The USDA's Losing Effort

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.

Three-fourths of the jobs that the USDA attributes to its guaranteed-loan program are "saved," not new, a Post analysis found. Missouri's Johnson said such loans may serve "as a bridge to fight another day" but they do not help revitalize rural economies. "If your purpose is a development program, it should be to transform the economy, not to fill in the dips in the economy," he said.

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.

Many of the "saved" or "created" jobs are part-time or seasonal, or pay minimum wage or slightly above.

The USDA recently backed a $4.5 million loan to Wild Water & Wheels, a water park near Myrtle Beach, S.C. Owner Mark Lazarus said the park is a seasonal operation with "about 150 employees" in season and "about 10" employees in winter. "The wages average anywhere from $6 to $10" an hour, he said, "depending where they work. It's mostly high school students. High school and college."

The Prime Shine Car Wash in Milford, Del., got a guarantee on a $1.4 million loan in 2003 after the owners said they needed the money to save two jobs and create two others.

"It's like flipping burgers and making minimum wage," said Jim Waters, a USDA official who oversees business programs in Delaware. "What you have is college kids and high school kids working on Saturday. And maybe a dad who's lost his job. But at the same time, we're reaching a segment of the economic scale where people need somewhere to go."

The car wash's owners did not return calls. They have since paid off the loan.

Aid for Snowmobilers

In Maine, the USDA is using rural development aid to fund dozens of snowmobile clubs.

Over the past eight years, the agency has awarded nearly $1.4 million to 47 snowmobile clubs to buy equipment to maintain paths. The checks came from the Rural Business Enterprise Grants program, which seeks to aid rural communities with populations below 5,000.