IN A RADIO ADDRESS two weeks ago, President Reagan sent a warning to Congress on the pending farm bill. "The law governing our farm program expires Sept. 30," he said. "I'm eager to sign historic legislation that will put American agriculture on a sound course for the future." But "in writing farm legislation, I expect the Congress to stay within its own budget -- its own budget goals."
The test sounds fair enough; all Congress needs to do is keep a month-old promise. But it is not fair, at least not to farmers, because Congress played a game in writing the budget. It used what members knew were highly optimistic assumptions as to likely future farm support costs. These were the starting point in deciding how much the farm programs needed to be cut. Because they minimized likely future costs, they reduced the pressure on the members; on paper it took fewer cuts to reach desired spending levels.
Even so, the agriculture committees have not been able to get down to the budgeted levels in writing the farm bill. And now, new and more realistic cost estimates have been drawn up reflecting in part the likelihood that bumper crops this year will further depress market prices and increase support costs. To reach the spending levels in the budget resolution, then, Congress would have to cut supports much more in the near term than anyone intended, and probably more than anyone thinks is healthy.
There are two elements to the current support structure. For most of the staple crops there are loan rates, prices at which farmers can put their crops on loan to the government each year. In effect, these are minimum U.S. prices for the crops, and in recent years these have been above world prices. This has made U.S. products less competitive, cut into sales and added to government surpluses. The administration wants to reduce these loan rates to below-market levels so U.S. products can compete again. The committees have pretty well agreed.
The problem is with the second part of the support system, under which farmers are also given so-called deficiency payments to supplement their incomes in poor years. The administration wants to phase these down, too -- and to stay within the budget they would have to be brought down pretty rapidly. The committees want a slower parachute. Almost everyone agrees that will mean busting the budget, probably by several billion dollars.
In this case, it ought to be busted. As far as it affects farm programs, the budget resolution is a phony document, and Congress ought to admit it. The farm economy has to be weaned from the federal Treasury. The question is not whether, but how fast -- the speed with which farmers who had been led to count on one level of support should now be forced to adjust to another, and possibly drop out of farming. There is something close to a social revolution involved in this, and engineered revolutions need to be done gently. It would be a tragedy if real-world farmers were sacrificed to two-dimensional budget politics.