Despite general recognition that nonmetropolitan areas have a disproportionate share of the nation's problems; that this is both a cause and an effect of rural-urban migration and metropolitan compaction; and despite official rhetoric in favor of "rural-urban balance", virtually all evidence points to a pattern of inequity in Federal outlay for rural areas and small towns. Examination of "Federal Aid to State and Local Governments" (reported annually as part of Special Analysis of the Budget) and the series of reports titled "Federal Outlays" (distribution of all Federal outlays and of federally insured credit programs down to the county level and to towns of 10,000 or more population) reveals that in most categories of Federal outlays, nonmetropolitan areas get less than their fair share, and where they get more, the effect frequently is to make things worse. For example, Federal outlay for highways in nonmetro areas has accelerated the demise of smaller communities, since highway development has helped enlarge the trading areas of larger towns. We need, therefore, to take a much closer look at what the budget impact is in terms of rural-urban balance, and geographic, racial, and economic equity, particularly in reference to income security, welfare, jobs, job training, education, retirement, social security, housing, farm programs, health, and medical assistance. (JC)