An article yesterday about President Reagan's farm policy incorrectly stated the sum that the Illinois legislature had approved using from the state's surplus to "buy down" interest rates. The correct figure is $25 million.
In Iowa, the state's two leading Republicans, Gov. Terry E. Branstad and Sen. Charles E. Grassley, are taking turns teeing off on President Reagan's farm policies and drawing increasingly favorable performance ratings in the process.
Illinois Democrats are anxious about whether Republican Gov. James R. Thompson, who won by 5,074 votes in 1982, will be willing to veto a farm credit-assistance plan pending in the state legislature. Agriculture is the state's biggest industry.
In Minnesota, Republicans took control of the state House this year and set their sights on the statehouse. Now many farmers, angered by continued GOP opposition to a moratorium on farm-loan foreclosures, are targeting one of the party's more promising gubernatorial hopefuls, House Speaker David Jennings.
Throughout the Midwest, Reagan's decision to let farmers tough out high interest rates, low market prices, slumping land values and declining agricultural exports has produced the first cutting issue for the 1986 campaigns.
States that can afford it are using state funds to launch new programs and expand old ones that stimulate bank loans by, in effect, subsidizing interest-rate reductions and guaranteeing partial payments. Some are considering delays on farm-loan foreclosures.
But the political fallout lingers, with uncertain national consequences for next year. "If the past is any guide, this is a real Achilles heel for the Republicans, and once again you've got a large number of seats that are up in the farm belt," said Norman J. Ornstein, resident scholar at the American Enterprise Institute here. "There's a serious potential issue here."
Ornstein recalled the 1958 elections in which Republicans lost 47 seats in the House and 13 in the Senate. The greatest defeats that year came in farm states where voters were angered by the controversial free-market-oriented farm policies of Ezra Taft Benson, President Dwight D. Eisenhower's agriculture secretary.
Next year, twice as many Republican-held seats as Democratic ones will be up in the Senate, and Democrats also will be trying to increase their House majority. On the state level, Republicans had hoped to begin transferring their recent success in national politics to the statehouses and legislatures, where Democrats hold 2-to-1 edges.
In 1982, with the "fairness" issue and White House proposals to cut Social Security going against Republicans, Democrats picked up 26 House seats, seven governorships and raised from 28 to 34 the number of states in which they controlled both legislative chambers.
On the surface, the farm-credit crisis has a narrower appeal than either of the two issues that influenced some 1982 contests. Farmers, who supported Reagan 2 to 1 in 1984, represent about 3 percent of voters, and the current farm-credit crisis that dominated headlines earlier this year was centered in only one of the nation's many agricultural areas.
"It does not really galvanize yet," said one GOP lobbyist here, who is familiar with farm issues and who asked not to be named. "The way it was handled alienated a lot of people, even though they agree that the administration is doing the right thing."
Democrats, meanwhile, smell blood. "It presents kind of a tough problem for Republicans," said David E. Johnson, executive director of the Democratic Senatorial Campaign Committee. "On the one hand, do they want to associate themselves with a real popular president? Or, on the other, do they want to run away from him on something that's cutting really hard in their state?"
The issue was joined last month after Reagan vetoed emergency farm-credit-relief legislation that would have provided an additional $1.85 billion in federal farm loan guarantees. Reagan says the current $650 million is sufficient.
The style of Reagan administration policies may have made a more resounding political impact than the substance. The president announced his veto from the Oval Office with great fanfare. A few weeks later, speaking about the farm crisis at the Gridiron Club dinner here, he quipped, "I think we should keep the grain and export the farmers."
Earlier in the year, budget director David A. Stockman had virtually predicted the veto -- and piqued farmers' ire -- by repeatedly maintaining that American taxpayers were not obliged to rescue farmers from their bad business decisions.
Peter Secchia, a Republican national committee member from Michigan and a party vice chairman for the Midwest, said such rhetoric branded the GOP favorably as "the party of discipline."
"I think David Stockman is a national hero," he said.
Other Republicans were more critical -- including embattled Secretary of Agriculture John R. Block, who said that Stockman's statement showed "insensitivity" and that Reagan's quip was "unfortunate."
"David Stockman," Ornstein said, "may be this year's Ezra Taft Benson."
South Dakota Gov. William Janklow (R) said both parties may lose as a result of the federal government's inaction on the farm-credit crisis, which he termed "a mess" created by "these gutless people in Washington" unable to take action to lower the federal budget deficit.
"Nobody believes either party," Janklow said. "All the Democrats know how to do is bitch; and all the Republicans know how to do is whine."
Meanwhile, some governors and legislatures have moved to act -- delayed in some instances by their efforts to draw more federal aid, clearly cognizant in others of their limitations.
Iowa was one of the hardest-hit states, but state lawmakers have resisted large-scale relief programs. The state treasury has been pinched by the declining farm revenues.
The state Senate rejected a plan to subsidize farm loans with a sales-tax increase, leaving Iowa farmers largely dependent on federal programs. The state has used its employes and even the National Guard to help process federal loan applications.
The governor, who was 11 years old when the farm states rebelled against Benson, said the farm vote in Iowa is a nonpartisan "swing vote." But Branstad apparently learned a lesson last year from Sen. Roger W. Jepsen (R), whose reelection bid failed even though Reagan carried the state. "He went along with the administration," the governor said of Jepsen, "and he paid a price for it."
Conditions are better in Illinois, where the economy depends less on agriculture and more farm families can draw on nonfarm income, said state agriculture director Larry A. Werries.
Five years ago, Illinois launched a program to spur agricultural loans by investing in rural banks that agreed to loan the money at reduced interest rates. This year, that loan fund was increased from $50 million to more than $200 million.
The legislature has approved a bill to use $25 billion from the state's budget surplus to "buy down" interest rates. Under the plan, banks would make one-year operating loans to farmers. When the loans became due, the farmer would be required to pay the principle and half the interest. The state would pay the rest and be repaid by the farmer over five years. The bill would help 8,000 of the state's 96,000 farmers.
Thompson, trying to keep the pressure on the federal government for more assistance, has not yet said whether he will sign the measure should it pass the full legislature.
"Not everyone is convinced that it's a good idea or that it's the way we should go in Illinois," said Thompson press secretary David R. Gilbert, adding, "The farm problem has not become a political issue for the governor at this point."
State Rep. Calvin R. Sutker, the Illinois Democratic chairman, countered however, that Thompson is "on the firing line. What he does here with a constituency that has been overwhelmingly in his corner in the past could change the whole atmosphere of the campaign."
In Minnesota, legislators last month approved a $50 million loan "buy-down" plan similar to that pending in Illinois. Few banks and farmers have taken advantage of it, however, and farmers by the hundreds have launched protests, pressing instead for a loan-foreclosure moratorium.
House Speaker Jennings (R) has complained that the moratorium would only "dry up credit" in the state. GOP state Sen. Charles Berg has bolted the party, however, declaring, "If the Republicans don't do a flip on this issue, it will be politically devastating."
Still, Sen. Majority Leader Roger Moe (D), who represents a farm district in northwestern Minnesota, says farm issues "are going to cut in 1986." Moe predicted that Rep. Arlan Stangeland (R-Minn.), whose 57-percent majority in last year's election was the lowest among the state's three GOP congressmen, would be vulnerable.
Kansas and Indiana are represented by senators who held firmly to the Reagan line on emergency farm-bill votes. Both are up for election next year. Neither is considered imperiled because of the farm-bill votes.
A small group of farmers in north central Kansas launched an effort to dump Senate Majority Leader Robert J. Dole (R-Kan.) but have won few allies. If the political winds change, however, some state observers expect Gov. John Carlin (D) to receive more encouragement to challenge Dole's reelection bid next year.
The strongest anti-Dole sentiment appears to be in neighboring Iowa. "Dole is writing his political epitaph right now," said David Ostendorf, director of Prairiefire, a rural action and advocacy group in Des Moines. "If the man wants to run for president, he starts in Iowa, and people are not going to forget where he is on these farm issues. They're not going to let him off very easily."
Kansas, like Iowa, has used state resources to help federal officials process loan applications, and the state legislature has before it a measure that would give lending institutions tax credits for cutting interest rates on some agricultural loans.
In Indiana, Sen. Dan Quayle (R) is up for reelection next year but catching little flak for his pro-Reagan stance on the farm-credit legislation. That may be partly because Indiana farmers, as Lt. Gov. John Mutz once put it, "are generally not looking for someone to provide a bailout."
The state has taken steps to help farmers, including a $50 million low-yield investment program similar to that in Illinois.
Some Indiana politicians say the farm-debt furor could be equally temporary. Republicans hope that is so. Democrats, like state Sen. Louis J. Mahern Jr., among several considering a race against Quayle next year, are ready to capitalize on it if not.
"One more bad year," Mahern said, "and it will surely be a major theme of any Democrat's campaign."