"WE WILL SURVIVE"

By MICHAEL DUFFY/FARGO

When the taxpayers of Cass County, North Dakota, learned that Washington was ready to spend $46 million on a new federal courthouse in downtown Fargo, they did something most politicians in Washington couldn't have imagined: the citizens tried to give the money back. Agitated by stories in the local newspaper, they sent angry letters to the federal judge overseeing the project, who then helped shrink the plan to $36 million. The state's two Democratic Senators joined the opposition and urged architects to design something that would cost no more than $23 million. Then planners scrapped the idea of a new building and settled instead on a modest $16 million addition to the existing courthouse.

And now it probably won't get built at all. Last month, in a prelude to the balanced-budget campaign, the U.S. Senate cut $16 billion in current spending, which included all funds for the courthouse and 94 other unbuilt federal projects in other states. Surprise of surprises: the people of Fargo don't seem to mind very much. Next, however, comes a far more severe test. The $1.4 trillion in cuts proposed last week by the Republicans in Congress would have a vastly larger impact on the lives of people in Fargo and elsewhere around the U.S. Indeed, the seven-year plan to balance the budget by 2002 set off a wave of indignant reaction from the President, Democrats in Congress, special-interest groups and lobbyists eager to protect their perpetual claims on the Treasury.

But after 15 years of failure to get the deficit under control, are these almost predictable reactions more reflexive than real? Do the Washington lobbyists and interest groups reflect popular sentiment, or just their own Beltway impulses? To see how a community confronts the prospect, two TIME correspondents spent a month examining the federal dependence of Fargo and its surrounding county, which reap $1.30 in benefits for every $1 in taxes the citizens send to Washington. While Fargo may lack the urban woes of larger cities, its federal take closely tracks the national average, and its share of spending closely matches the budget as a whole. Like most Midwesterners, the people of Fargo believe in the American myth of rugged self-reliance. And now they want to make it real.

With a few notable exceptions, Fargoans ranging from senior citizens to public broadcasters say they are ready to forgo much of the help they receive. But they pose two conditions: the cuts should be spread evenly around the country, and they must not be too abrupt. The residents of Fargo (pop. 77,000) aren't happy about the coming loss of benefits, but they believe it may be overdue. "I don't think the Federal Government can subsidize us forever," says 80-year-old C. Warner Litten, a retired health-care administrator who is probably Fargo's most respected town elder. "I hope the slash isn't too quick, but we can make up for it." Like many Americans, residents of Fargo increasingly doubt that a new courthouse or post office or Army Reserve center is necessary if it means more debt for their offspring. "Regardless of what happens, we're going to deal with it," says Larry Akers, 40, a red-bearded construction foreman sipping a screwdriver at a Fargo tenpins alley called The Bowler. "It's going to hurt. But we're borrowing from our grandchildren. And it's got to stop somewhere."

That a county like Cass, which has nursed on federal subsidies since its founding, would be willing to wean itself from the Treasury suggests that the historic changes wrought in November's elections were not a curious anomaly. That bodes ill for the Democratic Party, and for its standard-bearer in the Oval Office. For the budget fight that Congress began in earnest last week will test the two competing political strategies of the decade: Do middle-class voters, as Bill Clinton is betting, no longer worry about debt and fear instead a government that may shrink its subsidies and benefits? Or are the Republicans correct when they wager that most voters will reward the party that cuts government most? Both parties have in effect rolled the dice; how they land will in large part be determined in cities and towns like Fargo. And at the moment, the Republicans seem to have the edge.

Hugging the banks of the Red River on the eastern edge of the state, Fargo is a solidly middle-American town, where most people are at work by 7:30 in the morning and say hello to strangers on the sidewalk. It is the state's largest and most prosperous city, buoyed by the presence of several heavy-equipment makers, a state university and many new data-processing companies. Fargo is home to nearly 200 churches, as well as the state's lone abortion clinic. Traffic jams are nonexistent; only eight taxicabs prowl the streets. Undergraduates from three local campuses jam a handful of bars at night to sample microbrews and play blackjack at tables benefiting local charities. Along residential streets, bicycles lie unstolen on front lawns where they were left the night before. Earlier this spring, espresso bars began to dot the city's wide, tree-lined avenues. "This is a strange place," muses George Sinner, who was Governor of North Dakota from 1985 to 1993. Sitting in the modern, glass-encased office where he helps preside over a sugar company, he adds, "There is something here that is still small enough to contain the rural life and yet pick up the grace of culture."

Partly because of their long history of reliance on Washington, Fargoans are at once indebted to and resentful of the Federal Government. The state was settled after Congress gave huge rights-of-way and financing to two railroads on the condition that they expand westward to the Pacific. Settlers too were drawn by the benefits of the 1862 Homestead Act, in which Congress gave 160 acres to anyone who could carve out a living on the land for five years. North Dakota is one of only three states that currently send no Republicans to Washington. But in 1992 Cass County voted for George Bush over Bill Clinton by a large margin.

The Federal Government is deeply embedded in the local economy in thousands of ways. In Cass County alone, home to 102,000 people, Washington spends more than $529 million a year on everything from dispersing nettlesome blackbirds to scrambling F-16 fighters. That amounts to $5,186 for every man, woman and child. Directly or indirectly, federal dollars support the local symphony, pay for potato-blight research and underwrite most of the county's roads, bridges and sewer projects. They support schools, the local airport and health care for the poor and the elderly. Uncle Sam pays the salaries of post-office workers, Air Force officers and hundreds of Agriculture Department employees. "We have a web of dependence that's been woven over a long period of time," says Marvin Duncan, an agricultural economist at North Dakota State University.

What to cut? In Fargo, as elsewhere, the biggest piece of federal largesse is also untouchable: in Cass County $104 million a year goes to senior citizens in the form of Social Security. The monthly checks account for 25-c- of every dollar in direct payments from Washington. At present, neither party is proposing to cut those benefits. Maybe they should. Willard Filley, 76, and his wife Lillian, 70, say they would be willing to take a 10% cut in their $660-a-month Social Security checks to help the government through hard times. Though she and her blind husband have an income of only $19,000 a year, Lillian says she would give up the $32 cost of hiring someone to look after him while she ventures downtown for her once-a-week shopping trip with her sister.

But with the largest entitlement off limits, reductions in just about everything else will be that much deeper. No program is more vulnerable than Medicare. It is growing 10% a year; Republicans want to slash that rate dramatically. Bill Clinton's advisers believe this is the issue that will bring elderly Americans back to the Democratic fold next year. On paper that looks right: Medicare puts $53 million into the Cass County economy each year. Deep cuts would hurt doctors, hospitals and, presumably, senior citizens. But the prevailing view among the lunchtime crowd at the Northern Pacific Depot Senior Center is that spending on the elderly is excessive. They should know: nearly every day, at least 150 seniors, regardless of income, gather to talk, read, knit, play pool or eat a federally subsidized lunch inside the old Romanesque railroad station, exquisitely renovated in 1984 with the help of-what else?-federal dollars. The lunch is cheap: seniors contribute anywhere from 50-c- to $2 for a portion. Even director Brian Arett, whose program feeds, transports and provides minimal health services to about 6,000 elderly Fargoans, says it could survive a 10% cutback. Of course, that would raise the price of lunch a quarter or so.

The seniors themselves are, if anything, more realistic. "Medicare is too generous," says Clyle Dwyer, 80, a retired truck driver, who says he is still outraged that doctors in the late '70s charged the government three times for his twice botched artificial-knee surgery. "I know guys who have stuff done that they shouldn't," says Dwyer, awaiting his plate of meatballs and potatoes, "because Medicare will pay for it."

Though no one in Fargo favors cuts to needy seniors, local experts acknowledge that Medicare and several other programs reach too many people who could do without. Peter Thoreen, chief executive of Dakota Heartland Health System, which owns two of Fargo's three hospitals, favors stricter limits on which patients and procedures get covered by Medicare. Noting that Washington provides the same benefits to seniors earning $150,000 as to those earning $20,000, he says, "This country has a difficult time saying no to anybody, but especially seniors."

Fargoans see room for tightening as well in Medicaid, the health-care program for the poor. Under one provision, for example, Washington will pay as much as $50,000 a year toward a low-income elderly person's nursing-home care. But the definition of poverty is widely inclusive: spouses outside the nursing homes can earn as much as $1,871 a month and own $77,820 in assets, not counting a home or vehicle. "That may not be a lot of money in New York, but it's a lot of money in North Dakota," says Ruth Swain, one of two county nursing-home caseworkers. Swain estimates that 10% of the 400 elderly in the program probably should be dropped "because they could afford to buy nursing-home insurance. I think they could cut this program. It's very generous."

Ken Donarski, who supervises the community's low-income housing, feels that the 616 federally funded and managed units in Fargo are a showcase for the nation. Like an excited real estate agent, he shows a visitor photographs of the nicest units, including 220 split-level and ranch homes. Each year he spends more than $4 million in federal money on rent for 1,800 people in those units and on rent vouchers for an additional 2,400 people who live in privately owned buildings. Like others in Fargo, Donarski sees excesses. First, he says, the eligibility requirements are too lavish: a family of four with income of $31,750 qualifies for a place in public housing. That's only 20% below the city's median family income of $39,700. And he worries about fraud: Donarski says he is prohibited from demanding income tax returns to verify income levels. "We're not the fbi or the cia," he says. "We're still very easy to dupe."

Outside town last week, where heavy spring rains have postponed planting for weeks, farmers fretted more about getting their wheat into the ground than about budget cuts. But most Cass County farmers know the end of the 62-year-old federal farm program is near. Republicans in Congress want to reduce the program slowly over the next five years, then effectively eliminate it by 2002. The cuts would hit North Dakota very hard: the state ranks No. 8 in direct farm subsidies from Washington; Cass County's 1,778 farms got $16.1 million in price supports in 1994 for wheat, corn and barley. The government also paid farmers in the county $585,000 last year for not planting on 12,686 acres of environmentally sensitive land. Farmers get millions of dollars more in marketing loans, subsidized crop insurance and technical advice.

Perhaps because they sit atop some of America's most fertile land-the topsoil, the remains of a prehistoric lake bed, can run 6 ft. deep -- many Cass County farmers say they are ready for change. Most find the welter of farm programs confining and confusing; many would prefer to shuck them altogether. Indeed, some farmers have begun to get out of the farm program voluntarily. Gerald Melvin, a third-generation farmer who works 3,000 acres that produce durum wheat, beans and five other crops, suggests that farmers would gladly accept reduced payments if Washington stopped placing burdensome environmental regulations on farming methods. But, he says, echoing a prevailing view, the trade-off would be worth it. "If Washington is going to get out of our business, it should get completely out."

While both of the state's U.S. Senators oppose deep cuts in the farm program, many farmers see silver linings in any case. One is that the loss of price supports will cause land rents to fall, which will lower the cost of farming and could encourage younger people to get into agriculture. Another is that an end to obsolete limits on production will better position trade-savvy farmers to compete in markets overseas. Democrat Kent Conrad has warned of a "disaster" if the cuts are indiscriminate. But Bill Pietsch, vice president of the North Dakota Farm Bureau in Fargo, a Republican-tilted outfit, puts it this way: "Our people will swear. We expect our Senators to swear. But as these payments are reduced, most of North Dakota will continue to be farmed."

The Red River valley's most prosperous farmers, the sugar-beet growers, show little fear. Beet-sugar producers like to boast that they are not directly helped by Washington; in fact, the government restricts imports of raw sugar and provides cheap loans to farmers so they can market their beets when prices are highest. Last month the Government Accounting Office called the program a "cartel" that costs consumers $1.4 billion annually in higher sugar prices. Throughout the spring, officials from American Crystal Sugar, the large local beet cooperative, have made repeated trips to Washington to save some part of "the sugar program." Beet farmers in Fargo say their product can compete against unsubsidized beets anywhere. What they cannot do is survive without help against foreign sugar producers, who still get subsidies. "Are farmers ready for a change? Yes," says American Crystal Sugar's George Sinner. "But are they ready to change without some kind of safety net? No, they're not ready to make the transition that fast."

Some of the local flexibility can be traced to Fargo's good fortune. Like that of medium-size towns elsewhere, the economy in Fargo is diversifying as banks, insurance companies and light industries are drawn to its cheap, well-educated labor force and its low crime rate. Violent crime is a rarity here; there were only five homicides in the entire state last year. Not all the locals are working as much as they would like, but unemployment stands at 2%, and help wanted signs are everywhere. Urban Weber, regional manager for Job Service North Dakota, knew something had changed when Hardee's offered $6 an hour for hamburger flippers this spring. "I've never seen an economy like this," says Weber. "We've got more jobs than we've got people."

These trends help explain why Mark Lande, controller for Prairie Public Television, is not overreacting to the possible elimination of federal help for his station. Prairie Public TV gets a fifth of its funding directly from the Corporation for Public Broadcasting and a sixth from the Department of Agriculture for rural programming. "We're waiting to see what happens," Lande says. "There is some time to react to this." Similarly, Linda Coates, executive director of the Fargo-Moorhead Symphony, thinks she could manage without the $25,000 Washington contributes to the symphony's $380,000 annual budget. "We will weather it," says Coates. "It won't be easy, but it won't do us in."

Of course, not everyone is willing to take a cut. Each Monday morning at the Nokomis Child Care Centers on Fargo's south side, director Gayle Johnson lays on a bigger-than-normal breakfast, including pancakes. Many of her 94 charges, she believes, have not had a good meal all weekend. "There is no way we would give them cold cereal on a Monday," she says. Much of Johnson's budget comes from Washington. The Agriculture Department pays for meals; a federal child-care block grant helps with salaries, rent and utilities; Aid for Families with Dependent Children helps parents pay the centers' fees. Some benefits are too abundant: kids get meals regardless of income. But since virtually all the children at Johnson's two centers are from low-income families, the prospect of cuts angers her. "I would like to see the budget cutters walk in the shoes of our parents for a week," she says. "We're trying to get people off the system."

Kathy Hogan, the county's social-services director, estimates that 4,500 households in Fargo receive some form of public assistance and that possibly 1,500 more need it. Many of her clients on afdc and food stamps work full time; she fears cutbacks in child care will drive more parents to quit their jobs, and thus increase demands for welfare. "I'm not a hysterical person by nature," says Hogan, "but I am panicked now."

Cuts will affect few in Fargo the way they will the legions of rural-life researchers toiling at North Dakota State University. On the edge of chocolate-dark fields on the west side of the campus, the federal government has built a maze of greenhouses, labs and research facilities dedicated to spawning new high-yield varieties of bug-resistant wheat, potatoes, sunflowers and sugar beets. There the Northern Crop Sciences Lab, the Biosciences Research Laboratory and the Wheat Quality Laboratory attract millions each year in research grants. Nearby, the Upper Great Plains Transportation Institute and the Mountain-Plains Consortium perform Washington-sanctioned studies on guardrails and scenic byways. N.D.S.U. grew so fast in the 1980s under the pork-barreling patronage of then Senator Quentin Burdick that local wags dubbed the campus "Burdickville.'' Now that the spigot may finally dry up, NDSU must look to outside sources for its research dollars.

"There's a North Dakota saying," explains Boyd Christenson, a radio talk-show host in Fargo: "When a little animal has been on the teat for a long time, it's tough to be weaned." In general, Fargoans refuse to wait passively for the budget cuts to rip their social fabric. In early March, 10 Fargo churches, along with the Salvation Army, created a Communal Needs fund to help locals who touch bottom. The money will be doled out to individuals who need emergency help with rent, transportation or food. There is not much to go around: donations now total a modest $20,000.

But the readiness is visible all around. The day after Republicans unveiled their plans to scrap government programs that have become part of the American way of life, Fargoans barely blinked. If anyone had reason to panic, perhaps it was Marlene Brown, 30, a mother of an eight-year-old son. She receives $337 a month in AFDC payments and $200 a month in food stamps. Currently enrolled in a vocational school where she is learning word-processing and stress-management skills, Brown also has a Pell grant of $760 and a $1,700 federal loan to pay for her education. Sipping a Bud Light with her sister-in-law at The Bowler, Brown takes the news of the probable cuts in stride. "If they cut it all out, I would make do," says the plain-speaking brunet, who lost her long-distance-operator job at AT&T in a 1987 restructuring and has worked on and off since as a housecleaner and a cashier. "People here will figure out a way to get by. We're good at looking after our needs." Her sister-in-law Julie Eyestone, 30, who lives across the river in Minnesota, agrees. "People here think a lot about surviving." she says. "They survive the winters. They'll survive the cuts."

--With reporting by Wendy Cole/Fargo

With reporting by WENDY COLE/FARGO