Uneven Ground (37 page)

The president's decision to abolish the ARC had little to do with his views about Appalachia or his opinions regarding the economic goals of the commission. Indeed, his knowledge of the region was extremely
limited, and he shared the agency's commitment to economic growth as the solution to most of society's problems. Unlike many liberals during the Carter years who had begun to question the limits of growth, Reagan exuded the optimism and faith in economic expansion that characterized most of the World War II generation. He had campaigned on a promise to revitalize the nation's stagnating economy by reducing taxes and government regulation. “Our aim,” he told the nation in his first address on the economy, “is to increase our national wealth so all will have more, not just redistribute what we already have which is just a sharing of scarcity.”
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Reagan's economic strategy for the country was based on the assumption that increasing investment and productivity by reducing personal and corporate taxes would generate business expansion and create jobs. This supply-side economics rejected the Keynesian intervention in the economy that produced the welfare state and called for a halt to the growth of government programs and budgets that had mushroomed since the New Deal. Great Society programs such as the War on Poverty, the president believed, had inhibited growth by proliferating business regulations and increasing government debt. Regional development agencies like the ARC only added another unnecessary layer of bureaucracy to big government and should be abolished.

Appalachian leaders had attempted to head off the demise of the ARC even before the inauguration. Soon after the election, a group of Appalachian governors sent a letter to the president-elect, petitioning for the continuation of the commission, but received no response. After the White House announced its intention to close the agency, the governors issued a resolution calling on the president and Congress to delay the action and to work with the commission to design an orderly phase-out program. While some advocates of the Appalachian program argued that there was still much to be done in the region, others accepted the president's position but favored a more gradual reduction of the commission's role in regional development. Led by ARC federal cochair Al Smith and Kentucky governor John Y. Brown, who served as states cochair, ARC supporters turned to Congress to save the agency, which had long been a favorite of powerful members on both sides of the aisle.

Following a bipartisan appeal, the House Appropriations Committee requested that the commission prepare a “finish-up” plan that would allow the ARC to complete its work over a three- to five-year period. The commission submitted the finish-up proposal in late 1981, providing a rationale for the continuation of the program on a year-to-year basis through 1987. The House Appropriations Committee subsequently funded the commission at less than half of its previous levels and continued that level of annual funding through the 1990s. The Senate narrowly complied. Although its appropriations were reduced significantly, the ARC survived the Reagan revolution and continued to provide limited public resources for Appalachia when federal spending cuts limited the resources otherwise available for housing, health care, and other community infrastructure. With Congress determined to continue to appropriate funds, President Reagan finally replaced Democrat Al Smith in 1982 as federal cochair of the ARC and appointed Winifred Pizzano, a Republican health services administrator from Illinois, to head the agency.

Its future uncertain and its appropriations slashed, the ARC limped into the 1980s, struggling between the politics of survival and the task of addressing persistent problems in the mountains. Much of the energy of the Washington-based staff was channeled into the fight to defend the agency and to sustain annual appropriations from Congress. Two southern representatives, Jamie Whitten of Mississippi and Tom Bevill of Alabama, emerged as unlikely champions of the ARC in the 1980s, interceding on behalf of the commission in subcommittee budget negotiations and reaping an abundance of special ARC projects for their districts. The annual struggle for appropriations left the agency even more vulnerable to accusations of pork-barrel politics.

The finish-up program proposed by the Appalachian governors in response to the funding crisis placed priority on the completion of the Appalachian Development Highway System, drastically cut support for nonhighway programs, and reduced research and regional planning operations. Highways had always been one of the most popular parts of the Appalachian program with planners and policy makers, and roads received high priority in the scaled-back agenda for development. The new strategy pledged to complete 630 miles of the remaining
1,300 unfinished miles of the Appalachian corridor system by 1990. The plan would emphasize the completion of roads that had the highest traffic volume, were most needed to transport coal, and completed critical state-line crossings.
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Acknowledging that economic growth in the region had been uneven and that many Appalachians still did not have the education and job skills necessary to compete in the modern, postindustrial economy, the commission reorganized nonhighway projects into an area development finish-up program and concentrated its efforts in three areas: job creation, health care, and assistance to persistently distressed counties. At a major conference in Atlanta in the spring of 1983, the ARC launched a five-year job training and private investment initiative designed to improve the basic skills of the Appalachian workforce and to encourage private capital investment. In addition to supporting the efforts of state governments to recruit more high-tech industries to the mountains, the agency hoped to spur local entrepreneurship and small-business development, especially in the service sector. The commission also undertook new initiatives to reduce the high school dropout rate and to revitalize vocational training programs at both the secondary and postsecondary levels.

In the area of health, the ARC committed itself to a three-year plan to bring modern health care to the sixty-five counties not yet reached by basic health services and to further reduce the region's chronically high infant mortality rate. Since 1965, the commission's health program had evolved from an emphasis on hardware and hospital facilities to the promotion of comprehensive regional health planning with the goal of providing primary care within a thirty-minute drive of every mountain family. Indeed, the health program was one of its most successful initiatives. Working with state and local health professionals, the agency fashioned a demonstration model for primary health care in the 1970s—with a focus on preventive, basic, family-oriented services—that provided a blueprint for the creation of the National Rural Health Initiative. The ARC closeout program aimed to extend primary care services to every Appalachian resident by 1985, including those in the most remote parts of central Appalachia, and to increase the number of health professionals throughout the region. The latter goal would be achieved by tapping into the National Health
Services Corps, which recruited physicians, including special-visa foreign-born physicians, to “health shortage areas.”
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The most challenging part of the ARC finish-up program, however, was the distressed counties program, established to address the problems of the most persistently poor counties in the region. The program was created in part as a response to media and congressional criticism that the agency had done little to ameliorate the poverty of the most severely distressed counties in Appalachia and in part out of a concern of ARC staff that, having improved conditions in the urban and peripheral counties, the commission should focus its final resources on the hard-core poverty areas. These counties were located primarily in eastern Kentucky and southern West Virginia and in rural areas scattered throughout the ARC-defined region. Since the 1960s, they had exhibited less improvement in per capita income, poverty, and unemployment rates than other counties and continued to reflect the greatest need. The program urged the states to concentrate their area development funds in these sixty or so counties and set aside special regional funds for safe drinking water and waste-disposal projects for these communities.

Although the area development finish-up program reflected growing attention to human development and basic community services at the ARC, smaller, nonhighway allocations diminished the political importance of the commission to Appalachian governors and almost eliminated the strategic planning role of the ARC on the state and regional levels. Compared with other state budgeted programs for development, the ARC allocation was becoming less significant, especially when new agency regulations limited commission contributions to 50 percent of total project costs. The loss of major, direct ARC funding for the local development districts, moreover, pushed the multicounty districts to become even more dependent on local government support for their operating budgets. More and more they functioned as program delivery centers for local government services (especially in job training and care for the elderly), and their role in community development and area-wide planning diminished.

A final recommendation of the finish-up strategy included the creation of an Appalachian development foundation, which would raise endowment funds from individuals and corporations and invest them
in regional development projects to replace the threatened federal funds. Pointing to the history of exploitation of the region's natural resources by absentee developers, the Appalachian governors hoped to raise a permanent endowment to sustain the work of the commission based on donations by coal, timber, and other businesses that had acquired their wealth from the region. “In recent years,” the ARC governors told Congress in 1981, “some corporations have shown an increased commitment to the communities in which they do business. We believe many corporations and individuals have an interest in remedying some of the past neglect in Appalachia and a stake in fostering a strong diversified economy.”
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After establishing an office in Washington and hiring a director, however, the Appalachian Development Foundation eventually failed, closing its doors in 1987 without—to paraphrase Harry Caudill—raising a tittle of corporate responsibility.

The failure of corporate interests to accept accountability for Appalachian development in the face of diminishing government involvement was not surprising. After the expansive years of the coal boom in the 1970s, energy prices plummeted in the early 1980s, and the subsequent glut of oil sent the world economy into decline. Appalachia was slower to recover from the recession of 1981–1982, and the region's economy remained sluggish throughout the remainder of the decade. Coal exports from the mountains rose from 49 million tons in 1973 to 104 million tons in 1981 but plummeted to 73 million tons by 1983.
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Although mechanization would increase productivity in the late 1980s, it provided employment for fewer miners. The number of operating mines declined once again, and many out-migrants who had come back to the region to work in the mines in the 1970s now found themselves unemployed and unable to return to their factory jobs in the Midwest because of the flight of American steel and manufacturing companies offshore. At the end of the decade, the number of working miners in Appalachia reached an all-time low. The most recently hired workers, often women miners, were the first to lose their jobs.

The economic decline of the 1980s reduced the ability of state governments to respond to the needs of mountain communities as well. The loss of federal social programs and the reduction of ARC budgets during the Reagan years increased the burden on state and local governments to meet basic program needs in health, education, and community
development when most states were suffering from a loss of tax revenues as a result of the recession. Appalachian states especially were pressed to maintain basic services, let alone initiate new social and economic programs. West Virginia, for example, suffered an unemployment rate of 21 percent in 1983, the highest rate recorded for any state since 1940, and Standard and Poor's reduced the general obligation bond rating for the Mountain State from AA+ to AA–.
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Similarly, Kentucky experienced a budget shortfall of $186 million, resulting in major reductions in nearly every department and agency of state government. Governor John Y. Brown took the entire $265 million of coal severance tax revenues to meet the budget deficit in the state general fund, returning none of the levy to the coal-producing counties to repair coal roads or encourage economic diversification.
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Retrenchment in government programs and in the economy as a whole did not return Appalachia to the pre–Great Society conditions that had brought national attention to the region, but it did slow the pace of improvement, and some of the most severely distressed rural counties of the mountain heartland lost significant ground. Overall the region's per capita personal income compared to the rest of the nation dropped from 82.7 percent to 80.8 percent between 1979 and 1989, but that figure obscured fundamental differences within the ARC region. Northern Appalachia suffered from the continuing deterioration of its old manufacturing base as it transitioned to a postindustrial economy. Southern Appalachia saw personal income increase by 3.2 percent and population rise by almost 9 percent as a result of the growth of military expenditures and the expansion of metropolitan centers such as Atlanta, Winston-Salem, and Huntsville. Central Appalachia witnessed the worst decline, with a drop of 7.3 percent in personal income and a 5 percent rate of population loss over the decade, as its economy, based on coal, apparel, and timber, collapsed because of mechanization and globalization.
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Rising poverty rates also reflected a growing polarization within the region. The socioeconomic gap between central Appalachia and peripheral parts of the ARC region increased along with the gap between the mountain heartland and the rest of the United States. Whereas Appalachia outpaced the nation in the 1970s in reducing poverty, that trend reversed in the 1980s as the percentage of the region's
population below the poverty level increased from 13.7 percent in 1980 to almost 15 percent in 1990. Poverty in central Appalachia declined from 34 percent in 1970 to 22 percent in 1980 but jumped to more than 25 percent in 1990. In some counties of eastern Kentucky and southern West Virginia, poverty rates were three times the national average. Women and children bore the heaviest burden of rising poverty. The number of female-headed Appalachian families increased by 36 percent during the decade, while median family incomes declined by 4.5 percent regionally and by 13.5 percent in central Appalachia. In measures of education attainment, workforce participation, and child poverty, the gap between central Appalachia and the rest of the region increased dramatically.
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