May 24, 1977
Page 16293
UP AMENDMENT NO. 298
Mr. MUSKIE. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The amendment will be stated.
The assistant legislative clerk read as follows:
The. Senator from Maine (Mr. MUSKIE) proposes an unprinted amendment No. 298:
On page 106, line 6, delete "$2.90" and insert in lieu thereof "$2.65".
Mr. MUSKIE. Mr. President, as chairman of the Senate Budget Committee, I am deeply concerned about the budget implications of this bill not only for fiscal year 1978 but for the later years covered by it, fiscal years 1979 through 1982. This bill is the first major spending bill to be considered by Congress this year. It is a spending bill because the largest programs in this bill are entitlement programs which permit little, if any, real control through the appropriations process.
The Congressional Budget Office estimates the 5-year direct spending impact of the farm income support programs in this bill at over $24 billion, not to mention food stamps, Food for Peace, and other programs.
From the standpoint of the budget, the major problems with this bill occur in the area of farm income programs for fiscal year 1978 and future years.
If this bill is enacted and fully funded, and if other agriculture programs are funded as expected, the agriculture function could be almost $1 billion over the first budget resolution for fiscal year 1978.
In addition to this fiscal 1978 excess, commodity programs would then virtually double by fiscal year 1982 under the terms of this bill.
The first budget resolution for fiscal year 1978, Mr. President, which Congress has just adopted, was based on the March 15 report to the Budget Committee by the Committee on Agriculture, Nutrition, and Forestry, which made no recommendations for change in existing commodity program support levels.
S. 275 violates the budget resolution assumption by including a provision which increases the target price for the 1977 wheat crop to $2.90 a bushel. As a result, outlays for fiscal 1978 for wheat price supports will increase by about $475 million above the assumptions in the first budget resolution.
Similarly, the bill includes price support provisions for wheat and feed grains in later years which virtually double the cost of the commodity program.
The administration did not request this change in the target price for wheat, and the President has stated, through the Secretary of Agriculture, that he will veto this bill if this provision is retained.
It is my understanding that the chairman of the Senate Agriculture Committee did not favor the increase in the wheat target price to $2.90 per bushel for the 1977 crop when the amendment to S. 275 was adopted by the Agriculture Committee. This target price for wheat exceeds by nearly $500 million the $4.35 billion outlay target for the agriculture function as provided in the first budget resolution.
In addition, the international grain reserves provisions in title X of the bill could cost an estimated $170 million in fiscal 1978, depending on actions permitted to be taken by the Secretary of Agriculture. This amount would also be above the first budget resolution agriculture targets. However, I understand that Senator BELLMON has been assured by Secretary Bergland that this provision will not result in fiscal year 1978 outlays.
There are also new authorizations in the bill for agriculture research, which if fully funded, would cost an estimated $0.2 billion over current policy. The first budget resolution can accommodate the new initiatives in agricultural research and services of about half this increase.
The Appropriations Committee, in its March 15 report to the Budget Committee, indicated that it would fund about $0.1 billion of new initiatives for agriculture research and services, and I simply point out that this restraint on the part of the Appropriations Committee will be necessary if the budget totals of the first resolution are to be maintained.
Mr. President, I also point out that, under current agriculture law, the President has ordered a sugar producers subsidy program which is estimated to cost about $200 million in fiscal year 1978, an amount which was not anticipated in the first budget resolution. While this does not directly involve S. 275, it causes further pressure on the fiscal 1978 budget.
Mr. President, if we are to balance the budget early in the next decade as the President has suggested many times, then we must face up to the fact that this bill proposes about $8 billion more spending in fiscal years 1979 through 1982 than the administration has requested for wheat and feed grains price supports. This is an increase over the President's request of about $2 billion per year. Congress cannot preach that it wants a balanced budget while setting in motion such large entitlement increases.
Let me emphasize again that there are three major problems with this bill as reported. First, it would exceed the fiscal 1978 first budget resolution targets for agriculture that were approved only last week by the Congress. Second, it would cause uncontrollable future outlays which far exceed current policy in later years. Third, as a result of these excesses, this bill will be vetoed by the President, and we may not have needed farm programs enacted in time for important planting decisions for the 1978 crops.
The major reason for the breach in the fiscal 1978 agriculture spending totals is the significant increase in this bill for 1977 wheat price supports. Let me point out again that this feature of the bill was not mentioned in the March 15 report by the Agriculture Committee to the Budget Committee, nor was it mentioned in subsequent communications to the Budget Committee prior to the markup of the first budget resolution. There was some mention of this provision in a Budget Committee review of the estimated outlays for fiscal 1977, but that discussion specifically related to fiscal 1977 outlays and not to fiscal 1978 outlays. Following the markup, in an exchange of correspondence initiated by the chairman of the Agriculture Committee, I made it clear that a provision to increase wheat supports such as is now contained in S. 275 would exceed the first budget resolution assumptions then beingconsidered by the Senate. While the conference agreement on the first budget resolution did increase outlays for the agriculture function, the increase was caused solely by a later estimate of the cost of existing programs and does not alter the guidance given in that letter. Mr. President, I ask unanimous consent that this exchange of correspondence be printed in the RECORD at this point.
There being no objection, the letters were ordered to be printed in the RECORD, as follows:
U.S. SENATE, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY,
Washington, D.C.,
April 29, 1977.
Hon. EDMUND S. MUSKIE
Chairman, Committee on the Budget,
Washington, D.C.
DEAR MR. CHAIRMAN: The Senate Committee on Agriculture, Nutrition, and Forestry is presently considering omnibus farm legislation which will revise and extend the support prices for commodities. In actions taken to date, the Committee has tentatively agreed to a provision increasing the target price and loan rate for the 1977 crop of wheat. There is a possibility that this change would increase outlays in fiscal year 1977 by approximately $15.5 million and in fiscal year 1978 by approximately $500 million.
I would appreciate your advising me (1) whether the proposed increase in outlays for fiscal year 1977 would be within the level of outlays in the most recently agreed to concurrent resolution on the budget for fiscal year 1977, and, (2) whether the proposed increase in outlays for fiscal year 1978 would be within the contemplated level of outlays in the first concurrent resolution for fiscal year 1978.
I would also appreciate knowing whether a bill reported out of this Committee containing the proposed increase in the 1977 target price and loan rate for wheat would be subject to any point of order under the Congressional Budget Act.
I would appreciate a formal response from you on this issue as soon as possible. With every good wish, I am
Sincerely,
HERMAN E. TALMADGE,
Chairman.
U.S. SENATE, COMMITTEE ON THE BUDGET,
Washington, D.C., May 4, 1977.
Hon. HERMAN E. TALMADGE,
Chairman, Committee on Agriculture, Nutrition, and Forestry,
U.S. Senate,
Washington, D.C.
DEAR HERMAN: This is in response to your letter of April 29 requesting my advice concerning the budgetary effect of legislation tentatively agreed to by the Senate Committee on Agriculture, Nutrition, and Forestry.
An increase in outlays of approximately $500 million in fiscal year 1978 cannot be accommodated within the Function 350, Agriculture target proposed in the First Budget Resolution for fiscal year 1978 unless major reductions are made in other Function 350 programs. In considering Function 350 during markup on the First Budget Resolution for fiscal year 1978, the Senate Budget Committee used the latest information available from CBO concerning the expected level of outlays in fiscal year 1978 for current law. In arriving at the recommended targets of $2.2 billion in budget authority and $3.7 billion in outlays, the Committee did not explicitly provide for any legislative increases in fiscal year 1978 outlays for price supports to farmers. Thus, an additional $500 million in outlays from new legislation could only be accommodated within the $3.7 billion recommended target if reductions were made in existing price support programs — changes I understand are impractical at this time — or in other programs in this function, chiefly agriculture research and services.
The Office of Management and Budget has recently reestimated total outlays for fiscal year 1978 for Function 350 as part of its April 1977 budget reestimates. Based upon initial review by CBO, the Senate Budget Committee determined that no adjustment to the reported targets for Function 350 for FY 1978 was necessary. There are likely to be significant reestimates both up and down in many functions between now and the adoption of the Second Budget Resolution for fiscal year 1978 in September. For that reason, the Committee decided there was no need to make adjustments in the presently recommended targets for the fiscal year 1978 First Budget Resolution.
I am deeply concerned, however, that administrative actions already announced by the Secretary of Agriculture could increase outlays for price supports to a much higher level, resulting in Function 350 total outlays much higher than the $3.7 billion included in the First Budget Resolution as reported in the Senate. In the event that the Senate Agriculture Committee also agrees to report an omnibus farm bill with substantial increases in target prices for the 1977 crop, the Agriculture function outlays could be in the range of $5.0 billion or more in fiscal year 1978, with probable increases in future years.
What I am saying is that if there is no restraint in the new farm bill, it will become increasingly difficult to find money for other worthy new programs and to balance the budget for fiscal year 1981.
With respect to fiscal year 1977, an increase in outlays of approximately $13.5 million would add further to the existing Function 350 ceiling which has already been breached. It would not necessarily exceed the overall ceiling on outlays in the Third Budget Resolution for fiscal year 1977 agreed to on March 3, nor would it necessarily exceed the amended fiscal year 1977 aggregate outlay ceiling now being proposed by the Senate Budget Committee in the Committee amendment to S. Con. Res. 19. The Third Budget Resolution for fiscal year 1977 contained an overall outlay ceiling of $417.45 billion, with an outlay ceiling for Function 350 of $3.0 billion. The Senate Budget Committee now recommends for fiscal year 1977 a revision to the Third Budget Resolution, with an overall outlay ceiling of $408.8 billion, including an outlay ceiling for Function 350 of $4.5 billion. An increase of $13.5 million in outlays would not exceed these revised ceilings. But, the pressures on these spending ceilings are very substantial, and many worthy programs are now competing for the remaining 1977 dollars.
With respect to technical points of order relating to a bill reported by the Agriculture Committee concerning target price and loan rate adjustments, I can only answer your question after review of the specific legislation. I can offer the following considerations: points of order under the Budget Act concerning spending levels relate to the budget as a whole, not to individual functions, so it would be unnecessary to review the entire relationship of proposed legislation to the relevant Resolution before a complete response could be given.
As you are aware, specific sections of a bill must be interpreted in the context of the legislation as a whole. With this understanding, I would point out the following:
Any new entitlement contained in the Omnibus Farm measure must have an effective date of October 1, 1977, or later in fiscal year 1978, to avoid a point of order under Section 401(b) of the Budget Act. It is my understanding that the section pertaining to wheat presently expires on December 31, 1977; thus any extension of an entitlement effective January 1, 1978, is not subject to a point of order. If, however, there is created a new entitlement affecting fiscal year 1977, the effective date of the authority for that entitlement must also be October 1, 1977, or later, or it, too, will be subject to a point of order under Section 401(b).
As you know, if there are any authorizations for the enactment of new budget authority for fiscal year 1978 contained in the measure, the bill must be reported by May 15, which I believe is your intention. If there is any authorization for the enactment of fiscal year 1977 budget authority in the reported Omnibus Farm bill, then, as you know, a waiver resolution waiving Section 402(a) of the Budget Act must be reported as well for reference to the Budget Committee.
The Budget Committee staff is available for further consultation once a final draft of the Omnibus Farm bill is completed.
With best wishes, I am.
Sincerely,
EDMUND S.MUSKIE.
Mr. MUSKIE. It is for this reason that I have offered the pending amendment, which reduces the 1977 wheat crop target price to $2.65 per bushel, thus reducing fiscal year 1978 outlays by about half a billion dollars. This action is essential if the agriculture function is to remain within the budget totals. The President has indicated, through the Secretary of Agriculture, that he will not oppose the agriculture bill if this amendment is adopted and if later year outlays for price support programs under this bill are reduced to the level proposed by the administration. I point out that wheat farmers will be receiving a significant increase in farm income if this $2.65 per bushel target price level is adopted — nearly 20 cents per bushel above the current level of $2.47 per bushel that has been proposed by the President. It has been estimated that an increase to $2.65 per bushel will significantly increase net farm income.
I ask unanimous consent that a letter from the Secretary of Agriculture, indicating that an amendment of this kind is needed if we are to prevent unnecessary delay in farm legislation this year, be printed in the RECORD at this point.
There being no objection, the letter was ordered to be printed in the RECORD, as follows:
DEPARTMENT OF AGRICULTURE,
Washington, D.C.,
May 23, 1977.
Hon. EDMUND S. MUSKIE,
Chairman, Senate Budget Committee, U.S. Senate,
Washington, D.C.
DEAR Mr. CHAIRMAN: Concern has been expressed in the Senate about the potential impact on the budget for Fiscal Year 1978 of three provisions of S. 275, the Food and Agriculture Act of 1977, as reported by the Committee on Agriculture, Nutrition, and Forestry.
The provisions are: (1) the increase of $2.90 (from $2.47 in existing law) in the target price for wheat for the 1977 crop year; (2) creation of a stock of not less than 2 million tons of food for an International Emergency Food Reserve; and (3) authority for the Secretary to acquire up to 75 million bushels of wheat, food grains, and soybeans.
The Department opposes an increase in the established price for 1977 crop wheat as proposed in S. 275.
However, the President is deeply concerned about the financial plight of many wheat producers, and he has authorized me to endorse an increase in the target price for 1977 crop wheat to $2.65 per bushel, but on the condition that the Administration's legislative proposals for wheat and feed grains for the 1978 and subsequent crop years are adopted.
As I have outlined previously, the President has proposed an income support rate (target price) of $2.90 per bushel for wheat in the 1978 crop year, with adjustments in future years to reflect changes in nonland production costs, and a minimum market support (loan) rate of $2.25. The President also has proposed an income support rate and market support rate of $2 per bushel for corn in the 1978 crop year, with adjustments in the income support rate in subsequent years to reflect changes in nonland production costs.
The Department estimates the additional cost of deficiency and disaster payments with an income support rate of $2.65 at $408 million; the additional cost of an income support rate of $2.90 per bushel, as proposed in S. 275 would be $883 million. An amendment which would reduce the income support rate for wheat to $2.65 would save $475 million from our estimated total cost of S. 275 for the 1977 crop year.
Moreover, using the Department's cost estimates based on favorable weather, the Administration's proposal would save an average of $1.9 billion annually in Fiscal Years 1979 through 1983, compared with the cost of S. 275.
Section 1002 of S. 275 would amend the Agricultural Act of 1949 to authorize the President to negotiate with other nations to create an International Emergency Food Reserve, and to authorize the Secretary to acquire not less than 2 million tons of food for such a reserve, increasing the stockpile to not more than 6 million tons upon completion of an international agreement.
The Department estimates that the cost of acquiring 2 million tons of food grains in Fiscal Year 1978 would be $170 million, with an annual cost of $16 million in subsequent years for storage and maintenance of such a stockpile.
This cost estimate, however, assumes that the Secretary would purchase the full minimum amount authorized in FY 1978, instead of in FY 1977. Making such purchases in the current fiscal year would mean only the $16 million for storage and maintenance would be added to FY 1978 outlays.
Section 1003 of S. 275 gives the Secretary authority to purchase feed grains, wheat, soybeans, hay, or other livestock forages for use in the emergency livestock feed program authorized by the Agriculture and Consumer Protection Act of 1973.
The Department would prefer, as an alternative to acquiring and maintaining stocks for use in alleviating feed grain shortages for livestock producers, an amendment which would authorize the Department to issue to eligible livestock producers in areas affected by drought, vouchers which would be used to obtain feed grain at a rate of not more than 2 cents per pound.
Such a proposal has been advocated by the President as part of his comprehensive drought assistance package, and the Department strongly endorses its inclusion as an amendment to S. 275.
The Department estimates the cost of emergency livestock feed program at $75 million in Fiscal Year 1978. This year about $85 million is being expended for this purpose. The $75 million will not be an additional outlay since funds for an emergency livestock feed program are already in the budget for the Federal Disaster Assistance Administration. I should point out that the authority in Section 1003 is discretionary with the Secretary, and that adoption of the President's proposed voucher system would make it unnecessary for the Department to incur any costs under Section 1003 in Fiscal Year 1978 or in subsequent years.
Sincerely,
Bob BERGLAND, Secretary.
Mr. MUSKIE. Mr. President, I urge the Senate to adopt my amendment to bring S. 275 more closely in line with the first budget resolution targets.
I point out that even if the wheat target price for the 1977 crop is reduced as I have proposed, title X of the bill should be amended to reduce the potential budget impact of the international and domestic grain reserve programs unless the Secretary of Agriculture, as he has indicated to Senator BELLMON, is able to hold down those outlays in fiscal year 1978.
At some point, after we deal with the pending amendment, Mr. President, I would like to discuss the fiscal 1979-82 costs of this bill with the chairman of the Senate Agriculture Committee and would like to have his views on this matter at an appropriate point during this debate.
Let me close by saying that now is not the time to commit the Federal Government to additional spending not contemplated in either the congressional budget or the President's budget requests. The agriculture targets adopted by Congress in the first budget resolution contain generous amounts for farm programs. The Senate adopted a spending total of $3.7 billion for agricultural outlays. The conference raised that target to $4.35 billion — almost to the House level. Congress has now agreed upon that amount. The deficit for fiscal 1978 is already projected at $64.6 billion. We simply cannot afford to push this deficit any higher. If we do so for agriculture, equally compelling arguments will be made for other new programs which were not assumed in the first budget resolution. Congress must not abdicate its obligation to take the responsible course in its spending decisions.
Mr. President, with that, I reserve the remainder of my time.
Mr. CURTIS addressed the Chair.
The PRESIDING OFFICER. The Senator from Nebraska.
Mr. CURTIS. Mr. President, I yield myself 5 minutes.
Mr. President, I think that it is interesting that the distinguished chairman of the Committee on the Budget brings in this amendment.
The bill before us is a combination, an agriculture bill and a welfare bill. The food stamp program is costing us about $6 billion a year now, or nearly so. The bill before us, reported by the committee, will call for an additional $2 billion in expenses for the food stamp program.
I ask the distinguished chairman of the Budget Committee if he expects to offer any amendment relating to the food stamp program.
Mr. MUSKIE. I say to the distinguished Senator that on the food stamp program submitted to us by the Agriculture Committee, it was assumed by the Budget Committee that it was within the budget.
Mr. CURTIS. I am afraid the Senator did not understand my question.
Mr. MUSKIE. Will the Senator allow me to finish my answer?
Mr. CURTIS. Surely.
Mr. MUSKIE. If the Senate wished to reduce those amounts, they should have initiated that reduction. If they wished that, they should have put it in a letter which the Agriculture Committee submitted to the Budget Committee in its March 15 report.
It is not for me to second guess the Agriculture Committee on those amounts.
With respect to wheat price supports, the amount we are talking about here was not recommended to us by the Agriculture Committee in its March 15 report, so it is outside the assumption of both the Agriculture Committee and the Budget Committee.
Mr. CURTIS. That is all well and good, but I am wondering if the distinguished chairman is interested in the budget and to lessen the deficit or is just interested in the resolution.
Here we have a situation with desperately low wheat prices for the first time in many years. The price of wheat is below the price of corn. Here is a farm bill, and the welfare part of it is about three times the cost of the agricultural part. We have an amendment picking out one commodity, and in order to lessen the budget — and I am for that — we decide on that action.
Here is another gigantic program that has increased in cost a great deal. The food stamp program was started in 1964. It only cost $360 million. This year it is going to reach nearly $6 billion.
Here is what that is. The number of participants is a 3,908 percent increase over the original enrollment. The expenditures have increased by 16,220 percent of the program's original cost.
We have a bill before us that will increase this program by somewhere between $2 and $2.5 billion.
I ask the distinguished chairman of the Budget Committee, if we adopt his amendment regarding wheat, how much will it lessen the Federal deficit?
Mr. MUSKIE.By $500 million.
Mr. CURTIS. By $500 million.
Now, the Senator bases that on the fact that the price of wheat will not go up?
Mr. MUSKIE. We base that on CBO estimates of the outlays that will be driven by the policy laid down in this bill, taking into account the normal process which has been used for estimating those costs.
Mr. President, I ask unanimous consent to have printed in the RECORD at this point a letter dated May 24, 1977, from the Director of CBO, outlining the method by which these estimates are made.
There being no objection, the letter was ordered to be printed in the RECORD, as follows:
CONGRESSIONAL BUDGET OFFICE,
U.S. Congress,
Washington, D.C.,
May 24, 1977.
Hon. EDMUND S. MUSKIE,
Chairman, Senate Budget Committee,
Carroll Arms Building,
Washington, D.C.
DEAR Mr. CHAIRMAN: Subsequent to preparing our May 13 analysis of the costs of S. 275, the Congressional Budget Office has reviewed the cost estimates developed by the Department of Agriculture for the commodity provisions of that bill. Based on this review, we believe that there is no reason at the present time to modify our estimate of the costs of S. 275.
The CBO projections of market prices, yields, and export levels are based on five-year historical trends. These projections do not reflect the impact of unusually good or bad weather, either in the United States or abroad, on yields or U.S. exports in any year. Under this methodology, both yields and U.S. exports increase at moderate rates during the forecast period, with yields somewhat below the USDA "favorable" projections and exports somewhat above. Thus, the CBO forecast reflects long term normal trends and roughly corresponds to USDA's "favorable" conditions. If weather conditions in the future are significantly worse on average than in the last five years, the costs of S. 275 would be substantially below the CBO estimate. On the other hand, if weather conditions are significantly better than in recent years, the costs of the bill would be much greater than currently projected.
Should the Committee so desire, we would be pleased to provide further details on this estimate.
Sincerely,
ALICE M. RIVLIN,
Director.
Mr. MUSKIE. Mr. President, as the Senator knows, the CBO is our estimating arm, and they have had a pretty good record.
There are, of course, uncertainties when we try to predict weather for a year, let alone 5 years in advance. There are uncertainties when we try to project market prices. But somebody has to evaluate the budgetary impact of these programs, and the CBO has looked at all of the relevant data, including OMB's and USDA's evaluations.
The response to my request this morning, which produced the letter I have had printed in the RECORD, has really confirmed the estimates upon which this amendment is based.
I understand the uncertainties. The distinguished Senator from Minnesota (Mr. HUMPHREY) yesterday, in an eloquent speech, discussed those uncertainties. I am sorry there are those uncertainties, but we have to accept the best estimates we can get.
The CBO is our investigating arm in order to try to estimate the budgetary impact of these and all entitlement programs, including food stamps, social security, unemployment compensation, and many other entitlement programs subject to the same vagaries. They are the estimating arm. These estimates are based on economic conditions, are based on weather, and on demographics. But OMB and CBO do the best they can to make these estimates, and both institutions have considerable experience.