President Joe Biden signs the American Rescue Plan, a coronavirus relief package, in the Oval Office of the White House, Thursday, March 11, 2021, in Washington. (AP Photo/Andrew Harnik)

This story was originally published by the Brookings Institute.

Despite having carried the vote in only 10% of rural counties and 15% of rural counties that are in economic distress, President Biden has publicly made it a priority to rebuild rural America. For political observers, this may reflect political savvy—cutting losses in just a few rural counties will be key to statewide races, whether to win the electoral college, Senate seats, or state government offices—or tangible evidence that the president is serious about unifying the country. For policy wonks, it is a recognition that the fortunes of rural Americans are inextricably intertwined with key administration priorities, such as addressing climate change and the legacy of racism. Over 50% of rural Black residents and 45% of rural Native Americans live in economically distressed counties, persistent poverty counties are over 85% rural, and rural places will play a central role in transitioning to a clean energy economy.

The administration is intent on following through with policy and resources: Susan Rice, director of the Domestic Policy Council, has suggested that the American Rescue Plan, approved and signed into law on March 11, and the proposed American Jobs Plan, the administration’s basis for the current negotiations with Congress on infrastructure, will represent “historic levels of public investment” in rural America.

Grants to Local Governments: A Step Forward

Designed as both relief and stimulus, a significant portion of the already approved $1.9 trillion American Rescue Plan represents a one-time injection into the country’s social safety net programs. These include direct payments to families, unemployment benefits, child tax credits, and assistance for housing and health care. By definition, these programs do not offer special treatment to rural Americans, but the amount that will reach rural people will be significant. Some rural regions may ultimately benefit at higher rates because of disproportionate levels of poverty and unemployment.

At the community level, the $350 billion relief fund for states and local governments offers rural places a chance to mitigate the effects of the pandemic while laying the groundwork for future development efforts. Of the $65.1 billion set aside for counties, $15.33 billion—over 23%—will go to non-metropolitan counties.

Rural towns, municipalities, and townships will not fare as well out of the other $65.1 billion directly committed to city governments and local jurisdictions. While $19.5 billion is reserved for smaller jurisdictions—that is, non-county governments with a population less than 50,000—most of these will be within the boundary of a metropolitan area.

Nonetheless, the flexibility of these grants represents a step forward. Our recent analysis of federal assistance highlighted the void in this type of community investment for equitable rural development. This funding will allow local leaders the ability to make their own decisions within a set of broad parameters.

Many will seek to fill fiscal holes left by the pandemic and other economic transitions (as a group, rural areas still had not returned to pre-2008 levels of labor rate participation by the time the pandemic hit). The grants also offer an opportunity to enable locally-led strategies and get local solutions underway that could have a lasting effect. However, while the overall federal investment through this fund is substantial, the grants themselves are unlikely to be large enough to cover the types of cornerstone projects that local leaders have in mind. Many communities will also feel the need to strengthen their capacity with people, expertise, and more robust organizations to be successful with such efforts.

Increasing the Return on Investment for Equitable Rural Development: A Three-Point Plan

These dynamics highlight the importance of making sure that other resources within the administration’s legislative actions and proposals are friendly, or even intentionally designed, to meet the unique needs of rural communities, especially those in persistent poverty counties or experiencing significant economic distress. Improving the effectiveness of this federal aid and increasing its development “return on investment” will be important if these resources are to have lasting, meaningful consequences for rural communities over the long term.

Since quick action was a top priority when putting the American Rescue Plan together, it depends upon existing programs and mechanisms to funnel the resources. Not all programs have the discretion or flexibility to intentionally target and enable equitable rural development, but several—such as the $4 billion to support local food systems, the $1 billion to offer technical assistance and capacity building to socially disadvantaged farmers, and the over $7 billion for broadband access—have rural built in.

 Anthony F. Pipa is a Brookings Institution senior fellow in the Global Economy and DevelopmentCenter for Sustainable Development.
Natalie Geismar is a project coordinator and research assistance in the Brookings Institution’s Global Economy and Development, Center for Sustainable Development.

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