April 10, 1978
Page 9387
Mr. MUSKIE. Mr. President, I yield myself 5 minutes.
Mr. President, the distinguished Senator from Kansas; my good friend, suggested — maybe the suggestion was not directed to me personally — but he did clearly suggest that there is some objection to the fact that so many farmers from around the country are visiting Washington and are visiting Members of Congress in their offices and in the corridors of the Capitol.
I want to assure the Senator from Kansas I have no such objection. I think they are welcome here. I think maybe it is about time they recognized that this is an opportunity for them to influence the legislative process, and I welcome that even though we may not always agree.
But the distinguished Senator from Kansas made another observation in connection with that one, which I cannot believe he really means. He suggested that, although the farmers are welcome, the members of the Budget Committee, the Congressional Budget Office, and the President of the United States are somehow out of order in undertaking to influence the result of this vote.
I remind the distinguished Senator that I was given a specific charge as chairman of the Budget Committee to enforce this discipline and I will not yield that responsibility simply because a number of Americans who may disagree with my point of view are visiting us in Washington. I want to make that clear.
The second point the distinguished Senator from—
Mr. DOLE. Mr. President, will the Senator yield?
Mr. MUSKIE. I would have been happy to engage in this colloquy earlier. Now I wish to finish my side of it, but I will yield in due course.
Another point that the Senator made was that CBO's estimates, the cost, the inflationary impact of this bill are based on worst case analysis. I challenge that, but before I do I point out that the Senator from Kansas himself is engaged in worst case analysis of the position of the Budget Committee, the Congressional Budget Office, and the administration.
I listened to his description of our position, I listened to his description of the President's position, and if I ever heard a worst case analysis, a strawman analysis designed to give him an attractive target to hit, for the purposes of his supporters in the galleries, that was it. I did not recognize it, and I doubt that the President would.
So now I wish to get to the merits of this issue and the procedural questions that are involved.
Some of this I hope may be of interest to citizens in the gallery who are concerned about the state of this country's economy not only from the point of view of their own livelihoods but from the point of view of the economy as a whole because it is that with which I am charged. The Budget Committee is not the Agriculture Committee. The Budget Committee has been created to exercise discipline with respect to the whole $500 billion of Government spending which can come from only one place, the taxpayers' pockets. My friends in the galleries are taxpayers as well as farmers.
That is our responsibility and it is our responsibility to give the Senate our best judgment even when that best judgment runs counter to the popular tide of a current popular issue.
If the Budget Committee were to bend with the wind every time the wind from the grassroots says, "Senator, we need more money," there would be no budget process. There would be no restraint on spending. And instead of a $500 billion outlays ceiling for the next year we would have something closer to $530, $540 billion.
If there is any doubt on the part of anyone in the gallery on that point, I would be glad to give them as much exposure as they need to the pressures that are brought upon the Budget Committee to provide more money, more money, for this, that, or the other.
The PRESIDING OFFICER. The Senator's 5 minutes have expired.
Mr. MUSKIE. I yield 5 additional minutes.
Mr. President, President Carter has advised us that if Congress passes this conference report he will veto it. My good friend from Kansas has said, "Does the President not care at all about farmers?" He has said he will veto it because it could drive food price inflation to double digit levels and add as much as $6 billion to our Federal deficit. My good friend from Kansas challenges that $6 billion figure as being an inflated worst case figure.
I remind my good friend from Kansas that that number is supported by our own Congressional Budget Office which was created to give us independent analyses, the CBO's analysis is based upon a projection of normal weather, not worst case weather, normal weather.
Mr. DOLE. Mr. President, will the Senator yield there?
Mr. MUSKIE. I would like to finish.
Mr. DOLE. I just wanted the Senator to tell us how he got that figure.
Mr. MUSKIE. I would be glad to provide that analysis from CBO, but I cannot do it within the constraints of the time I want to devote to this particular part of the debate. But that figure was produced by the CBO in the same way CBO produces every figure that the Budget Committee and the Congress use to reach judgments independent of that of the President and the executive branch to keep spending under control.
If we are willing to trust CBO's judgment and capability and objectivity for $500 billion of spending surely their judgment is equally objective and sound when it relates to a program in which a particular Senator may be interested at a particular moment in time.
What do we do? Bring in a new estimating authority whenever our own authority somehow does not fit our personal desires or our personal wishes? Obviously, that is not the road to budgetary discipline.
Mr. President, the President also said that this conference report will damage our livestock industry by sharply increasing seed prices.
That sort of thing has happened before, Mr. President. This is not a new perspective or perception of the interrelationship of feedgrain prices and cattle raising costs. This is the warning flag. It has happened within the last 3 or 4 years. The President says it could happen again under this conference report.
The President said it will undermine our competitive position in world agricultural markets. Is that in the farmers' interest, if true? If the President and his experts believe it to be true, if CBO believes it to be true, is that a warning that ought to be ignored not only by the rest of us but by American farmers?
Finally, Mr. President, the farmers will get no help from a bill that the President vetoes.
Mr. President, I ask unanimous consent that the President's letter be printed in the RECORD at this point.
There being no objection, the letter was ordered to be printed in the RECORD, as follows:
THE WHITE HOUSE,
Washington, D.C.,
April 6, 1978.
To Senator EDMUND MUSKIE:
Sixteen months ago, I asked Bob Bergland to join with the Congress to help restore a sense of direction and purpose to the farm and food policies of this nation. The extreme volatility of farm and food prices of recent years has not been in the best interest of either our Nation's farmers or consumers.
When we took office, farm income was in sharp decline. We undertook to reverse this trend and return stability to the nation's farm economy. Working with you and other members of the Congress, we developed the most sweeping farm legislation of the past 40 years. Using the authorities of that law, we have moved to improve the incomes of America's farmers.
This policy is working. Our agricultural economy has improved markedly in recent months. To further strengthen this recovery, we announced last week:
An expansion and liberalization of the farmer-held grain reserve.
Paid diversion of 7 to 9 million acres of excess crop land.
And other steps which, in combination with the reserve and the acreage diversion, will add up to $4 billion to crop producer income.
These are carefully considered measures. They will provide decent farm incomes, protect consumers from precipitous price rises, enhance our reliability as a major agricultural exporter, and allow us to meet our humanitarian food aid commitments.
Yesterday a conference committee of the Congress reported H.R. 6782, legislation that was hastily drafted in an atmosphere of emotion and confusion. Should that legislation reach my desk, it will be vetoed.
No one who understands our farm economy should be deceived about the impacts of this measure.
It would increase food price inflation to double digit levels.
It would add as much as $6 billion to the Federal budget.
By sharply reducing production and increasing prices, this bill could seriously undermine our competitive position in world markets.
The higher feed prices that result would adversely affect our own livestock industry. It would require vast new layers of bureaucracy to administer the complicated and confusing schedule of eligibility requirements and payments.
And, this bill would direct the vast majority of its benefits to a small number of the very largest of our farmers, rather than those in greatest need of help.
This Administration is committed to a strong and prosperous farm economy and one that is able to compete successfully in international markets. We now have a policy to accomplish this objective. I call upon you and other members of Congress to join with me in supporting this policy and in defeating this conference committee bill.
Sincerely,
JIMMY CARTER.
Mr. MUSKIE. Mr. President, I ask unanimous consent that there be included in the RECORD following his letter a Department of Agriculture briefing paper dated April 3, 1978, which describes the President's nine-point program to deal with this issue. I do this in answer to the. Senator from Kansas' suggestion that the President does not care.
There being no objection, the briefing paper was ordered to be printed in the RECORD, as follows:
NEW FEATURES OF FEDERAL FARM PROGRAMS
BACKGROUND
The world has harvested two consecutive large crops. U.S. farmers have harvested three.
Declining commodity prices and farm incomes in 1977 were the result of large worldwide supplies of grains, oilseeds, and fibers and an increasingly large proportion of stocks accumulated in the United States. Liquidation of the domestic cattle herd because of unprofitable feeding and poor pasture conditions caused by drought also took their toll.
Realized net farm income in 1977 declined to $20 billion — in real terms, equivalent to 1971. The result of this overall situation was severe cash flow and debt repayment problems for many farmers. The severity of these problems varied greatly by commodity and by region of the country.
Realized net farm income for the first halfof 1978 is at an annual rate of $23 billion, or about $3 billion higher than last year. Foreign demand for the major crops points to a record volume of agricultural exports in the current marketing year.
RECENT MARKET DEVELOPMENTS
Most commodity prices have shown appreciable increases in recent months from earlier lows:
Wheat at Kansas City from $2.30 last June to $3.20 now;
Corn at Chicago from the fall low of $1.80 to $2.43;
Cotton at Memphis from 48 cents at the turn of the year to 56 cents;
Soybeans at Chicago from $5.50 in October to near $7.00;
Rice from $6.87 at mid-year to $11.40 in February;
Choice steers at Omaha from $37 last spring to over $50;
Hogs from $36 last April to $48 now.
Even though commodity prices have shown these increases because of the farmer-held reserve, improved export markets (particularly for oilseeds), increased livestock returns, and some improvement in general economic conditions, some farmers still are experiencing severe problems.
ADMINISTRATION INITIATIVES
On March 29, 1978, The Vice President and the Secretary of Agriculture announced nine major actions with the objectives of dealing with these problems, further strengthening farm income, and continuing the steady growth in agriculture:
1. To ensure better crop prices and thwart runaway food price inflation caused by the weather, the farmer-owned reserve is being expanded and the terms liberalized. Grain placed in reserve will not be subject to interest charges after the first year. The reserve programs will be used to remove excess 1978 crop production.
2. To take excess 1977 crop corn and grain sorghum off the market, both crops can be put into the reserve program starting May 1.
3. To ensure that the United States can meet its food aid commitments in times of short supply and to support market prices, the government will purchase wheat in the market to build an emergency reserve of 220 million bushels, including wheat accumulated from CCC loan forfeitures.
4. To adjust wheat production downward, producers who participate in the 20 percent set aside may graze out their wheat or harvest hay on up to 40 percent or 50 acres (whichever is larger) of the total acreage of barley, corn, grain sorghum, upland cotton, and wheat intended for harvest in 1978, and receive a payment of 50 cents a bushel or the wheat deficiency payment rate, whichever is higher.
5. To bring feed grain production in line with potential demand, producers who participate in the feed grain set aside may divert additional acreage equal to 10 percent of acres planted to the crop and receive a payment of 20 cents per bushel for corn or 12 cents per bushel for sorghum or barley on the normal production from planted acres.
6. To adjust cotton production down, producers may divert acreage equal to 10 percent of the acres planted in return for a payment of 2 cents per pound on the normal production from the planted acres.
7. To balance soybean loans with competing crops, the loan for 1978 crop soybeans is being established at $4.50 a bushel, up $1.00 per bushel over the 1977 loan.
8. To compensate for increases in costs, loan and target prices for 1978-crop rice will be increased, according to law. Preliminary data indicates a loan of $6.40 per cwt. and a target price of $8.53 per cwt. There will not be a set aside program for the 1978 crop.
9. To improve credit access for farmers and ranchers with serious debt repayment problems, we are urging the Congress to pass our proposals for an Economic Emergency Loan Program.
IMPACT OF INITIATIVES
The reserve gives producers the opportunity to hold their crops off the market at low cost to await higher market prices, protect consumers and livestock producers against severe price increases in the event of a poor harvest, and ensure our credibility as a reliable supplier of farm products.
The diversion and grazing payments will:
Provide additional economic incentives for participation in the farm programs;
Give immediate cash assistance and potentially provide crop producers a $3-4 billion increase in net returns;
Strengthen market prices by bringing supplies into better balance with demand; and
Conserve energy and natural resources, while providing an accessible land reserve for use when needed.
GRAZING AND HAY PROGRAM
Section 1004 of the Food and Agriculture Act of 1977 authorizes the Secretary to administer a special wheat acreage grazing and hay program.
A producer who decides to participate must designate the specific acreage on the farm that is to be used for grazing or hay (cut immature for green chop, hay or silage). Acreage included in this program must be in addition to set aside acres and be within the normal crop acres of the farm.
The payment rate will be at least 50 cents a bushel or the deficiency payment rate, whichever is greater. The total payment will be determined by multiplying the established farm wheat yield, times the number of acres in the program, times the payment rate.
Producers will receive a 25 cent per bushel payment at sign up.
This initiative is expected to result in an additional 1 to 1.5 million acres being grazed or hayed, with a 30-50 million bushel reduction in 1978 production from current estimates.
Wheat prices will likely be slightly higher (3-5 cents) and net budget outlays will be slightly lower because of a reduction in deficiency payments and loan and inventory outlays.
FEED GRAIN DIVERSION PROGRAM
Section 502 of the Food and Agriculture Act of 1977 authorizes the Secretary to make land diversion payments to producers to adjust the national acreage of feed grains to desirable goals.
The 10 percent voluntary land diversion program for feed grains is in addition to the 10 percent set-aside for feed grains.
To receive diversion payments, producers' 1978 plantings cannot exceed 1977 plantings for each of the crops, or exceed the normal crop acres for the farm. The diverted land must also be put into an approved conservation use.
The payment rates for the voluntary diversion of feed grains are: 20 cents per bushel for corn and 12 cents per bushel for barley and grain sorghum. The payment will be determined by multiplying the payment rate times the established crop yields for the farm, times the 1978 acres planted for harvest.
At sign up, producers will receive an advance payment of 10 cents per bushel for corn or 6 cents per bushel for sorghum or barley.
Estimates are that 10 million acres will be placed in set aside or land diversion. Approximately 7 million acres will be corn, 1.5 to 2 million acres will be grain sorghum, and 1 to1.5 million acres will be barley. Six of the 10 million acres will be in set aside; four will be in land diversion.
The impact of this diversion program will be to reduce feed grains by 5 to 7 million acres from current estimates with a 4-6 million acre reduction in corn and a 1 to 2 million acre reduction in soybeans.
Feed grain stocks are expected to be reduced about 335 to 450 million bushels (corn equivalent) over current estimates. Diversion payments for this program will likely total about $625 million: $540 million for corn, $50 million for grain sorghum, and $35 million for barley.
Corn prices for 1978 are expected to strengthen 15-25 cents a bushel from current estimates, with increases to other feed grains in relation to corn.
Net government outlays are expected to be minimal because of a reduction in deficiency payments and loans and inventory outlays.
COTTON DIVERSION PROGRAM
Section 602 of the Food and Agriculture Act of 1977 authorizes the Secretary to implement a paid diversion program for 1978-crop upland cotton.
Participants would divert crop land equal to 10 percent of the 1978 planted cotton acreage and also limit 1978 cotton plantings to not more than 1977 cotton plantings. The payment will be determined by multiplying the 2 cents per pound rate times the farm yield times the cotton acreage planted for harvest; producers will receive a 1 cent/lb. advance at sign up.
Planted acreage is expected to be reduced 500,000 to 1 million acres from current estimates with no diversion.
Farm prices will likely increase about 3 cents per pound; net returns would be increased $50-60 million. Consumer prices of goods made from cotton will be slightly higher as a result of slightly higher cotton prices; the price of a $15 cotton shirt would go up about 9 cents.
Diversion payments will likely total $100 million, and be offset by a reduction in deficiency payments and loan and inventory costs.
EXAMPLES OF PAYMENTS
For Wheat:
Assumptions: A farmer has 300 acres of wheat and will graze all of it and also plant cotton and sorghum. The normal crop acreage (NCA) is 1,000 acres. The farm yields are: 30 bu./acre (wheat), 500 lb./acre (cotton), and 40 bu./acre (sorghum). Also 1978 planted acreage will not exceed 1977 acreage.
The payment for the 300 acres grazed out is: 30 bu./acre x50 cents/bu. X 300 = 4,500.
The payment for the cotton diversion is: 500 lb./acre x2 cents/lb. X 300 = 83,000.
The payment for the sorghum diversion is: 40 bu./acre x 12 cents/bu. X 250 = 81,200.
Note.—The farmer can graze out all of his wheat because it is not more than 40 percent of his NCA total of 1,000 acres.
For Feed Grains:
Assumptions: A farmer has a normal crop acreage (NCA) of 400 acres. He decides to plant 100 acres of corn this year. His 1977 planted corn acreage was 105 acres. His farm yield for corn is 100 bushels per acre.
Remember that 1978 planted acreage cannot exceed 1977 planted acreage in order to obtain the diversion payment.
EXAMPLE
The payment in this example is: 20 cents/ bu. X 100 bu./acre x 100 acres = $2,000.
For Cotton:
Assumption: A farmer has a normal crop acreage (NCA) of 500 acres. He is planting 100 acres of cotton this year. His 1977 planted cotton acreage was 100 acres. His farm yield for cotton is 500 pounds per acre.
Remember that 1978 planted acreage cannot exceed 1977 planted acreage in order to obtain the diversion payment.
EXAMPLE
The payment in this example is: 2 cents/ lb. X 500 lb./acre X 100 acres =1,000.
Mr. MUSKIE. He may disagree with the program, but the fact that the President does not care is another point entirely.
Mr. President, the Senate must meet its responsibility to return this bill to conference in order to produce a bill which meets the farmers' needs with minimum possible cost in increased inflation, deficit, and grain shortages.
At this point I would like to make some parliamentary inquiries to put in perspective a parliamentary issue the Senate in one way or another will have to resolve today.
Mr. McGOVERN. Mr. President, at the appropriate time will the Senator ask for an additional time to yield so we can have a little colloquy on some of the points he is raising about the impact of this bill on the budget, on the Federal deficit, and also on consumers, the issues that he raised here this morning, and also in his letter to Members of the Senate?
The PRESIDING OFFICER. The Senator's 5 minutes have expired.
Mr. MUSKIE. You see what the time problem is, may I say to the Senator. I will be glad to try to engage in as extensive a discussion as my hour time limit permits.
Mr. McGOVERN. Maybe 5 or 6 minutes.
Mr. MUSKIE. I do have some priorities that relate to that time concerning my responsibility as Budget Committee chairman.
Second, I am not an agricultural expert so I am not in the same position as the Senator from South Dakota is, perhaps, in discussing some of the substantive questions.
Mr. McGOVERN. It is really the budget matters I wanted to discuss. That is why I asked the Senator to request additional time.
Mr. MUSKIE. I cannot promise the Senator. I have made some commitments as to time, but I will do the best I can.
Mr. President, with respect to the parliamentary inquiries: Is it not true that conference reports such as the pending legislation are amendments and, therefore, subject to the procedures of section 303 of the Budget Act?
The PRESIDING OFFICER. Will the Senator state the parliamentary inquiry again, please?
Mr. MUSKIE. Is it not true that conference reports such as this one are amendments and, therefore, subject to the procedures of section 303 of the Budget Act?
The PRESIDING OFFICER. Did the Senator say is it not true that they are amendable
Mr. MUSKIE. That they are subject to the procedures of section 303 of the Budget Act.
The PRESIDING OFFICER. The Senator is correct. Section 303 has been interpreted to include amendments made in conference that contain new matter not previously considered by the Senate.
Mr. MUSKIE. The second inquiry: Is it not true that this conference report provides new spending authority within the meaning of section 401(c) (2) (C) of the Budget Act which is to become effective on October 1, 1978? I understand these questions were reviewed with the Parliamentarian earlier so that we will not be springing any surprises on him.
The PRESIDING OFFICER. The Chair would have to examine the conference report in order to answer the parliamentary inquiry.
Mr. MUSKIE. Well, I guess I have been misinformed as to the scope and thoroughness of the prior review. I will pass over this matter for the moment while counsel for the committee consults with the Parliamentarian so that we will not waste my hour. I understand it had been thoroughly reviewed.
But instead of putting parliamentary inquiries at this point I will make the point, which I hope to reinforce later with a ruling from the Parliamentarian, so that we can proceed. I do not want to use an hour debating this technical question.
The PRESIDING OFFICER. The answer is yes to the second parliamentary inquiry.
Mr. MUSKIE. The answer is yes.
Now, third, is it not true that under section 303(a) of the Budget Act this legislation, on the basis of the two previous answers, cannot be considered until after the first budget resolution for fiscal year 1979 is adopted?
The PRESIDING OFFICER. That is correct.
Mr. MUSKIE. So that if that answer is correct, this conference report, since it is pending before the Senate prior to the adoption of the first concurrent resolution for 1979, is subject to a point of order?
The PRESIDING OFFICER. The Senator is correct.
Mr. MUSKIE. I thank the Chair and the Parliamentarian. Mr. President, I will now comment upon the answers I have received.
It is not difficult to understand why this provision, section 303, was inserted in the Budget Act. That provision says that when we are dealing with the next budget year all spending decisions are to be considered together in the first concurrent budget resolution so that when we begin to authorize spending for the next budget year we do so having in mind all of the spending pressures and demands we are being asked to consider.
What we are being asked to do here is to give preference to this particular bill and this particular proposal over all others, $500 billion worth of them, which the Budget Committee is at the present time considering, with a view to reporting the first concurrent budget resolution to the Senate on April 15. That is the point.
Once we abandon it, and especially if we abandon it in the way that Senator TALMADGE proposes, to suspend the Budget Act altogether, to suspend it altogether, what we are saying is we do not even care about the procedures.
There was a procedure available to the conference to deal with section 303. They could have applied to the Budget Committee for a waiver of section 303, and that could have been done last week. But, no, the Agriculture Committee and the conferees find that too inconvenient. They have not asked for a waiver, they have not asked the Budget Committee for a waiver.
They have not tried to make a case in the Budget Committee for a waiver, but instead they come here and say, "That Budget Act is too inconvenient, so I am going to move," the distinguished floor manager says, "to suspend the Budget Act."
Well, if we are going to suspend the Budget Act every time it is inconvenient, every time it is uncomfortable, every time it stands in the way, every time it requires us to follow a certain procedure to assure that the provisions of the act are safeguarded, then it becomes meaningless. If at some time, then, our friends in the gallery are concerned about another form of Government spending, and they say, "Why do not the Budget Committee and the Congress stop that," how are we going to stop it if we have already undermined the procedures for controlling and disciplining Government spending? How are we going to stop it? Do you think we can turn it on and off like a faucet of water?
Mr. DOLE. Mr. President, will the Senator yield?
Mr. MUSKIE. Not yet. How are you going to observe a procedure if you get rid of it, throw it away, suspend it every time it becomes inconvenient?
So, Mr. President, it is not difficult to understand why this provision was inserted in the Budget Act. As reported from conference, the bill carries an October 1, 1978, effective date. It contains fiscal year 1979 farm entitlement provisions, which are to be considered before the Budget Committee has had an opportunity to establish national spending priorities in our first budget resolution for fiscal year 1979. It is therefore subject to a point of order under section 303(a), and because the floor manager of the bill understands that, he wants to avoid the point of order by moving to suspend the Budget Act.
Mr. President, this bill fails to comply with the requirements of the Budget Act, and disregards orderly budget procedures. That means that the Budget Committee is forced to draw up its resolution under pressure to include a specific program, without retaining the responsibility to establish spending priorities for fiscal year 1979.
It would appear, Mr. President, that if this bill indeed exists in circumstances that are extraordinary, the Budget Act, by providing a waiver procedure, anticipates the ability to respond to extraordinary and unanticipated emergencies. But, no, we do not use the waiver. We do not use the procedure. We just push the Budget Act to one side, and then do what we will.
That is the way we used to operate, and it looks to me as though that is the way we are going to continue to operate in the future, if we have more precedents like the one before us in the Senate today.
Mr. President, if the budget process is not strong enough to moderate constituent pressures and focus congressional deliberation on the Nation's problems in an orderly and deliberate way, then the budget process is not worth the paper on which it is written. If the budget process is only to total the interest on the public debt, or to serve as an accounting mechanism to add to the cost of proposals from the authorizing committees, then we might as well go out of business. If that is the will of the Senate, so be it. I and my 15 colleagues have other interests we could pursue, and other committees on which we might focus our attention. If, indeed, we have been wasting our time for the past 4 years working on budget resolutions and advising the Senate on the budget implications of all major legislation, then we might as well close our doors.
Indeed, for the past week, Mr. President, our committee has been working 15 hours a day, late into the evening, to prepare the first budget resolution for fiscal year 1979. We have been trying to review the 19 functions of the budget and to set national spending priorities.
By forcing the Senate to consider this 1979 spending bill in advance of congressional action on the budget resolution, the Agriculture Committee is saying that farm spending must go ahead of every other important national issue, from defense through income security to interest on the national debt.
Mr. President, this kind of conduct is not consistent with the Budget Act; and so, in due course, if the motion of the Senator from Georgia is defeated, I will raise the point of order against the conference report.
May I say to my colleagues that the Parliamentarian advises me that the effect of that would be the same as a motion to recommit to the conference. If the point of order is sustained, the bill will go back to conference, and the conferees will have another opportunityto work their will on this bill and report it to the Senate. That is the purpose of the point of order.
Mr. DOLE and Mr. McGOVERN addressed the Chair.
Mr. MUSKIE. Mr. President, how much time do I have remaining?
The PRESIDING OFFICER (Mr. ZORINSKY). The Senator has 32 minutes remaining.
Mr. MUSKIE. At some point I would like to get into that part of what I want to say that addresses the merits of the conference report, and I am prepared to do that, if the distinguished floor manager is willing.
Mr. McGOVERN. Mr. President, will the Senator yield to me to discuss the budget impact of this bill, since I think that is the matter which most concerns him, and also the impact of the bill on the consumers? Those are the points thathe has raised in the letter he sent to us.
Mr. MUSKIE. I have not yet raised those points this morning, and I am about to do that. I simply would inquire of the Senator from Georgia if he wishes me to continue using time at this point.
Mr. TALMADGE. If the Senator will proceed, that is fine with me.
Mr. MUSKIE. All right; then I will proceed, and I will try to yield to the Senator from South Dakota at the appropriate point.
Mr. President, as my colleagues will recall, the Senate version contained several contradictory set aside programs and new farm subsidy provisions which carried extremely high costs to the Government and the consumer. Moreover, this program would have made our Nation vulnerable to future crop failures. So contradictory were the various provisions of that measure that CBO was unable to come up with a cost estimate for the entire bill, and we have never been able to get that cost estimate for the entire bill from the CBO because of the contradictory provisions. So this is one proposal to which I have no answer, to which the CBO has no answer, and under which we have no way to estimate the budgetary costs.
I suspect that many of my colleagues voted for this bill because of assurances they received from the chairman of the Agriculture Committee that the conference would produce a more responsible piece of legislation. I regret that the majority of Senators voted for this measure, which they knew to be unsound economic and agricultural policy.
The conferees have succeeded in adding insult to injury by compounding the inflationary and ill-conceived economic policies contained in this bill.
Mr. President, let us take a look at what the conferees have brought back to this body for our consideration and approval.
First, they have accepted the flexible parity concept proposed by my colleague from Kansas and, at the same time, have increased the target and loan price schedule for the commodities covered in this bill.
Mr. DOLE. Mr. President, will the Senator yield for a correction?
Mr. MUSKIE. I yield.
Mr. DOLE. I would just point out that the loan rates in the conference report are lower than those passed by the Senate. In fact, the Senator from Montana was just complaining about that action by the conference.
Mr. MUSKIE. I understand that the target prices are higher than your provision in the Senate.
Mr. DOLE. No, the target prices remain the same under flexible parity, except that the first jump was higher. From that standpoint, that is accurate.
Mr. MUSKIE. All right; I accept that correction.
Second, the conferees rejected every substitute to these inflationary measures. They rejected a substitute by Representative FOLEY which would have made a permanent change in the 1977 farm bill for target prices and loan rates for wheat, feed grains, and cotton. CBO analyzed the Foley substitute and concluded that it would be significantly less inflationary than the bill reported by the conferees.
The conferees also rejected the administration's recommendation to modify the conference report to reflect recently announced administration initiatives. As you know, between the time the Senate passed H.R. 6782 and the beginning of the conference the administration set forth a nine-point program which would, as I have stated earlier:
Provide greater economic incentives for participation in farm programs;
Give immediate cash assistance yielding crop producers approximately $3-4 billion in new returns;
Strengthen market prices by bringing supplies and demand into better balance;
Conserve energy and natural resources while providing an accessible land reserve for use when needed.
But, again, Mr. President, the conferees cast caution to the wind and went far beyond these more reasonable alternatives.
Even the Foley proposal, I should note, would have carried a high price tag in terms of budgetary costs. At least, however, economic impact might have been somewhat more equitable since its impact on food prices would have been less severe. Food price inflation is the cruelest kind of tax — a regressive tax. The burdenof this bill will be carried disproportionately by the poor and middle-income citizens.
Mr. President, we should recognize by now that Federal programs which aid farmers cannot create money out of thin air. Sooner or later, unless dramatic changes occur, those dollars which are added to farm income must come either from U.S. taxpayers in the form of higher spending or from consumers in the form of higher food prices. In either case, it is the American people who must foot the bill.
Certainly the American consumer will not be fooled when he sees his food bills increase by nearly 3 percent in the upcoming fiscal year. Over $5 billion will come out of the pocketbooks of American consumers to finance this legislation. In other words, the average American family of four will end up paying about $100 a year more for food when this bill is added to the recent administrative actions.
As for the inflationary impact of this legislation, CBO estimates that the fiscal year 1979 food component of the consumer price index will increase approximately 2.5 percent over January current policy projections, adding approximately 0.5 points to the overall rate of inflation.
However, this is merely the first-round effect. Wages and long term contracts tied to the CPI will also be adjusted upward, and as a result prices will rise throughout the economy.
By 1981, the first round plus the secondary and tertiary effects flowing from this legislation, plus USDA action, will have added a full point to the overall consumer price index.
In terms of budget impact, CBO estimates that this legislation will require approximately $5.7 billion in outlays over current policy estimates in fiscal year 1979.
Mr. President, I ask unanimous consent that the tables including CBO estimates be printed at this point in the RECORD.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
[Tables omitted]
Mr. MUSKIE. We have a costly and dangerously inflationary bill before us — a bill that will hit the pocketbook of every American taxpayer and consumer.
Apparently, my colleagues have not heeded the early warning signs that inflationary pressures are on the rise. The recent surge in consumer and wholesale prices is largely attributable to sharp increases in the price of food which have already taken place. Are we to make double-digit food inflation a permanent feature of our economy?
If we now pass this bill which will accelerate food price inflation, we will raise the underlying inflationary momentum in the economy. As I have pointed out before, inflation is sustained by the determination of every individual in every sector to catch up with inflation. This process is sustained in large part by the administration and the Congress, as we take economic policy decisions which have large inflationary effects. The list of culprits include increased agriculture price supports, higher payroll taxes, the increase in the minimum wage, import restrictions, and certain regulatory activities, to name only a few. I believe we are discovering that one of the most serious problems in an underemployed economy is the pressure it creates to adopt policies to protect incomes which add fuel to the inflationary cycle.
I had hoped that the congressional budget process would provide us with a mechanism for resisting these pressures for politically expedient action. Mr. President, I confess that legislation such as this undermines my faith in the ability of Congress to act responsibly on tax and spending legislation.
H.R. 6782 is but another glaring example of ill-conceived economic policy. In a headlong rush to respond to the strident voices of one segment of our farm population, we have ignored the impact this measure will have on the dairy, poultry, and livestock producers, and the agricultural sector as a whole. The bill reported by the conferees would aid grain producers while severely hurting livestock producers. The price of corn, a staple feed grain, is projected to rise to $2.45 a bushel in fiscal year 1979 under this bill, as opposed to $2.25 without it and $2 before the administration acted.
Furthermore, within the farm sector. only 5 percent of all farms, the largest ones, will reap approximately one-third of 1 percent of the benefits from this program. This same group averaged approximately $50,000 in net income last year — a bad year for grain farmers. Clearly, these agricultural executives are not in need of additional Federal assistance at the expense of American consumers and taxpayers and other farm producers.
Ironically, 60 percent of all farmers — those small farmers facing the most serious financial difficulties — will reap only a small portion of the benefits from this program. I am sure many of these people have been told that this bill will provide them with relief. The hard facts reveal the absurdity of such assertions. I sympathize with these farmers. I believe they, and the rest of us, have been sold a phony bill of goods.
We should recognize that the financial squeeze now being felt by some farmers stems from ill-timed investments they made in land and machinery when prices for grain were exceptionally high. Has the time arrived for Government to rescue all of us from our mistakes? Is it time to bail out every small and large businessman who makes an unsound investment? Is that our free market system, our economic system of reward for initiative and risk taking?
Finally, I think we are just beginning to see the effects of the 1977 farm bill in agriculture. For 1978, net farm income is already approximately $3 billion higher than last year, even without any new farm entitlement program.
As I indicated earlier, agricultural prices are now rising substantially. This ill-conceived legislation is designed to 'fight the last war, not the real economic battle we face this year, which is the battle against inflation.
Mr. President, we must also recognize that this bill will adversely impact on U.S. grain reserves. Bad weather combined with the set aside program could reduce U.S. grain stocks to dangerously low levels. Wheat and feed grains stocks could fall to levels of the 1974-75 levels, when we had exceptionally high prices. CBO estimates that under this provision carryover stocks could fall 24 percent below its January current policy estimate. The administration's initiatives would have reduced stocks only about 7 percent under current policy. The 2.2 billion bushel grain reserve estimated under the conference agreement is a dangerously low level which could be wiped out by any number of unforeseen circumstances, including the weather and changes in world grain demand.
I think it is not prudent to play Russian roulette with the American and world economy. A healthy reserve is essential to economic stability.
Do members realize the possible consequences of this foolhardy policy? In 1973-74, we ran short of reserves, we had double-digit food inflation, followed inevitably by restrictive anti-inflationary monetary policies and by deep recession. We got nearly 9 percent unemployment. We got the massive weakening in both U.S. and foreign economies which is still with us. And from this we got the economic budget deficits we have faced since that time.
The next time it will be worse. Accelerating inflation will lead to tighter monetary policies — Chairman Miller has already told us that. Another similar recession will produce our first $100 billion dollar budget deficit. Is that what the Congress wants to vote for today?
H.R. 6782 is not the answer to the financial problems facing American farmers.
Mr. President, perhaps it is expecting too much in an election year for Congress to act responsibly on controversial spending and tax legislation. And, of course, there is always that temptation, in times such as these, for us to shirk our responsibilities and leave the difficult decisions up to the President. As chairman of the Budget Committee, I am deeply disappointed that we, as a legislative body, have failed to live up to high expectations in our deliberations on major economic decisions. In this case, we have clearly acted recklessly in adopting an extravagantly expensive farm bill, which could have tragic consequences for our economy. Indeed, we have acted so hastily in this instance that we have not had the benefit of cost and budget information on the consequences of this bill.
Mr. President, the responsible thing to do at this stage is to reject the conference report and not leave it up to the President to veto the bill.
We should also realize that certain politicians will surely exploit the discontent of frustrated farmers to further their own political ambitions. To these people I would like to point out that no one gains under this legislation: not the U.S. farmers — not the U.S. consumer — not the U.S. economy — not Congress — and not the President.
We all lose.
Mr. President, how much time do I have remaining?
The PRESIDING OFFICER. The Senator has 25 minutes remaining.
Mr. MUSKIE. Mr. President, I have agreed to yield 15 minutes to other Senators. The Senator from South Dakota would like to put some questions.
I will be happy to yield 5 minutes of my time to listen to the questions of the Senator from South Dakota.
Mr. McGOVERN. Mr. President, I thank the Senator from Maine.
I believe Senators appreciate the conscientious way in which the Senator from Maine is discharging his duties as chairman of the Budget Committee. I do not know of any Senator who wants to do away with the excellent work the committee has done. There are times, though, and I know the Senator from Maine recognizes this, when even the most carefully laid plans have to be revised to meet difficult circumstances.
I would like to suggest to the Senator from Maine that I am just as concerned as he is about respect for the Federal budget. The Senator knows that whether we do anything at all for farmers this year we are estimated to run a $60 billion Federal deficit. We cannot blame that on this farm bill or any other bill pending here for farmers. That deficit is projected by the Senator's own
committee whether we vote yes or no on this bill.
We also know—
Mr. MUSKIE. Will the Senator yield at that point?
Mr. McGOVERN. I yield.
Mr. MUSKIE. We have no estimate as to the deficit for fiscal 1979 at this point.
Mr. McGOVERN. The Senator was at least sure enough of it so that he said in his letter to Members of the Senate that the coming year's deficit is already estimated at $60 billion or more.
Mr. MUSKIE. It is estimated by the administration, that is correct. We have the administration's estimate which is now $61.5 billion. We have not completed our work. We hope to come in under that number. This bill, of course, would make it much more than that.
Mr. McGOVERN. Let us take the word of the Congressional Budget Office that this bill in this current fiscal year will save $375 million, but that in fiscal year 1979 it will cost $5.6 billion. I do not know whether those estimates are right or not, but I am willing to accept them.
Mr. MUSKIE. May I make an observation?
Mr. McGOVERN. Let us round it out to $6 billion and say for purposes of argument the bill will cost the Treasury $6 billion.
Mr. MUSKIE. The Senator's question reminds me of another point which I think is very important. There ought to be another point of order. The conference eliminated all additional 1978 spending under the bill, but it provided the provision on page 3 of the conference report, section 103. This provision is designed to get around the Budget Act, to avoid a point of order which would have been in order if there had been additional 1978 spending. But instead this provision makes it possible for farmers, after next October, to renegotiate their contracts on the 1978 crop, and to renegotiate them on the basis of the new target prices. We do not know what that bill will be. We do not know at all. Part of that cost is included in the estimate of 1979 and it is really a 1978 cost. So the conference has further confused the question of cost by that kind of legislative legerdemain. I think it is important to make the point.
Mr. McGOVERN. If the Senator will just let me accept for purposes of argument whatever he thinks the cost of this bill is—
Mr. MUSKIE. I am concerned not only with cost but with this kind of device designed to avoid facing up to the cost under the budget discipline.
Mr. McGOVERN. Let us estimate that it is somewhere around $6 billion in cost,which seems to be in the neighborhood of what the Congressional Budget Office is recommending. I would like to suggest to the Senator that there is a way to handle that without adding one penny to the Federal deficit this year or next year. That is for us to reduce the proposed $25 billion tax reduction by that amount. I think the administration is mistaken in any event in recommending a $25 billion tax cut at a time when we have urgent needs of the kind which now face American agriculture. We have very serious needs in the cities. We have a desperate need to be moving ahead on the development of solar energy and other forms of renewable energy.
At the appropriate point in this session, I am going to move — and I hope other Senators will join in this effort — that instead of the $25 billion tax cut we reduce that figure by whatever is necessary to cover the cost of the farm program.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. McGOVERN. Will the Senator yield further?
Mr. MUSKIE. Why do I not yield to Senator CLARK at this point to be sure he gets his time and then I will be back. I would like to yield myself one more minute to make a point.
The kind of trade-offs the Senator is talking about are supposed to be made first in the Budget Committee as it deliberates the first concurrent budget resolution. This whole procedure undermines that. This cannot be done on the floor of the Senate. It can be done later after the budget resolution comes in and the Senate debates it. The trade-off the Senator is proposing may very well be a reasonable trade-off, but it should not be made here. The Senator is assuming that if we look at the whole picture, certain trade-offs that the Senator prefers could be made. Maybe his preference would be in the majority position and maybe it would not be. But the place to do it is under the provisions of the Budget Act. This bill torpedoes all of that.
Mr. McGOVERN. As the Senator known, I appeared before his committee to tell him what I had in mind in terms of the tax cut.
Mr. MUSKIE. I understand that.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. McGOVERN. I must say that I was very surprised that the Senator's Budget Committee increased the President's military budget by almost $2 billion.
The PRESIDING OFFICER. The timeof the Senator has expired.
Mr. MUSKIE. I will respond to that in a moment. When the Senator wanted to present those issues, we welcomed him before the Budget Committee. We held a special hearing for him. We are always willing to do that. But that is the place to do it.
Mr. McGOVERN. That is why I appeared before the committee.
Mr. MUSKIE. But this bill is not there. It is here. This conference report has never been before the Senate Budget Committee. The motion of the Senator from Georgia is to suspend the Budget Act so that it does not have to go there. That is the point I am making to the Senator. He can have his own priorities. I have mine. Sixteen members of the Budget Committee have theirs, and 100 Members of this body have theirs. It is for the purpose of organizing and handling those in a deliberate, rational fashion that we adopted the Budget Act. The Senator cannot persuade me that considering this bill here today is consistent with procedures of the Budget Act.
Mr. McGOVERN. The Senator knows that, in the last analysis, 100 Senators have to decide everything that we decide. It is not just my priorities. I am willing to take my chances with what the Senate will do here today, but there is no way we can devise a budget procedure that ought to foreclose action on this floor to modify it and react to it. The Budget Committee can make its recommendations.
If I understand that act properly, we always have the recourse, as Members of this body, to modify the action of that committee. That is what this debate is all about today.
Mr. MUSKIE. We have a procedure to apply to the Budget Committee for a waiver. That has not been done. The Budget Committee acts on the waiver and listens to the case made. That has not been done.
The Budget Committee reports the waiver to the floor, where the Senate can consider it. That has not been done. So I am not impressed by the Senator's argument. The procedures of the Budget Act have not been followed.
Mr. McGOVERN. We moved just as quickly as we could on this bill, I say to the Senator.
Mr. MUSKIE. You have had 3 days to apply for a waiver.
Mr. McGOVERN. It is remarkable, in my judgment, that we were able to complete action on it and bring it to the floor as quickly as we have. If I had ever thought that the Budget Act would foreclose this kind of procedure for us to deal with an emergency situation of this kind, with a major part of our economy facing a crisis that is going to have a much more serious impact on the budget than anything we do here today if we reject this legislation — the Senator needs to keep in mind, too, that if we have several million farmers going bankrupt in this country, that has an impact on the budget, too. It is a loss of revenue, it is a loss of purchasing power, it is a loss of our basic food producing industry.
Those are considerations that we need to be looking at as well as these technical procedures.
The PRESIDING OFFICER. The Senator from Maine has 15 minutes.
Mr. MUSKIE. I shall use 1 minute, and I shall not yield on this minute.
The staff of the Budget Committee asked the staff of the conference last Wednesday to submit a waiver. We repeated that request later in the week. We got no response. What the Senator from South Dakota regards as a mere technicality is an important procedural safeguard to insure that the fundamental problems of farmers, defense, consumers, and everybody else are protected.
If the Senator from South Dakota chooses to say that once he decides that the Budget Act is an inconvenience, we ought to set it aside casually, I cannot go along with that.
I yield 10 minutes at this point to the Senator from Iowa.