Wool Subsidy’s End Shows Vigor of Sacred Cows

Sometime in the next few days, President Clinton will take pen in hand to do something quite remarkable in the annals of Washington--eliminate a longstanding federal spending program.

Clinton’s signature will repeal the subsidy for wool and mohair producers, which has been on the books for nearly 40 years and has successfully resisted repeated attempts to erase it from the federal ledger.

But this time, even the powerful farm lobby could not fight off an onslaught that seemed to come from all directions at once--a new President, the national media and a growing legion of lawmakers no longer willing to vote for what they believe are wasteful agricultural subsidies.

“There was no one thing--the program died from a thousand cuts,” mourned Larry Meyers, Washington representative for the American Sheep Industry Assn.

Yet more than anything else, it is clear that the subsidy could not withstand the growing pressure in Washington for deficit reduction. And the legislative battle it provoked offers a fascinating glimpse at what it takes to cut spending--which voters generally say they favor until talk turns to specifics.

It is a battle that is likely to repeat itself as the competition for federal funds intensifies.

In fact, only days after Congress wiped out the wool subsidy, House and Senate negotiators agreed to kill a far more expensive and controversial program: the $11-billion superconducting super collider. Like the wool program and other agricultural subsidies, the Texas atom smasher had become a frequent target of would-be budget cutters.

Yet even with this new mood of austerity permeating Congress and the Clinton Administration, eliminating entrenched spending programs is still one of the hardest things to accomplish in Washington.

Budget analysts noted that for all its rhetoric about waste, fraud and abuse, the Ronald Reagan Administration managed to repeal only a handful of federal programs. Among those it could not kill was the wool and mohair subsidy.

“We got slapped down when we tried to take it out of the 1985 farm bill,” recalled Robert Thompson, a former assistant secretary of agriculture under Reagan.

The subsidy very nearly survived Clinton’s efforts as well.

While the program is tiny by Washington standards--its elimination will save $500 million over five years--it took most of the first year of the Clinton Administration to get rid of it. Most observers believed that it would never happen at all.

Even now, lawmakers, lobbyists and bureaucrats on both sides of the battle said they are stunned by the outcome.

As far as Agriculture Department historian Dennis Roth can tell, the only other time a subsidy program was completely wiped out, except for those imposed briefly as a result of World War II, was in 1936, when Congress repealed a potato crop program that it had approved a year earlier.

“I’ve been in this business for 30 years and I’ve never seen this happen before,” marveled Dennis Avery, an agricultural analyst at the Hudson Institute and a former Agriculture Department official.

For Meyers, the sheep industry lobbyist, the congressional vote was the ultimate defeat, eliminating an important client’s federal benefits.

“Nobody wants to go out to lunch with me this week,” Meyers quipped.

But for Sens. Richard H. Bryan (D-Nev.) and John Kerry (D-Mass.), the vote was sweet vindication for their persistence in attacking the program and the senior farm-state lawmakers who supported it.

“Programs such as these should be wiped off the books,” Bryan said. “It’s been a long time in coming.”

Created in 1954 under the National Wool Act, the program had noble intentions. It was designed to help the ailing sheep industry, which during the 1950s was hard hit by an import surge after tariffs on foreign wool were reduced.

Subsidies for mohair, which comes from Angora goats, were thrown in to help the troubled goat industry.

The program’s appeal was enhanced because it had a national security component: It was supposed to ensure a stable domestic supply of wool for military uniforms.

In the wake of the Korean War, Congress was fearful of having to rely on shipments of wool from Australia or New Zealand in case of another conflict. Today, the military still purchases about 8% of the annual domestic production of wool for its peacetime needs.

But wool has not been classified as a strategic material by the Pentagon since 1960.

A 1990 report by the General Accounting Office questioned whether the program could still be justified. Even with the subsidies, it noted, U.S. wool production had plunged since the program’s creation. Repeating a warning that it had issued in a similar 1982 report, the GAO said that the program seemed to have a “limited effect on encouraging wool production and improving wool quality and was not an effective means to solve the sheep industry’s problems.”

Congress had largely ignored such attacks, authorizing subsidies of as much as $190 million a year.

In both houses, agriculture committees were populated with wool supporters, and the industry had a ferocious defender in House Agriculture Committee Chairman E. (Kika) de la Garza (D-Tex.). Texas received more benefits from the program than any other state.

But this year was different.

In his first budget, Clinton focused attention on the program by calling for a sharp reduction in subsidy payments. For the first time, congressional leaders were faced with an aggressive young President of their own party who was gunning for wool and mohair. Farm-state Democrats could not ignore that.

Clinton’s decision put wool and mohair on the media’s radar screen. A front-page story in the New York Times was followed by a spate of articles in other publications.

Another controversial subsidy received by honey producers, which Clinton proposed to eliminate entirely, received similar scrutiny.

“The Administration put this in play, and then it got kicked around by the media and by agriculture critics,” noted a senior House Agriculture Committee aide.

The stories caught the eye of Bryan, the Nevada senator. Although not a member of the Senate Agriculture Committee, he began to attack the program.

“This was red-flagged to us by the media,” Bryan spokesman Jim Mulhall said. “And Sen. Bryan thought this program was totally unjustified.”

The sheep industry and its congressional supporters, sensing that the tide was turning, agreed to a compromise similar to Clinton’s call for cutting subsidy payments. De la Garza sought, and won, a commitment from the White House endorsing the compromise.

Yet at the same time, Vice President Al Gore’s task force on “reinventing government” had set its sights on wool and mohair as a prime candidate for elimination.

Just one week after Clinton sent a letter to de la Garza applauding the “compromise that is acceptable to all parties,” the Gore task force called for the program’s demise.

One Administration official conceded that the White House had tried to craft the letter to de la Garza so that it would not make a promise that could be broken quickly by the Gore task force.

“But I can’t say that that was communicated clearly,” the official said. “You had so many things going on at the same time--the budget bill and the National Performance Review (Gore’s task force). And the decision to call for the program’s elimination came at the last minute.”

Congressional sources said de la Garza was irked by the switched signals, although he refuses to comment on the matter.

“It’s over. The program is done,” de la Garza said, throwing up his hands.

Gore’s report, released Sept. 7, provided fresh ammunition for the program’s opponents. With the Administration apparently eager to end the program, the Senate’s Democratic leadership decided not to choose sides.

When the Senate took up the farm spending bill, Bryan won passage of an amendment eliminating the wool and mohair program.

Caught off guard, wool supporters were outraged when they realized that the amendment would end subsidy payments immediately, including those for 1993 wool production.

Ranchers who had already taken out loans against this year’s production would be in financial straits. As a result, a House-Senate conference committee excised Bryan’s amendment.

Bryan refused to give up, and launched another attack when the bill returned to the Senate.

By late September, wool supporters realized that they were facing a groundswell of opposition.

“De la Garza saw that this was a debate that wasn’t going to be won on the floor of Congress,” one House Agriculture Committee aide said.

The best they could do was to save the subsidies for 1993. A new deal was struck. To keep the program intact for one last year, de la Garza and other supporters agreed to phase it out completely by 1996.

On Oct. 15, by voice votes, the House and Senate decided to do just that. De la Garza said in an interview that he has no intention of trying to revive it.

Longtime critics of pork-barrel spending hailed the action, expressing their fervent hope that it marks a permanent shift in the mood in Congress about deficit reduction.

Others want more evidence before joining the celebration.