When the Rural Electrification Administration was created, Congress stipulated that it should last for 10 years and then quietly go out of business. That was 45 years ago.
The REA, of course, did not go out of business. Over the years, it has flourished and now represents a multibillion-dollar program of insured loans and loan guarantees to electric and telephone utilities in rural areas. It has its own constituency, which is centered in the National Rural Electric Cooperative Association, an organization of more than 1,000 member utilities with 25 million customers in 46 states, including Maryland and Virginia.
But now, like a lot of other agencies of government, the REA also has some new enemies in powerful places -- especially in the Reagan administration's Office of Management and Budget. REA is a target in OMB Director David A. Stockman's effort to cut federal lending programs, and the agency's constituents, the electric co-ops, do not like that a bit.
In the coming months there will be far larger skirmishes in the battle of the budget than this. Stockman will win some and lose others. But in every case, large or small, there will be a fight, for the same instincts of self-preservation that kept the REA alive beyond its original 10-year span are at work again in it and the other intended victims of the OMB's budget-cutters.
Stockman has recommended to President Reagan that REA's loan activities be cut back and its way of doing business be changed, forcing the electric co-ops to raise more of their funds directly in private capital markets rather than from the Federal Financing Bank. For Stockman, this is part of a longstanding philosophical commitment to reduce the federal government's "intrusion" in those capital markets, freeing more money for private investment to stimulate the economy.
But for the utilities, the Stockman proposal means fewer loans at higher interest rates. It is not a question of economic philosophy -- many in the rural electric cooperative association would undoubtedly applaud Stockman's and Reagan's economic goals -- but a question of money.
So well before the president was to outline his specific budget proposals to a joint session of Congress, the defenders of the REA way of doing business had sprung into action, as have the defenders of other programs threatened by Stockman and the OMB budget-cutters. The National Rural Electric Cooperative Association already has cranked out its own analysis of the Stockman proposals, which it charges would not reduce federal spending but would contribute to inflation.
On Feb. 5, Robert D. Partridge, general manager of the cooperative association, wrote to Reagan, asking for a meeting on the REA proposals and reminding the president of a written campaign promise to seek "the advice and counsel of the rural electric leadership" before making any significant changes in REA loan programs.
And, of course, alarm signals have gone out to the REA's friends on Capitol Hill, where the agency -- while not as strong as it was in the days when Sam Rayburn of Texas, one of the co-sponsors of the original REA legislation, was the speaker of the House -- still has some important allies. These include House Majority Leader Jim Wright (D-Tex.), one of the featured speakers at the cooperative association's 39th annual meeting in San Francisco last month.
Another longtime friend of the agency is Sen. Bob Dole of Kansas, second-ranking Republican on the Agriculture Committee, whose home in Russell, Kan., just happens to be near the home of LaVern Becker, a Kansas wheat farmer believed to be in line to become the next administrator of the REA.
How much good these connections will do the electric cooperatives in the battle with Stockman and OMB remains to be seen. Stockman is not without his own weapons, chief among them being a mandate from the new president to slash the budget at every opportunity and an ability to make many of the proposed changes in the REA program without congressional approval.
But even before the great battle of the budget has been joined, there are those who share the sentiment of Rep. Ed Jones (D-Tenn.), chairman of the subcommittee that handles REA legislation.
"My folks down here can't afford what Reagan is talking about," Jones said recently.