Farm Subsidy Reforms Dead : Congress Makes Political Decision Not to Cut Aid

Congress, believing it politically smarter to continue propping up struggling farmers than to slash bulging budget deficits, is plowing under President Reagan’s proposal to radically reduce the 52-year-old system of federal farm supports.

Both the Senate and House Agriculture committees have adopted the legislative framework for making relatively small changes in current farm programs. Although the details are not complete, the cost would total about $40.5 billion over the next three years--only $1 billion less than if current programs were extended without change.

Five months ago, Agriculture Secretary John R. Block disclosed a sweeping “market-oriented” plan to reduce federal deficits by up to $50 billion over the next five years through the phasing out of price supports and other subsidies. In the process, it was hoped, U.S. farmers could increase their share of expanding world markets.

But, witheconomic hardship persisting on the farm, the Reagan Administration has backed off its reform zeal. This week, White House Chief of Staff Donald T. Regan agreed to add roughly $8 billion to the $20.5 billion initially earmarked by the Senate for major crop subsidies over the next three years.

After meeting with a group of senators, Regan declared: “We’re very sympathetic to the plight of the farmer.”

Sen. Mark Andrews (R-N. D.) expressed the widespread sentiment of farm-state lawmakers who are facing reelection campaigns next year in the midst of the agricultural crisis.

‘Solid Farm Program’

“Let’s not worry about budget figures,” he said. “We didn’t build this (farm legislation) to fit within the budget. We built it as a solid farm program.”

To be sure, not all members of Congress--not even all members of the agriculture panels--are happy about keeping federal farm programs generally intact.

“This is not an adequate response to the problems in agriculture,” asserted Rep. George E. Brown Jr. (D-Colton), a member of the House Agriculture Committee. “It will add $10 billion a year to the deficit above what it should be. And, whether it will help farmers’ income is dubious. It will encourage more production, creating more surpluses and depressing prices even more.”

However, lawmakers who would like to see major changes in farm programs are hampered because “the main actors in writing the legislation are influenced by the large commodity groups,” Brown noted. “The influence of taxpayers and consumers is small. Their representatives are not masters of the complexities of the bills. So Congress ends up going with the ‘experts,’ who are dominated by the commodity groups.”

Although the general shape and cost of the support programs are being retained, Congress is concocting a few “market-oriented” twists designed to make U.S. wheat and other crops more competitive worldwide, while ensuring that farmers’ incomes do not decline further.

For example, there is substantial support for a plan advanced by Senate Majority Leader Bob Dole (R-Kan.), Sen. Edward Zorinsky (D-Neb.) and Rep. Thomas S. Foley (D-Wash.) to overhaul the federal system of issuing crop loans to wheat and corn farmers. In effect, the House Agriculture Committee cleared the way Wednesday for the adoption of that proposal when it rejected an alternative farm subsidy plan by a vote of 22 to 20.

Current law allows a wheat farmer to borrow money at the congressionally established rate of $3.30 a bushel, using his crops as collateral. A farmer may default on his loan if wheat prices fall below that figure--a system that has forced the government to buy massive amounts of wheat and corn in the last four years as world market prices plummeted.

The Zorinsky-Dole-Foley plan is intended to make U.S. farm products competitive again overseas by allowing the per-bushel loan rates to be reduced as market prices fall--saving billions of dollars. But, to protect farmers’ incomes, another provision would increase direct subsidies to farmers to cover the difference between the per-bushel price a farmer actually receives for his crops and the per-bushel “target” price set by Congress.