They had to filibuster to save the farmer, they say. There was no other way but to force a Senate vote. This legislation that they pressed upon us was the only way to get the crops in the ground this spring, they declared.
Didn't we give a loan to Chrysler -- and then to Lockheed too? And how about the Continental Bank in Chicago?
And what did all the hyperbole, posturing and filibustering accomplish? Well, some of it was vetoed by President Reagan. But despite that veto, it's my judgment that the banks got a hell of a deal: the federal government -- that is, the taxpayer -- is going to pick up a lot of their bad loans, loans that they willingly gave, indeed, often encouraged farmers to take.
What about the farmers? Personally, I don't blieve their position was improved at all. It may even have been worsened.
Last September, a credit program was passed by Congress. It didn't have the desired effect, however, so the U.S. Department of Agriculture -- at the urging of many of us -- changed the rules of the program. The new program was:
1.The federal government would guarantee 90 percent of bank loans where the bank would make a concession to the farm borrower equal to 10 percent or more of the loan and where the farmer had a 110 percent cash flow.
2.Guarantees totaling $650 million were appropriated, and if that wasn't enough, guarantees as necessary would be made available.
3.The Farmers Home Administration would have adequate funds available to meet its commitments for farm operating loans for the spring planting. (The FmHA would also be pushed and given adequate personnel to move faster. At least in Minnesota they're terribly slow -- or at least the farmers think so.)
What kind of change did the filibuster bring about? The cash flow requirement was reduced to 100 percent. Not much help to the farmers, but the bankers sure love it.
Cash flow means that a projection is made: Will the farmer receive for his crops or animals enough to cover the expenses of his farm and family? If he has just enough, that's 100 percent. If he has a 10 percent cushion, that's 110 percent.
Picture a farmer and banker sitting down and projecting the farmer's cash flow for next year. There they are -- two willing co-conspirators -- the farmer wanting the loan and the banker wanting the federal guarantee -- and all this depending on whether the farmer shows a positive cash flow.
So they talk. The farmer says he expects his 100-bushel-per-acre corn yield to be up by five bushels this year. Fine, says the banker, we'll put that down. That will increase cash flow. "I put a lot of nitrogen fertilizer into the soil last year -- need 20 percent less this year," says the farmer. The banker agrees -- "that's less expensive -- less cash out this year than last." Diesel fuel is probably going down in cost again this year, they agree. Will the farmer have a recurrence of root worm in his corn this year? Probably not, they both say. Pretty soon the farmer's cash flow looks a little better, and the banker hardly has to give the farmer any concession at all to reach 100 percent cash flow.
In short, cash flow is a very flexible concept. It was the feeling of many of us that if 110 percent cash flow was required, the banks would have to stretch -- to make some real concession on principal or interest to get that farmer to cash flow. After all, many of those banks had encouraged those farmers to borrow -- and anyway, why should federal guarantees go cheaply?
Will more farmers qualify at 100 percent cash flow? Surely the answer has to be "yes." Could cash flow have been stretched to include most farmers at 110 percent? believe the answer is just as surely "yes." Will all those farmers who could have qualified at 110 percent get less of a concession from the banks because of the 100 percent requirement? Absolutely. They will all be paying higher interest because of the change to 100 percent cash flow.
Then a couple of days later these self-proclaimed farm defenders gave the banks another break: an amendment that would pay the bank half of the interest concession that they gave the farmer! To top that off, these "friends" of the farmers reduced the cash flow requirement from 110 percent to 100 percent for farmers who had their debt restructured by the Farmers Home Administration.
A great victory for the farmer was declared -- high and low across the land so that all should hear.
In reality little was done. The interest buy-down provision was vetoed, and even if it had been signed into law, it could not have been put into effect soon enough to help most farmers before spring planting -- and those who stomped and roared on the Senate floor know that as well as I do.
But a guarantee program remains in place -- pretty much unaffected by filibustering. I believe it is a good one and that it will help farmers in need to get credit for spring planting.
Better yet, the Russians have purchased more grain in the five months since Oct. 1 than we've ever delivered to them in a 12-month period. And Amoco says it will use ethanol as an octane enhancer rather than lead. The Corn Growers Association says that means they'll need a billion extra bushels by 1990, and that will raise corn prices 50 cents a bushel.
Now that's the kind of relief farmers need.