Half of promise implemented, half not
During his 2008 presidential campaign, Barack Obama promised to spur economic development in rural areas through two specific programs -- one to hand out out small, "micro-enterprise" loans to rural small businesses, and another to give a 20 percent tax credit on up to $50,000 in investment in qualifying small businesses in rural areas.
Obama successfully implemented the first of those programs, but he failed to enact the second.
A program to distribute micro-loans through the Rural Microentrepreneur Assistance Program ended up being enacted during the 2008 presidential campaign as part of that year's farm bill. The farm bill is a large bill typically approved by Congress every five years to update and modify agricultural policy.
The most recent farm bill was passed in 2014, and it extended the existing micro-loan program for the rest of the Obama presidency and into the Donald Trump presidency.
Under the micro-loan program, the Agriculture Department provides loans and grants to "microenterprise development organizations" to support businesses with 10 or fewer employees to launch or expand their operations. The loans typically run from $5,000 to $50,000. From the start of Obama's tenure through 2014, the program lent $52 million to 257 rural small businesses, the department said. The longer-term cost for the government is significantly smaller -- $3 million a year -- since the loans are eventually counted as revenue in the federal budget once they are repaid.
The 2014 farm bill also extended the Intermediary Relending Program, which was not specifically mentioned in Obama's 2008 promise but attacks a similar challenge. This program lends money to nonprofits and public entities; in turn, they re-lend the funds to rural businesses that might not otherwise be able to obtain financing.
The effort to enact Obama's promised 20 percent tax credit was not successful.
A version of this initiative -- called the Rural Microbusiness Investment Credit Act -- was introduced by Reps. Ron Kind, D-Wis., and Wally Herger, R-Calif., in 2011, but it did not advance.
Ultimately, Obama succeeded with the first half of this promise but failed on the second half. We rate it a Compromise.
Agriculture Department, "USDA Announces Availability of Loans and Grants to Support Rural Economic Development," May 20, 2014
Center for Rural Affairs, "Rural Microentrepreneur Assistance Program," accessed Dec. 1, 2016
National Rural Housing Coalition, "Spotlight on the Intermediary Relending Program," Jan 26, 2016
Marketplace, "A post from Rural America," Sept. 16, 2011
Email interview with Brian Depew, executive director of the Center for Rural Affairs, Dec. 1, 2016
Obama uses stimulus package to boost small business
Revitalizing rural America was a big part of Obama's campaign platform. Many of his promises, including one to spur job growth in small communities, are part of a larger effort to boost poor towns and create jobs.
This promise sounds a lot like one Obama made to create a rural revitalization program. While investigating that pledge, we found that the Department of Agriculture has launched a Rural Tour to "engage in a more robust dialogue with folks living in rural America."
Obama has backed up that effort with cold cash, as well. A little more than half of the Agriculture Department's share of the stimulus funding -- about $28 billion -- is dedicated to rural development projects. For instance, in October, Agriculture Secretary Tom Vilsack announced $30 million in stimulus funding for 36 community facilities projects, many of which are health care facilities. That was in addition to $335 million that the Agriculture Department had already announced for such projects.
Building and staffing these projects is meant to create jobs.
This promise also deals specifically with creating a 20 percent tax credit for up to $50,000 of investment in small businesses, and we were hard-pressed to find the exact initiative Obama talked about on the campaign trail.
Nevertheless, Obama used the stimulus package to boost small businesses. Overall, it included $375 million for small businesses, and eliminated fees on loans given by the Small Business Administration. Specifically, the bill set aside $50 million in additional funding to support small business microloans and $24 million for technical assistance training. None of this money is specifically earmarked for small, rural businesses.
The legislation had all kinds of other goodies for small businesses, including allowing small businesses to immediately write off up to $250,000 of some investments in 2009, essentially providing an immediate tax break. It also extended bonus depreciation, allowing businesses to take a larger tax deduction within the first year of a property"s purchase.
Finally, the stimulus bill included a measure that excluded from taxation 75 percent of the capital gains for investors in small businesses who hold their investments for five years.
In December, Obama asked Congress to renew some of these deals and add new ones. But so far there's been no substantial action on his request.
So, it seems Obama has been pecking away at the issue of boosting small, rural businesses, but not through the microlending program he described on the campaign trail. We plan to keep our eye on this one, but for now we'll call it a Compromise.
The Small Business Administration, Microloan Overview, accessed Jan. 12, 2010
The New York Times, Little New for Small Business in Obama Job Speech, by Robb Mandelbaum, Dec. 8, 2009
The White House, President Obama and Secretary Geithner Announce Plans to Unlock Credit for Small Businesses, March 19, 2009