September 8, 1977
Page 28177
SECOND CONGRESSIONAL BUDGET RESOLUTION, 1978
The ACTING PRESIDENT pro tempore. Under the previous order, the Senate will now proceed to the consideration of Senate Concurrent Resolution 43, which the clerk will state.
The assistant legislative clerk read as follows:
A concurrent resolution (S. Con. Res. 43) revising the congressional budget for the United States Government for the fiscal year 1978.
The ACTING PRESIDENT pro tempore. Who yields time?
Mr. MUSKIE. Mr. President, I understand that under the order previously entered, the subject before the Senate is the Talmadge amendment. Am I correct?
Mr. TALMADGE. Mr. President, will the Senator use his microphone? I cannot hear him.
The ACTING PRESIDENT pro tempore. The Talmadge amendment has not been called up.
UP AMENDMENT NO. 764
Mr. TALMADGE. Mr. President, I send to the desk an amendment for myself, the ranking minority member of the Committee on Agriculture, Nutrition, and Forestry, and over 30 other cosponsors, and ask for its immediate consideration.
The ACTING PRESIDENT pro tempore. The amendment will be stated.
The assistant legislative clerk read as follows:
The Senator from Georgia (Mr. TALMADGE), for himself and Senators DOLE, ABOUREZK,
ALLEN, BURDICK, CLARK, DOMENICI, EAGLETON, EASTLAND, FORD, HAYAKAWA, HUDDLESTON, HUMPHREY, LUGAR, McCLURE, McGOVERN, MELCHER, METCALF, MORGAN, STONE, TOWER, YOUNG, ANDERSON, THURMOND, LEAHY, MATSUNAGA, CULVER, NELSON, WALLOP, CHURCH, PACKWOOD, HASKELL, INOUYE, PEARSON, STEVENS, HART, BENTSEN, and BARTLETT, proposes an unprinted amendment numbered 764.
Mr. TALMADGE. Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with, and I will explain it in some detail.
The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.The amendment is as follows:
On page 2, line 2, strike "$459,000,000,000" and insert in lieu thereof "$459,700,000,000".
On page 2, line 5, strike "$64,000,000,000" and insert in lieu thereof "$64,700,000,000".
On page 2, line 7, strike "$778,200,000,000" and insert in lieu thereof "$778,900,000,000". On page 2, line 9, strike "$78,200,000,000" and insert in lieu thereof "$78,900,000,000". On page 3, line 11, strike "$5,600,000,000" and insert in lieu thereof "$6,300,000,000".
On page 5, strike section 3 in its entirety.
Mr. TALMADGE. Mr. President, yesterday the distinguished chairman of the Committee on the Budget and the ranking minority member of his committee, the Senator from Oklahoma (Mr. BELLMON), the ranking minority member of the Senate Committee on Agriculture, Nutrition, and Forestry, the Senator from Kansas (Mr. DOLE) , and I had a conference—
The ACTING PRESIDENT pro tempore. Will the Senator from Georgia yield himself time?
Mr. TALMADGE. I yield myself such time as I may consume.
We had a conference to determine the procedure as to how we would proceed on the second concurrent resolution on the budget for fiscal year 1978, and the conference report of the Committee on Agriculture, Nutrition, and Forestry on S. 275.
Since an agreement was made on procedure late yesterday afternoon with the chairman of the Budget Committee, more than 30 Senators have agreed to cosponsor the amendment at the desk.
Of that number, 14 cosponsors are members of the Committee on Agriculture, Nutrition, and Forestry, and 6 are members of the Budget Committee. In other words, we have received expressions of support from more than half the Senate. I am proud that we could get such a strong expression of support in such a short period of time.
Mr. President, the Food and Agriculture Act of 1977 (S. 275), which has been reported out of conference, represents an extended legislative effort that began over a year ago. Both House and Senate committees held extensive hearings and markup sessions. The conferees met during the week of August 1—5 with both day and night conference sessions.
I was pleased that President Carter called both Representative FOLEY and myself to offer his congratulations on the outstanding work of the conference.
While the administration has not officially commented on the bill, we have every indication that the President will sign the measure.
While no bill can satisfy everyone, this measure goes far in meeting the needs of our farmers and consumers. Without doubt, it is the most comprehensive Food and Agricultural Act ever undertaken by Congress. This complex measure was drafted to maintain a viable agriculture for the benefit of all of our people and to assure a sound economy.
There has been concern on the part of the Congressional Budget Office over the budgetary implications of this legislation. I have always been a strong believer in a balanced budget and the budget process itself. I have worked to support balanced budgets during my 20 plus years in the Senate.
We felt that we had strong support in the Senate for the conference report, but out of respect for Senator MUSKIE, and the budget process, we decided to postpone the conference report.
During our committee's 8 a.m. markup sessions, extensive consideration was given to the budgetary impact of the legislation. We considered the cost implications of different weather conditions as well as different support levels. I consistently reminded the committee of the cost implications of the legislation being developed, and I had some reservations over the bill as passed by the Senate.
CONFERENCE ACTION
In spite of our efforts to hold the budget outlays for the agriculture function to the $5.6 billion limit established by the Budget Committee, there is a possibility that agricultural outlays will exceed this amount.
In conference, the Senate conferees made numerous concessions and were particularly sensitive to the issue of program costs. However, supply forecasts — both in the United States and abroad — have increased since passage of the Senate bill in May. In addition, market prices have dropped sharply. These developments are increasing the probable costs of the programs.
For this reason, I and other Senators are offering an amendment to raise the function 350 level to $6.3 billion. I firmly believe that this full increase will not be required, but it is necessary to cover that contingency.
There was no difference between the Senate and House on the $2.90 per bushel wheat target level for 1977. The Senate conferees accepted the House $2 per bushel target and loan levels for corn in 1977 in response to the worsening financial condition of our farmers. I might add that the administration also recognized this need by establishing identical corn loan levels.
For 1978 and in future years, supports were set largely on the basis of the lower House numbers. The target price adjustments are to be based on a moving 2 year cost of production figure which would rise less rapidly than the Senate committee formula. The Secretary is authorized to reduce loan levels by up to 10 percent annually in order to remain competitive on the world markets. Also, loan levels are not tied to the target prices, as had been the case in the Senate bill.
Mr. President, it is important to point out that the conference report is significantly less costly than the bill passed by the Senate.
One of the several major cost reductions was wheat. As passed by the Senate, the wheat target price for 1978 was set at $3.10 per bushel. For 1979 and beyond, the target price was set at cost of production, but not less than $3.10 per bushel.
The House bill, on the other hand, provided for a target price of $3 per bushel in 1978, adjusted for 1979 and beyond by changes in the cost of production.
The conferees accepted the House version, except that in 1978 the target price would be set at $3.05 if production was less than 1.8 billion bushels.
By lowering the wheat target for 1978, program payment costs are cut by $90 million to $180 million from the Senate-passed bill. This adjustment means a potential Federal savings of $630 million for the 1978-81 period just on the wheat program.
A similar situation exists for feed grains. The Senate bill set the target price for corn at $2.28 per bushel for the 1978 crop, adjusted thereafter by changes in cost of production.
The House version provided for a target price of $2.10 per bushel in 1978, adjusted thereafter for cost of production changes.
The conferees accepted the House version.
The 18 cent reduction in the target price means we reduced potential deficiency payments by $990 million annually.
The Senate conferees felt that they had acted responsibly and gone far in conference to meet the concerns of the Senate Budget Committee concerning the cost of the pending legislation. Farm programs, after all, will cost money during adverse times for farmers. That is why they are needed. However, there should be little if any cost when markets are in balance.
We felt that, with the major reductions made in conference, we were about on target in terms of meeting the $5.6 billion Senate budget resolution outlay figure for fiscal year 1978. Since the House budget resolution provided $6.1 billion for agricultural outlays, we felt that the cost issue had been resolved.
NEW CBO COST ESTIMATES
The Congressional Budget Office, however, has since done a further cost estimate based on later crop conditions and the administration's recently announced set aside plans. This estimate adds $0.7 billion to the program costs for the commodities sections of the bill, thereby increasing the potential fiscal year 1978 outlays to $6.3 billion.
I am disappointed that the Senate Budget Committee has taken this approach of revising its cost estimate after the conference committee completed its work. I also am distressed that CBO has used the worst possible cost assumption — the July crop report rather than later crop conditions. And there has been some indication that the Senate Budget Committee wants to make an example of the agriculture budget.
(Mr. ANDERSON assumed the chair.)
Mr. MUSKIE. Will the Senator yield?
Mr. TALMADGE. I yield.
Mr. MUSKIE. I simply want to make the point that the estimate to which the Senator refers is not the Senate Budget Committee's estimate but that of the Congressional Budget Office, an independent institution created by the Congress for the purpose of providing objective information and data on the cost of the programs. The estimate was not mandated by the Senate Budget Committee. We did not set the timing. This is CBO's estimate. I take it we have some obligation to pay attention to it.
Mr. TALMADGE. I appreciate the clarification of the Senator from Maine on that point.
There are people who question the significance of agriculture — representing under 4 percent of our population — even if agriculture accounts for a quarter of the Nation's GNP.
The latest upward revisions of the Congressional Budget Office reflect depressed prices and the administration's announced increase in the 1977 corn loan level from $1.75 to $2.
Net lending for feed grains is estimated by CBO to increase by $700 million — $300 million because of the market and $400 million because of the increase in loan level to $2.
In other words, we face a budgetary problem because of depressed markets and decisions reached by the conferees and implemented by the administration.
At the same time, no recognition is given for savings resulting from the sugar amendment adopted by the conference. The CBO had earlier established a level of $185 million as needed to cover the administration's direct payments to sugar producers.
That program was declared illegal by the Justice Department but this decision came after the conference had concluded and also after the conferees had mandated the establishment of a sugar support program to be implemented at no cost to the Treasury.
The CBO cost estimate on sugar is now zero, but there is no indication as to what was done with the $185 million which was a 350 function item.
The problem of estimating costs for agricultural programs is best demonstrated by the changes in the cost of the various programs in the agriculture function made by the Congressional Budget Office. In the past 6 weeks we have had three separate reestimates for outlays for agricultural programs under current law. Originally, the estimate for outlays for agriculture was $4.7 billion, then it was increased to $4.8 billion and the latest estimate is $5.4 billion — these figures represent costs with no additional benefits under the farm bill, S. 275. The base cost alone of commodity programs has been reestimated up by $700 million — a 15 percent increase. This was not due to any action taken by the Congress — it is an estimating problem caused by the weather.
Agriculture is also subject to sharp swings in demand because of uncertainties in our export markets.
Two years ago, the Soviet Union harvested a 140 million ton grain crop. Last year, their crop was around 225 million tons. This year's crop is expected to be about the same level. The Soviet Union alone has a major influence on our export markets, and an influence that we cannot predict.
It should further be noted that the cost estimate now being used for the agriculture function is likely to go down. Congressional Budget Office technicians agree that their estimate of $6.3 billion is probably high because of more recent downward trends in crop conditions for August and September. These trends were pointed out to CBO, but they preferred to maintain their earlier, higher cost estimates.
I should also point out that these budgetary considerations are distressing, not just to our farmers but also because of the impending economic distress of our rural communities and the agricultural sector.
We in the United States are faced with a constant uphill battle against unemployment. The latest estimates are 7.1 percent of the labor force. In the past 2 years alone, the Congress has appropriated $17.4 billion specifically for job development. This budget action against agricultural programs seems to be in direct conflict with this objective of low unemployment.
The farm legislation provides farm income security in a way that will maintain and create jobs in our rural communities and the agricultural sector of the economy while not stimulating inflation.
The estimated additional $700 million which may be needed to carry out the farm programs will be more effective than the billions per year being spent on creating jobs.
It should also be remembered that much of the initial outlays of the farm programs are really investments in food stocks that will meet future shortfalls in supply at home and abroad. It is surprising that people have so quickly forgotten the doomsday prophecies of world starvation of just a few years ago in an effort to meet arbitrary budget targets.
I am as dedicated as any Senator to fiscal responsibility and a balanced budget, but we cannot forfeit the welfare of the Nation's farmers and consumers in an attempt to comply with an arbitrary directive of the budget resolution. Hard-pressed wheat and corn farmers around the Nation are depending on the additional benefits provided by the farm bill to meet production costs, mortgage payments, and living expenses. To suddenly deny these benefits would be a cruel blow.
Many responsible farm producers feel that the measure is, if anything, inadequate. On August 26, the Department indicated that net farm income would drop 12 percent, to $19.3 billion, in 1977.
This compares with $29.9 billion in 1973, $27.8 billion in 1974, $22.7 billion in1975, and about $22 billion in 1976.
How many people have faced not only a 12 percent reduction in income in 1 year but a 35 percent reduction since 1973? At the same time that production costs have skyrocketed.
This increased spending is necessary to provide farmers with income support as market prices for commodities continue to decline. The USDA reports that at only one other time in history has the severe cost-price squeeze on farmers been so severe. The average parity ratio in August 1977, was 64 percent, down from 71 percent a year ago. Only in March of 1933 were conditions worse, when the average parity ratio was 55 percent. Wheat and feed grain farmers have been particularly hard hit. Prices received last month by wheat farmers represented only 40 percent of parity; feed grains were at 48 percent of parity.
Of the $6.3 billion in function 350 outlays, 37 percent, or $2.3 billion, are loans which will be repaid, with interest. USDA experience with commodity loans indicates that 98 to 100 percent of these fiscal year 1978 loans will be recovered, with 7 percent interest. The collateral for these loans is the commodity held in bonded storage.
In my State of Georgia, we experienced a disaster this year because of the drought, while other communities have experienced distress because of low prices and unmet payments on loans.
I also should note that authorization for the food stamp program expires at the end of this month, and I would like our friends in the CBO to tell us what they would do to deal with the chaos if this program were to lapse.
I suggest that we quit posturing and playing games with numbers and raise the level in the budget resolution to meet this urgent need. We pass emergency assistance and disaster legislation for other sectors of the economy.
Our farm producers deserve no less consideration.
While I expect that the full $6.3 billion is not likely to be required, we need to pass this amendment to the budget resolution to cover these potential outlays.
I urge adoption of the amendment.
Mr. President, it is unfortunate that Senator HUMPHREY, the senior Senator from Minnesota, who contributed significantly to the formulation of the Food and Agriculture Act of 1977, is unable to be with us today to speak on this important amendment. Senator HUMPHREY, the chairman of the Foreign Agricultural Policy Subcommittee, authored several bills which are now a part of S. 275. He has asked me to share with the distinguished Members of this body his views on this amendment. I ask unanimous consent that his statement be printed at this point in the RECORD.
The PRESIDING OFFICER. Without objection, it is so ordered.
STATEMENT BY SENATOR HUMPHREY
The Food and Agriculture Act of 1977 is one of the most significant pieces of legislation that the Congress will enact this session. It is important to the entire nation — to consumers and farmers alike. The Senate recognized the importance of this bill by passing it by a vote of 86–19 in late May.
Today, the Committee on Agriculture, Nutrition and Forestry comes before the Senate to ask that $700 million be added to the agriculture function in the Second Budget Resolution. While I am fully supportive of the effort to increase the agriculture function by this amount, I do not believe that actual outlays for commodity support programs will ever reach the level of $6.3 billion that this account would have with the passage of this amendment. In fact, actual outlays could fall significantly short of that total. The reason I do not believe that the $6.3 billion mark will ever be reached has to do with the nature in which these particular budgetary projections are made. Projecting outlays for agricultural commodity programs is an extremely difficult task that requires a combination of superb intellectual skills with inordinate good luck.
The very uncertainty that has plagued agriculture since man became a cultivator makes these types of projections especially difficult. First of all, there is the problem with the weather. Sharp fluctuations in weather can cause sharp fluctuations in commodity prices. With bad weather, commodity prices would rise and government outlays fall. Second, there is the factor of exports. The good weather that has helped produce this year's abundance of food cannot be taken for granted. But we can expand our overseas markets. This would help us reduce outlays. With a little work we will, by this time next year, have done away with the self-imposed restrictions on trade that keep us from tapping promising markets such as the Peoples Republic of China.
The point I am making is that projecting outlays is primarily a matter of guesswork. And in guessing, our budget makers have leaned to the conservative side, which has led to projections that exceed outlays.
While it is important to be aware of the difficulties in making budget projections for agriculture, these difficulties by themselves — as important as they are — may not be reason enough to support such an amendment.
There are two facts that we should keep in mind in arriving at a decision on this matter. The first is that the Conference on S. 275 was completed one day after the Second Budget Resolution was passed by the Senate. The second fact has to do with a wide variety of initiatives already taken by the Administration which have the effect of increasing spending under current law to a level of about $400 million above that provided for under the Second Budget Resolution. The importance of this second fact is that the Senate, if it defeated this amendment, would have to reevaluate both the Farm Bill and an entire array of Administration initiatives that are important for both farmers and producers.
I have every indication that the President will sign the Food and Agriculture Act of 1977.
In closing, I point out to my distinguished colleagues that this Act is a bare bones bill that assures minimal viability to our food economy. No one will get rich from this Act. In the final analysis we must recognize that we are talking about far more than an amendment to a budget resolution. We are talking about a set of policies that are important to the welfare of this nation.
Mr. TALMADGE. Mr. President, I ask unanimous consent that Mr. Joe Kinney, Senator HUMPHREY'S assistant, be granted the privilege of the floor during debate on this amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. TALMADGE. Mr. President, I yield the floor and I yield the remainder of my time.
The PRESIDING OFFICER. Who yields time?
The Senator from Maine is recognized.
Mr. MUSKIE. I shall reserve my time, Mr. President, until the proponents of the amendment have concluded theirs.
The PRESIDING OFFICER. Who yields time?
Mr. TALMADGE. Perhaps the Senator from Maine should proceed now and then Senator DOLE will take some time.
Mr. MUSKIE. I shall try to divide my time so I can respond to each of my three colleagues. I suspect that I am going to find difficulty getting other voices to join mine on this side of the issue, so I shall try to reserve my energy and time so that I can respond as intelligently as possible to the arguments of my three distinguished colleagues.
First, let me state appreciation to the chairman of the Committee on Agriculture for agreeing to use this forum, debate on the second budget resolution, for the purpose of considering the issues which he has raised. I think that is in the interest of orderly procedure and I am willing to abide by the result.
Second, I am under no illusion as to what the nose count is at this point on this amendment. It is because I understand that that I have urged the distinguished chairman of the Committee on Agriculture to use this forum, in order that the Senate, as a whole, might assume the responsibility for making the changes requested in the budget resolution.
This process is not the property of the Senate Budget Committee. It is implied, from time to time, by those who are unhappy with our recommendations that we treat it as such, but it is not our property. It is the property and also the responsibility of the Senate as a whole. If a change of this magnitude is to be made in the congressional budget, the Senate, as a whole, should make it.
That is my judgment.
The distinguished chairman of the Committee on Agriculture refers to the budget resolution numbers as arbitrary numbers. I take issue with that very vigorously. He says that as though there had been no chance for anybody, including the Agriculture Committee, to influence the numbers in the budget resolution. Let me remind the Senator, for the purpose of this record, of these facts:
No. 1, under the budget process, the Agriculture Committee is required to submit its recommendations to the Budget Committee by March 15. Those recommendations were received. They were debated at length. Many of the Senators who are cosponsors of the Senator's amendment are members of the Budget Committee, as Senator TALMADGE himself has emphasized today. They are just as articulate and just as vigorous at pressing the interests of the farmers in the Budget Committee as they will be on the floor of the Senate today. To suggest, therefore, that some outside force, presumably the Senator from Maine, has arbitrarily established these numbers for the agriculture function simply is not a reflection of reality. I vigorously take issue with that.
It is the Senator's prerogative, of course, to make his case for his amendment. I always assume that the distinguished Senator from Georgia acts responsibly. I do not think there is a Member of this Senate who takes his duties, either as a chairman or a member of a Senate committee or as a Senator on the floor, with a greater sense of responsibility than the Senator from Georgia.
Mr. TALMADGE. If the Senator will yield, let me express my great appreciation for the generosity of the Senator's remarks. The difficulty with trying to set budget targets for agricultural programs, of course, as the Senator knows, is that no one can predict the weather, therefore no one can predict what market prices will be. That is the cause for the $700 additional outlays that we are requesting here today — the weather and market prices. In addition the administration has increased the loan level for corn to $2 a bushel. That increase in the loan level adds an additional cost of $400 on to the agriculture function — 350.
Mr. MUSKIE. I understand the peculiar factors that influence the agriculture budget. I would point out to the Senator that there are estimating difficulties involved in virtually every function of the budget.
That is one of the reasons we have two budget resolutions — a first and a second. Mr. President, I ask that there be printed in the RECORD at this point a table which identifies the changes that have been made since the first concurrent resolution by the second budget resolution that reflects that fact.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE. Mr. President, there are estimating difficulties. The fact that we have had shortfalls in Federal spending in each of the last 2 fiscal years of billions of dollars supports the problem of estimating. Is that to say, therefore, that we should have no budget numbers for any program as to which there are estimating difficulties or that every program that has estimating difficulties should establish its own number?
If we are to do that, then we will be back to the budgetary chaos of previous years.
Notwithstanding these difficulties, which I acknowledge, we have a budget responsibility to estimate those numbers and that is the responsibility we have tried to discharge.
With respect to commodity price supports on this question of the arbitrariness of numbers, price supports in the Carter budget were listed at $900 million. In the first concurrent resolution, they were assumed at $2.8 billion. Under current policy, they would be $3.2 billion, taking into account the weather and other problems of that kind to which the Senator refers. The second concurrent resolution sets them at $4.1 billion.
Now, the Talmadge amendment would set them at $4.8 billion. That is a pretty wide range in a period of a few months — an increase from $900 million to $4.8 billion. It is a fivefold increase.
If we compare the second concurrent resolution number of $4.1 billion with the Carter budget request of $0.9 billion that is a fourfold increase.
I do not consider that arbitrary. I consider that adjustment as an attempt on the part of the Budget Committee to respond to some of the uncertainties to which the Senator from Georgia referred. I think it was a good faith attempt to do so.
The next point I would like to make is that budgeting is not a matter of choosing between obviously good programs and obviously bad programs. If we were to define budget making in those terms, the budget would be several tens of billions of dollars higher than it is.
Budget making imposes on us the responsibility of choosing between good programs and programs that may be equally good, or choosing between one number and another number that is larger. It is choosing between the good and the good, or the good and just less good.
So anybody who attempts to pitch this debate on the basis of who wears a black hat and who wears a white hat is arbitrarily ignoring the nature of the budget process to serve his own political ends, or he does not understand it.
The Senator from Maine fully understands, because I have supported farm programs over the last 19 years, the problems that our farmers, including my own farmers, face.
But I am going to be asked to justify the total outlay numbers here to Members of Congress who would like to spend more money for other worthwhile objectives, including job making.
I just heard a news report this morning that the Black Caucus had visited President Carter yesterday, urging more funds to deal with the unemployment problems of the central cities, which have risen according to the most recent statistics.
Now, is that a bad request? Are the people who are advocating that budget busters? Is their case less meritorious than this one?
Well, who is to make those judgments? The Senate as a whole, the Congress as a whole, acting as it may wish on the recommendations of the members of the Budget Committee.
I do not suggest that however a Member votes that his vote is arbitrary, but every Member under the budget process has a responsibility shared by the Budget Committee, a responsibility for evaluating that vote in the context of the overall.
The PRESIDING OFFICER. The 10 minutes have expired.
Mr. MUSKIE. I will take another 5 minutes, and then I shall yield. I have not gotten to my full statement and maybe I will reserve that for after the next one.
Mr. President, I would like to call my colleagues' attention to what precisely this does, because this is why I pleaded for this debate to take place on the floor in the context of the second concurrent budget resolution.
I think Members who vote on this amendment, or any other amendment proposed today, must do so with the recognition of the consequences in terms of the numbers that are included in this amendment.
This amendment proposes striking the total outlay figure in the second concurrent budget resolution. That figure is $459 billion. This amendment proposes to raise that by $700 million. It proposes to strike the deficit number, which is $64 billion. It proposes to raise that deficit number by $700 million. It proposes to strike the estimate of the public debt which is stated in the budget resolution at $778.2 billion and to raise it to $778.9 billion.
It proposes to strike the figure which represents this year's increase in the national debt. This year's increase in the national debt, absent this amendment, would be $78,200,000,000 and it would be raised to $78,900,000,000.
It would strike the total for the agriculture function which is listed in the resolution at $5.6 billion and raise it to $6.3 billion.
I understand that later today or tomorrow there will be offered to the Senate for its consideration three amendments to reduce taxes. I suggest to Senators that when they vote on this amendment they consider what they might like to do on those tax cut amendments when they come up, because the effect of those tax cut amendments will also be to raise the deficit number, to raise the public debt number, to raise the increase in the public debt number, and that is the kind of context in which the Budget Committee must consider its recommendations for all these worthwhile functions.
I do not know of a function in the budget that is not worthwhile. I do not know of a function in the budget that cannot make a case for more spending. I cannot think of a program in any function of the budget that does not have a case for more spending. But the Budget Committee has to worry about these numbers, and I suspect that if we had come to the floor of the Senate with a budget resolution that proposes a deficit of $75 billion, a majority of this Senate would have been outraged. Every Senator would have had suggestions as to how we could have cut that deficit. We reduced it to $64 billion. I remind Senators that that $64 billion is about $14 billion more than the deficit for 1977, the fiscal year in which we now find ourselves.
I submit that ED MUSKIE is not the only Senator who has a responsibility to consider those numbers when he votes not only on the agriculture function in the Budget Committee, but also every other one and every other program. I have to look at those numbers, and I suggest that they have a similar responsibility.
I am going to reserve the remainder of my time and get into my prepared statement, which goes into detail on this whole question of the agriculture function and price supports, following further discussion on the part of proponents of the amendment.
I repeat, Mr. President, that the budget process is not ED MUSKIE's process. It is not the Budget Committee's process. It is not the Senate's process alone. It is a process of the Congress of the United States. If it is to work, every Senator must exercise his discipline not only with respect to the other fellow's program and priorities, but also with respect to his own. If a process does not generate that kind of attitude on the part of Senators and Representatives, it will not survive.
That does not mean that the Senate does not have the right and even the duty to change the numbers in a budget resolution when a proper case has been made; but even then, one should bear in mind that a proper case probably could be made for other programs as well. It is more difficult for the Senate as a whole to consider add-ons one by one, because then it becomes difficult, when they all have been considered and conceivably approved, to reduce the totals back to an acceptable deficit. We can do it in the Budget Committee. We can go through the functions, vote on them individually, and if the total adds up to something more than we think is prudent, then we can go back and cut back. We cannot do that on the floor in any way that occurs to me.
This year, for example, in the committee deliberations on the functions at the end of our first round, we had a deficit that I thought was at least $2 billion too high, so I recommended to the committee that we go over the functions again. I made specific recommendations for reductions in functions, and we were able to cut $2 billion. If we could do a similar thing here in the Senate as a whole — let the Senate go to the budget function by function and exercise its own judgment on each function, and then at the end add up the total and if it is too high, cut back — that is another way of doing it. However, I suspect that if we were to do that, we would convert the Senate budget process into a Christmas tree operation of the kind that we have seen so often with respect to tax bills, and that is a dangerous business.
That is my explanation of why we are here and what we tried to do to respond to the pressures and the needs in this function.
I reserve the remainder of my time at this point.
Mr. YOUNG. Mr. President, will the Senator yield?
Mr. MUSKIE. I am happy to yield to my good friend from North Dakota.
Mr. YOUNG. I certainly agree with the objectives of the Senator from Maine to cut the budget but I believe that a special case can be made for agriculture.
When the price goes up and when we have a good foreign market — several times embargoes were imposed, so we could not sell our commodities at the then favorable prices. Wheat is a very special case. If we do sell wheat and other grain to foreign countries, the law requires that in Public Law 480 cases half of it be hauled in American bottoms. That is about the situation now if we sell wheat to Russia. One-third of such wheat has to be hauled in American bottoms, where the shipping rate is one-third more than it would be if it were hauled in ships of other countries.
So most countries which buy wheat now, if they want a cheaper price, and they do, are forced to go to some other country.
What we are doing requires that agriculture subsidize the merchant marine. I agree that we have to have a merchant marine, but I do not think agriculture alone should be required to do most of the subsidizing.
Mr. MUSKIE. I understand the difficulties to which the Senator has referred, and I do not disagree at all that they exist. But what are we to do? Do we put agriculture off budget because of those uncertainties?
May 15 to September 15 is 4 months. Do we give agriculture the prerogative of changing its numbers every 4 months as contrasted with other functions of the budget? Do we have no restraint at all? Do we give agriculture a blank check?
I know the difficulties and the uncertainties, and I sympathize. Senator BELLMON, in his discussions in the Budget Committee, has done a great deal to educate this Senator and others as to the problems of estimating agricultural costs. The whole business of the loan program costs in the long run is a question that Members of the Senate should face.
It is my impression that of the billions of dollars of loans for agricultural commodities, only a few hundred million dollars, at most, represent the ultimate cost to the Treasury. However, in the meantime, we have to provide the money. We have to fund the programs. We have to go to the marketplace to sell U.S. bonds to raise the money, and there is some budget cost. I think we should look at the real cost, not the imagined cost.
I agree with Senator BELLMON. He has some interesting ideas as to how that might be done, and I am for exploring those. But at this point — and I will make the case later — I say to the Senator from North Dakota that from the Budget Committee's point of view — or those of the Budget Committee who are still with me — as to why we have done what we did and why we think it is justified, it seems to me that we have to raise the question for the Senate as a whole to decide what kind of discipline, if any, we should apply to this particular function, given the kinds of problems that Senator TALMADGE has articulated and that Senator DOLE , Senator YOUNG, and Senator BELLMON will discuss. I understand those difficulties fully, and I hope that somehow, in the long run, whatever we do today, we can find a better way of coming to grips with the uncertainties to which the Senator has referred.
Mr. President, I reserve the remainder of my time at this point.
Mr. TALMADGE. Mr. President, I yield10 minutes to the distinguished Senator from Kansas, the ranking minority member of the Senate Committee on Agriculture, Nutrition, and Forestry.
Mr. DOLE. I thank the distinguished chairman.
Mr. President, I serve on both the Agriculture Committee and the Budget Committee, and I have the highest regard for both distinguished chairmen. I find myself in no conflict with either the distinguished Senator from Georgia or the distinguished Senator from Maine.
I think it has been fairly clearly explained that this Senator does not suggest that it is rural America versus ED MUSKIE or farmers against the Senator from Maine, or vice versa.
I understand the difficult position of the Senator from Maine, and I applaud him for his efforts to make the budget process work. However, as the Senator from Maine has indicated, this is an opportunity for the Senate to work its will. This is the orderly process. This is the process agreed upon yesterday as the right way to proceed, rather than some way that might appear to some to be deceptive or somehow an effort to take advantage of a Member or a committee chairman. We are proceeding in a very orderly fashion.
We have before us the second concurrent resolution on the budget; and in cooperation with the distinguished chairman of the Agriculture Committee, I understand that a total of 35 cosponsors have offered the amendment.
It would appear the amendment has a good chance of passage. We will keep working on cosponsors and, perhaps, we will have enough cosponsors before the debate ends to be sure the amendment will pass.
I will repeat briefly what the Senator from Georgia said. Without the administrative actions — and I do not criticize the administrative actions — $5.6 billion would have been adequate. But because of declining prices in the corn belt and in feed grain areas, and because of the set aside and loan rate action taken by the administration, and because of reestimates made on more recent crop reports, unless something is done we need another $700 million. It is just as simple as that. We need to raise the figure from $5.6 billion to $6.3 billion.
Of course, that is the purpose of the amendment offered by the distinguished chairman, by myself, and by the many other Senators who have cosponsored this amendment, Republicans and Democrats, members of the Budget Committee, members of the Committee on Agriculture have offered this amendment. I would assume that there may be other cosponsors before the morning ends.
I would suggest that none of us from farm producing areas look with any pleasure on the Federal Treasury for income. Most farmers whom I know across the country want their income from the marketplace.
I would point out that 37 percent of the $6.3 billion referred to in this amendment is for loans which are repaid by farmers. This is not a subsidy; this is not a grant. It is a loan. It is repaid with interest by the American producer. But, in any event, if prices were right there would be very little money spent for this budget function.
I would also suggest there are actions the administration could take now to reduce the cost of this function and to satisfy the statements made by the distinguished Senator from Maine and others about this particular function.
It would seem to me one thing that might be done is to program very quickly and very rapidly some of the Public Law 480 sales. It is my understanding we are lagging behind in expediting and programing for the next fiscal year.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. DOLE. Yes.
Mr. MUSKIE. I would like to make a point, because the distinguished Senator from Kansas and the distinguished chairman emphasized the point, that some of the money provided in this function is for loans. But in the Federal budget as a whole, there are outstanding about $70 billion in loans. This is the equivalent of almost a quarter of the budget, so agriculture is not the only program which might argue its justification on the basis that it is only a loan to be repaid. There is $70 billion. That $70 billion has to be provided, and that is the point I made earlier. I thought that total figure might appropriately be included in the RECORD at this point.
Mr. DOLE. I appreciate the comment, and I understand it. No one in this Chamber misunderstands it. But it is misunderstood by others. When we talk about $6.3 billion, there is a feeling out there that this is a subsidy given to the American farmer. That is not the case, as the Senator from Maine has so rightly expressed. But there are some actions that could be taken to reduce these costs, and we should look at how to reduce farm costs generally.
I suggested to Secretary Bergland that he seriously consider financing Commodity Exports under Public Law 480 and Commodity Credit Corporation programs in the following amounts for 1978:
First. Public Law 480, title I and new title III — $1 billion worth of commodities, up from $800 million in fiscal year 1977.
Second. Public Law 480, title II — $555 million worth of commodities and ocean freight. This level, if used in conformance with the pricing provisions of the new farm bill, would provide 1.7 million tons thus assuring that the legislative minimum of 1.6 million tons would be shipped.
Third. CCC credit — $1.5 billion worth of commodities, up from $1 billion in fiscal year 1977, and only a $750 million funding level recently announced by USDA for fiscal year 1978.
It seems to me we could also stimulate exports, and that could be the answer to the present farm problem. I have suggested that Secretary Blumenthal review the Ex-Im Bank's policy as it relates to agricultural exports. Instead of the relatively meager credits for farm exports ranging from only $69 to $95 million annually in recent years, I believe Ex-Im Bank should step up their financing of farm exports to $500 million annually. This would still be a very small proportion of total Ex-Im Bank resources which have been running from $6 to nearly $10 billion annually in recent years for U.S. export assistance. Farm exports which represent over 20 percent of total U.S. exports deserve considerably more attention from the Ex-Im Bank than is currently the case.
The best hope for improving farm prices is through increasing our share of export markets. A dollar spent on export stimulation may save many dollars in farm program costs.
I assume the administration is giving serious attention to how we can step up the export market to raise market prices.
It is an area that needs some attention and, if successful, then perhaps all the fears we are expressing this morning about the $700 million and the need to amend the budget will disappear.
As has been pointed out previously this morning, the fiscal year 1978 second concurrent resolution reported out of the Budget Committee on August 4, 1977, recommends a ceiling for agriculture function outlays of $5.6 billion. This ceiling was thought to be sufficient to fund commodity price support provisions under current law, plus the wheat price support provisions of the Senate-passed farm bill, S. 275. Now little more than 1 month later the same price support programs are estimated to cost $6.3 billion, or $700 million more than the previous estimate, which is the basis of the amendment offered.
Three events have occurred recently which effected these spending levels for fiscal year 1978.
First, CBO increased their estimate of the cost of commodity price support programs. Using new supply figures from USDA, CBO concluded that continuing declines in market prices for wheat and feed grains would increase outlays for loans and deficiency payments by $389 million.
Next, the administration took two discretionary actions to aid the sagging farm economy which increase fiscal year1978 outlays. A 20 percent set aside for 1978 crop wheat was announced by USDA last month. Since a 30 percent set aside was assumed in previous CBO estimates, this action caused outlays to be revised upward by $200 million. Higher feed grain loan rates wore also announced, increasing the expected outlays for loans by $400 million.
Finally, the Attorney General declared the administration sugar subsidy program to be illegal, eliminating outlays of $185 million.
So what we have are, in fact, some technical readjustments. These technical readjustments raise the estimated spending level for function 350 to $6.3 billion, an increase of $700 million over the level first recommended by the Budget Committee. This amendment would make these adjustments in function 350, and allow support programs to proceed as planned.
Mr. President, I ask unanimous consent to place in the RECORD at this point a table which summarizes these required adjustments to outlays for function 350.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. DOLE. Mr. President, my colleagues in the Senate should also be aware that this adjusted fiscal year 1978 spending ceiling for function 350 provides sufficient funds for the provisions of the food and agriculture bill of 1977 as reported out of conference. It is my understanding that the Senate will take up this conference farm bill, if possible, this week and, if not, perhaps next week.
Mr. President, farmers — in Kansas and elsewhere — are acutely aware of the real causes for the substantially higher outlays for price support programs this year. The farm economy is in a state of depression. These spending increases are helping to sustain a marginally adequate income for farmers who have seen commodity prices drop well below cost of production. USDA reports that parity ratios are at a 44 year low. The average parity ratio in August was 64 percent, down 7 percent from a year ago. Wheat and feed grain farmers are particularly hard hit. Prices received by wheat farmers last month were at 40 percent of parity. Feed grain prices were 33 percent below a year ago. These farmers are counting on continuation of announced farm support programs.
It seems to this Senator and, I think, many others who represent rural constituencies, if we are talking about the American taxpayer or the American consumer or the American producer, we have got to do what may be necessary to sustain the American producer who is now on the farm and who wants to stay on the farm, not to make a profit from the Federal Government, but to at least recover his cost of production or near his cost of production.
I agree with my distinguished chairman of the Budget Committee that this is the appropriate place to debate this issue, and I hope that after full consideration we will decisively uphold the amendment offered.
I also again repeat that there has been a great deal of talk about the budget impact of the $6.3 billion. But a total of $2.3 billion, or 37 percent of the total outlays in this function are for loans.
These loans are expenditures on the budget. There is no doubt about that. The Commodity Credit Corporation is not an off-budget agency. Furthermore, USDA experience with commodity loans indicates that 98 to 100 percent of these loans will be repaid, with 7 percent interest. Collateral for these loans is the commodity held in bonded storage.
This Congress has shown a great concern for jobs and for stimulating the economy. The public service jobs program is about $7 or $8 billion of the $27 billion cost in function 500, for example, providing about 1 million jobs.
I do not quarrel with the need for public service jobs. But for contrast I would point out that this amendment proposes to spend $6.3 billion — $700 million more than previously agreed — to help keep 4.3 million farm workers on the job, and to help sustain our producers in the worst year for farmers since 1933.
There is no doubt about it that the $700 million increase we are seeking is a substantial sum of money. This amendment is estimated to increase outlays in function 350 by that amount.
But if this $700 million will help to sustain the Nation's largest and most important industry, help to maintain its $22 billion in exports, and help to retain its 4.3 million jobs, then the $700 million is money well spent.
I hope that my colleagues after full consideration will support the amendment.
Mr. President, I yield back the remainder of any time I have.
Mr. TALMADGE. Mr. President, I yield 3 minutes to the distinguished Senator from New Mexico who is a member of the Budget Committee, I might point out.
Mr. DOMENICI. Mr. President, I thank my good friend from Georgia.
Mr. President, I am not going to repeat the many facts that have been discussed here today. I am going to attempt to do just two things, first, from my standpoint and for the Senate through me to justify the need and, second, to give my rationale as to why this is not a serious departure from what the Budget Committee had in mind when it met prior to recess.
First of all, let me say, Mr. President, that in this country there are few things remaining that are really working for the benefit of the overall American economy, and among those few at the top of the list are the American farmers. Every place in this economy where you look for general macroeconomic impacts that are good farmers are at the top of the list.
While we are spending $40 billion to import oil, where would we be without the $22 billion that farmers bring into this economy by the fruits of their effort through exports?
I agree with the Senator from Kansas. We must promote that with every skill, every law on the books, and every kind of innovative international financial mechanism. The benefits to America are tremendous.
Second, with all the inflation what is the best of the necessities that Americans need? What is at the top of the list in terms of price, in terms of adequacy, and in terms of a good buy? It is food, the things that American farmers produce.
It seems to me that we as a matter of course in this Government when we find a problem with far less of an impacted community, a community that serves us well, nourishes, and feeds this great economy, with far less of a community of that type we are quick to come to their assistance. If we do not do that here for this group, it appears to me that basically we are almost being ridiculous. We find a new program for every problem in this country, and that reflects in this budget that we are concerned about. Now we find the farmers of America in one tremendous economic predicament.
It seems to me that we would not have any trouble convincing anyone as a matter of substance that the conference report that the House of Representatives and Senate will report soon is right for this country. If it is right the next thing is, do we pay for it or permit it to be paid for under the normal budget practice under our new Budget Reform Act or not? And I think the answer would be overwhelmingly yes.
So the only thing we have to concern ourselves about is the second proposition. Is this apt to destroy or water down the effectiveness of the budget process? And my answer is no. In fact, my answer is unequivocally no because if we knew the facts that we know today 6 weeks ago, just a matter of that time, then I believe we would not even be here because the orderly budget process that we are so proud of would have included it, just as we would have included between the first and second concurrent resolution readjustments in entitlement programs.
If we had figured unemployment wrong and an entitlement program was going to cost $500 million more between target in first and target in second we would put it in as a matter of fact as a matter of that is what the law is. Six weeks ago if we would have known what CBO knows now we would have added, as the Senator has indicated, over $300 million. If we would have known that the President was going to use his power with reference to the set aside and the relationship of a need for loans, I believe we would have put it in then.
So it appears to me that the only possible thing we would have done would maybe look at the overall expenditures in this budget. But there is no doubt in my mind we are merely today doing what we would have done and philosophically we are just putting in the numbers to comply with what we had in mind as our notion of an adequate agricultural target.
We had certain ideas. We were going to fund the conference report. It just turns out that it is going to cost more. But we intended in our target to fund that bill. The new estimates indicate that conference report will cost more. So it is very logical to add them at this point in time.
The reason I make so much of the second point is because I have the greatest respect for the budget process, and I do not think I have to repeat what I have said so many times. I have respect that is well beyond that and esteem for the distinguished chairman, the Senator from Maine, and the ranking Republican, and their efforts. I support that process and have worked hard at it. But I really believe as a matter of substance, as a matter of priority and, yes, in conclusion, as a matter of following the orderly process of the Budget Committee, that we should adopt overwhelmingly the amendment proposed by the Senator from Georgia, the Senator from Kansas, and 28 other cosponsors.
I thank the Senator from Georgia for yielding time.
Mr. TALMADGE. I thank the Senator from New Mexico.
Mr. MUSKIE. Mr. President, I yield myself 10 minutes.
First of all, may I say while the Senator from New Mexico is in the Chamber — and I wish to get the attention of the distinguished Senator from Georgia on this point — that the two speakers who have just presented their views on this amendment are members of the Budget Committee, and they are just as vigorous and just as articulate when they argue the farmer's case in the Budget Committee as they are on the Senate floor. So the Budget Committee has not been isolated from the facts, the arguments, and the philosophy that underlie the Senator's amendment.
I simply wish to make that point.
The second point I wished to make was that I am reassured by Senator DOMENICI's conviction that whatever happens to this amendment the budget process will survive. I hope that is so. There is always a risk whenever we change the numbers, but it is the Senate's prerogative to change them.
I just hope that we do not trigger, at some point, an avalanche of disrespect — or disregard, let me put it that way — for the Budget Committee's numbers. But I am reassured, and I know, from the record of his own commitment to the process in the years that we have served together on the committee, that the Senator means what he says, and I express my appreciation to him publicly, even though we disagree on this amendment.
Mr. DOMENICI. May I add just one comment?
Mr. MUSKIE. Yes.
(Mr. ZORINSKY assumed the chair.)
Mr. DOMENICI. I thank the Senator from Maine for those comments, and I would merely say, as a matter of the pragmatics of the budget process, I think the Senator would agree with me that every now and then the institution is going to make a decision that is not exactly what the Budget Committee suggested, recommended, or found. I do not think the Senator from Maine, I, or any other member of the committee would want it otherwise. That is the collective wisdom of the institution; and I think today we are going to justify this departure from accepting the committee's recommendations.
I do not think that means we will accept departures willy-nilly, lightheartedly, or in a series of irresponsible episodes.
Mr. MUSKIE. That is the way it works and is meant to work, and I hope that is the way it will work in the event this amendment prevails.
Mr. President, I would like to take the next 9 or 10 minutes, if I may, to outline for the Senate what has happened since the early months of this year with respect to this agriculture function.
When the Senate on May 24 debated S. 275, the agriculture bill, which will be before us in a modified form today or tomorrow, a number of Senators who thought that the commodity outlays of the Senate version were too high voted for them anyway in the belief that reductions could be made in conference with the House. As a matter of fact, the Senate representatives in that conference indicated to me their belief that that is what would happen.
Forty-six Senators voted for my amendment supporting an increase in the target price for the 1977 wheat crop to $2.65 per bushel. As we all know, that amendment did not prevail and the conference agreement contains a target price of $2.90 per bushel for the 1977 wheat crop. The Senate-passed bill at the time the budget resolution was reported cost $5.6 billion. The conference version now costs $6.3 billion.
Those who voted for a costly farm bill in which they did not believe are now witnessing the consequences. Events since the Carter administration proposed its budget of $2.3 billion in agricultural outlays have made a mockery of budgetary prudence.
I am especially disappointed that the administration has capitulated to those advocating ever higher farm income supports. There were many Senators who believed the President's assurance that he would veto any farm bill if it were as expensive as the bill which passed this body a little over 3 months ago. Now the farm bill includes all of the costly features of the Senate bill insofar as fiscal 1978 is concerned, and the higher loan levels for the 1977 corn and feed grains crops, yet we hear not a whisper of opposition from the administration. Indeed, the Secretary of Agriculture by administrative action has increased loan levels for the 1977 corn crop to the amounts agreed upon by the conferees. So what began as a modest Carter administration request of $2.3 billion for agricultural outlays on February 22 has now increased nearly threefold to $6.3 billion if this amendment is accepted here today.
One wonders what other Presidential surprises are in store for those of us who believe that the administration is trying to control spending and really means what it said when it promised a balanced budget by 1981. The message is certainly clear. It is simply this — Congress must set its own spending priorities without regard to the shifting positions of the administration. I say that with regret because I know how important it is to have the administration's support in budget battles.
As chairman of the Senate Budget Committee, I want to point out some of the major policy implications of accepting this amendment and thus the conference agreement. In May and again in July, I pointed out to the Senate the possible consequences of the farm bill. In May, I expressed grave concern about some of the provisions of S. 275, particularly the proposed target price for the 1977 wheat crop of $2.90 per bushel, because the best estimates then showed that the Senate bill would cause spending for the agriculture function to exceed the first budget resolution target for fiscal 1978 by $0.8 billion; 45 of my colleagues supported my effort to reduce the cost of that bill and I think they, as well as other Members of the Senate, will be concerned with what I now have to say.
The first budget resolution provided a generous amount for farm price supports and agricultural research and services — $4.35 billion. This was $2 billion more than the Carter administration requested in its February budget message to Congress. The increase was to take care of later estimates for price supports and other agricultural needs and demonstrated that Congress was aware of the severe problems facing farmers in a time of mounting surpluses, deteriorating prices, and increased costs of production.
The second budget resolution which the Budget Committee reported on August 4 was even more generous than the first budget resolution with respect to agricultural outlays. It provided $5.6 billion for the agricultural function, and funded all appropriation actions completed and all known potential later requirements for appropriations, the July estimates by the Congressional Budget Office for price support programs under current law, and the increased costs of price support programs provided for in S. 275, as it passed the Senate. In essence, the second budget resolution agriculture outlay ceiling accommodated current law and the Senate-passed farm bill.
We responded to the mandate of the Senate at that time. May I point this out, Mr. President, with respect to the second budget resolution: The second budget resolution includes a total of five increases over the first budget resolution. The one for the agricultural function is by far the largest. Let me list the others:
Function 920, allowances, $100 million.
Law enforcement and justice, $150 million.
Commerce and transportation, $200 million.
National resources, environment, and energy — surely a high priority by any measure in this Congress — only $800 million.
Agriculture, $1.25 billion.
The Budget Committee in every other function — every other function — has reported decreases from the first concurrent resolution amounting to as much as $1.3 billion. To suggest, in the face of this record, that the Budget Committee was insensitive to the needs and problems of the farmers, is to arbitrarily ignore the record. I think I put this table in the RECORD earlier, and I simply refer to it here at this time.
The conferees on S. 275 were advised by the Senate Budget Committee of its actions during the markup so that they were aware of the amounts provided for farm price supports in the second budget resolution. The conference report on the farm bill was agreed to 1 day after the second budget resolution was reported. It included higher price support provisions for corn and feed grains which are at least $400 million higher than contemplated in the second budget resolution
So from a budget standpoint, what we are talking about is higher target and loan support levels for wheat and corn than existed under current law at the time the budget resolution was reported. These increased supports make it impossible for the conference agreement on S. 275, when added to current law, to remain within the $5.6 billion outlay ceiling for the agriculture function under the second budget resolution.
I certainly do not mean to imply that all of the increases in agriculture outlays have occurred due to the actions of the conferees on the farm bill. Some of the increases have occurred because of two actions on the part of the administration which have altered the assumption of the Budget Committee when it recommended the $5.6 billion outlay ceiling for the agriculture function. On August 12, the Department of Agriculture altered its crop estimates of current law price support outlays and increased corn outlays by $0.3 billion and wheat outlays by $0.1 billion. These increases were offset by a reduction of previously assumed sugar outlays due to the Attorney General's opinion that the administration's sugar program was illegal. The net effect of these reestimates was an increase in agricultural outlays under current law by $0.1 billion.
A few days later, on August 29, the Secretary of Agriculture announced the administration's set aside program for the 1978 wheat crop at 20 percent compared to the 30 percent set aside assumed by the Budget Committee in its cost estimates, and also announced an increase in the price support level of feed grains under current law by $0.6 billion above the best estimates made by the Congressional Budget Office in late July, which was the basis for the budget resolution.
There was some discussion of that estimate by the distinguished chairman of the Committee on Agriculture and Forestry. May I make this point: we have not yet had an official estimate from USDA with which to compare the CBO estimate, but our unofficial information is that USDA is using a number of about $7.6 billion at the present time instead of the $6.3 billion that CBO has recently estimated. I do not know if that will be the final firm estimate of USDA. We did not use that number. We used the CBO estimate. By comparison CBO is more conservative than USDA appears to be trending at the present time.
The combination of new crop information and administrative actions has resulted in a net increase in outlays under current law from $4.7 billion at the time the budget resolution was reported to $5.4 billion, or $0.7 billion.
Now, if we add the increased outlays under the conference agreement on S. 275, this will require an extra $0.9 billion for wheat payments above current law, for an agricultural function total estimated by the Congressional Budget Office at $6.3 billion for fiscal 1978.
The Budget Committee anticipated that a conference agreement on S. 275 might breach the second budget resolution target for the agriculture function, and so it included language in the resolution in the nature of a reconciliation instruction directing the Agriculture Committee to limit the spending under its jurisdiction to an amount not to exceed the $5.6 billion established in the agriculture ceiling. The Budget Committee does not attempt to tell the Agriculture Committee where it should cut programs which produce outlays, but the resolution has the effect of requiring agriculture spending to conform to the budget resolution.
Faced with the consequences of enacting a farm bill that will push outlays above the ceiling of the budget resolution, it is my firm belief that there are substantial reasons to hold the budget resolution to the outlay total of $5.6 billion and to reject this amendment and the conference agreement because it will exceed the amounts set out in the budget resolution by $0.7 billion. An increase of the ceiling to $6.3 billion is unjustified for fiscal year 1978 and these policies heavily mortgage future budgets.
I say this for these reasons:
First, the amendment permits excessive outlays. The administration's action and the conference agreement working together increased projected fiscal year 1978 outlays for agriculture by more than $0.7 billion above the farm bill as it passed the Senate.
Second, the circumstances affecting agriculture are basically unchanged since the first budget resolution. No material change in agricultural policy has taken place since last spring which justifies increased farm spending which will have to be financed by more deficit spending. The American public should not be penalized by additional payments to farmers who planted with full knowledge of the level of price supports they faced.
Third, this is a major breach of a target ceiling. No other legislation except for energy, which was foreseen, has resulted in a major breach of budget targets adopted last spring.
Fourth, this amendment, by permitting the conference agreement, heavily mortgages future budgets. It provides high support levels for future years which will lead to large uncontrollable outlays in the years beyond fiscal 1978. The Congressional Budget Office estimates that fiscal 1979 costs for farm price supports will increase above the fiscal 1978 costs of $4.8 billion to $5.4 billion, and that the 4 year average cost of farm price supports under the bill will be at the high level of fiscal 1978, or $4.8 billion. So, when we add agricultural research and other farm programs, we are talking about budget costs that range between $6 and $7 billion a year over the next 5 years.
Fifth, let me simply say that increases in the agriculture function mean fewer resources for our programs. There is no inexhaustible supply of money to fund every program that we can think of in the Congress. It is irresponsible to add new programs or increase the costs of old programs two or threefold without thinking of what we are doing to the fiscal 1978 budget and later budgets. To provide for a major increase in farm price supports — and that is exactly what we are talking about — simply means fewer resources will be available for other competing goals in other functions or it means increasing the deficit.
Let me assure the Members of the Senate that the Budget Committee is not insensitive to the needs of the American farmer. As I have pointed out, we started off with a $2.3 billion request by the Carter administration and the second budget resolution more than doubled that amount to $5.6 billion. I do not think that the Budget Committee can be accused of being stingy with the American farmer. Neither do I think that the American taxpayer should bear a disproportionate burden to raise farm price supports to levels that are not in accord with fiscal prudence.
In my judgment, the second budget resolution accommodates the reasonable goals of protecting the American farmer and the American taxpayer and the consumer. We ought to defeat this amendment, and we should design a farm bill that fits within the budget resolution. I do not think we ought to do more than this for any segment of our society.
I am deeply concerned that this amendment and the conference agreement on S. 275 will have the effect of preventing a balanced budget by 1981. The level of price supports in the conference agreement on S. 275, as I have mentioned previously, will mean that we will commit at least $6 billion to $7 billion for agriculture outlays each year over the next 5 years. This compares with $2.5 billion in outlays for the agriculture function in fiscal 1976, the latest year for which we have final figures.
Let me also say that higher support levels for farm commodities mean higher food prices for the consumers and greater inflation just when we are making visible progress in the battle against inflation.
So I urge the Senators to consider all of these matters before we vote on this amendment. Now is the time to hold the line. We must apply the standard of budget discipline to agriculture programs just as we do to all other areas of the budget.
Mr. President, that is my case. That, I think, presents the situation with respect to this problem as it has evolved, from my perspective, at least, and I present it to the Senate in that spirit. I reserve the remainder of my time.