairs the House Appropriations Committee, has been in force for at least the past seven years...
...The Senate bill calls for expanding the REA's mission into development projects besides electricity and communications—which means freeing up more money for REA borrowers...
...they have grown up over the years and developed sophisticated lobbies in Washington that jealously guard their benefits...
...There are a couple of holes in their logic...
...A lot of [other] factors tended to be more important in the aggregate than how dispersed the area was...
...This means that for next year, instead of being paid back for their initial investment, the taxpayers will eat about 20 cents of each dollar loaned by the RTB...
...The path to power In an age of fax machines and modems, it's hard to imagine life without a telephone, let alone without electric power...
...Cajoling...
...Reading by the dim, flickering light of a kerosene lamp quickly wore out the eyes (in fact, rural students' grades greatly improved on the heels of the introduction of electricity...
...The telephone lobbies also have an effective line: "The minute that you say you don't want to have subsidized loans, they say `Oh, they want to take away the phones from rural America, they're going to make the phones go dead,"' says Macdonald...
...Restoring that faith is the key to convincing people to go along with the progressive income tax increases required to move the budget fully into the black and to do what really needs doing, from paving the roads to caring for the sick...
...each new member still must buy one share of $5 common stock...
...The REA was scheduled to go out of existence in 1946...
...deny or reduce any loan or loan advance under this Act based on a borrower's level of general funds...
...it would make sense only if the government were desperately competing with private sources of capital to lend out money...
...What rural congressman could deny such a constituency...
...The NRECA has been pushing for these sorts of changes for several years...
...The REA wasn't the only agency doing that kind of math...
...Those who have battled these groups are particularly in awe of the NRECA...
...In 1944, with the government's cost of money at 1.7 percent, the rate for REA loans was pegged at 2 percent...
...Mission accomplished...
...For example, it authorizes a new $40 million program for the REA to make loans to electric and telephone companies to set up water and sewage facilities...
...On the electric side, the REA has subsidized companies that provide power to resorts like Hilton Head, Aspen, and Vail...
...But the REA found that equipment could become obsolete in as short a period as 12 years, at which time the borrower reappeared, hat in hand, for more money for an upgrade...
...Inertia...
...erful...
...Sticking with a strategy of snapping up smaller, independent telephone companies, it's managed to grow and grow, expanding service to suburban communities across the country...
...No radio...
...As long as the Revolving Fund keeps lending beyond its means, it probably won't be reabsorbed by the Treasury starting in 1993, and the borrowers will not be weaned off federal money...
...In 1990, when 98.8 percent of farms have electricity and 96 percent have phones—compared with 93 percent of households overall—the REA's work somehow doesn't seem so necessary anymore...
...During this period, rural and urban standards of living in the U.S...
...Because [development] is a very vital activity to give them a reason for existence...
...They have that sort of motherhood flavor," says Frederick Khedouri, the associate OMB director who preceded Davis...
...Power Failure Rural electric and telephone programs show that good government programs never die—they just get more expensive by James Bennet The outlook has only gotten rosier for Alltel, a telephone holding company headquartered in Ohio, since Forbes called it "the industry's most dramatically improved company for 1986...
...Basically, no one," says Randy Davis...
...The Administrator and the Governor of the telephone bank shall not...
...In the past, almost all REA loans were paid back over 35 years...
...If Congress were able to overpower the interlocking interests that make the REAs uncuttable, it would do more than just blot out a lot of red ink...
...The NRECA's political clout on the Hill, and to a lesser extent that of the telephone lobbies, comes from the co-ops...
...That new rule got nowhere...
...At OMB, they used to describe REA supporters' efforts to expand the agency's mission this way: "The sun is setting, so they're trying to stop the earth from spinning...
...Fortunately for the REA borrowers, it turns out that the traditional combination of obfuscation, cajoling, intimidation, and inertia has always been more than enough to sway them...
...The best example of hiding behind complexity is when [Rep.] English changed the formula for interest rates" for the Rural Telephone Bank, says an administration official who has fought the REA for years and gotten a little frustrated in the process...
...it taxes the urban poor to pay those rural bills—a move that adds injury to insult...
...It is probably one of the most polished lobbying groups—aside from Social Security—in this town," says a former REA official...
...Senator Paula Hawkins was one of the last members of Congress to take on the lobbies...
...In addition, it contains a section ("Title VII") that would make some fairly startling changes to benefit the telephone borrowers—naturally enough, since they were the ones who wrote them...
...The NRECA is happier with the Senate bill, the telephone lobbies with the House version...
...You can imagine the campaign commercial: "He tried to cut the energy lifelines to America's farms...
...When a horse drives a hoof into a farmer's head or a child develops appendicitis, help may be miles away...
...Why on earth does it deserve almost half a billion dollars in cut-rate loans...
...Like the deposit insurance that drove the crazy S&L lending, this was a great deal for everyone except the taxpayers...
...Intimidation...
...The REA has, I think, one legislative person, and the NRECA has nine registered lobbyists...
Vol. 22 • July 1990 • No. 6
